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impact your income statement. Depreciation does not begin until the project is complete and put into service – a fact unknown by many administrators. Not only do these costs not “hit” your income statement, they can be included in the total cost of the project you are financing. (This of course assumes you are financing. Some organizations are able to pay cash, have investors or raise needed funds.)
Balancing the existing operation with the vision of the future may be challenging if current operating financials and cash on hand are not robust – perhaps due to staffing, supply and debt costs along with low interest income and declining census. If this is the case, you must effectively communicate to your source of funds that you are creating a new product that you believe will attract an expanded market. Forecasting under such circumstances is very difficult, even scary, if you’re accustomed to running under capacity. But as previously noted, you will likely attract new residents and revenue with a more desirable environment and lifestyle.
This illustrates, once again, the importance of a thorough pre- feasibility analysis. It may be the basis, certainly, for interim line-of- credit financing if needed. The pre-feasibility study (and later if needed, your formal feasibility study) contains the market analysis that reflects professional confidence in your ability to attract additional residents. The market analysis is combined with your financial forecast, which should include potential new revenues from additional residents. This critical information is the foundation for not only the project, but also the financing.
Marketing the Household Model to Your Community
A succinct marketing strategy is necessary for clearly communicating your new vision to potential residents, and presents an opportunity to reclaim census and promote a new identity. If you engage a marketing firm, its representatives will help you articulate your message once they clearly understand the story of transformation from institution to home. The message needs to convey your new identity in every form of communication from the organization; position advertisements, radio ads, web page, telephone conversations, person-to-person interactions... everything.
There is a new story to tell and all the marketing pieces must tell it. The new message should communicate a lifestyle, not dependence. The kind nurse with caring, sympathetic eyes hovering over the helpless elder conveys the traditional model of illness. It is the approach used by almost
“You must effectively communicate to your source of funds that you are creating a new product that you believe will attract an expanded market.”
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