Careswitch | Home Care Industry FAQs

Q: How much should I pay the office staff in my home care agency?

While the circumstances of every agency are different, we've put together the most in-depth guide we're aware of—anywhere—to how much other agencies are paying and how this affects how much you should be paying.Breakdown of office staff rolesFirst, a quick note on roles/job titles. While the division of roles might look slightly different in every home care agency, the org chart will generally include some or all of these roles:1. Owner (may be active or non-active)2. Non-owner executives3. Admin (billing, reception. etc.)4. Scheduling/care coordinator5. HR/Recruitment6. Sales/marketing7. Field supervisors8. Clinicians (may or may not be the same as field supervisors)This are the roles we'll be providing compensation data for and generally speaking to.A quick note on our dat... Click to view the full answer from our home care industry expert.

Question 1

How can I implement performance-based compensation in my home care agency?

Ilya Vakhutinsky · Accepted Answer

First, let’s clarify a few things:When we say performance-based compensation, we’re not referring to an occasional sporadic reward or a holiday bonus—we’re referring to a formal plan in which employees can earn extra pay based on hitting specific metrics or goals.This is relatively new in home care; aside from marketers, less than 10% of agencies report paying their staff performance-based compensation. However, it’s beginning to take off and more industry leaders are calling for it to become a standard.Benefits of performance-based compensationWhy should agencies consider performance-based pay?It allows you to pay competitively without committing to pay scales that might be unsustainable if there’s a period where company goals aren’t being reachedIt helps focus employees on driving result... Click to view the full answer from our home care industry expert.

Question 2

How much should I pay the office staff in my home care agency?

Connor Kunz · Accepted Answer

While the circumstances of every agency are different, we&#x27;ve put together the most in-depth guide we&#x27;re aware of—anywhere—to how much other agencies are paying and how this affects how much you should be paying.Breakdown of office staff rolesFirst, a quick note on roles/job titles. While the division of roles might look slightly different in every home care agency, the org chart will generally include some or all of these roles:1. Owner (may be active or non-active)2. Non-owner executives3. Admin (billing, reception. etc.)4. Scheduling/care coordinator5. HR/Recruitment6. Sales/marketing7. Field supervisors8. Clinicians (may or may not be the same as field supervisors)This are the roles we&#x27;ll be providing compensation data for and generally speaking to.A quick note on our dat... Click to view the full answer from our home care industry expert.

Question 3

How much do home care agency owners earn?

Connor Kunz · Accepted Answer

While the amount a home care agency owner varies based on size of agency, how they&#x27;re compensated, and a variety of other factors, we have good data to help answer this question.The short answer: the average home care agency owner earns a salary of $101,400.By the way: we have this data thanks to our Home Care Compensation Report, which you can check out free here.Back to the question of how much home care owners earn. To start with, here&#x27;s a graph showing our current data on average salary for home care agency owners, split up by agency size (as measured by weekly billable hour ranges).Unknown block type "image", specify a component for it in the `components.types` optionIt&#x27;s also important to recognize there are various ways home care owners are paid, and not all are even ... Click to view the full answer from our home care industry expert.

Question 4

What basic financial statements should I be using for my home care agency and where can I get templates?

Mark Johnson · Accepted Answer

The main financial statements that Home Care business owners should be familiar with are:Profit & Loss account (P&L)Balance SheetBank reconciliationNote: Click here to download a spreadsheet with template P&L and Balance Sheets built for a home care agency.Within the P&L you should pay close attention to your:Gross Profit (GP) = Billable Sales-Caregiver wagesGross profit margin = GP/SalesNet Profit (NP) = GP-Administrative Expenses (what is left for the owner)Net Profit margin = NP/SalesKnowing what is going on in your P&L would allow you to know how well your business is doing and what actions you would need to take in order to improve your situation if needs be.In the Balance Sheet you want to ensure that your bank accounts in your accounting software are saying what ... Click to view the full answer from our home care industry expert.

Question 5

Are there any financial statements I might not be using that would give me a leg up in my home care agency's financial health?

Jennifer Ramos · Accepted Answer

Yes! A breakeven analysis and a Chart of Accounts are both valuable. Here are some templates of these statements built specifically for home care agencies.Download Chart of Accounts templateDownload Breakeven Spreadsheet template Click to view the full answer from our home care industry expert.

Question 6

Are there any value-adds home care owners overlook that can help maximize the value of their agency?

Jennifer Ramos · Accepted Answer

There are 9 areas to get right before you put your business on the market.1. Financial performanceConsider having audited financial statements prepared to give a buyer confidence in your bookkeeping. Your history of producing revenue and profit combined with the professionalism of your record keeping is critical. A buyer&#x27;s first barrier to entry are the business financials.Stop using your company as an ATM. Many business owners run trips and other perks through their business, but if you’re planning to sell, these treats will artificially depress your earnings, which will reduce the value of your company in the eyes of a buyer by much more than the value of the perks. Their job is to poke holes - and they will to decrease your asking price.Know and protect your margins: Understand if ... Click to view the full answer from our home care industry expert.

Question 7

What’s the biggest mistake home care owners make when preparing to sell an agency?

Jennifer Ramos · Accepted Answer

While a business owner may never know when a personal crisis will strike, they should always be ready to exit. The biggest mistake we see home care owners make is they begin the selling process when it’s too late to really prepare. Here are four suggestions that any business owner can start today, regardless of when they are looking to exit, whether 5, 10, or 20 years from now. You might want to take an annual day of reflection to consider the following:1. Consider Your Next ChapterTake some time to figure out the next phase of your life. For example, if you want some time to travel and relax before starting a new chapter, you may want to have a project always lined up. This can help remind you that the current business is only a chapter in your life.Here are some questions to get you star... Click to view the full answer from our home care industry expert.

Question 8

Should I apply for Employee Retention Credits and how do I know if my home care agency qualifies?

Angelo Spinola · Accepted Answer

The employee retention credit (“ERC”), enacted as part of the Coronavirus Aid, Relief and Economic Security Act, known as the CARES Act, is a fully refundable tax credit that can be as high as $26,000 per employee. Originally, the ERC was equal to 50% of up to $10,000 in wages paid to each employee before January 1, 2021. However, Congress has since extended and expanded the ERC through subsequent COVID-19 legislation.As a result of the new legislation, eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages paid to employees after December 31, 2020, through September 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021 for the first 3 calendar quarters. Thus, the ma... Click to view the full answer from our home care industry expert.

Question 9

What are the most important things a home care agency owner should be thinking about now if they want to sell in five years?

Jennifer Ramos · Accepted Answer

The decision to exit is only the first step in a series of critical decisions you as an owner must make. How you prepare yourself and the business for exit plays an important role in determining company value.Areas to focus on to prepare your exit:Your personal financial goalsPersonal Life and Social GoalsInvolvement after exitEmployees well-beingYour personal financial goalsMany business owners talk about their business like it’s one of their children. Ask virtually all parents, and they will state that they can’t assign value to their children. Similarly, some owners believe their business is invaluable and think of the highest number they will get offered for the business rather than the lowest they are likely to accept. I encourage you to define a “minimum number” as the lowest number ... Click to view the full answer from our home care industry expert.

Question 10

What's the best way to tell our clients that we're increasing our rates?

Adam Corcoran · Accepted Answer

Here's a template letter you can use to inform clients about a rate increase.You can copy and paste the text below or click here to download the letter as a Word Document. Beyond filling in the blank fields, we encourage you to personalize it as much as possible.Dear [client's name],On behalf of the team we want to thank you for being a valued client. We strive to provide the highest level of home care services in our area and we hope we are meeting your needs. is committed to growth and development in the home care industry and we are pleased to announce some exciting advancements within our agency.As you may know, our hiring process is rigorous and we aim to hire the most qualified Home Health Aides and Certified N... Click to view the full answer from our home care industry expert.

Question 11

If there's an economic recession this year, how will that impact my home care agency?

Connor Kunz · Accepted Answer

Short answer: it&#x27;ll put some pressure on you in terms of getting/keeping clients but it&#x27;s likely to have an overall net positive effect on your business because it would alleviate caregiver shortages.While there&#x27;s no one-size-fits-all answer, here are some facts and factors to consider.Another recession would almost certainly be easier on home care providers than the COVID-19 recession in 2020. That recession was an anomaly because it reduced demand while also reducing availability of workers - an effect that runs counter to "normal" recessions.According to Stephen Tweed, founder of Leading Home Care and the Home Care CEO Forum, "major economic upheaval has not had a significant impact on the home care industry," based on his experience working in home ca... Click to view the full answer from our home care industry expert.

Question 12

What's a good profit margin for a home care agency and how big a cut should I take as the owner?

Connor Kunz · Accepted Answer

Short answer: 36-50% gross profit margin and 10-15% owner&#x27;s cut—if you&#x27;re at the stage where you&#x27;re reliant on your business to support you financially and the business has gotten off the ground.Let&#x27;s give a little context for that since it varies from business to business.During a forum on this year&#x27;s Home Care Growth Summit I asked this question to two veteran home care leaders: Jeff Wiberg, CEO of Family Resource Home Care and a member of the Home Care Association of America board, and Tim Murray, Co-founder of Aware Senior Care.Here are some key points from what they told me:According to Tim, a good target to aim for is 50% gross profit margin and 15% owner&#x27;s cut (depending on how you calculate your finances and allocate profits, this may be near-synonymou... Click to view the full answer from our home care industry expert.

Question 13

How much does it cost to start a home care agency?

Connor Kunz · Accepted Answer

It&#x27;s actually crazy how much estimates on this vary; however, the general number sits around $60k for the initial capital investment. To give you an accurate idea of what to expect, I&#x27;ve pulled together as many estimates as I could find as well as my own experience working with home care agencies. Here are some estimates:Kenyon Home Care Consulting: $60k averageHome Care How-To: $45k minimum to start an independent agency or $35-48k for a franchisee license plus most of the cost of starting an independent agency.SeniorServiceBusiness.com: $900 if you&#x27;re willing to do things extremely cheaply and take the absolute lowest-cost options in every instance.(In my opinion, this number is inaccurate because you&#x27;ll quickly to have to add other overhead and infrastructure, but it... Click to view the full answer from our home care industry expert.

Question 14

What are the essential steps to starting a home care agency?

Connor Kunz · Accepted Answer

Our team created an in-depth guide to starting a home care agency covering even the minute, boring administrative stuff.Read the guide here. Click to view the full answer from our home care industry expert.

Question 15

Is there a spreadsheet I can download to easily calculate how much I need to charge to break even?

Julio Briones · Accepted Answer

There sure is. We have a breakeven spreadsheet with a detailed list of potential expenses. Enter in your expenses, caregiver pay, weekly hours per client, and billing rate, and immediately see how many clients you need to break even.This was put together by Julio Briones of Briones Consulting.Download the spreadsheet here. Click to view the full answer from our home care industry expert.

Home Care Owner FAQs