How profitable is a home care business?

Research shows that the UK population is ageing. The number of 65+ year olds is going to rise significantly by 2035 while the number of dementia patients is expected to reach over one million over the same period. In fact, it’s even believed that by 2051 this figure is expected to double. This means that more and more people will need in-home care to relieve the burden on the NHS and to ensure a more comfortable and supported environment for those who need it most. Since in-home care is not a luxury and is not a seasonal service, there’s a lot of room for growth and this is why the industry is booming and is among the fastest growing in the UK. So, if you’re thinking of starting a home care business and you’d like to know what to expect in terms of financial rewards, this post is for you. 


Why buy a home care franchise?

One of the first questions an entrepreneur will ask before buying a home care business for sale is what are the start-up costs for home health care business? The short answer is that there is no solid figure that we can offer because this will depend on the opportunity that you pursue. However, there are some factors to consider as you go about doing your research. These include:

Returns: Returns on home care franchises in the UK are generally quite generous. You are looking at net profit margins in the region of 22% to 24% (approximately), while the average gross margin (or the money that’s left after expenses are taken out) is in the region of 36.5%. This is a very high figure in an industry that’s growing exponentially with demand that’s not expected to wane anytime in the near future and beyond. Hence, as an investor, this is something worth considering.

Franchise fee and initial investment: As a home care franchisee owner, you will be asked to pay a franchise fee and prepare the initial investment. These costs can usually be financed by a lender that has a relationship with the parent company (up to 70%) if you don’t have the cash on hand. The amount that you’re most likely to pay will depend on the franchise opportunity that you pursue. However, it’s important to note that this investment is generally not as high as the investment you’d make if you were pursuing a business from scratch, starting it all on your own.

Intangible assets: Becoming a franchisee also opens up a lot of opportunities for you. For example, you’ll have access to use the intellectual property of the franchisor such as their brand and name, logos and benefit from their industry-recognised expertise and reputation. Hence, while a brand may be an intangible asset, it has inherent value and this is a cost factor that’s difficult to calculate but is valuable nonetheless.

Operational resources: Operational resources are the resources that help your business run smoothly. Luckily, in home care these are kept to a minimum. But, it’s also worth noting that you can take advantage of relationships that your parent company has established with suppliers and enjoy lower prices on certain essential items.

Ongoing training and support: Another aspect of the costs and profitability equation related to the value of a franchise business is the ongoing training and support that you will receive. This may be considered another intangible asset but it is invaluable for the success of your business. You’ll be taught all aspects of the business operations that you’ll be running and you can also take advantage of a strong support system of fellow franchisees who can help you overcome any challenges as well as give you ideas on how to improve your business within the parameters of the franchisor’s guidelines.

Marketing and advertising: A parent care agency franchise in the UK will usually have a pool of funds that are specifically dedicated to the marketing and advertising of the brand. This can end up being quite costly but when the cost is spread out among different franchisees, it becomes more manageable and you can also benefit from a more uniform rather than a diluted message that’s sent out to the public from the parent brand and reap the rewards of this.


Wondering why to start a home care business?

If you are looking at a care business for sale and you want to know whether it is profitable or not, the answer is that if you opt for a franchise business – you will certainly get high returns on your investment owing to the fact that you’re working with a proven and profitable business model.
However, every franchisor is different and the fees, royalties and other intangible assets that you’ll be able to take advantage of will vary from owner to owner.
As a result, while it’s hard to put a hard figure down on paper, it is worthwhile considering the factors mentioned above to help you make a more informed decision.

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