Hot Stuff

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There are 34.7 million people in the United States who are 65 or older, and though many are leading healthy, active lifestyles, some need a little help, creating growing opportunities in adult day care and nonmedical home services.

While a good percentage of adult day-care centers are operated as nonprofits, more and more entrepreneurs are looking at them as business opportunities, says Patricia Schull, former chair of the National Adult Day Services Association and founder of Adult Care of Chester County in Exton and West Chester, Pennsylvania.

There are barriers to success, however, that you'll need to be aware of before jumping into this industry. "You can make a profit with a center, but it's challenging," says Schull. Day-care services alone are not highly profitable; and the looming presence of large corporations hampers small businesses' entrée into the market. By offering senior daycare in combination with such services as outpatient care and other medical and non-medical services, big businesses have found a way to profit from daycare-but leave little room for independents in the process.

"The influx of assisted living facilities is also impacting adult day care. Consequently, you really have to look to new markets or new communities to open a center," says Schull. It's crucial, therefore, to get education and experience in human services and establish the resources to find necessary medical expertise before opening a day-care service.

Nonmedical home-care services is another growth area in the seniors market. For seniors who want to live on their own but need assistance with basic activities such as going to the grocery store and preparing meals, businesses that provide these services are sorely needed.

Current obstacles for entrepreneurs include cutbacks in Medicare, which previously funded nonmedical home services; difficulties recruiting staff in light of the traditionally low pay; as well as low visibility in the market.

In Winter Park, Florida, Stephen Wolf, 33, is taking on those challenges with his company, Compassionate Companions of Central Florida. The business, which Wolf launched in 1998, now has 33 registered companions and annual revenues of $90,000.

"I did my research in 1996 to see if there was a market," says Wolf. He discovered there were only a handful of similar services in the area. Investing $3,000 of his own money and taking advantage of an additional $2,000 of in-kind services, Wolf created a company that offers home cooking, light housekeeping, transportation, shopping, walking, socialization, mental stimulation and other nonmedical assistance to seniors.

The requirements for starting a business like Compassionate Companion depend on your location, says Janet Neigh, director of the Home Care Aide Association of America (HCAAA). "Thirty-seven states require licensure of agencies and 18 require that aides be licensed," she says.

And this is another market where big corporations like Kelly Assisted Living and Nations Healthcare, as well as organizations like the Visiting Nurse Association, simply have deeper pockets than independent firms.

As the senior market continues to grow and nonmedical services create more demand, it will become crucial to choose the right location, form relationships with complementary agencies and understand exactly who your clients are.

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This article was originally published in the December 1999 print edition of Entrepreneur with the headline: Hot Stuff.

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