The nation’s population is aging: Over the next 40 years, the number of U.S. citizens aged 65 and older will more than double to 80 million. Many seniors also stay at home, driving an expected 3.8% growth in the home care industry in 2020. With these numbers in mind, it’s not surprising to see more people looking into how to start their own home care business.
Home care can be your opportunity to build a solid or even lucrative business, but how do you get your company off the ground? This in-depth guide will explore how to start a home care business, from planning and funding to building a strong customer base.
The following steps will help you start your home care business:
Writing a business plan is a good first step to building your home care company. Detail the services you’ll offer, how the business can become profitable, and how you plan to scale.
In addition to listing measurable, SMART goals, examine your area’s competitors and craft a marketing plan that can get you on the radar of seniors and their families.
Note the background, skills, and training of the staff and managers you’ll employ. For a home health care agency, list which business licenses you have or need to apply for, as well as how your business will comply with federal home care regulations while meeting and exceeding customer expectations.
Overall, creating a business plan is a crucial step that will help you avoid common pitfalls while setting you up for success as you start your business.
A foundational startup decision is how to structure the company, such as a sole proprietorship or a limited liability company (LLC).
LLCs can provide a level of personal asset protection for business owners, such as if someone sues the business. If you start an LLC, you need to register it with the state and pay a filing fee, or you can work with a business formation company to streamline the process.
An accountant can also help you understand business taxes and structuring.
Consider names that are easy to understand, and perhaps make reference to the services you provide. States often don’t allow different businesses to have the same name, so as you create a name for your LLC, see if another business in the state has already registered it. To check on the availability of a name, go to your local secretary of state website and conduct a name search.
When selecting home care names, also consider reserving social media accounts, registering a domain name, and using a DIY website builder (such as WordPress, Wix, or Squarespace) to get your site up and running.
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Before you start looking for seniors to care for, register your business with the state. If you plan to do this yourself, you’ll need to file LLC formation paperwork with the state and pay a filing fee. A business formation company can also do this for you.
Your LLC will also need an employer identification number (EIN) from the IRS. You’ll use your EIN to file taxes, open small business bank accounts, apply for a bank loan, and pay employees. In just a few minutes, you can apply for an EIN online.
If your home care business will be billing Medicare or Medicaid, you’ll need to obtain the right certifications. Plan accordingly though, as certification and accreditation processes can take up to a year.
Some states may require home care business owners and staff to pass a jurisprudence exam, which tests your knowledge of state laws and rules.
To handle everything from injury claims to property damage, also consider talking with a local insurance agent to ensure your business has the right liability and other insurance coverage.
Startup costs vary by services offered and licenses required. If your business model offers non-medical in-home care, you can expect lower startup requirements. With a car, cell phone, laptop, and some marketing money, you could be in business for under $900.
For a licensed business or one offering health care services, startup costs can range as follows:
Initial and ongoing costs may include licensure, regulation compliance, hiring, procuring equipment, leasing commercial space, taxes, and payroll.
Private loans may be available from commercial banks, or friends and family. A solid business plan can help backers understand that you’ve done your homework. If you’re receiving funds from individuals, put the terms in writing so everyone is on the same page.
Business credit cards can be another funding option, but be careful about payments and high interest rates. You may consider putting more expensive medical equipment on a credit card so you can pay it off over time.
Federal grants for entrepreneurs may be available. Search Grants.gov for programs. Federal loans through the Small Business Administration (SBA) are an option, too.
Venture capital or angel investors can also back your home care business in exchange for an ownership stake. Venture capital powerhouses like General Catalyst and Andreessen Horowitz are upping their investments in this sector.
The equipment needed for a home care business depends on the services offered. If you plan to start a small, companionship-based business, you typically don’t need many supplies. You may want to invest in some games or activities, basic first aid and sanitation supplies, and maybe some basic mobility equipment, such as walkers or canes.
If you plan to offer more advanced services through a medical-based home care business, the full list of equipment grows and can become more technical. Your business may have to procure medication administration equipment, test kits, meters and monitors, respiratory equipment, feeding equipment, and a hospital bed. You may also need an office space, be it at home or elsewhere, to run your operation.
Starting your home care business is a big first step, but you also need to find clients and appeal to potential customers. Who is your target market, and what online, broadcast, or print advertising can reach them?
For example, 62% of online seniors use Facebook. Consider setting up a Facebook Page for your business and regularly posting to it. Print remains useful, too: 46% of older Americans read traditional newspapers, so newspaper ads may be a good avenue for building customer awareness.
While setting up social channels, it’s a good idea to follow accounts and join groups that pertain to the industry, especially in your area. You could follow the local Social Security office, and join groups related to topics such as senior care, aging in place, and hospice care.
Your business may also gain visibility by being set up and optimized in online directories such as Google My Business and YellowPages.
Home care covers many different services, and you can choose which ones your business offers. A non-medical home care agency could offer meal preparation, home assistance, and companionship, whereas in a skilled home health care business, trained medical staff provide personal care for individuals in their residences.
An industry background is helpful but not necessarily essential. With a positive attitude, a drive to help others, and a willingness to learn, a caregiver can become a successful home care business owner.
Profit potential is there, too. Home care businesses have generated $96.9 billion in revenues over the past five years. With aging populations expected to drive those earnings higher, home care can be a great business opportunity.
There are a number of different kinds of home care businesses that you can start, such as:
Opening a home care franchise is also an option. Home health care franchises are some of the most profitable in the U.S, with more than 60 franchise brands offering startup opportunities.
Starting a home care business can be a rewarding and lucrative business opportunity. You can start small, base the company out of your home, and work one-on-one with a few clients. As you learn and grow, you can take on more clients, hire staff, and scale into other locations and services.
As more and more American seniors seek out home care, you could be one of the entrepreneurs ready to help through your own home care business.
Business formation starts at $0 + state fee
Kansas, Missouri, Delaware, New York, Rhode Island, South Dakota and the District of Columbia can all be good places to base your home care business. You can incorporate your business yourself by filing state-specific LLC formation documents and paying a filing fee, or a business formation company can file the paperwork for you.
While there is a need for home care businesses, finding clients can be a challenge. You’ll need some DIY marketing skills and a small advertising budget to get the word out. Aside from marketing, if you plan to start a business that offers medical assistance or want to take payment through Medicaid or Medicare, the licensing requirements and procedures are extensive.
There are non-government resources that can help your home care business. Here’s a list of funding resources to review.
An independent home care agency that’s 3-5 years old can generate about $2 million in annual revenue, with the owner making about $270,000 a year.
You can start a home care business with just a few essentials including a website, car, and laptop. You can start caring for people yourself and grow the business over time.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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