Home Care U - The 3 Critical Decisions Most New Agencies Get Wrong (Julio Briones Pt. 2)

Episode Date: January 16, 2023

Julio Briones is the guy home care agencies call in to fix things when all else fails. According to Julio, there are three critical decisions up front that most new agencies get wrong. (Hint: your office location matters more than you think, and there's a very specific reason.) Get your note pad and come ready to learn from others' mistakes.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, everyone, to Home Care U.

This is a weekly live event series where the recordings will come out as podcasts. I'm Miriam Allred, head of partnerships at CareSwitch. CareSwitch is the home care industry's first freemium home care management software with built-in payroll. You can get started for free or learn more at CareSwitch.com. Today, I'm excited to be joined by Julio Briones for starting in Agency 102. Julio, thanks for joining me today. Hi, Miriam. Thanks for having me. All right, so I'll just introduce myself real quickly.

Julio Briones, CEO of Briones Consulting Group. And we are home care strategists and with a recent venture into more extensive management services. I've been doing home care since I was 15. I'm 46. And I've been doing this for a very long time. You name it in home care, I've probably done it at some point in my career, with the exception of actually wiping somebody's behind.

My career has taken me through all different aspects of this industry, taken me out of this industry for a little while into the military and into retail clothing and other ventures. And when my father got sick, we put home care in place for him. It was not good and not a good experience in general. And that brought me back into the industry on a mission-driven focus to just help agencies provide the best service they can so that other families won't have to suffer like mine did. A lot of people can relate to a background such as

yours with a parent or a loved one and real, you know, firsthand experience leading you to starting an agency, you know, operating an agency. So you have firsthand experience and you've worked your way all the way through all of the roles in home care and you speak very candidly. Yeah. And I mean, ultimately leading me to the whole big multi-state, multinational position within franchising. And so it's really, I think having a diverse experience is really helpful. Yeah. Well, we're going to get into that today. So just recapping for people tuning in. Last week, we covered some of the fundamentals to starting a home care agency. We covered topics such as licensing, passive marketing, picking a location, capitalization, time management, and hiring.

Today, we've got Julio back again to dive a little bit deeper on a handful of those topics. So just prefacing today's episode, we're going to talk about picking an office location. We are going to dive into capitalization and financing your agency. And then we're also going to cover passive marketing. So three different topics, but three really important topics when people are considering starting an agency or in their first, you know, few months, first year, these are topics that you feel strongly about and know the importance of. So let's get right to it and talk about picking an office location. What you shared

with me on this topic is pretty scientific. So walk us through the science of picking a location. Yeah. When it comes to your office location, there's two schools of thought. You have the one group of people that are just sitting there and they go, wow, I want my friends and family to come in here and see what an amazing office I have. It's in a prime location for foot traffic. And that's great. As long as you're going to be hiring your friends and family to

go be caregivers. All right. So the reality is that your caregivers and your clients, typically they live in very different neighborhoods. And this is where, you know, the office location really becomes such a cornerstone to your long-term success. While you have to, you have to balance it out. So if we have this big area, we have this giant area we call our territory. It doesn't matter now if you are a private owner or if you are a franchisee, it doesn't matter how you do. I don't even care if you're sitting there in your big capital venture group and you just think you have all the experts. The fact is, long-term, what's going to matter is can you service a case? That's all it comes down to. When you're balancing this out, you have to

understand two key notes. Number one, where is your client? That one is actually pretty easy. If you're private pay, for example, we're going to take the median income in your state, wherever it is, we're going to go 40% above that. So if your median income for your state, I'm just going to use numbers that are easy to do in my head, not, you know, has nothing to do with reality. Let's say median income where you live is $100,000 a year. That's your median household income. That means it's not the highest, it's not below us, it's somewhere right in the middle. So what we're going to do is if we want to find clients, we're going to look for people

that live in geographic areas that make about 40% above that. Because this is what that does. It allows us to find a client base that has a comfortable living level. They're able to afford nicer things, but they're not at the level where they could stop working can work so that mom and dad can get taken care of. They're not ready to sacrifice their own standard of living. So it's easier for them to go, let me go get a job. Let me go put somebody in place to watch mom and dad. Now, once we understand where those areas are, okay, now we have to look at who is servicing those areas. So this is really going to depend. And this is where some of the scientific stuff comes in. When city planners, when they're designing areas where people are going to live, they have to take into account a couple of things. And one of the things that we're taking into account is that people like to feel safe. generation, so this is very important. You know, people like me, my parents are older, my kids are younger. I am sandwiched in between them.

So for me, comfort is knowing that I have a hospital close by. So now close by is going to be relative to the type of environment that you live in. If you're in a more urban area, New York Metro, Chicago Metro, LA, all right, you are now looking at about 4.2 to 4.6 miles from any given point in the city, you're going to find a hospital. There's overlap, but you're going to find some sort of emergency service or hospital, usually within that four or four and a half mile range. Now, if we're moving out more, okay, so now we start in the urban area. Now, let's move out into the suburbs. The reality is we're going to live still in order for us to feel comfortable. And this is the way city planners usually do it. It's somewhere between five and 6.4 miles. Okay. This is where it is. So if I know my rich

people live here, the hospital is going to be somewhere here. This is important to understand because when we're talking about where people live, we also are talking about independent living facilities and assisted living facilities, 55 and older communities. So all of these are targeted right around that hospital. And if we're way out in the sticks, like I just recently moved to Indiana, so not too far from me, that's the sticks. Okay. So those people out there, you pick any random farm out in the Midwest, it doesn't matter. Within 10 to 11 miles, you're going to find an emergency room or a hospital. Because just because you live out in the middle of nowhere doesn't mean that you don't ever need medical care. And as a matter of fact, I'll venture to say they should probably be

a little closer to a hospital because farms are dangerous places. All right. So that's the first thing that we know. So now we know where we live and we know where our clients live, not where we live, but we know where our clients live. And we have a clear understanding where the most basic medical care is, hospital or emergency room. This is important to know because there is other geographic data that's going to be very important. If I was going to open a skilled nursing facility, a post-acute or sub-acute facility that's really going to focus in on short-term rehab. Okay. So where am I most likely going to get my clients from? The hospital. You know, hospitals are acute facilities. So the post-acute or sub-acute means after the intensive care.

So here we are. So we have these big facilities. They require something called a feeder unit. The feeder units are typically hospitals. at any hospital anywhere in the country, within 500 feet to two miles, you will find one or more skilled nursing facility that provides short-term inpatient care. And everywhere in between there, you're going to start finding home health agencies, doctor's offices. You're even going to find some attorneys. You're going to find all these ancillary services that support that hospital who supports your client. That's step one. Understanding where

all of this is, is going to be important because now when we're looking for our office location, we have to know kind of where we're going to go market. The other end of that equation is who's going to take care of our clients. And to me, at least as when I work with my clients, I tell them that is a lot more important than where your clients are. The reason for that is because if I have an office that is next door to my clients and my caregivers live more than 15 to 20 minutes commute, they are not going to come to my office to apply. And then we're going to have a recruitment problem. They will travel 30 to 40 minutes, and depending on where you are, how much you're paying

and a number of other factors to service your clients, but they won't necessarily travel that far to apply for work. The difference is very simple. Once I'm hired, I'm getting paid to go somewhere. If I don't even have the assurance of a job, why should I go out of my way? Now that we understand this, we have to really take a look at who is, and this is where the part of understanding your client is again. So if we're going after that private pay market, all right, we're going for the higher income. Okay. If we are going for a Medicaid market, now we're going for lower income. So let's take again, that base $100,000. All right. So if we're looking for a private pay clients, we're going for for 40% above median income.

It's not a hard number. This is an estimate based on what we're going to find in those neighborhoods, okay? So if we're looking for caregivers, we're doing the exact opposite. Now we're looking at 40% below median income. There's a wonderful stat out there that's thrown around by a lot of statistics companies, Department of Labor, everything else. Your average caregiver makes about $22,000 a year. That's not true. Because what they are doing is they are lumping in the minimum wage caregiver that works for Medicaid, along with

that independent caregiver that is working for private cases that's out there stealing all your clients. This is what they're lumping in. That's filing that 1099 at about 20 bucks an hour. They are also lumping in the private pay caregivers. So you can't really look at it as black and white as average caregiver makes 22,000 a year. The reality is we have to look at what are some of the behaviors and some of the demographic conditioning that we're going to have to pay attention to when it comes to picking caregivers and where they live. So if I am looking for a caregiver to work Medicaid cases, I don't, reliability is not as important to me. Okay. And I know I'm going to get crucified for that. Okay. I get it.

We all want caregivers who show up, but let's be realistic. If you live in a state, like for example, Alabama or Louisiana, I'll take Alabama just because I very literally had a conversation with somebody from out there yesterday afternoon. Your private pay only pays about 18 to 20 bucks an hour out there. That's all they bill. So minimum wage is still $7.25 an hour. So Medicaid, if I'm not mistaken, it only pays like $11 or $12 an hour. The thing that we're going to look at here is $7.25 an hour does not translate even at 40 hours a week into $22,000. So we cannot use the same standard there. Now let's take another example. Let's take New

York. New York City, currently, if I'm not mistaken, it's $17 an hour, the minimum wage for a caregiver out there. Where does it make sense? You cannot do the comparison. It's the same thing without getting political about anything about that fight for $15. $15 an hour is only a livable wage if we're talking about Little Rock, Arkansas. It's not a livable wage if you're talking about New York City. Okay. So you have to take that into account. The next thing you have to take into account is age. Okay. Your average caregiver, all right, that's going to work Medicaid. They're going for quick availability, instant work, you know, where let's be realistic, depending on the market, where it's not a lot of work.

All right. Medicaid tends to be less labor intensive. What we're looking at are caregivers that are typically under 32 years of age. This plays a big role in reliability because if someone's under 32, typically their children are younger. Younger children translates into more family emergencies. Younger kids get sick more. They get hurt more. And there's a higher likelihood of running into babysitter issues. So your pool of available caregivers is higher because your reliability gets lower. And they're also willing to take less money.

And therefore, if we are recruiting and we're doing a recruitment analysis, we're going to start looking at it from the perspective of easy availability. All right. If I pay less, I'm going to have less overhead. Doesn't matter if I have a bigger churn. Now, if we're looking at private pay, ideally, we're going to look for caregivers in the age range of 35 to 54 years old. Typically, we're talking about older children, which means less call-offs. They also mean at that age, people tend to seek out more responsibility. All right, more responsibility along with coupled with older children means that we

are going to look for middle-class, upwardly mobile neighborhoods. That's where you want to recruit. Let me put this in more plain English. All right. So if I'm opening up a Medicaid agency in, let's say, in northern New Jersey, all right, just for argument's sake, because I know the layout there better off the top of my head. I'm going to have a higher likelihood of recruiting large volumes of caregivers in an area like Newark, New Jersey. Okay, we're talking about income levels are right. There's a large population of people willing to do the work, lots of home care agencies in the area that do Medicaid. There's also a large volume of

home health aid schools that specifically train caregivers. All right. So if I'm a Medicaid agency, that's where I want my office, close to my clients, close to the caregivers. Where on the other side, if we're going to go into a place like, so if we're seeking out actively private pay clients, I'm not going to go into a city like Newark. Now I have to sit there and where am I going to open my office? I'm going to open it somewhere that is going to work at the facilities that are servicing my clients will also be able to get to my office. So that's where you're looking for. And this is where office location leads to long-term success.

Client lives here. Their facilities are here. Your office is here. And here's where your caregivers live. Yeah. Let me jump in. I love the prescriptiveness. You know, we said we were going to get scientific and you just got scientific. And I think a lot of

people forego the importance of this concept. You know, they're not thinking about the income levels. They're not thinking about the age ranges. You know, I think I've seen videos where you're literally showing a map, making circles drawn. Every agency needs to get this specific when they're picking a location because of how important it is for their long term success. Exactly what you just said. I've got three kind of rapid fire follow up questions that I want to hit before we move on to a different topic. On the recruitment side, we're not going to get too deep on recruitment, but I want this concept of Zoom interviews. You know, we over the pandemic have seen people upping their virtual recruitment and interview process. Should agencies be taking that into consideration or should they still focus on the physical location of the caregivers?

That is a very loaded question. And I'm going to answer that question as simply as humanly possible. The Reader's Digest version of that is if you're Medicaid, recruit however you can do it. Get them where you can. Okay. Why? Because again, the payout net margins, and once you take everything into account, you want to minimize your expenses. Now, on the other hand, if you are a private pay agency, there's three types of categories. I break them down into three categories. You have your discounter agencies that are just really racing towards the bottom. All right, if you charge 20 bucks, I'm going to charge you 19 just because. Okay. Even if I take a loss, I'd rather take the client in the long term. Then you have what's called is your competitive agencies. This is where you find out, you call 10 agencies, you find the highest price,

the lowest price, and you stick somewhere in the middle and move along. Those agencies are very different from the types of agencies that I call the high touch agencies or the exclusive agencies. All right. So it depends on how you're structuring your business is whether or not I would ever recommend you do a Zoom interview. If you are on the top tier, that exclusive agencies that you're charging on average 10 to 15% above everyone else, then you must do in-person interviews. There's no way around that. If you are a discounter or on that competitive level, but a little bit lower down the scale, then you can easily get away with Zoom calls, all right, or phone calls even, you know, because your need for that high touch and extra

level of professionalism is not there. That's really what it boils down to. Yeah, that was a good answer. And that's like a tangential topic, defining which type of agency you are because that also plays into this concept of picking a location and what format you're going to conduct some of this in so so good response there i also want to ask about thinking of more metropolitan areas say an agency has gone through this prescriptive process of finding that right fit location, should they be deterred if there are competitors on that block in that neighborhood right there? Does that, you know, do you discredit that and just move on? Oh, I will tell you, I actually take the exact opposite approach. Whenever I work with my clients that are in that phase where they're looking for an agency, one of the first things that I do is look for where are there big clusters of agencies, and I want to be smack in

the middle of all of them. Because if I'm a caregiver, and think about this from a logical perspective, you are making somewhere between $15 and $20 an hour, depending on what market you're in. And especially if you're in a metropolitan area, you're looking probably at that $15 and $20 an hour, okay, depending on what market you're in. And especially if you're in a metropolitan area, you're looking probably at that $16 to $18 range in most parts of the country. How much time do you really have to go and apply at 20 different places? You don't. So you're going to try to plot all of your applications and interviews right around a one or two day window. So why would I want to make it complicated for you? So that's, that's basically the answer there. Awesome. That's, that's a

question. I think I want to ask more people in the industry, cause I agree with what you said and your defense there. I haven't opened my doors, but I've heard, you know, I've talked to owners in say Philly, for example example they say i've got a thousand competitors within a 20 mile radius of my agency so i'm just curious you know do you take the smack dab middle approach or do you kind of branch out i think owners new owners are asking themselves this question you know right next to a right at home and a visiting angels if i'm a mom-pa shop or do i need to kind of push the boundaries a little bit and be in a different spot to different people? Having worked with a franchise,

and actually it's funny you mentioned Philadelphia specifically. I actually have a larger franchisee in the Philadelphia market as one of my clients. And when they opened their second territory, this is specifically the question they asked. This is what it comes down to. Like, let's say I was working with you, Miriam, to open an agency. Okay.

My question to you is very simple. If I put you in the middle of a room with 100 home care agency owners, how many Miriam Allreds are there going to be? One, you. Competition is a myth. That's really what it comes down to. And if you're that worried about what your neighbor is doing, you might not be in the right industry. Yeah, you're exactly right. I love that. Last question on this topic. You mentioned something to me about how difficult it is to change locations. So just to kind of close out this topic, give us a look into maybe clients that you've worked with that have changed locations. You know, just give us a look into the headache that that causes so people

really think twice about where they put their location. We'll start at the most common problem that people will have. The majority of states are licensed. Now, let's say I'll deal with one that I'm actually working on with a client right now in the New York area. New York licenses aren't a moratorium. You can't get another one. So to change her address literally two doors down, she was facing potentially shutting down. Okay, because the license is registered to one address. Now, we had to go and justify why the move, you know, and the regulations just became a nightmare. Okay, I had, it's as simple as like, name changes, DBA changes, any change that you're going to do to your business, you kind of want to avoid it, especially if you're in a licensed state. And that's the biggest headache.

The next headache that's going to come down to is, you know, when we're, we live in a digital age. Okay. And if you're not tech savvy and you're trying to move locations, you're going to have a nightmare because you're probably not going to change everything on every website or registry that you've had it on. It's going to confuse people. And when we're talking about senior care, we're dealing with a population that is one, not really overly tech savvy. So there are a lot of times they rely on their kids to find you. They're also from a generation that tends to be very distrusting. And this is a problem. Why are you moving?

Why do you have to change locations? What are you hiding from me? And these are questions you're going to get from your clients. And then it not only affects all of the digital are questions you're going to get from your clients. And then it not only affects all of the digital footprint when you're moving. Sometimes it could take months for this to catch up, but you also have to deal with distrust from your clients. You have to deal now also with the comfort that your caregivers had going to where you are. Look, anybody who's been in this industry for more than 10 minutes knows that you could tell

a caregiver the same thing a hundred times and they're going to ignore you 99 of them. Okay. And this is where predictability and reliability comes in. So if I have my office in one location for 10 years, all of a sudden I'm moving down the block or two blocks away because it's a better place. The caregivers, they're just going to be like, oh, they don't exist anymore. They're not going to bother looking you up. They're going to go to one of the other agencies around you. And these are headaches. This is why I think, you know, one of the things that I usually tell people when licensing aside, if you're going to open a second location or a new location, start it out as a second location, get people used to going there, and then shut down your first office. It'll save you a lot of headaches.

Yeah, we could basically like mic drop on this topic. Those are the headaches I wanted you to hit on because you've opened my eyes to this picking a location concept more than I've heard anyone in the industry talk about it. And so I just wanted to like drill down that deep to get into why people need to really take the time on this topic as they're opening their doors. So awesome job there. I want to push on next two topics, going into financing and capitalization.

We have both heard it before that people go broke before they open their doors. So in kind of like a nutshell, talk to me about what not to do to go broke before you open your doors and some of the common pitfalls that people fall into when it comes to financing in their first one to three to six months. All right. So the first problem that people do, and this is something that I can tell you how I address it. Before I work with any client, I sit there and I make them do a budget. I need people to understand exactly how much money it takes them to operate for one month. Because that, I'll tell you, most people will sit there and go,

well, I got $20,000 sitting around. Yeah. I can open a home care agency. Well, here's the problem. All right. How long can you survive without a paycheck? You know, cause that's a fact that that's a big problem that people have. So what do they do is they compensate and they say, oh, well, that's no big deal. I'll go get a job. Okay. I'll keep my job until my business gets open. And that is the number one hands down reason for failure in this senior care space. People do not understand how much money it actually takes to stay open.

And they underestimate the amount of time that, well, let me rephrase it. They understand their own skill and ability. They overestimate their skill and ability to get this thing off the ground. People think, oh, I'm just going to open my doors. They hear that wonderful stat. 10,000 people turn 65 every day. So, oh, so by that numbers, I should be a millionaire in three months. Okay. Let me tell you the reality.

Reality is if you're in a licensed state, depending on what state you're in, you may be forced to pay rent for as long as a year before you're even allowed to operate. All right. That is expensive. All right. That is expensive. All right. The other problem that comes in is like, for example, states, states like Texas, they require you to have some sort of a nurse on staff. It's just on paper, but there are people that will charge you for this. If you're not a nurse, you have to pay somebody to do this, okay, because they're putting their license on the line for you. All right. So these are all expenses that people, again, do not calculate in. And let's take a look at some of the other things.

If you're working, okay, to finance your business, who's going to do the work? Who's going to market? Who's going to recruit? Who's going to answer the phone? Because there's one simple rule in business. You're either going to do the work or you're going to pay someone to do the work. There's no middle way. If you can't answer your phone during daytime hours, are you going to hire a VA? A VA will cost you as much as $1,800 a month, depending on the service you get

and the amount of volume of calls you're getting in. How many of those calls are useless sales calls? They charge you by that. So these are things to consider. What about your business insurance? Yes, year one, until you get a first client, you're probably only going to spend $300, $400 for general liability insurance. But what about the other insurances, unknown vehicle, workman's comp, your state contribution,

your employer burden? As you get staff, all of this comes into play. And if you're in a regulated state, your average nurse will charge you for a start of care assessment anywhere between 50 and $200. So before you can even bill a client, you've spent money. So these are problems that typically happen. All right. And the most common solutions, okay, that people have is they go get a job. They borrow from their 401k, you know, they borrow money from friends or they, God help them, they get investors. Investors are great. I don't see anything wrong with that. But if, for example, if I'm going to invest in your business, I need to have a good contract in place because otherwise you're screwed. At what point do you make money? So all of these things factor into play. Now let's talk about how do you mitigate this. So if you're in the private pay space, it's very simple. When you go out to get clients, you have to one, hustle. If you're working full time, take leave of absence from work, get out there, really bust your behind and go find clients,

go market. I don't care if you're bad at it, go market. If you're not out there marketing, your business will never grow. And then what you need to do is make sure you have in place a solid deposit strategy. Now, again, I'll get crucified on this at some point, because I believe in a two-week deposit. A lot of people will say, no, no, no, people don't want to pay that. They don't understand it, so they don't pay it, so they'd rather move on. Here's the problem. If you want a successful business, especially for the first one to two years, if you're in private pay, you need to take a two-week deposit.

You need to take a two-week deposit, you need to bill weekly, then you need to make sure you're paying bi-weekly and have one of those apps that allow people to get paid daily. Are people receptive to that or do you get a lot of pushback? I get a ton of pushback until it hits the fan and they're sitting there going, oh my God, I'm 8,000, 10,000 short on payroll. Of course you are, because you didn't take a deposit and you're not billing weekly and you're trying to pay weekly. Look, you're not here to please the masses. You're here to run a business. And that is a big problem.

The easiest solutions to put in place are that. Because if I'm taking two weeks deposit from my client, that gives me, that's not two weeks deposit. That's three weeks of payroll. See, that's the part people aren't understanding. All right. So, and if I'm billing that client weekly, let's say my week starts on a Monday and ends on a Sunday. So Sunday night, I close out my week. Monday morning, I start calculating all my billing and I confirm my schedules and everything's done and my billing goes out by 2 p.m. I throw it in the mail, okay, because let's be realistic, seniors are not always tech savvy. So while I can email 40-50% of my bills, I'm still going to have a large number of bills I have to send in the mail the traditional way. So if we're looking at one to three days

before they get the bill, then you have to wait till they get around to go into the mailbox, wait till they get around to writing you the check and sending it back to you. So by the time you get it deposited in the bank and the check clears, remember we start on a Monday, it might be the next week Thursday. So now what? You have payroll. If you're paying every week and you've only received 50 to 60 percent of your invoices by the end of the week, what are you going to do? And I hear this all the time. Oh, I'll put them on ACH. ACH does not give you your money instantly. So then what are you going to do? You're going to put them on credit card and you're going to charge a convenience fee. People are more used to that now. They're more receptive to it than they were pre-COVID. Great. That's still not going to assure you positive cash flow. All right. And these are the issues that you're going to have. I love this level of detail because I have talked to countless new owners and they're asking them themselves this question. Yes. How do I pay myself? How do I pay my

caregivers? This deposit concept will make or break the business in the first three months. How to not go broke before you open your doors alone could save your business in the first three months. And I just want to put in a shameless plug for your consulting services. Not to fault a lot of owners, you know, that come with a clinical background and they have the heart and the intention to start these businesses. They make phenomenal owners, but it's this type of prescriptive coaching and consulting that they need upfront to make these decisions and make them wisely because, you know, a lot of businesses don't make it past the first six months because they can't figure out the financial element of their business. So I want to

drill down a little bit more on budgeting. I want to finish up this part of this because there's another whole other element to this when we're dealing with Medicaid, because a lot of people, they go after the big air quotes, easy money of Medicaid. Yeah, they'll take the lower margins because it'll generate higher volume. And because you can run Medicaid in a lot different, it's a lot less labor intensive than private pay. They think, oh, yeah, I'll just go for that. But what they do not tend to understand is that you will bill, hell, yeah, I'll just go for that. But what they do not tend to understand is that you will bill, hell, you could bill Medicaid daily if you want. It doesn't matter. They pay whenever they feel like it. All right. If you look back, you know, again,

not to knock UnitedHealthcare from my understanding, they fixed a lot of their problems they had before. But a number of years ago, all right, I'm going to say 2016, 2015, all right, it was, there was a lot of problems because there were a number of lawsuits against these big providers like UnitedHealthcare. I think there was another one with Aetna at one point. Again, look it up, do this research yourself on when it happened exactly. And I don't want to overstep and give exact dates, but essentially this is what was happening. People were waiting as long as 48 months to get paid for one bill. How does your business survive? So what I tell people all the time is do the 70-30 rule, 70% private pay, 30% Medicaid, your total billings.

This way you have the cashflow and your deposits coming in, in order to fund your Medicaid business. I have a client right now that I'm actually working with in Virginia, that the EVV system that they were using changed the setting during an update without her knowing. And she actually went into arrears almost $130,000 and had to take out debt loans, which are a nightmare, in order to cover payroll three weeks in a row. So now, yes, she's got $100,000 worth of billing. But by the time the loans come in and the interest comes in, because she didn't have a deposit strategy in place from not having enough private pay. All right. So that $100,000 turned into $10,000 profit. It

reduced her profit to next to nothing. Okay. And again, she's worried about how long she can keep her doors open now and these are these are real problems that people have to they have to learn to deal with and work around i just wanted to touch on that because i didn't do the medicaid side of it no that's perfect i get a little single track on the private pay but i'm glad you're covering the medicaid concepts because you're so right people get into this business, they see dollar signs on the Medicaid front and they want to chase them. But I like that you're sharing the pros and cons to Medicaid because there are benefits, but there are cons and people need to be aware of those upfront before they just chase the dollar signs. And so we appreciate the perspectives on both fronts.

Can we go a little bit deeper on some budgeting? I just want to think through... Budgeting looks a little bit different to everyone personally and professionally. What are maybe a few line items on a budget that an agency may not be thinking about in their first three months? I know you've talked about a couple of different things, but anything that people may be missing that could turn into a big money pit? So one of the big things that I personally find important is understanding the most important number that people have to reach. It's not, you know, people always, they stress, oh, I'll wait until I make $8,000 a month, $10,000 a month. Forget that. Okay. Those, those are useless and meaningless numbers that are used by, by a lot of people to sell courses.

Okay. Make a million dollars a year. Yeah. You know, here's the reality. All right. Am I able to share my screen? I'm going to talk through it because I know it's going to be a podcast too. This is just a tool that I created here. It's very simple. All right. And this is what we need to look at. Okay. This is one of the first things I ever go through with anyone. It's not about understanding how many dollars you need. It's about understanding how many billable hours do you need in order to properly pay your expenses? All right. And so let's look at, I'm just going to use this as an example, so I can keep it up on the screen, you know, so that you can understand what are your expenses

as a business owner, typically. Rent and mortgage. Some people own a building, that's fine. Or, you know, or if you're going to rent a space, call it what it is. Even if here, and here's the thing, please understand, even if you're running this out of your kitchen table, the square footage you are using is rent. OK, please understand that even if you're not paying it directly, you must budget for it. Give you an example. If you have a thousand square foot house and your kitchen is 100 square feet, that's 10% of your floor space is your kitchen. So that if you're paying $1,000 a month in mortgage, $100 a month is your rent to your business. Okay. Just to keep it very simple. All right. Utilities, self-explanatory. Some places have utility bills. Some do not. It is what it is. Insurance, we're talking about business insurance, workman's comp,

disability insurance, all of that other employer burden stuff. If you're a franchise, I think that's pretty self-explanatory. You got to pay anywhere from, usually it's somewhere between 6% and 18% depending on the franchise system. And they'll tell you 5% when you're signing up, but there's a lot of hidden costs there. Operations and technology. If you're a franchise, this is covered under your franchise fees more times than not. But if you're an independent, this is all part of what we need to put in place. What scheduling software? I mean, thankfully you guys provide something free.

The next thing, other things that you have to keep in mind is how are you communicating with your team? Are you using a VoIP system so you can manage on call better? Are you using something, you know, some team management like a Slack or something similar to that? All of these things add up. Okay. $10 here, you know, $50 there. It all adds up very quickly. What sort of professional services are you putting in place? Are you hiring somebody like me? You know, or do you have an attorney to review all of your service agreements? Do you have an accountant? Do you have payroll processing? Do you have a bookkeeper? So these are some of your typical expenses.

Your cell phones. Please do not use your personal cell phone when you're running a home care agency. You will not get a night's sleep again the rest of your life. There are a ton of VoIP apps out there. You have Grasshopper, Nextiva, Zoom, Open Phone. The list goes on and on and on. There's hundreds of them. You buy it.

They cost you anywhere from $10 to $50 a month. You put an app on your phone and you can slide a little button that says, do not disturb when it's time for you to go to sleep. And they never have to know your personal phone number. Office staff payroll. That's not your money. Like I said in the beginning, you're either doing the work or you're paying someone to do the work.

You got a budget for that. And eventually, and just on a side note here, if you're doing the work yourself, you have to put in a part-timer as fast as humanly possible, somebody to cover about 15 to 20 hours a week, because while you're out marketing and recruiting, somebody needs to be in the office in case applicants walk in the door. Owner's salary, car payments, auto expenses, recruitment budget, caregiver retention budget. Please make sure you have something. All right. Credit cards for the business, not your personal. Please do not use it as a cash register.

Digital marketing expense, other advertising, promotional materials. You have a discretionary business development budget, which is things that you're going to use for active marketing, lunches, events, things like that. And then you have an incidental business development budget, which is, I will, when we talk about passive marketing here in a moment, this is what I'm going to be talking about most. A $2 cup of coffee will generate $100,000 worth of business. Make sure you have a budget for that. So then we're looking at events, networking, and sponsorship opportunities, any licensing fees, and organizational dues.

You take your bill rate, take your caregiver pay, figure out your gross margin, divide that by, remove all the amount, and you can divide that by the sum of your total monthly expenses. And you can figure out how many clients you're going to need or how many hours you need to bill in order to break even. If you are not calculating out your caregiver pay, you're really mismanaging your budget. That's's the rapid fire i totally put you on on uh the pitch here to share some of this in real time but you did awesome um if it's okay you know we'd love to put that up on f you.careswitch.com yeah no problem i'll send it to you guys after is one of the better budgets i've seen especially for newer agencies you don't want

to get chewing the weeds on expenses too soon, but you want to be realistic with yourself of, you know, these are the 25 things that are going out the door every week in my business. You need to be aware of those. So awesome budget. We'll share that after. We've got 10 minutes. I really want to get into passive marketing. Passive marketing. If you're in a licensed state, you got to be careful how you do this just because there's regulations. For example, you cannot hand out a business card in Florida while you're waiting for a license because it has to have the number at the bottom. Okay. No big deal there. So what are you doing in the meantime? And you're sitting there twiddling your thumbs trying to figure all of this out. So what are we doing? We need to, one, start researching. Okay? There are, on average, 50 facilities that you can market to within a 10-mile radius of any given office of home care anywhere in the country. You need to, if you're sitting there waiting for a license, you need to take something very simple, a notepad and a pen. Write out, everybody, call the place. Hey, who's the office manager? Oh, thank you. Do you know what their availability is? Okay, great. No, no, I justary, accountant in your area that caters to the senior population. We're going to talk about it a little bit more.

Don't forget your handymen, your realtors, your landscapers, you know, all of these, your scrappers, all of these people that nobody ever thinks about, they're the others. Okay. But if you find a core group of people that specifically cater to the senior population and you tell them, hey, listen, let me get your business card. I'm about to open up a home care agency. And if I get clients, I want to make sure they get somebody that can help them. All of this comes into play as passive marketing. You're getting your name out without directly advertising yourself. Another thing, if you go, I like Dunkin' Donuts. Okay, that's me. Other people like Starbucks. They both offer the same deal. Go on there and make sure you find how to send digital or emailed gift cards. $5 gift card. You can invite these people to a virtual cup of coffee. All right. And you're buying them the coffee when you invite them.

These cards, if they don't cash them in, the money goes right back to your bank account in 30 days. So it's not wasted money. All right. And if they use it more times than not, people will at least sit down and have a cup of coffee with you. You should be going to networking events and keeping your mouth shut. If you're in a licensed state, if you're not in a licensed state, you should be very loud about what you're getting ready to do. Okay. I don't have clients yet. I'm getting ready to open up. And here's the other thing. And this is the key thing here. You're never new.

Nobody trusts the new guy. Nobody will ever refer to the new guy. You have X amount of years experience. You're expanding into the vertical of healthcare, home care. Hey, I've been a nurse for the last 25 years. So I'm expanding my horizon and getting into the home care space. Now your agency is new, but they recognize you as an experienced professional. Hey, listen, yeah, you know, I've been involved in the home care space for the last 15 years. I'm expanding my horizons.

I'm moving into. Expansion is better than being new. People understand expansion. People associate new with not knowing what the hell you're doing. And that's what it comes down to. Remember, it's very simple. It's all about know, like, and trust. And get to know you, that's what you should be doing. Passive marketing means you're not actively asking for clients. You're just introducing yourself. People will like you or they won't. It doesn't really make a difference. That's you as an individual. But I got to tell you, don't get nervous about it, especially for all you introverts out there. I'm one of them. Don't overthink it. It takes a lot more for somebody to hate you than it does for them to like you. All right.

So if you have a personality that rubs people the wrong way, say less. Okay, that's all. Say less, smile more, walk away. That's it. All right. And trust. Trust is a hard thing to do.

And, you know, we can, later on, we can have a whole discussion on this. But there's a couple of fast ways to build trust. And one of the fastest ways, especially if you're trying to do some sort of sales and marketing, is to create predictability. If I show up to meet you on Monday at 10 o'clock in the morning, believe me, every Monday at 10 o'clock in the morning, I'm going to ask you for a new meeting. I'm going to show up at 10 a.m. until the point where the day I don't show up, you will sit there and go, oh, yeah, I really missed you last week.

I got used to talking to you every Monday morning. And that usually takes somewhere between three and six interactions to build the beginnings of trust if there's predictability in place. Because they will automatically associate your predictability and your reliability. They will transfer that to your caregivers. You got the worst caregivers in the world, but if they trust you, they'll trust them. Yeah. And that's my spiel. No, that was awesome. That was so good. I have one follow-up question on this topic. I'm thinking of, you know, an owner that's maybe three to six months in, they're catching some momentum. Passive marketing may start slipping down on their priority list. Where would you rank passive

marketing on a priority list? Passive marketing on somebody who's already in business, you're licensed, you're operating, and you're just trying to figure it out. Go visit your clients. Make sure you have an active and running list of every client you have in the hospital. Follow your clients. Do not lose track of them. And here is a way to use your caregivers to passively market on a very active level. If I have a client, Mrs. Jones, and she went to the hospital, and I know she's been admitted to the hospital, she's probably going to be there for about three or four days, and she's most likely going to end up in an XYZ skilled nursing facility for the next two weeks. I am going to send her the caregiver that she's used to having for four hours twice a week on me. This way, everybody in the facility sees that my caregiver is there. I will make sure my caregiver has an ID badge and has a t-shirt that has my

company name on it. T-shirt, scrubs, whatever your uniform policy is. And I will not send a caregiver that is known for her skillset. I will send a caregiver that is very loud and personable. I want them to be able to make sure that they can get everyone's attention, but she's so friendly that everybody falls in love with her. Okay? And that is the most active, passive marketing technique you can have. Build relationships

with these independent living facilities, their sales team. Use them to visit their residents when they go to the hospital under the pretense of, hey, listen, I'll put my caregiver in there for free. Okay. It doesn't matter. You write it off as a marketing expense. This way, neither of

us lose track of that client and they'll come back to your facility instead of to an assisted living facility. It will generally, again, no guarantees on anything I am saying. Okay. I don't guarantee anything, but it typically in my experience, using that simple method will increase your billable hours by about 20 to 25% month over month in the longterm because you'll never lose your client and you'll have access to new clients by making these arrangements with these facilities. Awesome. Awesome. That was not entirely what I was expecting.

But I just want to recap. You know, passive marketing is essential before you open your doors. But then turn your clients and your caregivers into your passive marketers as you go on. You know, spread that concept to them to continue that marketing because you've always got to be fueling the pipeline, you know, at three months, at six months, you may be taking off, but you know, in 24 months, where will you be if you stop marketing? You know, you just got to keep that, keep fueling the fire. Yes. I mean, I have clients that have been in business seven to 10 years doing three to $5 million. And by implementing these techniques, they've been able to double up their business in a year. Quality assurance at passive marketing. What it does is it exponentially increases your presence in your marketing sphere.

Julio, you are a wealth of knowledge and you're easy to talk to, which is why I love this. The last hour went by, you know, it feels like in just minutes. Oh, wow. I didn't even tell you about it a minute ago. I didn't realize it was that long. It's already been an hour. I just want to say thank you. And I want to encourage anyone that listens to this to reach out to Julio.

You know, a lot of what we covered, we've gone deep, but I think we're still scratching the surface on some of what he knows and what he can cover. I also just want to point out you are at a client's office right now. You are that dedicated in that you visit and help and coach in the office of your clients, which I think speaks volumes to the person that you are and the services that you offer. So thank you for giving us a couple of slivers of your time. We will post some of what you shared on screen today so that people can access that. And I just want to say, you know, thank you for your time. And we look forward to hearing more from you in the future. All right. Thank you for having me. I really appreciate it. Everyone's welcome to

join us next week. We will have Jen Ramos with us and we're going to cover, we're going to go deeper on some of these financial topics that we touched today, financial basics for new owners and financial horror stories and how not to become one. So join us next week for Home Care U, same day, same time. Thanks for joining us. 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.