So you’re considering opening a home care business?
You’ve started researching all the different options to getting started and fortunately, you’ve come across HomeCareHowTo.com.
www.homecarehowto.com was designed as a supplemental guide to the book Home Care How To – The Guide To Starting Your Senior Care Business, and serves as an affordable option to aspiring entrepreneurs and home care business owners that want to start and grow an in home care or senior care agency. By providing inside secrets, information and open collaboration, by and for other home care agency owner/operators, this site can be used as an aide to get you on your way, at fractions of the costs of the other options available.
What better way to really dig in and research the possibilities, opportunities, and resources available in home care agency options than at the beginning of your venture. Find the best option that fits the business dreams you have and meets the budget you have to work with to achieve your desires!
Let’s hit the ground running and summarize what options are available to getting your own in home care business started and growing:
In Home Care Agency Start Up Options
- Start Own Home Care Agency – Independently.
- Purchase a Home Care Franchise.
- Purchase a Home Care Membership.
- Acquire an Existing, Operational Care Business/Agency.
1. Start Your Own Agency – Independently
Are you inclined to strike out on your own? Create your own rules, systems, operational guidelines, establish communities you serve without limits as you determine fits best for your business? HomeCareHowTo.com helps you do just that, independently.
In starting an independent home care agency, you forge your own path. You create the business model that works best for you with only the limitations that you place for yourself and company. You call the shots. Start-up costs are significantly lower, since there’s no upfront franchise, membership or acquisition fees and costs. You choose which services to provide without requiring authorization from a franchisor. Your service area is as large or small as you decide so if you wish to expand your service area, you can do so immediately without permission or added fees. Your bottom line isn’t diminished by ongoing monthly royalty or membership fees.
On the flip side, it’s up to you to find the ongoing support of other like-minded business owners. You’ll need to define your own support network of business owners and managers. Ads and logos are up to you to design, change, and experiment with as you see fit. You’re also responsible for coming up with new, fresh ideas to stay ahead of your competition. This site can help you with all of this, providing the forms, tools, support and coaching you need to go it on your own.
2. Purchase a Senior Home Care Franchise
When the word franchise is mentioned people often think of McDonald’s, Taco Bell, or other fast food. In reality, franchising has become common in just about every industry, including the many that target seniors and home care.
Franchises provide systems for startup and operations, one to two weeks of training usually at the franchise headquarters and a specific territory to serve in exchange for an upfront investment of $20K to $100K and verification of additional funds available to build the business. Once trained, you’ll head home to implement the systems they teach you.
In addition to the franchise purchase cost, when you start generating revenue, plan to cut an ongoing monthly royalty fee check of 2 to 8 percent of gross revenues. The ongoing royalty fees are in exchange for using the franchise name, ongoing support, varying levels of shared marketing/advertising expenses, and in some cases back office software systems that tie directly into the franchisor’s computers. Some franchisors require you have an office location (not a home office) from the beginning, which is fine, however adds to upfront cash requirements.
Ongoing support varies among franchisors but can include phone support, newsletters, marketing guidelines, software use or discounts, conference calls with the other franchise members to exchange ideas and compare strategies, and some have annual meetings. Most franchisors limit the territory you can service and contractually lock you in the franchise agreement for 5 to 10 years. If you wish to expand your territory, you’ll need to invest additional fees if another franchisee hasn’t already claimed that area. If you get a call from a client in an area covered by another franchisee, you usually need to hand the client to that franchisee.
3. Purchase a Senior Home Care Membership
Starting your agency by becoming part of a Membership organization can provide the benefits of a franchise, however instead of a percentage of your gross income paid in franchise royalties you pay a fixed rate each month. An initial upfront investment of $20K to $35K can be expected to get the training, tools and start-up guidance plus the monthly flat rate fee each month between $350-$750.
The information, systems and support provided by the organization doesn’t change as you grow, so the fixed rate can be attractive, especially over time as your revenues increase. Upon becoming a member, your initial training is provided either by flying to the headquarters or training center or training via the internet. Depending on the organization, the type of ongoing support provided varies and often includes conference calls, email support and back office software or discounts.
It’s important to note that purchasing a franchise or membership system does not guarantee your success in the industry, any more than going the independent agency route does. The common phrase amongst franchisors and membership companies is “you’re in business for yourself but not by yourself”. However, keep in mind that franchisors and member organizations are not in the same business as you. They are in the business of selling franchise territories. There’s a big difference!
Your efforts of sales are focused on helping other clients to stay in their own home. They’re sales are focused on sales of franchises/territories and ongoing royalties or fees. If you were to part ways in your relationship with them or you go out of business, you’ve lost your upfront investment and the ability to go on your own in that area to strike on your own independently for the 5-10 years that their non-compete contracts will often lock you into. However, rarely do their contracts restricted them from selling another franchise in that same area if you’ve closed doors. In short, verify any research provided by franchisors or membership organizations with your own research and work with a lawyer to review, negotiate and completely understand all contracts before you sign.
4. Acquire an Existing Home Care Agency
Another option becoming more available is obtaining a senior care agency by acquisition. Buying an existing business can provide instant cash flow, clientele, staff, office, marketing and sales operations, systems and reputation. There are often home care agencies for sale which have been around for 2 to 10 years and depending on many variables, vary in cost. Being able to buy these resources already functioning can be a tremendous benefit and allow rapid growth. The flip side is that if it’s done improperly it can prove more of a burden than you bargained for.
Buying someone else’s business is not for the faint of heart. It requires significant amount of market research, careful due diligence, business savvy, proper timing, great negotiation and more. If you’re considering this route, make sure you know and understand at least the basics of how an existing home care agency business needs to operate profitably. Whether you’ve never owned a business before or have an extensive business background, always consult with your professional team including an attorney, experienced business brokers and accountant.
Each option to help you enter the senior care / home care agency industry carries it’s pros and cons and this article doesn’t cover all of them in depth. Whole books have been written about acquisition strategies and franchise dos and don’ts. Whichever route you choose, do your research.
Creating systems isn’t difficult. It takes time and thought and once they are in place, you’re simply repeating and improving on their processes. The question becomes how much do you want to invest upfront for getting those systems up and running? How much of your profits are you willing to part with (and for how many years) for ongoing support each month after those systems are in place and running?
Think about it this way: a franchisor is going to present the best possible picture to you how what your potential is to succeed in the market they assign you. $35,000 is a chunk of change for the territory. Plus 6% royalties on $50k gross income per month is $3000 per month. After 12 months of $50k+ gross revenues on your end, they’re better off helping you succeed. However, what if you’re only making $15k per month and the market you serve is largely rural, sparsely populated or lower income? It benefits a franchisor to sell a franchise in that market every few years.