Running any business is challenging but care sector businesses present numerous additional demands and pressures on the owners.
What do most care home owners do when they are borrowing money and they hit financial problems? As a former bank manager I can tell you from experience that unfortunately, most instinctively jump the wrong way. Perhaps for fear of a knee-jerk reaction they keep the bank in the dark and keep their heads down.
If there are problems with a CQC inspection or if the local Social Service Department refuses to send further residents to the home, the business can quickly go into free-fall. Like the hospitality industry, residential care businesses are driven by occupancy levels. Bank managers don’t like surprises and care businesses can be daunting for them too. Being a mortgagee-in-possession where there are vulnerable occupants in residence can be a banker’s nightmare.
Equally daunting is the prospect of the adverse publicity attracted by evicting them. The best chance of survival exists when everybody pulls in the same direction. Generally if there are management issues in a care business it will quickly convert into a cash flow problem. Similarly, behind every cash flow crisis invariably there will be a management problem. It is easy to fall behind with compliance issues. Particularly if a key member of the management team is absent for any length of time – perhaps because of illness.
So how can a bank help? Given that they have a vested interest in seeing the care home be successful, they can help in many ways – but only if they know about the problems in good time. If the bank has confidence steps are being taken to address the underlying problems they are more likely to provide financial support to enable the business to ”trade out”. They have a wealth of expertise “in-house” and can also introduce independent care sector specialists, such as Network Care UK who can:
- work closely with management teams to ensure the delivery of care is supported by robust governance structures.
- easily identify if the right balance and mix of experience exists amongst the staff
- help with training, recruiting and putting proper systems in place to get the business “back on the rails”