Retirement communities may not seem like groundbreaking ideas, but more are coming on the market each year to serve the needs of mature adults. These are individuals who still want to be active and social, but they do not necessarily want to live in their same home anymore. Retirement communities promote active lifestyles and allow individuals to age gracefully. With the right activities and target market, any retirement community business can flourish.
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Learn how to start your own Retirement Community and whether it is the right fit for you.
Start a Retirement Community by following these 10 steps:
- Plan your Retirement Community
- Form your Retirement Community into a Legal Entity
- Register your Retirement Community for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Retirement Community
- Get the Necessary Permits & Licenses for your Retirement Community
- Get Retirement Community Insurance
- Define your Retirement Community Brand
- Create your Retirement Community Website
- Set up your Business Phone System
There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your Retirement Community. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
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STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a Retirement Community?
The base costs involve purchasing land, developer fees for residential building, staff salaries, and any required licenses or insurance. From there, the remaining costs will depend on the type of amenities that will be offered to residents.
What are the ongoing expenses for a Retirement Community?
Ongoing expenses include employee costs, recurring license fees, insurance, land maintenance, and utilities. Communities that offer on-site restaurants also need to account for food and cooking supplies in ongoing expenses.
Who is the target market?
The target market is anyone who is entering retirement or has retired. In addition, you’ll want to target the families of retirees as well.
How does a Retirement Community make money?
This business makes money by charging residents. More often than not, residents pay monthly. Without residents, the community will not make money. Some communities opt to have restaurants and entertainment venues on-site that the community can visit. This is an additional income source for the retirement community business.
How much can you charge customers?
The more a retirement community offers, the more residents can be charged. Upwards of $2,000 a month is average in the industry. This cost is expected to cover almost any and all of the residents’ needs.
How much profit can a Retirement Community make?
A retirement community can expect to make at least a third of its revenue as profit. Roughly another third of revenue will go to ongoing expenses, mortgage, and land maintenance. The other third will go toward staffing expenses.
How can you make your business more profitable?
The fastest way to make this business more profitable is to pay off long-term loans, like land and real estate development, as quickly as possible. Once these payments are finished, more profit will be available.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your Retirement Community is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
- LLC Taxes
- Sole Proprietorship vs LLC
- LLC vs Corporation
- LLC vs S Corp
- How to Start an S Corp
- S Corp vs C Corp
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
Besides being a requirement when applying for business loans, opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Open net 30 accounts
Net 30 accounts are used to establish and build business credit as well as increase business cash flow. With a net 30 account, businesses buy goods and repay the full balance within a 30-day term.
NetMany net 30 credit vendors report to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our best net 30 vendors, guide and start building business credit.
Get a business credit card
Getting a business credit card helps you:
- Separate personal and business expenses by putting your business' expenses all in one place.
- Build your company's credit history, which can be useful to raise money later on.
Recommended: Apply for an easy approval business credit card from Divvy and build your business credit quickly.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
How to promote & market a Retirement Community
The best way to promote and market this business is through traditional methods of advertising. TV ads, radio ads, printed postcards, and print informational pamphlets will work more efficiently than digital advertising.
How to keep customers coming back
The retirement community should showcase the exact amenities that make residents want. Golfing, spas, tennis, restaurants, shopping, public transportation, and more are just some of the amenities to highlight.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2022 to find the best phone service for your small business.
Recommended Business Phone Service: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
Start a Retirement Community in your State
- District of Columbia
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
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Is this Business Right For You?
This business is right for an individual or group of individuals who know how to have a good time. Just because someone is older than 60, it does not mean they want to sit around all day. The owners of this business need to be capable of being friends with many individuals from all walks of life. After all, these retirees have quite a few stories to tell about their heydays.
This business will not be right for an individual who prefers to work alone. The nature of this business requires you to interact with others and find ways to cultivate community. Additionally, there are many logistics that must be promptly handled each day. Facilities must be maintained, employees must be held accountable for arriving on time, and new residents must be given tours when requested.
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What happens during a typical day at a Retirement Community?
Since individuals at retirement communities are often able-bodied, the staff will not need to make wake-up calls. Some retirees will cook for themselves, while others will expect the on-site restaurant to have breakfast ready to go. The staff will need to make sure all facilities are clean and ready for use. Depending on the amenities the community offers, it may take many hours to get the facility ready for the next day. Regardless, rounds will need to be made throughout the day to ensure everyone’s needs are met.
On the administrative side, payments will need to be collected monthly in order to cover recurring costs. Any maintenance requests must be addressed in a timely manner. New residents will request information and expect calls or emails to be returned quickly. Providing performance reviews for employees will also be expected on a regular basis. Your day to day will likely vary, but your job will be to ensure all your guests’ needs are being met.
What are some skills and experiences that will help you build a successful Retirement Community?
It is crucial to have skills and experiences in hospitality and familiarity with selling and renting properties. Experience organizing community events and offering amenities could also be useful.
What is the growth potential for a Retirement Community?
As more individuals reach retirement age, the need for retirement communities continues to grow. This business has large growth potential as more gen-x individuals retire.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a Retirement Community?
Retirement communities are meant to be fun and active. They should almost feel like a never-ending vacation. By creating a community, you will have a client base that will allow for opportunities to partner with local businesses that can cater specifically to your community.
How and when to build a team
A team should be built immediately in order to meet the demands of the community. Retirement communities are too large for just a handful of individuals to run. Teams that specialize in the amenities offered need to be built and trained before the first resident arrives. Posting ads on job boards is a good way to start the hiring process.