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Your Guide to Starting an Assisted Living Facility

Written by:

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by:

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Your Guide to Starting an Assisted Living Facility

Fast Facts

Investment range

$401,550 - $804,100

Revenue potential

$450,000 - $1.44 million p.a.

Time to build

6 – 12 months

Profit potential

$135,000 - $432,000 p.a.

Industry trend




As people get older, many are unable to care for themselves as they once did. An assisted living residence provides a place for the aging to continue to enjoy their lives, yet with 24-hour assistance. 

As the population ages, the US’ $33 billion assisted living industry is projected to grow in the coming years. If you’re a passionate caregiver, you could start an assisted living facility and put your passion to work, helping numerous people every day.

But before you get started, you’ll need to understand what’s involved in launching a business. Fortunately, this step-by-step guide contains everything you need to know to start a successful assisted living facility. 

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting an assisted living community has pros and cons to consider before deciding if it’s right for you. 


  • Serve Your Community – Help people enjoy their golden years
  • Growing Demand – More ageing people mean increased demand
  • Good Money – Senior housing costs thousands per month


  • Passing Residents – Sometimes deal with loss
  • Investment Required – Constructing the facility is expensive

Assisted living industry trends

Industry size and growth

assisted living industry size and growth
  • Industry size and past growth – The US assisted living facility industry was worth $32.6 billion in 2021 after expanding .5% annually for the previous five years.((https://www.ibisworld.com/united-states/market-research-reports/assisted-living-facilities-industry/)) 
  • Growth forecast – The US senior living industry is projected to grow modestly over the next five years.
  • Number of businesses – In 2021, 20,855 assisted living facility businesses were operating in the US. 
  • Number of people employed – In 2021, the US assisted living facility industry employed 506,551 people. 

Trends and challenges

assisted living industry Trends and Challenges

Trends in the assisted living facility industry include:

  • The latest trend is assisted living communities of tiny houses, rather than apartment-style living.
  • The pandemic brought new technology into assisted living facilities, including communication tools so that residents can interact with family members virtually.

Challenges in the assisted living facility industry include:

  • Many assisted living facilities are experiencing a staffing crisis, making it difficult for them to operate effectively. 
  • Inflation is drastically increasing the expenses of assisted living facilities, cutting into profit margins. 

Demand hotspots

assisted living facility demand hotspots

What kind of people work in assisted living?

assisted living industry demographics
  • Gender  60.9% of nursing home administrators are female, while 39.1% are male.((https://www.zippia.com/nursing-home-administrator-jobs/demographics/))
  • Average level of education The average nursing home administrator has a bachelor’s degree. 
  • Average age –  The average nursing home administrator in the US is 47.2 years old.

How much does it cost to start an assisted living facility business?

Startup costs for an assisted living facility range from $400,000 to $800,000 and could be much more. Costs include at least a 30% down payment on the construction of the facility, furnishings and equipment, and a labor and operating budget. 

You’ll need to have your facility licensed as a residential care facility with your state. Check with your state for requirements. 

You’ll need a handful of items to successfully launch your assisted living facilities business, including: 

  • Furnishings and bedding
  • Security systems and call buttons
  • Basic medical equipment
  • Computer system
  • Kitchen equipment
Start-up CostsBallpark RangeAverage
Setting up a business name and corporation$150 - $200$175
Business licenses and permits$100 - $300$200
Business cards and brochures$200 - $300$250
Website setup$1,000 - $3,000$2,000
Facility construction 30% down payment$150,000 - $300,000$225,000
Furnishings, equipment, computer system$100,000 -$200,000$150,000
Labor and operating budget$150,000 - $300,000$225,000
Total$401,550 - $804,100$602,825

How much can you earn from an assisted living facility business?

assisted living facility earnings forecast

The average range of prices for assisted living is $2,000 to $4,000 per resident per month. These calculations will assume that you’ll charge $3,000 and have the capacity for 50 residents. Profit margins of assisted living facilities are typically around 30%. 

In your first year or two, you might have 25% occupancy, bringing in $450,000 in annual revenue. This would mean $135,000 in profit, assuming that 30% margin. As you fill up your facility, you might have 80% occupancy. With annual revenue of $1,440,000, you’d make a remarkable profit of $432,000.

What barriers to entry are there?

The only barrier to entry for an assisted living facility is the high startup costs of constructing the facility. 

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Step 2: Hone Your Idea

develop a business idea

Now that you know what’s involved in starting an assisted living facility, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research assisted living facilities in your area and online to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a long-term care facility for disabled children or a skilled nursing facility for disabled adults. 

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as operating as a nursing home or a mental health residential care facility.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your services

Your services will include:

  • Assisting residents with daily activities
  • Basic health care services
  • Provide meals
  • Cleaning 
  • Arranging activities

How much should you charge for assisted living?

Average prices for assisted living range from $2,000 to $4,000 per month. After all costs of labor and overhead, you should aim for a profit margin of about 30%. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market is likely to be elderly people or their families. You can market to them on Facebook or LinkedIn. 

assisted living facility idea rating

Step 3: Brainstorm an Assisted Living Facility Name

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “assisted living” or “long-term care”, boosts SEO
  • Name should allow for expansion, for ex: “Caring Hearts Senior Living” over “Assisted Living for Veterans”
  • A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create an Assisted Living Facility Business Plan

Here are the key components of a business plan:

what to include in a business plan
  • Executive Summary: Summarize your assisted living facility’s aim to provide high-quality, compassionate care and living accommodations for seniors, focusing on personalized service and community engagement.
  • Business Overview: Describe your facility’s services in offering assisted living care, including housing, healthcare, daily living assistance, and social activities for elderly residents.
  • Product and Services: Detail the range of services offered, such as personal care assistance, medical monitoring, recreational activities, and dining services.
  • Market Analysis: Evaluate the demand for assisted living facilities, considering factors like the aging population, local demographics, and existing senior care options.
  • Competitive Analysis: Compare your facility to other local assisted living options, focusing on your unique offerings like specialized care programs, facility amenities, or staff expertise.
  • Sales and Marketing: Outline your strategy for attracting residents and their families, using methods like community outreach, informational seminars, and online marketing.
  • Management Team: Highlight the qualifications and experience of your management team, especially in healthcare, elder care, and facility administration.
  • Operations Plan: Describe the day-to-day operations, including resident care, staff management, facility maintenance, and regulatory compliance.
  • Financial Plan: Provide an overview of financial aspects, covering startup costs, operational expenses, pricing strategy, and revenue projections.
  • Appendix: Include supplementary documents such as licensing, certifications, floor plans, or detailed market research to support your business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to assisted living facilities. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your assisted living facility will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

types of business structures
  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

  • Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
  • Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding an assisted living facility business. Angel investors and venture capitalists do sometimes invest in assisted living businesses, as they do have high profit potential, particularly if you have multiple facilities. 

Step 8: Apply for Assisted Living Facility Business Licenses and Permits

Business Licenses and Permits

Starting an assisted living facility business requires obtaining a number of licenses and permits from local, state, and federal governments. You’ll need to have your facility licensed as a residential care facility with your state. Check with your state for requirements. 

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your assisted living facility business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

types of business insurance
  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

Launching a Business

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as PointClickCare, Celayix, or Yardi, to manage your operations, charts, scheduling, payroll, payments, and HIPPA compliance. 


  • Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.


Here are some powerful marketing strategies for your future business:

  • Community Outreach Programs: Work with local centers and health groups to teach about senior health and show what your place offers.
  • Local SEO — Regularly update your Google My Business and Yelp profiles to strengthen your local search presence.
  • Targeted Social Media Campaigns: Use Facebook and Instagram ads to show your personalized care and share stories from residents to gain trust.
  • Referral Programs with Healthcare Professionals: Partner with doctors and hospitals. Give them reasons to recommend your place to their patients.
  • Host Open Houses and Tours: Have open days and tours so people can visit, see your facility, and meet the staff.
  • Online Reviews and Testimonials: Ask happy residents and their families to write good reviews online to improve your image.
  • Specialized Health Workshops: Offer free workshops on health topics relevant to seniors, positioning your facility as a knowledgeable and caring resource.
  • Strategic Print Advertising: Advertise in local papers and magazines focusing on seniors, highlighting your facility’s features.
  • Participate in Senior Expos and Events: Attend senior fairs and events to meet potential residents and give out information and freebies.
  • Leverage Video Marketing: Make videos like virtual tours and resident stories, and share them online to show the quality of your care.

Focus on USPs

unique selling proposition

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your assisted living facility meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your assisted living business could be: 

  • Luxury life at our premium assisted living facility
  • Feel at home and cared for in our comfortable apartments
  • Your loved ones will be part of a loving community


You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running an assisted living facility, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in assisted living for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in assisted living. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

Building a Team for a New Business

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a assisted living business include:

  • Nurses – provide basic health care
  • Home Care Aides – assist residents with daily living
  • Cooks – prepare meals
  • Housekeepers – clean units and facilities
  • General Manager – scheduling, accounting
  • Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run an Assisted Living Facility – Start Making Money!

Running a Business

The value that assisted living facilities provide is immeasurable. Many people, particularly the elderly, are unable to care for themselves and need a helping hand. Assisted living facilities change these peoples’ lives — providing a home and the right care and a community of like-minded people. If you’re a passionate caregiver, is there a better way to serve your community and make a great living? 

Now that you understand the business side of things, it’s time to break ground on your successful assisted living facility!

Assisted Living Facility Business FAQs

How profitable is an assisted living facility?

Assisted living facilities are very profitable. But more importantly, they serve an essential need in any community by providing a safe home for people in need.

What state has the most assisted living?

According to the National Center for Assisted Living, as of 2021, California has the most assisted living facilities with approximately 7,600, followed by Florida with approximately 4,000 and Texas with approximately 3,900.

How do I develop a personalized care plan for each resident?

Developing a personalized care plan for each resident in an assisted living facility requires a thorough assessment of their individual needs, preferences, and medical history. This assessment should involve input from the resident, family members, and healthcare providers, and should consider factors such as the resident’s physical and cognitive abilities, medication requirements, dietary needs, social preferences, and personal goals. 

What staffing requirements are needed to operate an assisted living facility?

The staffing requirements for operating an assisted living facility vary depending on the size and level of care provided. Generally, facilities are required to have a licensed administrator, as well as sufficient nursing and caregiving staff to meet the needs of the residents. Staffing requirements may be regulated by state or local licensing agencies, and may include minimum staffing ratios, training and certification requirements, and background checks.

What protocols and procedures should be in place for emergencies or medical incidents?

Protocols and procedures for emergencies or medical incidents in an assisted living facility should be developed in accordance with state and local regulations, as well as industry best practices. This may include developing an emergency response plan that outlines specific procedures for handling medical emergencies, natural disasters, and other critical incidents.


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Your Guide to Starting an Assisted Living Facility