Running a care-home franchise can be rewarding but has unique financial challenges. Daily responsibilities include managing cashflow, controlling costs, and staying on top of regulatory requirements. The right financial strategies are essential to keeping your franchise profitable and compliant. Here, we’ve put together a few key tips to help you safeguard your financial health and set your franchise up for long-term success.
Optimise your revenue streams
Ensuring consistent revenue is crucial for care-home franchises. Start by reviewing your pricing model. Are your fees in line with market standards and reflect the quality of care you provide? Research shows that average weekly care-home fees in the UK are around £800 to £1,000, depending on the region. Staying competitive while maintaining profitability is a delicate balance.
Consider diversifying your revenue streams as well. For example, offering additional services like specialised care packages or wellness programmes could appeal to residents and families looking for more tailored options.
Keep a firm grip on your expenses
Operating costs can quickly eat into your bottom line if not monitored closely. Payroll is often the most significant expense for care homes, so ensuring efficient staff scheduling and fair pay is critical. Tools like payroll software can help you manage this process efficiently while avoiding errors that might lead to HMRC penalties.
Review your supplier contracts regularly to identify savings. Are you getting the best value for utilities, food supplies and medical equipment? Even small cost reductions can add up over time, freeing up funds for other essential areas of your business.
Plan for tax efficiency
Tax compliance is where care-home franchises can’t afford to cut corners. With regulations and allowances changing frequently, it’s vital to stay updated. For instance, if you provide care that qualifies as a VAT-exempt service, ensure you apply these rules correctly to avoid overpaying.
Additionally, make use of available tax reliefs. For example, the annual investment allowance (AIA) lets you deduct the total cost of qualifying items like machinery and equipment from your profits before tax. This could be invaluable when investing in new facilities or upgrading existing ones.
Build a cashflow buffer
Cashflow is the lifeblood of any business and care-home franchises are no exception. With ongoing costs like staff wages, utility bills and maintenance, ensuring a reliable cashflow buffer is crucial.
One approach is maintaining a reserve fund equivalent to at least three months of operating costs. This cushion can help you navigate unexpected expenses, such as urgent repairs or higher-than-usual staff absenteeism.
Stay on top of financial reporting
Regular financial reporting isn’t just about ticking boxes for compliance – it’s a powerful tool for making informed decisions. Make it a habit to review monthly management accounts, including profit and loss statements, cashflow forecasts and balance sheets.
This level of oversight helps you spot trends, flag potential issues and measure performance against your goals. It’s also crucial for franchise agreements, as many franchisors require detailed financial reporting to ensure compliance with their terms.
Why expert advice matters
While it’s possible to manage your franchise’s finances independently, working with specialist accountants can save you time, money and stress. The right support can make a significant difference from optimising your tax position to ensuring accurate financial reporting.
At JCS Accountants, we’ve helped many care-home franchise owners like you navigate the financial demands of this complex industry. Whether you’re improving cashflow, preparing for audits or planning growth, we’re here to help you make confident decisions.
Reach out to us today to see how we can support your franchise’s financial health.
