Home Care U - How An Agency in Oklahoma Hit 100% Growth Two Years In A Row (Tim Smith Pt. 2)

Episode Date: May 14, 2023

After several years of near-stagnant growth, three things happened that helped Tim Smith double his agency's revenue multiple years in a row. We talk about what those are and what he learned from the experience that you can apply in your own agency.Enjoying the show? Send me a text and let me know!Learn more about Careswitch at: careswitch.comConnect with the host on LinkedIn: Miriam Allred This episode was produced by parkerkane.co

Hey, welcome to Home Care U, a podcast made by the team at Care Switch. Nobody went to school to learn how to run a home care agency, so we're bringing the education to you. Join our live audience by going to careswitch.com slash homecareu or listen on your own time wherever you get your podcasts. Home Care U is hosted by myself, Miriam Allred, and Connor Koons of CareSwitch. Enjoy the session. Welcome to this week's Home Care U class and episode.

We're excited to bring back our guest from last week, Tim Smith. Tim is the owner, president, and CEO of First Light Home Care of Oklahoma City. Tim, really briefly, thanks for being on with us again today. Do you want to introduce yourself, your background, and what brought you here today? Sure thing. Yeah, my wife and I started our business in 2018 here in Oklahoma City. I used to run factories for a living. I used to work for large companies. For a while, I was teaching classes in quality and process improvement. So I come from sort of an industrial background. My wife and I wanted to do something different, something connected to the community, more about helping people and

something of our own too. So that's what got us interested in home care. And that's why we started our agency. So we've been in operation since 2018 here in Oklahoma City. Awesome. Thanks, Tim. And before we get started here, I'll just give kind of a brief introduction of what to expect from today. So Tim is very much a financial and operations guru, as you might have surmised from his background. Last week, we talked a lot about the deep dark of financials and margins and things like that. Today, we're going to take a slightly different approach, where we're going to hear the story of Tim's business, you know, how he started it, what challenges he's faced along the way, how he addressed those, and how he grew it to the point where he's at today, which includes several years of 100% year-over-year growth in revenue. As we go, we'll kind of take detours at points to talk about different principles that he's learned and mastered, margins, different processes. We'll also address something that has kind of become an ongoing debate in some of our home

care U classes recently, which is whether it's best to focus on revenue growth or expenses. There's obviously a certain level of need to look at both. You can't put your focus on everything. We've had some guests recently who have really talked about the need to look at expenses and be like sort of a cost reduction driven company. Tim kind of takes the opposite approach of looking at revenue growth and the need to use that to drive everything. So we'll kind of continue that debate and in parts of this today too. One last thing to bring up, those of you who are regular listeners have heard me make this joke lots of times, but just introduce. So I do have a stutter. Some days it shows up, some days it doesn't. If it does, you know,

if you hear a random pause as I'm speaking, that is probably not Zoom buffering. That is not your internet buffering. That is me buffering. Just know that it's okay. We'll just roll with it. So that being said, Tim, let's hear your story. Take it away. Yeah, sounds good. You know, and you made the point about revenue versus cost. And we'll talk about that a bit as we kind of go through things. I'll just tell you that for me, I'm actually not good at cutting costs. So I mean, it's actually for me, it's partially just driven by that. It's just not my inclination. But that's something I learned in the factories over the years. I used to say that profitable growth covers all sins. And, you know, none of us want to be sinners, but if you can drive profitable growth, it can definitely make up for things in other parts of the business. So when we started our agency, it was just me and my wife working together. My wife was the marketing person. She was the one that was out in the field, meeting with referral sources, getting the word out about us. And I was the operations manager.

I was in the office. I've talked to lots of different owners of franchises, home care franchises. I've met a lot of the other first light owners. Some people have a nursing background or maybe even a caregiving background. A lot of people are in this business because it's just something that's in their heart that they really care about people. I'm really happy to help people and I love to be a part of a business where we get to do that. But I would say that our business is more sort of operations driven. You know, we're more focused on procedure and on finance as well. You know, when you're first starting out, especially if you're involved in the business as we were, you know, it's, I used to say it's 24-7, 365. You know, we didn't take a vacation for the first two or three years. It's just, you know, you're on call all the time. And that's just sort of what the business looks like when you don't have a team that you've hired, but you're

doing it yourselves. And, you know, most, I would say most businesses in our space start off with relatively low fixed expenses. You know, when you start out, you have your rent, you know, if you rent an office, if you're not working out of your home, you have like phones, that kind of thing, phone service, you have some marketing, you're getting brochures printed and flyers and maybe doing some advertising or internet sort of work, supplies, you know, gloves and things like that. So kind of a low level of fixed expenses for the first year or two is what we were looking at. I think what most agencies see, and like a lot of agencies, probably, we lost a substantial amount of money our first year. You know, first,

we had our franchise fee to get started, all the startup costs, all those, you know, covering those expenses on a monthly basis until you start to see revenue and start to see hours coming in, a lot of money up front. And, and one thing that people don't think about a lot is something we call opportunity cost as well. I had a good job. I worked for years and years for large companies. So I mean, I had a substantial salary. So I'm not making that anymore. That's a cost too that you need to take into consideration when you're starting a business. So that's sort of what the first year looked like. you know, pretty, pretty substantial losses and losing a significant amount of money. And I would say that I think for most agencies,

I mean, you can run it pretty cheap, I guess. I think for a lot of agencies, you might start off with fixed costs in the range of, let's say, like 10 grand a month, I think is pretty typical where that might be, you know, for the first year or two of a home care agency, that might be what you would expect. And that's probably what about, about what we saw is, is sort of fixed costs in that range. So that sort of, that's sort of like the first year of our business. A couple of questions about that really quick. So, I mean, like you talked about like your successful career before that. And you talked about recognizing the high opportunity costs there. All that being said, what made you want to start a home care agency? Yeah, you know, when I worked for industry, we would go wherever the factory was.

You know, we would go wherever the job was. My family, we moved a lot. In the first few years of our marriage, we lived in like six or seven different states. You know, North Carolina, Arizona, California, Texas, finally Oklahoma. So we moved around a lot. And that was something where if I were to state an industry, you know, if you want to continue to progress, eventually you need to go to a new company or to a new opportunity. You can't just kind of stay in the same spot for a number of years, especially in operations. People do it, but then you get kind of stuck. So, I mean,

really just as our kids got to the school age and they're getting into, you know, middle school, that kind of thing, just wanting to find a way to kind of stay put. And when you own your own business, you control your own fate, you know? So, that was a big piece of it for us. When we looked to open a home care agency, we actually looked at different parts of the country because we had only been in Oklahoma for a couple of years at that point, and we were not necessarily fixated on staying here. But Oklahoma has a very low cost of living compared to most places across the country, even places you wouldn't think of like, I looked at Wisconsin, you know, Georgia, places like that. And Oklahoma

just has a very low cost of living. So that makes it a good place to start a business because your expenses are low starting up. That makes sense. And there's always this choice when you're starting an agency of like, should you be an independent or should you join a franchise? So what led you to decide to join a franchise and how did you settle on First Light? For us, it was never really a choice. I'd never had my own business before. Maybe people who are more entrepreneurial and have more experience might feel more comfortable to just, you know, maybe go get your scheduling software out of the box and kind of figure things out. I really felt like we needed

that level of support. We wanted to start a high quality home care agency. Different franchises, I think, have different focus areas and different approaches. First Light is a company very much focused on quality and what they call their culture of care. So that was something that appealed to us early on. And that's why we considered First Light. We liked all the people when we met them. And we just like the idea of being the high quality provider for this area. That makes sense. Okay.

Yeah. So first year, you know, you had all your challenges. You lost a substantial amount. Let's go into that second year of business, what that looked like, what challenges you had. Yeah. And I think as we get into the second year, I want to talk just a few minutes about the concept of break even. So, I mean, I think it's critical for any business, not just home care, but any business when you're first starting out, you want to get to what we call break even. So just a couple of minutes to talk about the concepts here. You have all these costs that are variable costs with your business. As your

business goes up, those costs go up directly in relation to your revenue or to your sales. So in our industry, in the home care industry, one of the big ones is caregiver wages. Every time you have a shift, you're sending a caregiver there and you're paying the caregiver for their time. So caregiver wages go up pretty much directly with sales. In our case, we're a franchise. So our royalty is the same. Our royalty is based off sales. So as sales go up, royalties go up. So those are your variable costs. When you subtract your variable costs from your sales, you have margin. That's your gross margin. So margin is what you have left to cover your fixed expenses. I think of it as covering your nut. I mentioned earlier I had,

let's say, 10K a month in fixed expenses. So as we're trying to get to break even, we're trying to generate enough margin to cover those fixed expenses. Once you've covered your fixed expenses, whatever margin is left becomes your net income. If you understand those numbers, not only can you figure out what you need to get to break even, but you can also take into account other decisions you might need to make during operations of the business. So for example, if I have a shift that I'm having difficulty covering, I know if I know my margin per hour, then I know how much money I sort of have to play with for that shift. And if I need to offer a bonus to caregivers to cover it, I know how much I can afford before we might lose money on that shift. So I mentioned earlier about the idea of focusing on cost versus focusing on growth.

So I think a really good example, let's say you have a business in its early years, and let's say you have a situation where you want to improve your financial performance by $10,000 a month. So maybe in the case I was just using, you know, maybe you want to achieve break even with a $10,000 per month sort of fixed costs. So I got to tell you, it's really hard to cut $10,000 a month. You know, if you're a small to medium sized agency, you probably don't have any single expense line item on your profit and loss that equals that amount. You'd have to cut in multiple areas. You could cut one or two office staff and not get there. It's really hard to cut that much. But if you look at it from a growth perspective, a typical agency in this area, margin per hour

might be, let's say, $10 per hour. That might be a typical margin for an agency in home care. So now if you're trying to cover $10,000 a month, if you're trying to improve your performance by $10,000 a month, that's 1,000 hours that you would need to bill for that month extra to cover that. That's 250 hours a week. So I mean, that's not a small number. You can't just with the snap of your fingers increase your hours by 250 hours per week. But I'll tell you from experience, it's a lot easier to drive 250 extra hours of billing per week than it is to go and cut 10 grand. So that's kind of, that's that sort of comes to the point I was making earlier. Profitable growth can help you

cover your costs and help you create enough money to invest in your growth going forward. Once you start cutting costs, you're making it more difficult to grow because you're not investing back in business. That's interesting. That makes sense. And it probably brings up a question of like scale too. And like, if there's a point at which your scale is such that it makes more sense to put more focus on expenses because you're so big, there is a larger dent to be made. Yeah, to some extent. But I mean, if you're growing profitably, I mean, if you're adding fixed expenses at the exact same rate that you're growing, then you're just treading water. You're

not making any progress. A good business is growing and adding expenses to invest and to create further growth, but at a rate slower than the rate of your growing revenue. So I mean, I would say that over time, the bigger you get, the more powerful the growth becomes versus, you know, simple cost cutting. There's always a temptation to go and be like, you know, I can cut a few dollars here. I don't like that my person spent money on X or whatever. But for me, that's just kind of micromanaging. You know, if people feel like you're focused on that, then they're not going to feel the focus on growth. So, I mean, if I look at

our business, we probably achieved break even right around the end of our first year, maybe at like the 15 month, 18 month mark is where we got to the point where we were able to break even and now we can afford salaries for me and for my wife. We actually have some money to live on. We're not living off of savings anymore. Around that time is where we made a mistake that was really critical from a financial standpoint. So just to be blunt, we ran out of money. The business ran out of money. And you got to make payroll. I mean, you can't run out of money as a business. Lots of bad things happen when you can't make payroll, especially in our industry. So in our actual example, we didn't have enough cash on hand. So we had to go, I had to go raid my retirement fund. I had to go take a distribution,

which of course has a lot of bad stuff associated with that too, and transfer it into the business account just to make payroll. So I think, you know, we talk a lot about profitability, profit, margin, cost, but it's also important to keep an eye on cash. You should have an idea every two weeks, like how much you're going to need for payroll. I look at my bank account every single day to make sure I don't have any surprises coming. And one of the things you can do after you've been in business for a year or two, and you've got some financial history with your bank, and you've been around for a while, you have financial statements you can share. We went out and got a line of credit. So we got a line of credit up to a certain amount. We can take up to a certain amount of money. There's a draw fee and there is an interest associated

with that. So we don't do it just for fun, but we did have to use it one time a year or two ago when a lot of bad things happened all at once and all of a sudden we didn't have enough money for payroll. So that's a good example of you have to look at cash as well as profit and cost. That makes sense. And I respect your boldness as a podcast guest to say, well, thank you for that. But actually, it's the exact opposite of what you said. Yeah. And, you know, so as we got into our second and third year, now we were at a point where we could start investing in the business to drive further growth. So we did, we hired a scheduler early on after about a year, year and a

half of being in business to help me out with the office and give me a little relief on call and everything. That didn't work out very well. We had this person for a few months. It wasn't a good fit. So we had to make a change there. But we did hire a networker after a couple years in the business. And actually, it was an interesting coincidence because we hired our networker right at the start of the pandemic.

He actually went to training at the corporate office in March of 2020. So just right at that time. So and that was a challenging time for networking. We had to get creative and do different things. But that was something that definitely helped to drive our growth. The pandemic itself, I'll talk about that for just a moment. When it first hit, there was a lot of concern, right? Because right away, some clients are saying, we don't want anyone in the house. I had several clients cancel all their visits right away.

Definitely a nervous time for a month or two there. But what we saw, and I think a lot of other agencies saw this as well, is after people started to understand what was going on, our business actually went up quite a bit. That's where our growth really started was when the pandemic hit. And I attribute part of it to being where people did not want their loved one in a, in a hospital. You know, there was a lot of talk at the time about people getting infections when they went to the hospital or to a rehab facility. There were rehab facilities in Oklahoma City that were like, they had like many pandemics of their own where, you know, COVID kind of swept through.

So I do think that that was part of what contributed to our growth, but also our networker and having someone separate from me and my wife going out to businesses and helping to build relationships with those referral partners as well. So I actually want to rewind just a little bit here and zero in on a couple of things you mentioned in that second year. So remind me, how long had you been in business when you ran out of money? Yeah, we started at the beginning of 2018. And I think it was, I don't remember exactly, but I think it was early 2019 where we got to a point where I realized, hey, I've only got in the next four days, if I don't get some money in the account, I'm not going to be able to cover paychecks. Okay. So like six to 12 months before the pandemic, basically.

Yeah. Probably maybe a year before the pandemic, something like that. And was there any particular mistake or set of mistakes financially that led to that position? Well, I think that it was with the pace of our business because we had not achieved break even yet consistently. It was probably inevitable it was going to happen. I think the only thing is if I'd kept a closer eye on it, or if I'd had more warning, maybe I could have, you know, found the money another way or, you know, taking, you know, taking a loan out from the bank can be a bit problematic your first year or two in business.

A lot of banks, they're going to, you know, you don't have any history in our business. You don't have any inventory, you have no collateral. So if you're, if you're going to take a loan out to cover business expenses, you might need to do a second mortgage on your house or you might have to give them a signature on your mortgage, give them a lien on your mortgage. So your first year or two, it's kind of tough. I would say we underestimated a bit maybe how much money we were going to lose the first year. We didn't have as much cash as I would have probably would have wanted. Did you have any points in this where you thought about just throwing in the towel? Tons of times, absolutely. Like over and over and over again. Actually, there's a buddy of mine who runs an agency in another state. And I talked to him a couple months before the pandemic and I told

him I'm done. I'm ready to quit. Yeah, I broke even. Yeah, we're paying ourselves a little bit of a salary, but this is not working out the way I thought it would. And he talked me off the ledge, really. He's like, you know what? Give it six months. And then, like I said, that was the year where we really started to drive growth from 2019 to 2020. And then from 2020 to 2021, probably started to see sort of, you know, doubling our business each year. And we're still seeing, you know, pretty significant growth even at this point. So when it came to starting to grow there, it sounds like early on, there were kind of three, three steps to your growth, kind of leading into like the, the year of the pandemic. So you were growing during like as a

result of the pandemic. And then before that, you were starting to see some growth as a result of hiring a networker. But it sounds like there was kind of something you did to get you from the point where you had essentially run out of capital to being able to hire a networker. So what were you doing during that period to dig your business out of the to being able to hire a networker. So what were you doing during that period to dig your business out of the hole and start growing? And to some extent, it's the same things we were doing from the beginning. But in networking and all that, it takes time to build credibility with referral partners. So I think in the first year or two, you have to show up over and over again. And then when they give you an opportunity, you have to deliver. So I mean, referral partners are just like anybody

else. Like nobody cares about the success of your business. I've told my employees that before. Nobody like, all the people you're meeting with every day, they're all nice. They're all friends with you, whatever. But nobody actually cares if First Light of Oklahoma City succeeds or not. What they care about is the things that are important to them. So being a good referral partner and strengthening that partnership, that's what earns you business over time. If somebody calls and like, hey, I've got an emergency here. I got someone they need to start care tonight. Can you help us out? When you help them out and you can get it done and you do well with it, then they realize they can depend on you. So I mean, that's how you build

a relationship with referral partners over time is by being a problem solver for them and, you know, being part of the solution. Gotcha. That makes sense. So after the kind of boost you got from the increased demand for home care, post the initial months of the pandemic, you know, you're starting to grow, you're seeing traction happen. You have a networker who's starting to figure things out. Like that's where you really started to hit like a hundred percent growth year over year in the years following that. What were you doing during that time that started to become so effective? I think it is those partnerships. Our business here does a lot of business with the

VA. So I think being a problem solver for the VA and just having the VA to start to recognize that our agent, I mean, they have lots of agencies they work with and we certainly don't get like all their business or anything. But I think that over time they figured out that if they give a veteran to us for service, that that veteran is going to be happy and we're going to take great care of that veteran. So I think that, you know, delivering on that piece of it is part of what happened. And other partnerships in the community, too. You know, there's maybe 100 home health and hospice companies in the Oklahoma City area, maybe more. But we don't get referrals from all of them. We don't work with all of them.

It's probably impossible. But the ones where we do have a strong relationship, just to continue to strengthen that relationship. When we first started, we would try to do 40, 50 sales calls a week and our network was running around trying to make all these calls. I think we've gotten to the point now where I'd prefer seven or 10 great ones with a good conversation with somebody versus 40 or 50, where you're dropping off brochures and, you know, and asking them how their day's going. So I think, I think that the,

the maturity of our, our relationships with our partners has driven a lot. And I talked about the pandemic and it was kind of like a guess as to why our growth coincided with that. But it's just a guess. I don't I don't have a lot of direct evidence for that. It's probably a combination of of what was happening in the market along with the relationships we built. That makes sense. At the time during that, I was working at Home Care Pulse running the Home Care Benchmarking Study. And we looked specifically into the impact of COVID on demand for home care. And that was very much a not universal but widespread thing of starting about June to July 2020, everyone started to say we're seeing more demand because of the way the pandemic shined a spotlight on home care and also because of the way it introduced some of the risks of you know options like nursing homes

so yeah i very much believe that and probably part of what you saw there too you know the market in the last four you have to stay in touch with the market. You have to do competitive analysis. And you have to try to avoid taking your assumptions for granted because the market has changed a lot for home care in the last five years. Your point was definitely one of the big changes we've seen. We have seen an increase in demand. But also, there's lots of agencies that are not able to hire effectively and they're not able to retain their caregiving staff. So that's one thing that we focused on very heavily is when we have good caregivers, we want to retain them no matter what. We work strongly with our caregivers.

We pay the highest rate for our caregivers of any agency in the area. And, you know, the market has changed to the degree, like five years ago, I used to do all the in-home visits. I would go try to sign people up. And I mean, four or five years ago, it was very common when I'm meeting with somebody that they're meeting with three or four other agencies and you're in head-to-head competition. And even there might be some price sensitivity, like price might be the deciding factor. Now in our market, it's not like that anymore. Now, I mean, it's very common that we get people sign up who are only talking to us,

really. And I think it's because a lot of the agencies cannot staff and they're just not accepting new clients or just the market has changed. When you go into a person's home these days, I would say that I've not really experienced much like head-to-head competition recently. Okay. That makes sense. And this is actually exactly where I kind of wanted to ask you some questions next. So you mentioned that you pay the highest of all the agencies in your area. I would assume then that you were probably charging among the highest, and then it's kind of part of an overall strategy in how you're positioning your agency. Tell me about that. Yeah. I mean, you can't, I mean, there's just a direct relationship. We don't do like cost plus pricing. So really, I mean, you know, the example I always give, like when I'm,

when I'm teaching a class, I'll hold up like an iPhone and I'll be like, okay, everybody, how much does an iPhone cost? And people are like, yeah, it's like a thousand dollars or whatever. Okay. How much do you think it costs Apple to make this? And people, you know, nobody really knows. Right. But I mean, it's not 500, it's not 800. It's a pretty low number, probably. So, I mean, the price you charge for things and the cost, you know, of supplying those things, there is a relationship, but the price you should be charging should be driven by your vision for your business and by market analysis analysis so i mean the price for home care in

this area has gone up dramatically the last few years and a big piece of that is the increase in demand along with a constraint uh constraint of supply of the caregivers i mean it's just natural like i've had people in other states talk to me like yeah you know i mean i i'm turning away clients every day i said you know what your price is too low, I'm turning away clients every day. I said, you know what? Your price is too low. If you're turning away clients, just basic economics, demand is high, supply is low. There's got to be a change there. So yeah, we've always tried to make sure that we stay in touch with the market. One thing my agency does that's different, when I have a price increase because of what we're seeing in the market or because we've done an increase for our caregivers. I don't apply that immediately to existing clients.

I kind of make a spreadsheet and figure out when it's appropriate. I don't want people to see a price increase more than like once a year. And sometimes we don't give them the full increase just because we don't want them to be not able to afford care or to be in a difficult situation. But yeah, that's kind of our approach in terms of pricing is it's really market driven. It's not like a cost plus approach. So that's really interesting. There's something else you said I want to ask about. So if not based on cost plus, you know, looking at what like the market rates are and setting based on that, it sounds like you're also just looking at supply and demand and saying, what do I need to charge to make it so that the number of caregivers I can hire is equal to the number of people who want services so that I don't have this huge wait list. And also I'm charging a little bit more so I can pay my caregivers more.

I think it's very logical the way you put it, but I would say that in practice, it works a little different. I think that in our industry, most agencies are hiring all the time. We don't really, we don't slow down hiring because we feel like we have enough caregivers and we can't really accelerate it because we're already kind of hiring as much as we can.

So you're kind of hiring on faith most of the time, which is really hard when you're starting out and you have like 50 hours a week, you're trying to split among like seven caregivers. It's painful. But when you get bigger and bigger than usually, if you have a caregiver who wants to work, I mean, we can typically find work for them in the schedule. So I would say that there's not, there's not really a fine tuning of hiring related to your needs in the market.

Yeah, so I think that's what I would say on that. In terms of the price that you charge, you know, one of the examples I use is let's say you went to a restaurant and you were looking at the menu and they had filet mignon for $10. Would you order it? Maybe out of morbid curiosity, but don't be surprised if you get sick later, right? So, I mean, price is not just about margin. It's not just about covering your fixed costs. It's not just about paying your caregivers. It's also a signal of your quality. Like I, you know, when we go out and the way we set our prices, typically we call around and figure out what other agencies are charging in the area. And then, you know, when we go out and the way we set our prices, typically we call around and figure out what other agencies are charging in the area. And then, you know, we look at the agencies that are also quality agencies that are sort of in the same space as us.

And, you know, we should be we should be at the rate they're at or higher. I mean, that's that's sort of where the price should be. So, I mean, if you if you're trying to tell people that you're the high quality provider and then you quote them a price that's $5 lower than anyone else they talk to, you know, people are going to, you know, they may choose you, but they're going to be kind of suspicious. Yeah. So kind of going back to our timeline here and relating this to recruitment retention, summer, fall of 2020 is when a lot of people really started to get hit by caregiver shortages. Did your agency struggle with that? And, you know, if so, how did you address that?

Yeah, I mean, among agency owners, there was sort of like an urban legend almost that it's because people were getting, you know, unemployment and being paid to stay home. You know, that was right around the time when it was very difficult to hire. In some cases, what we've had to do is hire people that are great people that maybe need more training. We've had to add some training into our approach. So that's definitely one way we dealt with it. There was a time when I was turning away business too, probably for about a year in the depths of sort of the caregiver shortage and everything. But then once again, I think not to do it in a way that's unintelligent, but to think about like,

okay, what are we trying to achieve here? You know, I've talked over and over again about partnership, right? So if you're turning away clients, if you're forced to turn away clients, because you can't serve everybody, then maybe what you have to do is make sure you can take the clients from your key referral sources to sustain that partnership. So I would say that at that time, probably the ones we were turning away were more likely to be the ones coming to us off the internet with really no connection to our business, where we'd have to tell them, look, I'm sorry, we can't serve you right now. Let me give you a couple other numbers to try. So I think that that's how we kind of weathered that storm. And then eventually, one of the things we did is at one point during that time, we hired a

full-time staffing coordinator and that made all the difference for us. I was against it for the longest time because I did all the hiring and I would just call people in my spare time. I would call all the applicants. I made all the calls. We would do all the interviews. You know, for me, it was like, why would I want to hire somebody when I can cover all this? But when we brought a person on board who was dedicated to that activity, we saw our caregiver hiring go up immediately and it stayed up ever since. So it's just, it was a really important investment that we made in our agency. Interesting. So you were prioritizing which clients you take based off, partly at least based off who can we take that will help us ensure that we at least keep these referral

partnerships intact. Yeah. I even had a very direct conversation with my development, the networker who eventually became our development manager. At some point he came to me, he's like, hey, Tim, like we can't take all these clients. Like I can't, we can't cover them. We don't have the staff. Like, what are we going to do? He says, you know, maybe we need to do, you know, slow this down. I'm like, well, I said, here's what we can't do. We can't stop taking clients from our key referral sources. So what does that leave us with? I've always been a big fan in decision making in business. I've always been a big fan of saying, okay, if you take out all the things you cannot do, whatever you're left with, those are your options, right? So I mean, that's one

of the things that we focus on. So when we got into, let's say our third and fourth years, now we're seeing pretty significant growth. So that's where we had to do quite a bit of investing to support that growth. So we've grown our office staff a lot. You know, I kind of mentioned to you early on, I was like the one person show in the office. My wife was out in the field. We've gotten up to now we have a staff of about nine people working out of our office. A couple of them are nurses who do assessments and visits. The remainder are schedulers, staffing coordinator, a couple of key managers, that kind of thing. So that's been an important part of our growth. And then I think it's important early on

for sure, but as a business matures and gets bigger, it's really important to think about scalability. And a lot of businesses struggle with this. I mean, you see businesses that they grow to a certain point and then they collapse because they kind of grew too fast or they grew to a point where they couldn't support their business anymore.

So making sure your process is scale with growth is really important. So what that means is, you know, if a procedure, if a process is scalable, that means that as your business grows, the workload related to that process grows no faster than your business, you know. So, I mean, some things you can imagine are not very scalable at all. For example, when I first started,

I would see that some of the other companies would have paper forms at the client's home that the caregiver would fill out. A paper form, the tasks they did, clock in time, clock out time, and all that. And then presumably, somebody from the office had to go collect all those every week so that they could do billing and payroll and have all their records and all. Well, when you've got 10 clients, it's not a big deal. You can go drive a loop and probably catch most of them and then clean up the rest of them. When you have 70 clients, that becomes sort of a nightmare, right? So this is a process that's not scalable. And that's something I've always thought about since we started is how can I make sure that our processes are as scalable as possible? You know,

you might think, you know, an agency might start off and maybe the agency decides that every caregiver, you know, that they bring on board, they're going to go train them individually at every client that they start with and do on-the-job training. Sounds like a great idea, right? You start to have multiple new clients every week, multiple new caregivers every week. A process like that spirals out of control. So processes that are, you know, pretty well scalable, I would say, you know, scheduling scales pretty well. You know, when you get stable schedules set up for your clients where they have the same caregivers coming every week, those schedules kind of become, they're sort of on cruise control. You know, they just kind of glide off into the future if you can keep that schedule stable. You know, you do have to add some staff over time. You know, we've had that,

we have three schedulers currently at our business because you do start to see that call-offs, caregivers calling off of shifts does, it's not just necessarily a flat percentage, but it does increase some as you grow. And that can become a pretty significant challenge. But overall, scheduling is a process that scales pretty well with the business. So a couple of questions on that. So you said that in general, the percentage or like the frequency relative to size of business of no-shows actually increases as the business gets bigger. So not just the number, but like maybe the percentage too. Yeah. And I wouldn't say, I mean, no shows is hard to say like a no, a no call, no show is a pretty significant event. You know, you might only see one of those, you know, at our size, we might see like one per week or something as a typical number or a couple per week,

but caregivers calling off because they're sick, their kid is sick. They've got a doctor's appointment, all those kinds of things. Yeah. I would say that I'm not even, I've never done the exact math on it. But I would say it's not necessarily even a flat percentage. It's not like you're going to have 1% of all your shifts. As you get bigger, that number might become 2% or 3% or whatever. You know, it's maybe because you have more different caregivers with more different clients, maybe because you do have a bigger staff and you're staffing some people that are not as reliable as some of your, you know, your kind of go-to people. But yeah, I would say that it's not necessarily a flat percentage. Interesting. Cause I was going to ask, you know, what are some of the reasons why you think that,

but you kind of already addressed that. Are there any more thoughts on that? I mean, a lot of things related to your workforce are a little bit of a mystery. I always tell the people in my office, if you're a curious person, home care is not for you. You have a beautiful, wonderful, awesome caregiver, does such great care, shows up for all their shifts. One day they just vanish. They disappear.

They no show for a shift. You never find them. You never hear from them again. If that's going to bother you, then home care is not a good industry for you because you're just going to be irritated all the time. You just have to accept that your employees are maybe living in a slightly different universe than you are. They have different problems.

They have different situations going on. And maybe that caregiver that disappeared, I hope that everything's okay with them, but you don't know what's happening with them. And you just have to kind of make sure your clients are taken care of and take the appropriate actions. Yeah. I think we've all seen or heard of like the caregiver or at least the applicant who just gets abducted by aliens. And, and that's that. I mean, sometimes it's people that called off a lot in the first place. And they just, I think that it's almost like a linear curve, you know, like they got more and more and more unreliable until they're unreliable, kind of reach zero.

And now they're not just not just not coming at all anymore. But I mean, I have had a couple of cases over the years of somebody who is just like a plus caregiver, like right here and almost with no warning. They just kind of vanish. And I mean, it's interesting. But I mean, like I said, I never get upset about it. I think we always try to keep an even keel at the office, always try to give caregivers the benefit of the doubt. I remember there was one lady, I just couldn't believe she no-showed and she just never responded to anything. I even took the, like, I've never done this before, but I actually sent her a letter to her house. I sent a letter, said, hey, I'm so sorry, like, that, you know, you're not coming to work anymore.

I hope everything's okay. I'd love to hear from you. I mean, her husband got back with me. She died. I mean, she passed away. So, I mean, you never know what's going on. I mean, it's so awful, right? And she's not an older lady or anything. She's just one of those things.

I had a caregiver one time pass away on the way to a shift. Her husband was driving her, thank God. I mean, you just never know what's going on with people. So I think part of being a high quality agency for us has been investing, not just in our caregivers, but we have, you know, on-call programs. We have programs to try to cover those clients when things come up. And we just really, you know, we don't want caregivers to call off. We have programs that reward them if they don't call off, but if they do, you know, we're not, we're not checking their Facebook to see if they're actually at a party. We're not, we're not, you know, sending people to their house or anything. That's just, that's just not our approach.

Well, I think it speaks well to you and your agency and your methods that when someone kind of disappears, your first reaction isn't to be angry. It's to say, Hey, is everything okay? Which, which really is how it should be. And that kind of speaks to the importance of like empowering your staff versus policing your staff. And the two things are separate, how we feel about the caregivers and expressing sorrow or, you know, sympathy for them can be different from your procedures. I had a caregiver once who told me, you know, she no show, no call, no showed for a shift. And then a couple of days later told me, you know, she called back and said, you know, she was in the hospital. I said, okay, give me, give me a form from the hospital, give me any kind of bill, whatever. And, and it'll be

no problem. And she couldn't do that. So, you know, we ended her employment. I felt bad. I mean, if she was in the hospital, I feel bad for her, but, you know, a no call, no show is definitely grounds for termination. And if they can't supply some kind of documentation, then those two things are just separate. That makes sense. Taking it back to scalability, in your experience, which of the processes in your business has been the hardest to scale as your business has scaled? Well, I think just the actual covering of the shifts. I mean, you got to hire caregivers directly and it gets harder and harder as you get bigger, especially if you have clients with a lot of short visits and short hours. It does get harder and harder to manage that puzzle.

You know, how do you get the caregivers enough hours while still covering, you know, shorter shifts? I mean, one of the things we did is we do have a four-hour minimum for most of our clients. And that definitely helped because when we used to have a lot of two-hour visits, our quality was all over the place. It was really hard to staff those visits. It was hard to get consistency with the caregivers and the clients. You know, one process that scales great is like billing and payroll. You know, one process that scales great is like billing and payroll. You know, like running billing used to take me about an hour and now we've grown a lot and it still takes about an hour. It's one of those things that billing and payroll scale well. And that's one of the great things about technology. You know, when I look

at technology and where to use technology in our business, technology can really help with scalability. If you have a great, we moved, we use a software program for our payroll that we moved to about a year ago, and it just really helped. It took about an hour off our payroll process, and I feel like it's going to scale really well with our growth. We have another program we use for nursing assessments and supervisory visits. You know, our nurses used to have to fill out a piece of paper, actually four pages, then they would bring it to the office and drop it off.

Then I had to be at the office to pick it up. Somebody had to scan it in and then we had to enter it in the system so that it was reflected in our quality system. In some cases, remote nurses had to get paid for those visits. So we had to like put it in a payroll. It was like a mass. Now we have an automated system that when the nurses can fill it out on their iPad or on their phone, it gets automatically submitted. We get an email, we have the electronic version of the form and it's all just flows right into our system. So I think that's one of the things about scalability, that technology can help you look for technology that helps you scale, that's going to scale well with your business.

Yeah, you're speaking my language, you know, without going into too much here and or taking too much time. But we were kind of talking before this about what we're doing at CareSwitch and just like what we see happening in the industry. And I believe pretty strongly that the next year, just by itself, is going to significantly change a lot of the ways agencies run things, especially in terms of processes and how and what scales. So I definitely can get behind that. You mentioned you have nine staff members today. Do you mind if I ask the breakdown of like positions and roles within that? Yeah. And part of it's a personal decision. Like I like to work from home. Actually, you can see I'm in my home environment right now. I go to the office, you know, once or twice a week just to check in and meet with my key managers. But the way we've evolved

our business is I have two key managers that run the business day to day. We have a care coordinator who works with them. We have three schedulers. We have a staffing coordinator and two nurses. And then we have a lot of part-time nurses that help with remote visits. If we have a client that's far from the office, we might hire a nurse in the area to do the monthly visits, that kind of thing. And some of it's driven by regulation, Oklahoma. In Oklahoma, I'm doing monthly nursing visits by an RN with every one of our clients every month. That's part of operating in Oklahoma. But yeah, that's sort of the breakdown of our staff. And a lot of them, you know, one of the managers started off as a scheduler and worked her way up and has gotten mentoring along the way and training in terms of

how, you know, leadership and how to be a manager and everything. So we've had a lot of success in that area. Since these terms are sometimes used a little bit interchangeably, how do you define the difference between a scheduler and a care coordinator? Our schedulers are, they're, you know, it's kind of built in the name. Mainly what they're doing is they're they're, you know, it's kind of built in the name. Mainly what they're doing is they're dealing with, you know, caregiver issues in terms of fulfilling the schedule. The schedulers, their main job is to make sure all the shifts are covered. If we have a cancellation where we can't cover for some reason, they're calling the clients and arranging, you know, a backup visit or something like that. Everyone in our office

is a potential backup caregiver. So schedulers often go out and cover visits as well if needed. Care coordinator in our office, and this is different for every agency, but in our office, the care coordinator is dealing with client concerns, caregiver concerns. A lot of times when the nurses turn in their visits, they might say, hey, this client needs help getting grab bars. This client needs help getting more hours from the VA. Our care coordinator handles all those kinds of issues. Okay. Okay. That makes a lot of sense. Yeah. Definitely like things that are separate but overlap sometimes and different agencies will approach the overlap differently there. The Venn diagram of scheduler and care coordinator looks a little bit different everywhere I've found.

Another thing that helps with scalability is cross-training. So both of our key managers at the office are cross-trained on every procedure and process. They can both do in-home visits. They can both do networking if needed. They can both do the schedule, operations, client complaints, all that kind of stuff. Our care coordinator is in the process of being trained on all that too.

So my goal is that we'll have three people that can do all that. I have a kind of a rule of three from my background. If you have two people in a department, if one person's on vacation, the other person's sick, guess what? You're going in and you're doing that job. So I always feel like you need three people that can do any process because that's how, I mean, that happened two years ago at Christmas, like my whole office got COVID, like everybody was, I was, I was like, I was in the office covering everything just because we had so many people out. So you really, you know, we've, we've, we've staffed

not just for, not even just for the peaks, but we staff for backup capability as well. That makes sense. I think that's a really smart rule, the rule of three of always have three people who can do the job. So let's kind of talk about the future now. So we have about 10 minutes left in our time here. And tell me about what challenges you're grappling with today, how you're solving those. And as you look ahead, you know, what's next for your business? What are your goals? You know, what's going to happen with First Light of Oklahoma City over the next year? Yeah, we're going to continue to double down on the partnerships that are working well for us. You want to sustain those and continue to build them. And then, you know, finding more partners that we can build a relationship like that with. You

know, if we have, you know, right now, maybe we have five that are great. Can we get two more in the next year or two? You know, our office staff, we have enough staff, I would say, to cover our growth for the next year or two. So, I think the quantity is there, but also, you know, looking to continue to do cross training so that people are flexible so that we're not dependent on any one person for any particular process. We also create opportunities for personal growth with our office staff as well. We have something we call progression where somebody who's a scheduler one after 18 months, they can progress to scheduler two or scheduler three down the road. So that helps, I think, with the office staff

feeling valued and that they're continuing to get something out of the work. And they're building their resume over time too. If they decide they want to do something different, it's not like they had the same job for six or seven years. So those are some of the things we're focused on for the next couple of years. With that progression of like scheduler one to scheduler two and three, I mean, besides, I would assume pay, what is changing with that role as they advance? We have a document that lays out like to be a scheduler two, you know, scheduler one is all these basic things. To be a scheduler two, you need to be in the job 18 months. Plus, you need to be able to do these five additional advanced things. And then Scheduler 3 has kind of the same thing associated with it. So, and it's shared with our employees. It's not

a secret or anything. So, when somebody is, you know, at 12 months and they're getting ready for their progression potentially, then they're working on those things. They have a development plan with their manager to work on it. And actually, we've built cross-training into that model. So to be a scheduler two, you need to be able to do all these scheduling things. Plus, you need to be able to do everything for scheduler one. I'm sorry, I'm sorry for staffing coordinator one. And same thing, scheduler three, you need to be able to do staffing coordinator two and vice versa.

So we're building, you know, we're building that flexibility. And so that if somebody shows up for interview and the staffing coordinatorators at launch, any of the schedulers can be like, hey, I can interview you. I can hire you. You know, I can do all this. Okay. That makes a lot of sense. And I really like that approach of when they're at like scheduler three, that they need to know like the tier one capabilities of some of the adjacent jobs. You know, very cool way of like processizing that. I mean, do you have a, in the Q&A, I did notice something. It says here, other than competitive analysis, what's the formula best used to set rates?

You know, I have heard rules of thumb and you're, if you're working as a part of a franchise in particular, there's probably somebody who will tell you like, take your caregiver wage and do this to it, you know, add this to it, whatever. Like I said, though, I do always come back to competitive analysis. You know, you should be charging what, maybe look at the market, like who are the agencies that you want to be or who do you feel like you want to be compared to? And that's what you should be looking at. There's always going to be people out there, you know, this is an industry, even in a licensed state like Oklahoma, mom and pops come up all the time. And they've got three

caregivers and they're doing all their scheduling on spreadsheets or whatever. And so you always are going to have competitors like that who are charging maybe an extremely low rate. But I do think that you have to just think about where you are in the market related to quality and kind of go according to that. That makes sense. We also had a question in here asking about what the program is that your nurses are using for care assessments, I think, that is like separate from your other software. Do you mind sharing that? Not at all. And it's not specific to nursing assessments or anything. It's a, it's a company called Jotform, J-O-T-F-O-R-M. It's just a website. And they, I think they have an app too,

but we don't use the app. It's, but you can, what I like about it is it's a, it's a company that allows you to set up forms that your employees can fill out over and over again, but you can customize them. So we really, we've used that to set up our nursing assessments and supervisory visits, not just to check up on the clients and how the caregiver is doing and everything, but maybe to also look for other things in the home that we might want to know about, like, you know, hey, who is their home health company? Who is their hospice company? That way we can make more connections back to that partner. That makes sense. We're about at the end of our time here. Are there any final words of advice or wisdom that you want to share with our listeners? I would say too, some of this is luck. It's luck what market you're in.

It's luck maybe what partnerships you build early on. So, I mean, don't discount that, but you can only swing at the pitches that are thrown to you. So, I mean, when you get a pitch that's in your sweet spot, you need to crush it. So, I mean, some of that's outside your control, but the things that are inside your control, you just want to focus in on, I would say. Yeah, that's my words of wisdom, I guess. Thanks for that. I think recognizing what's in your control and what isn't is a huge skill as a business owner. So great note to end on. Thanks again for joining us today, Tim, and for last week, for sharing all of your experience, the things you've learned.

Just to speak to a few questions we often get here. Yes, this is recorded. This is both a live class and a podcast. To register for the live class, you can go to homecareu, that's u as in university, dot careswitch dot com. And then the podcast is called Home Care U. It's available wherever you get your podcasts. So we definitely, we take all of the classes and we convert them into podcasts afterward. Always feel free to join live, ask whatever questions you have. We get to them as we can.

So we have some great future topics and speakers coming up that I'm excited for and lots to keep learning. So thanks everyone for joining. Thank you, Tim, and have a great rest of your day, everyone. Thanks, Connor. That's a wrap. This episode was made by the team at CareSwitch, the first free home care agency

management software. If you're tired of running your agency on an outdated software that looks and works like Windows 98, and you want to save a little money for your bottom line, check us out at CareSwitch.com. Thanks for listening. See you next time.