The Growth Exit Loop Why Every Homecare Agency Should Plan Like They’re Selling

Episode Transcript

Speaker 1 (00:03):
All right, good afternoon everybody, and welcome to Homecare Owner's Corner.
We are here for our weekly Facebook live. If those
of you who are watching the replay on YouTube or
any other social media platform you know, feel free to
down in the description box somewhere below there's a link
for you guys to join our group. So today we

(00:29):
actually have a pretty good topic in mind, something I've
been getting a lot a lot of questions about. So
today's video is the growth exit loop. Why every home
care agency should plan like they are selling. So the
reality is this, you know, no matter no matter what's

(00:50):
going on, whether you are just starting out your business
brand new, you're thinking about starting a homecare agency, or
you've been in business you know, three four, ten years,
fifteen years, and maybe you're considering franchising, or you're considering,
you know, going multi state, multilocation. Wherever you are in

(01:10):
the process, strategic planning has to be one of those
non negotiable things that you're doing. All right, So that
goes without question. If you put it on paper, okay,
the likelihood of you following being able to create and

(01:30):
follow this roadmap becomes that much greater. Okay. And if
you see me looking way forgive me. I have some
notes on here that I want to make sure that
I'm following so that I don't get sidetracked. So go ahead,
while you're watching, leave a comment below. Let us know
where you're watching from and what you're hoping to learn

(01:52):
about this. In this video, we are going to cover
five very specific topics. We're going to talk about, you know,
operating with valuation in mind. We are going to talk
about systemizing your processes. We're going to talking about one
of my favorite topics KPIs, and we're talking about how
you build a brand. So let us know which of

(02:15):
that you'd like to learn more on so we can
possibly plan some follow up videos and let us know
where you're watching from. If you are watching on YouTube,
please do not forget to subscribe to the channel, give
this video thumbs up and share it with someone else
that could potentially benefit from learning something from here. All right,

(02:37):
And if you do want to get a hold of us,
all our contact information is below, and you know, let's
go ahead and get started, all right. So there are
five major points that I think that we need to
discuss whenever we talk about strategic planning. Somewhere along. You know,

(02:58):
if you're watching this on YouTube, I'm going to post
a link to another video that we did much more
in depth on strategic planning, and you guys can go
ahead and find us on our Homecare Owner Supporter YouTube
channel and are soon to come, we're relaunching our podcast.
So the you know, the five points, like I already mentioned,

(03:22):
you know there they all have to deal with that.
No matter what's going along, you want to make sure
the end is in mind. Let me talk a little
bit about that first. Okay, So those of you that
have watched me or followed me at any for any
length of time, you'll know that I'm a big believer

(03:43):
in that one day you will exit your business. You know,
it's something that any business broker will tell you. There's
a couple of them that we've worked with as far
as our company goes. We used to have Jennifer Ramos
on regularly to come and talk to us about different
M and A topics or topics related to M and A.

(04:07):
And the fact is that no matter what, you are
going to exit your business at some point or another
worst case scenario, you know it's because you passed away,
but with proper planning, you can avoid a lot of
headaches and you could start building your business day one

(04:28):
so that you can either leave the business as an
inheritance or a legacy for your children. You can sell
to venture capital. Maybe your goal is to build this
you know, multi state monstrosity that's you know, two three
hundred locations, four hundred locations, or even to franchise out

(04:49):
and compete in that space. But either way, at some point,
whatever your trajectory is, you need to make sure that
you have a plan of what's going to happen and
next at least keep that in the back of your mind.
So let's say we are sitting around and we're talking about, Hey,

(05:09):
you know, I'd like to open a home care one day.
This is where ideally your strategic planning will start. If not,
it's no such thing as too late, all right. So
one of the things that we have to do is
point number one here, all right, you want to make
sure that from day one, or if you haven't done

(05:32):
this before and today's day one, then make today day one.
You want to operate with valuation in mind. What am
I going to be able to do to make decisions?
What decisions am I going to make as if I
was selling the business tomorrow. Okay, that's simple. See if

(05:55):
you plan as if you're selling the business tomorrow or
as you know, you now have a better financial discipline
and you have better positioning and better systems that you're
going to start creating right away before you've submitted your application,
before you've done anything else, you should really sit with

(06:19):
someone company like mine or other companies out there and
develop a strategic plan as to where things are going
to go. Preferably, you want a good, solid roadmap for
the next twelve to twenty four months built out. And
even if you are already established, let's say you're like
a lot of people that call us. You have an

(06:42):
idea where you want your business to go. You've already
been operating for a while, but you don't have a
solid business plan or solid strategic plan built out as
to where you want your business to ultimately end up being.
All right, So it having this mindset will just guide

(07:03):
your processes as you move along towards that end goal.
I'll tell you, I'll give you an example. Actually, if
somebody who I recently was dealing with and we're dealing
with them on a different process, here now they had started,
they got their home care license, and they didn't know

(07:24):
where to go. They weren't even sure if home care
was the right idea for them. So what we did
was we planned out with them a couple of different
options where should they move. So by putting this plan
in place, they followed the necessary steps. They weren't sure
if they wanted to go into private pay, into Medicaid,

(07:46):
into VA. They weren't sure, you know, if they even
if home care was really something that they were wanted
to concentrate on, or if they wanted to go into
home health. So because they there was a lot of
an certainty, our recommendation to them was to get your license,
go through the process, and then start applying for all

(08:09):
the Medicaid contracts, start applying for the VA contracts, get
all of these in place, and make sure that your
property credentialed with everyone. Make sure you have some systems
in place for workmen's comps, so on and so on
and so on. And they were in a state that
some of these were a little bit difficult to get

(08:30):
so over time, this is not a project that started overnight.
We were able to help them through get all the
credentialing done, they're now ready to go. They ran into
a family emergency and now plans changed. Home care was
no longer while running this business was no longer an option.

(08:53):
They had these family obligations to take care of. But
by starting the process with a strategic plan in mind,
they were able to get things in place to where
they were able to successfully sell what's called the shell
all right, so basically the license with all of these

(09:14):
agreements in place to another buyer. They maintained everything in
good standing and an investment because they did a lot
of the work themselves and with us an investment that
cost them about, you know, thirty to forty thousand dollars
in total. They they were able to turn around because

(09:35):
there were changes within the state and now things weren't
able to happen, and they were able to sell this
shell license for three hundred and fifty thousand dollars, which
gave them them funds they needed to be able to
handle their personal issues all right. That is an example
of when you're in the planning or pre planning stages,

(09:56):
why it could be beneficial to you to have a
good strategy plan in place, you know, and being coming
in with valuation in mind day one. Another company that
we worked with, This was about two and a half
years ago. Now, they they had a relatively successful agency.

(10:17):
They were they were doing about four and a half
five million dollars in revenue, and you know, they didn't
really know which way they wanted to go. They knew
they wanted to grow, they weren't quite sure. They were
an independent agency, so they didn't have a lot of
the restrictions of a of a franchise relationship. So they

(10:40):
they were able to put you know, we were able
to come in with them, help them start looking at
it from a perspective of one day they may sell.
Their plan was to actually cash out in about another
five years, so which, as we'll get to it towards
the story, it happened a little bit sooner than it affected.

(11:01):
So they went on a trajectory of getting you know,
some of the other things that we're going to talk
about in order, and they were able to very quickly
expand to about six different locations in about two and
a half years time that they were franking doing pretty good,
and then they sold to a VC company. They walked

(11:23):
away with a nice payday. I'm not going to disclose
any appliance information. But they were able to get themselves
into a position where they retired very happily. Okay, So
these are instances of where understanding that if you operate

(11:43):
with evaluation mindset from day one, it puts you into
a better position when the time comes that you have
to make these decisions. Okay, selling may not be right
for you right away. It may be something you see
twenty years from now, it may be something you see
ten years from now, but you've got to make sure
that things are in place, even if day one is

(12:05):
today and you've been operating for the last ten years,
all right, which brings us to our second point. You
want to make sure that everything, and I do absolutely
mean everything in your business has a system. You want
to make sure it's all properly systematized. You want to

(12:26):
make sure that ultimately your business can run without you.
So if you know the fact is this, a turnkey
business has a better multiplier than a business where somebody
has to come in and reinvent the wheel. If you
are just selling a client base, the value of that

(12:49):
client base is not as high as a fully functioning
business that you can just plug in your team and
run with it. Okay, So this means you want to
make sure you have a good foundation for a team,
even if you are, as I said, even if you're
in the planning stages, you want to make sure that

(13:10):
you understand at what point do you want to bring in,
you know, additional staff, Which staff is going to be
a priority to you. You want to make sure that
your staff is properly hired and vetted and trained, well compensated,
you know, or at least has a trajectory for increased

(13:30):
compensation through bonuses and performance. You want to make sure
that you have all of your SOPs in place. Those
are standard operating procedures for those that aren't aware of
what that is. You want to make sure that you
have the right tools. You know, we live in a
very highly technological time where there's a fantastic and phenomenal

(13:52):
amount of tools out there. You want to make sure
that you have the right ones in place. AI tools,
automation tool, CRM, scheduling software. You want to make sure
all of this is built into your business, not just
for the person for the purpose of scaling your business,

(14:13):
even though it does play a big role in then
we're going to do another video about how to scale
your business and get into multiple locations. And if you
actually look through the history of the videos here, we
do talk about, you know, how to move into multiple
territories in an older video, but it's if and when

(14:37):
you are ready to either sell or you're ready to go.
Let's say you just want to build your agency to
the point where you can go public, you know, and
put out an IPO. I mean, there's a number of
different things that can happen down the road, but if
you're building your business, you want to make sure that

(15:01):
part of your strategic plan includes systematizing as much as possible.
You want to have minimal amount of impact on your
business if key staff members leave, okay, and always keep
that in mind. So now that we're building our team,

(15:23):
we're starting to look at business from perspective of you know,
how how are we going to plan in order to exit?
You know, we're looking at it with that mindset. The
next thing we want to really consider and keep in
mind is we want to be sure that we are

(15:43):
able to track what matters. You know, you want to
make sure that you have a good set of financial
and operational KPIs right home care home health, hospice, nursing.
You know, people, these businesses, they grow, they have really

(16:08):
good ROI there's a lot of things that throughout that
business that can really generate a lot of wealth. But
here's the question that you have to ask yourself, how
do you show the business's value? Well, this is something
that a lot of agencies when we come in, like

(16:31):
when my team comes in and we start working with people,
one of the first things that we do is an
assessment on the business. Not evaluation, but just an actual
operational assessment. Because you'll be amazed how many people know,
for example, their top line revenue, they don't really know

(16:54):
much of what's going on underneath. And I'm not necessarily
talking about that new agency owner that's you know, somewhere
between you know, five hundred thousand and one and a
half million, that's just they're in the weeds, knee deep
in it. I'm also talking about agencies that are performing
at you know, five to seven million dollar level. They

(17:16):
know some of their numbers, but not enough of them
all right, So what what this means is you want
to make sure you're tracking numbers. You want to make
sure that you are tracking your margins, that you understand
what your client retention rates are, your caregiver retention rates,
your caregiver turnover? What is your billable hours? You know

(17:38):
what what's your payer mix? Where are the opportunities to grow?
Where are you know? What are what is your marketing
or business development team doing? Do you you know? Do
you know what your average cost per client is for
a client acquisition? Do you know what your revenue per

(17:59):
referral account is? How about getting more granular than that.
How much revenue is each individual referral relationship within these
accounts generating for you all of these things. I'm not
saying you have to be a numbers expert. You know,
We've talked about this in previous videos and I go
over this with my clients. You don't need to track everything,

(18:21):
but you do need to pick three to five key
metrics that will give you a solid picture for your business.
Figure out the ones that you struggle the most in
keeping up with the ones that you would really that
you know you really need to track and go from there. Also,

(18:43):
build out your KPIs in such a way and this
is again where systems come into play, and build everything
out in such a way that your team becomes accountable
and for self reporting, so you'll already know the numbers
the beginning until you build that trust that they're producing
the right numbers. But you want to make sure that

(19:05):
throughout the process that they are bringing this information to you,
that you're not chasing it down and going to them.
By them being self accountable attents, it has a higher
likelihood of them performing better because nobody wants to be
the underperformer. Okay, these you know, when it comes to

(19:28):
an M and a perspective, you know, you want to
make sure that these potential future buyers have the confidence
in the stability and growth potential of the business. You know,
we we do in our company a lot of non
traditional due diligence and we will look at these numbers
when we're giving the reports of potential buyers and well,

(19:52):
whatever we don't see, we know how to generate based on,
you know whatever, Depending on the data that the former
owner is tracking, they can make significant differences in as
a seller, how much money you're going to receive and
as a buyer, I mean, if you're aware of this,
it could save you, you know, in some cases tens of

(20:12):
thousands of dollars in the valuation and you know, negotiating
the purchase price. So number four, you want to make
sure that from as early on as possible that you
are building a brand, not just a business. Okay. You

(20:34):
want to make sure that you have a brand that
is trusted, that is recognizable in your community, that you
know that it has a solid reputation. Like so this
is this is what what what I mean by that.
If you're an individual business owner and you you're trying

(20:59):
to build a brand out or you're trying to build
your business, you're going to go out and you're going
to build relationships, You're going to talk to people, and
you can potentially be very successful, all right there. The
where as opposed to if you purchase a franchise, the franchise,
now you're buying part of that name recognition and brand

(21:20):
recognition and everything else. So how do you, as an
individual business owner create that. Well, you want to make
sure that again you have solid community relationships, but you
also want to make sure that you have documented brand assets,
know your color codes for printing and marketing. No, you know,

(21:41):
create a unique brand voice. What makes you special? What
is your story? What is the company's story? How did X,
Y and Z home care, X, Y and Z skilled Nursing,
How did it come about and what is its role
in the community. You want to make sure that you
have what's called a marketing playbook where you have all

(22:04):
of these questions that are ready to answer, like what
sets you apart, how do you handle client call outs?
How do you handle client complaints if you're a home
care agency, how do you work with a family when
you have somebody who just doesn't want to accept care?
All of these things, they all become part of the

(22:25):
brand image. And if you're in a position where you
want to sell to another individual owner, that brand image
is something that you know. That brand image becomes something
that brings additional value to the business. So having a good,
strong brand, not just a business, that means the business

(22:48):
the agency built the community relationships, not just you as
an owner. So it makes the transition process even easier
to work with. All Right, So if you are a
multi unit, multi state organization, now you become that much
more attractive to venture capital, large investments groups. You're even

(23:13):
to franchisors that are looking to buy additional brands because
maybe they're running out of territory in certain areas. You know,
so these are things that having these that having having
in place really can benefit you. So you know, let's
let's just go go over this really quickly, just as

(23:35):
a recap. You want to make sure that day one,
even if day one is today and you've been in
business for a while, but you want to operate with
valuation in mind from day one. You also want to
systematize everything, get your business to a point where it
can run without you, even if you're just on your

(23:58):
kitchen table. You want to create that plan. What does
that look like, what staff will you need, and what
milestones or trigger events will allow you to bring on
additional staff. Because your end goal should be to work
on developing the business, not working on the day to day.

(24:19):
You want to be sure that you have a solid
list of KPIs both financial and operational, because what you
want to do is make sure you are tracking what
really matters. Because once you have all of your operations
in place, simultaneously, you want to make sure that you
are building a brand, not just a local mom and pop.

(24:39):
You want something that carries the weight of reputation and
trust in your community. And this brings us to the
final point of today. You want to make sure that
you have strategic growth pathways right even if you're not
ready to take them yet. So if your goal is

(25:04):
down the road to multi unit or to franchise, or
to do multi state corporate entity, you know, whatever it is,
you want to make sure that you have this plan,
the solid foundation of your original office. You want to
make sure that you have that You're well positioned, you

(25:27):
have everything properly documented, you have everything, all your KPI
is in place, and you have at least an idea
as to where you want to go. Don't think with greed.
Think think strategically, I'm going to make a billion dollars.
Well maybe maybe not. Your goal may be maybe to

(25:50):
do that, but you want to position yourself for that
so that when the time comes, you have that opportunity.
So let's take a look what I mean by that.
You're if you're a brand new think of your company name.
What does it say? You know, my company's name Briona's
Consulting Group. That's not a great name to sell because

(26:12):
not everybody's not you know, got the name Briona's. But
you have other companies like you know, let's say you know,
home Helpers, Senior Helpers, you know, some of these are
recognizable franchises, you know, Visiting Angels, Beata. They're all recognizable
because they started looking at it from building their brand

(26:33):
from day one. Everything from the foundation of the initial
location was with the mindset of growth and expansion, right,
And when you do that and you have all of
your ducks in a row in that initial location, everything
becomes repeatable. Then it's just a matter of understanding the

(26:57):
process to grow to multilocation if that's your objective, to
start looking at multi state expansion. Even if you are
going to grow through acquisition, which is a whole different
topic from this, but if you're part of your strategic
plan is to ultimately grow through acquisition buy out other
companies for a number of different reasons, you will have

(27:20):
your SOPs, your KPIs, all of this in place, and
it makes the transition being able to absorb that other
entity and their methods and people into your entity a
lot easier. So you know, keep so here. Those are
just some key points to keep in mind, all right,

(27:42):
whether you have selling is on your radar or not,
having a strategic plan should be even if you're just
at the early stages where you're just applying for licensing
and you're thinking about, you know, where where do you
see your business going? You know, there's plenty of videos
that I have on here and you can always find

(28:06):
different interviews and things that we've done at different location.
But always make sure that you're when you're sitting down
to do it. It's a worthwhile investment in time or
if you need a company like ours to help you
come up with a strategic plan. It's worth the time
investment and the financial investment in order to have this

(28:28):
built out, just because, like I said, you know, with
a good map, you won't ever get lost. Okay, So
here that's it for today. If anybody's got any questions,
feel free to leave them in the comment below, and
if you're watching the replay on YouTube, by all means,

(28:49):
please leave us alike, subscribe forget to subscribe to the
channel if you haven't already, and you know, leave us
a comment below. Let us know your thoughts. Where are
you in the process, Are you in the early stages,
are you going into multi unit or are you at
the point where you're gonna consider selling sometime in the
near future. You know, things to think about, things to

(29:12):
keep in mind. Best of luck and you know we'll
talk another talk to you next week.