Home Care U - The 6 Most Dangerous Pitfalls For New Agencies (Julio Briones Pt. 1)

Episode Date: January 9, 2023

Starting a home care agency is never for the faint of heart, but it doesn't need to be as difficult as it sometimes is. Here are six things most likely to sink your agency in its early stages and what you can do about them.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 the first episode of Home Care U. Our topic today is the six biggest challenges for early stage home care agencies. We'll overview that in just a minute and introduce our guest.

But before we get to that, let's talk through some agenda items. So first off, Home Care U is both a live class and a podcast. If you're listening on the podcast, know that you can join the live event and ask questions by registering free at homecareu.careswitch.com. That's you as a university. This podcast is made by the team at CareSwitch. So a brief introduction to who we are. We're the first free home care agency management software. You can run your business for free on our base version and add things like full service payroll and premium team chat as you need them. You can learn more and get started at careswitch.com. One more thing before we get started,

I'll be hosting today's podcast. I do have a stutter. Sometimes it shows up and sometimes it doesn't. I mentioned this because if you hear a random pause or gap in the sound on today's podcast, it is not Zoom buffering. It is not Spotify buffering. It is me buffering. So with that, let's go ahead and get started. I guess first off, Julio, do you want to give us maybe like the 60 second overview of our topics today, what the six challenges are, and then also maybe just like a one to two minute overview of your background, your story, how you came to be here today. Thank you, Connor. All right. So I'm going to start, flip the things around a little bit.

My name is Julio Briones. I'm CEO of Prima's Consulting Group. We do home care strategy. And my story brought me back into the world of home care when my own father got sick. After a pause from the industry, I just saw his health decline. I'll say this until I'm blue in the face. I think he got such terrible care from the company and from the facility that we had put in place that he suffered unnecessarily. And that made my own personal mission, you know, kind of work within home care agencies, within these assisted living facilities to help them bring their service up to that high touch

level that it doesn't matter if it's a Medicaid client or if it's a private pay client, that every client gets the dignity they deserve. Okay. So that's a little bit of a little bit about my background and where I come from. Now doing that, I've been doing this for off and on, you know, for about 30 years of my life, about the last 20 years, almost consistently, to where home care has become my life, my mission, and everything I do. And along the way, it's allowed me to find some normal patterns, some key elements of what it is that most home care agencies struggle with when they're first getting started and it doesn't matter to me if you're a franchise or a independent mom-and-pop owner or even these companies owned by

large capital venture it's all the same the same issues everybody runs into problems either with you know licensing their passive marketing finding the right location, their capitalization, how much money you have to get started, your time management, or hiring, or in our case, bad hiring. And that's really what we're going to talk about briefly in this session today. Great. I'm excited. All that being said, just a quick reminder to those who are joining live to put your questions in the chat as we go here. We may address them as we're going through the topics or we may save them for the end, depending on the nature of the question and the specificity and everything. So let's go ahead and get started. How we'll do this is basically that Julio will run this, but I'll be watching the questions and I may stop to ask

questions from the chat or just follow up with questions that I have. I'm looking forward to learning from this and I hope everybody else is too. So Julio, take it away. All right. We're going to start with licensing because that's really the most general and quite frankly, the quickest topic for me. Licensing is going to vary dramatically from state to state where you are. Depending on the regulations, it could be as quick as 45 days, you're licensed and ready to go. And it doesn't matter if you're doing home care or skilled. Other states, you don't have to do anything at all.

You just hang your shingle out and say, hey, we're a private pay home care agency and we're ready to rock. And other states, I mean, I've seen a couple of states take as long as a year to two years to process the licensing. Not going to get into a lot of detail on that because quite frankly, that's not really this conversation, you know, just for time constraints. The next thing that really makes a home care agency struggle is now you've got your license, you're ready to go or you don't need one and you've hung out your shingle. So what happens then? You know, one of the biggest reasons that and this one really causes a problem. It's passive marketing.

What are you doing to introduce yourself? I'm not talking about going out there and kicking doors down, saying, while you're still in that planning stage, maybe you're waiting for the licensing. Maybe you're waiting to see, got your name, you got your LLC, and you're just getting some other stuff together. What are you doing to introduce yourself to the community? Some people, they just sit there, twiddle their thumbs, oh, I'm just waiting for licensing. And I hear this a lot, especially in states like Florida and Connecticut, where you need your license number on your marketing materials. I can't do anything. Well, that's not necessarily true. One of the things that people can do, and these are small steps to help

kind of move the process along, is you can start just talking to people, go to networking events. Hey, yeah, listen, I'm, I'm coming soon. You know, start, maybe do, do what's some, something I call network mapping to where you take, you're the people that you know, and you ride it out, but get a big whiteboard, you know, go rent or go rent a place at a, like a Regis or something at the library and rent it with a whiteboard and really go through this exercise. Who do you know? Who do they know? Who can they introduce you to?

There's one thing when, especially when it comes to passive marketing, networking is a big part of it. Remember, there's only three types of people in this world, especially when we're talking about in business. You have people who know you, people who you know, and people who know the people that you know. It's the old theory of six degrees of separation, or if you want to take it to the 90s game, six degrees to Kevin Bacon. But it's kind of the same thing. We're all connected. And if you have this understanding, you're developing your plan and you're developing these introductions, believe me, it'll put you ahead of the game. Instead of waiting four to six months to get those first private pay clients trickling in because you're doing that boot stomping and building it out, it can reduce your

time by as much as 45 days to 60 days. Yes. So I have a couple of questions on that. That's really good. So it sounds like if I'm understanding that correctly, when you talk about passive marketing, especially before you necessarily even are actually in business yet, you are certainly at least referring to making the introductions uh personally networking to figures in the community who will be valuable relationship-wise right I guess my question is kind of a uh two-parter here first are there additional forms of passive marketing that you think agencies should be invested in during that time especially and more specifically are there forms of kind of more general consumer-based passive marketing that

should be happening during that time or should that be saved until you can actually start to actively take clients that's a great question actually And the answer is yes to both parts. Okay. Yes, there are other things you can start doing, but it's really going to highly depend on the state that you're in. If you are the more strict the regulation, the more complicated passive marketing can become. So if you have a brand, if you're an established brand, like for example, let's say you buy into one of the larger franchise systems or even a smaller franchise system, it doesn't matter. All right. They have an established brand that they can take over the local introduction, social media, radio, things like that. It's just general brand awareness. That's passive marketing. You want

people to recognize the fact that you exist. Okay. And this is why networking is such a great tool in this. Now, as far as to the people, start building out an email list. Hey, coming soon. If you put up just a landing page on a webpage and it's coming soon, maybe put a survey on there. Get an idea as to what it is people are really wanting in your area. Here's a great example. This is a client that I worked with out of Georgia a couple of years ago during the height of COVID.

We set out a survey locally, and we found out that one of the big things that their client base was yearning for was that camaraderie of going back to religious services. Well, it turns out the agency owner, their brother-in-law was a pastor at one of the local churches so they provided this service to anyone who wanted to participate that was already part of their existing client base to where a sermon was done twice a week by this

pastor and it increased the value for his Also, it attracted new clients because now people word of mouth got around. So that passive type of marketing became active client growth, right? And this is what we're talking about when I'm talking about passive marketing. So if you know what the people want, now when you are able to open or you're fully licensed, you can sit there and now give the people what they want. Now, when you are able to open or you're fully licensed, you can sit there and now give the people what they want to improperly quote Margaret Thatcher, you know, let them eat cake. You know, it's that type of thing. That's kind of what you're trying to create. And, you know, building that email list, building that contact list, building a text message list in today's

world, that's very important. Younger generation, that's all they do is they want to hit their thumbs, you know. And these people are getting older and their parents are getting older. And they're the ones that are taking charge of this activity, of the responsibility of finding, putting care in place for their parents and grandparents. So all of these passive campaigns that are just information gathering, this is what's going to help move along your business in the right direction from a strategic point of view. Gotcha. That makes sense.

Yeah. So the next thing that agencies, newer agencies particularly, what they struggle with is picking a location, right? And I can hear it in the ether already. Oh, it's home care. Location doesn't matter. It actually plays a huge part in the long-term success of your agency. If you look at any service area or territory, again, irrelevant as to whether or not you are an independent or if you are a franchise system, you have an area, geographic location where you can successfully service clients. Within this area, you should be able to clearly identify a couple of key points. Number one, where do your clients live? That's big because if you don't know who your clients are, you don't know where they live, you're never going to be able to properly market to them. Understanding where your clients live, you also have to understand the next phase.

Who services your client? Where's the hospital? Most people live, depending on whether you're in an urban or a rural area, anywhere between 4.2 and 10.6 miles from any hospital at any given moment, whether it be a full hospital or an emergency room. So understanding the dynamics of this is going to help you properly plot out the location. Because now what you're doing is who are the ancillary services that provide support to these hospitals and these emergency rooms. So what do I mean by that? If you're looking at skilled nursing and we're looking at home health, all right, as businesses, as primary support functions

to the hospitals, we're talking about all of the post-acute service providers. They are typically within a quarter mile to 2.5 miles from any hospital. And they do this because the closer they are physically to the hospital, the higher the likely source that that hospital will become the feeder source for their business. So understanding where this is, and understanding where it is in relation, it's going to give you a better idea as to how to strategically plan out your marketing. Yeah. So a question with that real quick, if I'm hearing you correctly, it sounds like you're saying that the types of healthcare professionals that are likely to become some of your best referral sources might choose you partially depending on your geographic proximity to

them. Am I understanding that correctly? No, I'm saying that that plays a big role as to how you're going to market to your client base. See, your geographic location is going to play a bigger role on the second half of that, of this equation. All right. So the second half of this equation, and the reason you need to know the first part, all right, where all of these facilities are, is because of the second part, labor. Okay. If you cannot find caregivers, you cannot have a business. So this is where the mistake usually comes in. Many people, especially if it's their first home

care agency, will go for that pride of ownership office. Meaning, my office is right smack in the middle where all my clients live. Isn't it pretty? Don't I have the nice conference room? Things like that. When the reality is your clients will almost, I'm not going to say never, but they have a very low likelihood of physically walking into your office to sign up for services. I've been doing this for a lot of years and I'm not going to say it never happens because it does happen. It's just doesn't happen often, right? The highest likelihood and the biggest need for your office is going to say it never happens because it does happen. It just doesn't happen often. The highest likelihood and the biggest need for your office is going to be your caregivers. This is where they're going to come in to apply. This is where they're going to come in to do an orientation. And in order to pick the right location, you have to find a place that is going to be accessible

to your ideal caregiver. So if you're a Medicaid agency, the type of location that you're going to be accessible to your ideal caregiver. So if you're a Medicaid agency, the type of location that you're going to have has to be more towards the population that will service Medicaid clients. If you are a private pay agency, you need to gravitate towards that. So what are the elements we're going to look at? The top demographic criteria that differentiates a private pay versus a Medicaid is one is age. Typically speaking, if you're looking for a private pay caregiver, you're going to look for caregivers in that 35 to 54 age range. They're a little bit older. They tend to have older children or children that are more able to be on their own. They tend to be in more stable relationships. So not marriage, couples, partnership, whatever it is. And they tend to live in communities that are slightly higher on the household income bracket than your agencies, than your caregivers that work for Medicaid. All right. And this has to do with social positioning and a number of other factors

that I don't think we can get into all of the details on it right now, but it's just traditionally speaking, this is where we're going to find our demographic base. So depending on the clients you're trying to serve, that's where you want to be able to get to. Understanding where the client lives and who services the client, like which hospitals and everything, is going to increase your success rate for hiring. So if I know that my clients live here, okay, and I know my caregivers live here, I want an office somewhere in the middle, closer to the facilities that are already servicing my clients. Case in point, if I know that there is an assisted living that has a large volume of beds that are within, let's say, five miles from where all my clients live, but that's not really a neighborhood where my caregivers would live. I want to kind of figure out where they're getting their caregivers and put the office there because it becomes accessible and they're already traveling out there to work in these facilities. So they would have no issue going out there to work for the clients that

live in that general area. And that's where the strategy of location really plays a big part. There's a lot of things to look at and understanding the right location could improve your recruitment, your retention rates, and it can improve your ability to actively acquire clients. That makes lots of sense. I think one more follow-up question that I have here is like, can you go into more specifics on some of the day-to-day ways that having a conveniently located office is going to benefit like you on the staffing and caregiver side? Like what types of things is it going to make, you know, run more efficiently in your agency because it's convenient to your caregivers? One of the big problems that we have, and this is something that I get a lot of flack for, everybody says there's a caregiver

shortage. I disagree with that greatly. I believe that there are plenty of caregivers out there in the marketplace. I also believe that because of the way everything has come post-COVID, during COVID and post-COVID, it's just become harder to attract their attention. And one of the things that we have lost just in general, as an industry, as a society, is that personal touch with our caregivers. And that's where it becomes a key resource to have the right location. If you want to build that relationship with your caregivers, that's going to increase retention. That is going to allow you to provide a higher touch, a higher quality assurance program, mentorship, all this, where it becomes convenient for the caregiver to stop by the office, have a cup of coffee, say hi to you guys. That relationship is going to increase the retention rates. And let's take away the metric of 30-day retention for a little while. If you want to have a higher profit margin, you want to shoot for that 90 to 120-day retention. You want that to really get close to that 20, 25% rather than knowing that you're going to lose 50 to 70% of your caregivers within 30 days. And one of the ways to do that quickly and effectively is having your

caregivers go to your office, build real relationships with your caregivers and build actual communication, not a Zoom call, not a phone call, not a text message. And that interpersonal communication is what's going to greatly benefit you by having a place that is more accessible to your caregivers. Love it. All right. So moving on from the location, this one is a big one, especially for independents. Okay. Capitalization. How much money do you have? Look, the reality is, if you're a franchise home care agency and you don't know what you're doing, you've come in from another industry and you're trying to muddle your way through this, the fact is you're going to

spend, regardless of what the franchise brokers will tell you, the reality is you're going to spend between $150,000 and $250,000 in that operation before you become fully profitable. Because franchise systems are great, but they're limited in the amount of resources they can give you for training and everything. And I speak this from having many years having worked as a franchise consultant inside franchise systems, teaching new agency owners. They're limited. There's a lot of legalities there that you'll ask questions and their response is going to be contact your labor attorney, contact this attorney, find a consultant. Nothing wrong against them. It's just we're in a litigious society and it is what it is. So that's the capitalization piece. Now, if you're

a private and independent owner, you tend to have more industry knowledge or experience. So things can move a little bit quicker, but you're still going to run into the same capitalization problems. Many people, they just come in, they are underfunded, they don't know what to do. They're trying to throw spaghetti at the wall and see what sticks to the wall to try to keep it as PG as possible here. The other problem, especially in the private pay space, is we're going to talk about Medicaid and private pay when it comes to this problem in particular as two separate things. Private pay space, a lot of people are afraid to ask for a security deposit and they don't have a proper deposit strategy in order to grow their business. And having a

good deposit strategy when it comes to building a private pay agency, it's going to be life-changing because you're taking two weeks deposit. If you're billing every week after that, and this is the part a lot of people don't like, but you got to pay every two weeks. Now it keeps your cashflow in the positive and it allows you to manage your finances so that you need a smaller pool of separate from your management or your operations fund, and this account keeps growing, now you can go to the banks and ask for lines of credit. And once you have the lines of credit to cover your payroll, you'll pay much lower financing expenses than if you get debt-backed loans. And what this will end up doing is you can now show health of the business, manage your payroll, and at that point, start paying weekly rather than biweekly. That's the private pay side.

The capitalization issues with Medicaid, this is where this becomes a problem. And this is something I'm seeing with a number of clients right now that are trying to add private pay into their business because Medicaid is becoming a problem. Medicaid pays when they want. It's a government payer source. You could file your billing as often as you want. You can sit there and you have to wait and you're kind of hoping for the best. You're gritting your teeth. You've got payroll ready to go. And you're like, oh, is today the day that deposit is coming? Because depending on which provider you have, some of these can get into a lot of problems. A big issue happened a number of years ago, I believe it was in around

2013, 14. And it's happened a couple of times before then. For example, UnitedHealthcare got sued by the federal government because they were taking as long as 18 months to 30 months to pay one invoice. So they were holding these funds. And now how can you survive one to three years where you're legally bound to pay the people for their work, but without the money coming in, and it becomes a bigger challenge. So what tends to happen is a lot of these Medicaid companies, especially newer owners, they don't understand this. Then they get into trouble. They go and find these debt-backed loans, which are high interest. And I can't tell you over the years I've been doing healthcare consulting, how many agencies

I've had to transition their clients out because they had to file for bankruptcy because these loans were just breaking them. So capitalization, big problem. There's a couple of interesting solutions to that that we can talk about. But really, the biggest thing is the 30% rule. If you're doing Medicaid, 30% of company go from exclusively private pay to adding on Medicaid? Yes. Personally, I got to tell you, I don't like it. But that's just from my own experience. And if you are going to do it, I actually am working with two's extra complicated, as soon as you are able to get the second separate LLC, separate license, you're going to thank me for it down the road. Because

once you build a Medicaid business and a private pay business, even if you're using one to fund the other, your saleability, if you ever want to transition on, increases tremendously because you have some agencies out there like larger companies that exclusively do Medicaid and they do not want the aggravation of private pay. And so your business becomes more sellable that way. And the same thing works the other way. the way, you'll have a lot of capital venture companies out there that want to buy existing and successful and profitable private pay only agencies, and they do not want the oversight and overregulation that comes with Medicaid. So having separate entities is going to help you. But yeah, agencies do it just from a profitability perspective. You're looking at your average private pay, simple gross margin, 50%, adjusted gross after employer burden. you're looking at your average private pay, simple gross margin, 50%, adjusted gross after employer burden, you're looking at about 42% to 45% if run properly. And on Medicaid,

depending on the state and a number of other factors, you're looking at a national average of only 28% to 32% gross margin. So the profitability is just not there. You need a lot more volume on Medicaid in order to succeed or to survive in some cases. So yeah, you're very welcome. All right. So the next big thing that happens is time management. All right. From an ownership perspective, all right, improper time management will kill you. Okay. Think about this. If you're making as an owner, a hundred thousand a year, okay. Depending on where your business is at the time, you know, especially if you're trying to structure yourself as an LLC in order to work as an escort for tax purposes, please talk to your tax professional

about that. I am not one of those. All right. But however it is you're structured, many of the agencies that I work with, their goal is to pay themselves $100,000 a year, or they're already at a level where they can pay themselves $100,000 a year. Okay. That seems to be the number that's safe for the IRS. All right. So here's the thing. You're paying yourself about 50 bucks an hour. So if you're mismanaging your time and you're taking on additional responsibilities because you're not trusting, and we'll talk about this as the last one a little bit too, your hiring practices aren't where they need to be and you're just doing unnecessary stuff. All right. It's costing you anywhere between $50 and $90 an hour.

You have to put a dollar amount to your time. So this way, when you're tracking your activities throughout the day, every activity becomes profitable. Now, some of you are probably asking yourself, hey, listen, I'm brand new. It's just me and this part-timer that's my cousin's neighbor that's doing me a solid. Hey, look, I get it. It doesn't mean that you can't manage your time properly. It still means that you have to understand that every task that's got to be done is going to have some sort of time commitment to it. And business is very simple. You're either throwing

money at a problem or you're throwing time at a problem. All right. And it all translates into profits at the end of the day. So everything you're looking at, if you want to properly manage your time, you have to one, set some goals. Okay. And your goals need to be, they need to have some very key elements. They need to be realistic. Look, if it's not a realistic goal, you're wasting your time. Don't sit there and say, I just opened my business today, and in 90 days, I want to make $5 million a month. Not going to happen. They have to be achievable and within a reasonable amount of time.

So not only does your goal have to be something you can do, but it has to be something that you're willing to do the work to get there. I want a million-dollar agency, but I don't want to work more than 10 hours a week. Is it possible? At some point, it will be. Is it possible right now? Just kind of as a side question to interrupt here for a minute, in your experience,

when it comes to agencies that are, let's say in their first six months of operation, what is the average amount of time every week that you see the owner spending? I think it'd be useful for people to kind of have maybe some kind of even informal benchmark to see like, am I doing way more or way less than a lot of other people? That question is directly tied to the next question. Basically, it's like this, depending on how well capitalized you are to begin with, and how good your hiring practices are, is how much time you're going to do. Poorly capitalized company agencies that, you know, let's say you're brand new, you're trying to

figure this all out. And you are now at the point where you're still working a full-time job. Well, you're going to be spending maybe 20, 30 hours a week on your business because you need to sleep and eat at some point. All right. And your business is just going to see a lot of slow growth. Now, if you're properly capitalized to where you can dedicate all of those six months, even if you don't have a lot of help in the office, you're still going to be looking at about 100 hours a week to begin with. I mean, it's insane the amount of work. So that's where the next part of this that we're going to get to here momentarily is hiring and bad hiring. I mean, just to wrap up the time management thing really quickly, you know, you got to set your goals. You know, they got to be realistic. They got to be

achievable. You have to be willing to commit to them in order to have success. And the other side of it is you have to learn to prioritize. Everything is either important or urgent, whatever that scale may be. You have to understand something i tell my clients a lot of times that in the beginning makes them a little upset i tell them all the time hey listen your lack of planning is not my emergency and this is kind of what you have the mindset you have to have in business all right somebody else's lack of planning does not constitute an emergency for you. So if you have a caregiver that couldn't get to work on time, great, scramble, cover the case, figure it out. But you got to have some strong words with that caregiver or find somebody else that's more reliable. If a client decides to tell

you at the last minute, hey, listen, you know, oh, I forgot to tell you, I'm going to go see my, you know, my cousin in Albuquerque tomorrow and I don't need services for the next three days. Well, I hope you have a solid policy in place for last minute cancellations so that you're still billing that client. You know, things like this, all of it comes into play. What's urgent? What's not?

What's important? What's not? Plan accordingly and make it match your goals. Do you find that there are specific activities or types of activities that become the biggest black holes or time sucks for early stage agency owners? Yeah, it's all head trash. All of it. Every bit of it. The biggest problem that new agency owners face when it comes to time management is getting stuck into the loop of, oh my God, am I going to fail tomorrow? All right. That hands down, that mind space

of everything, what happens? Did I take the wrong decision? That takes up more time than anything else. Now, as far as physical activity, like day-to-day work, this is actually part of where I'm going with the hiring and the bad hiring piece right now. Hiring and timing of hiring is hands down the biggest killer of any business. And this one, whether you're brand new or you've been in business for 10 years, a bad hire can greatly impact your business. One of the things, and this is the biggest advice that if you get nothing else from this entire webinar, please remember this, fail quickly. Okay. Those two words need to be your mantra, especially when it comes to hiring. You have to give everybody a finite amount of time and be willing to walk away from them. So why is this important?

And this sounds like everything that goes against the, you know, the big, the big world that we're in now where everybody's trying to protect everybody else's feelings here. Here's the thing with this. Okay. If I am a brand new agency, I need to pick my battles. The very first person that I suggest any agency owner to hire is somebody to be in your office about 20 to 30 hours a week to handle a couple of different jobs. One, answering the phone. Number two, recruitment. That early stage.

Come in, fill out the application. Hey, you've done all of this. Let's follow up, make these phone calls. and early stage scheduling. This is their function. The reason is because as an owner, your goal needs to be to get those first five accounts as house accounts. These are house accounts that no matter how big your business gets, that you never pay a commission on. And you, as the owner, need to get comfortable with bringing those in. And your time needs to be out there, building these community relationships. And this is especially important if you are in the world of private pay.

You have to get out there. People got to know. They need to understand why you're doing this. They need to understand what you're doing. They need to understand what is your vision, your mission. They need to get to know, like, and trust you. I don't know your company. You're brand new in the area.

Hey, I'm sorry. I've lived under a rock and I've never heard of that franchise company that you claim to represent. Great. But who are you as a person? You are the face of your business. So you need to be able to go out there and market yourself. And this is irrelevant as to whether or not private pay or Medicaid. Private pay, it's much more important. Medicaid, it's not as important because there's a lot of other ways to get these clients. But these relationships will carry you a long way.

Medicaid, VA benefits, if that's something that you're working with, people need to trust that you're going to do a good job and they will only do that if they know you. So hiring that first person needs to be someone who's going to sit in the office and free up about 20 to 30 hours of your time every week so you can go out there and build your business. After a while, once you've got that person in place and you start getting more clients, then you bring in a full-time recruiter, somebody who's going to handle recruitment, compliance, and your internal human resources, your retention processes.

That's the next most important thing. Recruitment and marketing never stop. If you're focused on one thing and ignoring the other, your business is doomed to fail. And finally, once you get into the later stages of the early business, typically, again, you were talking about six months to nine months. Your goal is to hire somebody to go out there to either do high level of client services that becomes a passive marketing, like a semi-passive marketing approach, or a full-time active door kicker, boot stomping marketer that's going to go and build these relationships and grow your business exponentially. That's the problem with hiring. Now, a couple of things that I will tell you,

there's nothing wrong with hiring family as long as you can keep the relationship separate. I have seen this go both ways. I've seen very cohesive family units work together in agencies. In fact, one of the most successful clients I've ever worked with owned a $17 million a year private pay only agency. And it was a husband and wife. What they learned to do is separate the responsibilities. One did one set of tasks. The other one did the other set of tasks.

And they learned to keep business, business and home life, home life. All right. If you cannot do that, then don't hire your family. Because here's the thing, what are you going to do if you have your cousin working with you or a brother or sister, and they're not performing the task? At what point are you willing to separate your financial risk versus upsetting a family member because you have to terminate them. And if you're not comfortable with that as part of your day-to-day and you don't want to risk a family relationship going awry, don't do it. Because that, I got to tell you, hands down, that's the most common bad hiring decision I have ever seen in home care. People hire family and then they can't get rid of them when they're not performing. One just kind of thought that I have to interject there. I mean, it sounds like the thought that I've heard that's kind of similar to that is like,

don't hire family unless you're prepared to fire them if necessary. It sounds like that's a good recap of part of what you're saying, but then you also shouldn't hire them unless you can keep the work life and the relationship separate for as long with you. Yeah, that's absolutely on point. I've seen it go a number of different ways over the years. I have seen, like I used that one example, some families, they're very good about it and they're able to succeed and thrive in both. I have also seen husband and wife teams build such a successful business that they forgot about their relationship and ended up divorced anyway. Okay. Successful

business, bad divorce because it became purely business. So just as a general rule, I don't ever recommend, you know, family, you know, relationships, things like that. But I do understand why people do it. And as long as there are clear boundaries, then, you know, clear boundaries, clear separation and everything else. And like you said, you have to be prepared to fire your family if things don't go well. And that's, that's tough. I mean, I personally didn't have an issue with it. I'd fired my own brother one time, but, people don't always have an easy time with things like that.

So the question is, did he have an issue with it? Oh yeah. He didn't talk to me for like a year, but it's all right. He got over it. So a couple more questions with that. You mentioned that typically the first full-time person you should bring on is someone to do like the recruitment and the HR, all the stuff like that. Typically, is there a benchmark of size of agency that you would say this is when you should start thinking about that in terms of hours or revenue or number of clients? Well, I never look at an agency in terms of number of clients, because contrary to what other experts out there will tell you, the fact is that as much as we hate to admit it, there is a 5% luck factor in this business. Now, it doesn't mean you're going to get lucky walking in to get a referral. It doesn't mean anything like that. What I'm talking about the

luck factor is if I do every marketing effort properly, my digital campaigns are on point. I'm buying leads. I'm out there physically marketing. I can never control for the amount of hours that the client's going to request when I pick up the phone to do an intake. That is where the luck factor comes in. So you and I can achieve the same results. We'll have the same marketing efforts. We will have the same number of intakes coming in. We will have the same number of billable hours, but the number of clients I have could greatly differ from the number of clients you have. So I use as a benchmark, the total number of billable hours. And depending on your pricing and depending on your market, the first full-time person could come in as little, three to 500 billable hours a month. It depends on your

budget and your financial situation. You know, I've seen agencies that have such high overhead in different parts of the country because, you know, where they are rent high, salary expectations are high, everything else where they could not hire a full-time person till they were building almost 800,000 hours a month, which isn't much. I mean, believe it, that's really not very many hours. And you can achieve that with a small number of clients. The issue comes in at what are you really looking at when it comes to your needs? Time is money.

And this is what I was getting at from the beginning of this. You have to look at your needs. Even if it means you can't take a paycheck right away, it might become a more urgent need for you to bring in that extra person sooner rather than later. And sometimes your business can't even grow until you bring someone in. All right. So don't wait till you're ready. Don't wait till your business is ready. Wait until the business needs it. And that's it. And make the determination. When the tide comes in, all ships should rise. That makes a lot of sense. There is something you said right before that, that I want to dig into a little bit more too.

You talked about how there's that 5% luck factor. And you said the way that that shows up is in the number of hours that clients request when they contact you to sign up for services. I think there's kind of an argument against that of, well, that would depend on how you position your agency, your value proposition, how you market yourself, and are there types of clients who might be conducive to requesting longer shifts that you're able to appeal to? What's your thought around that? What's your response to that? Well, my response to that is actually really simple. Yes, you can position yourself a certain way. And yes, you can mitigate the luck factor. In the sense that if somebody calls telling me, well, I only need two-hour shower visits.

Okay, well, great. We don't do those. Problem solved. Now you're not taking those small cases. It depends on where you are in your agency is how you're going to handle that. In this particular conversation, we're specifically focusing on new agencies. And new agencies, the way you mitigate that is you take every case that comes in the door, but you set your pricing strategy to compensate for it. So if, let's say, I am a newer agency and I haven't built that relationship or that trust with the community

yet. So I'm relying more on, let's say, digital lead sources. I don't want to mention company names, but there's a lot of referral platforms out there. So if you're working with them and they're sending you leads and you're signing them up, those leads tend to average only about, instead of the 30 to 40 hours that an organic or referred client will bring in on average, they will only typically bring in nine to 12 hours a week. Okay. So how do you mitigate when you get somebody that's just looking online, they're trying to figure it out. Oh no, mom only needs a shower like twice a week.

Well, you create a strategy in your pricing that says, okay, fine. We have a 12 hour weekly minimum, three shifts per week, minimum four or five hours, whatever it is you want to do. And that's how you can do that. And if they insist, then you can just give them, and this is something I teach my clients all the time. You don't turn them away. What you do is you take your minimum shift that the dollar value that it's worth and you take 80 of that and that is the price of your shower visit so if you're doing a four hour minimum and you're in a place that 25 an hour is reasonable that means your four hour minimum shift would be a hundred. So your shower visit would be an $80 visit up to two hours.

That's it. So how does that mitigate the problem? Well, it allows you to get a caregiver to go, first of all, because you can offer more money. But it also offsets the amount that you would lose because, look, the reality is, especially if you're a newer agency, you have to keep this in mind. Old people do not get younger. They do not get healthier as time goes on. So if you're trying to increase your client base, you take what you can. You charge accordingly to offset the staffing problems. You grow your business and you work on your internal strategies to build up the client base. Now, as far as how do you offset this, like I said, the biggest way that people teach to eliminate the luck factor is to turn away clients. I've heard it spun a number of

different ways, but every consultant, that's what they tell you. Every one of these guys out there, oh, don't take the small places. If you can't find that 168-hour-a-week client, you don't need them. Well, I disagree. I greatly disagree. So is there a stage of growth that you think it makes sense to start to turn those clients down? And if so, how would you identify that? It has to do with your capacity. Now, I have clients I'm actively working with that are in the $3 to $5 million range that do not turn away a single client. I also have seen people that don't want to take a two-hour or four-hour client, even though they have a six-hour minimum. It really is your market is going to dictate that and not just your market, but your ability to have the tolerance to see the ebbs and flows in business. So if you have, for example,

a population in your area that wants a lot of smaller hours and you just are adamant, if you're willing to see the decline in your business until you find that ideal client, by all means, it's all about tolerance and all about your ability to mitigate risk internally. So I do have people that I've seen work. Normally, I wouldn't recommend any agency under $750,000 in revenue if you're private pay, under about 1.7, 1.8 million if you're Medicaid to do that. I just wouldn't recommend it. I'm not saying take every two-hour case that comes in. What I'm saying is think carefully about your pricing strategy and your overall internal processes so that you can grow those existing clients. I'll give an example about that. If I have a bunch of

two to four hour clients and I want to increase my revenue without paying a lot of extra commissions or paying out fees, I will use my scheduling team and my recruitment team to actively communicate with the clients, pay attention to certain key points, falls, medication, slee large your agency is, by anywhere between 20% and 40% annually without fail. Because if you're paying attention to the cues that they're giving you, even on the smaller cases, you can increase them an hour per shift, two hours per shift as time goes on and that accumulates as your client base grows. So that's how you mitigate it. But as I said, as far as just telling people not to take them, I've never been a fan. I like business growth.

And the fact is, if somebody wants only a two-hour shower visit, believe me, you could tell them it's $150, $200, and some of them will pay it just to not have strangers in their home. Solid advice. I haven't heard quite that take before. Like you said, people typically say, don't take less than this minimum number. And I like hearing your take on it of like, well, yeah, take those, especially at the beginning, but work it out so that they're profitable for you. I think that needs to be said more. Let's start wrapping things up here. We'll have the chance to dive into all of this stuff deeper next week.

But for the sake of today, is there anything else that you think would be useful for our listeners to hear before we go for today? If you're a brand new agency, you have to. You have to understand two activities that never stop. And please do not ever make this mistake, marketing and recruiting. Okay. A lot of times agencies will ramp up their marketing, not really get a lot of clients right away, and they'll slow down on recruiting and then fall flat and lose potential referral partners because they stopped recruiting and they can't get a caregiver to cover the case. Find something that has your availability. Even if you're sitting there and hearing crickets for the last month, you just have to keep people interested in applying. Same thing works the other way.

Just because you don't have a caregiver, don't turn down a case. You will find one. Believe me, you will find one. Great. Thanks for that. And I definitely second all of that. As we close here, just a few final reminders. So, I mean, first off, thanks again. This was great stuff. I learned a all of that. As we close here, just a few final reminders. So I mean,

first off, thanks again. This was great stuff. I learned a ton from it. We're seeing people in the chat saying that they learned a lot and really appreciated it. We are going to be back here, same time, same day, same place in the sense of the same link next week. So if you enjoyed today, please tune back in next week, where we'll be diving more deeply into these and similar topics. And then remember that this will be a weekly thing that will always be free. You're free to join. We'll do this every Wednesday at 3 p.m. Eastern, and we'll generally have the same guest on for two weeks in a row so that they can kind of do an overview the first week and then a deep dive into the same or similar topics the second week. I've been in home care

owner education initiatives for about five years. And this is one of the things, if not the thing, that I've been the most excited about. We have an incredible lineup of speakers coming for you and I'm super excited. Also, as a reminder, for those who are joining live, this is going to be a podcast that you can find on Apple Podcasts, Spotify, and wherever else you get your podcasts very soon. So look into that. We'll send out an email when that becomes available. And I think that's a wrap on this week. So thanks again. And we'll see you all again soon. Thank you all for having me. 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.