This is a series of posts which will cover the 9 steps of marketing and positioning your home care agency for real growth. In each step I will cover an important topic which I personally used in growing my home care agency between 2013 and 2018 before it was sold. This is the 1st post in these series. Please make sure to give me your feedback!
What could your company do with an extra $1 million? A lot, I bet. Whether you’d hire more staff, make some much-needed improvements, or give some deserving people a raise, I’m here to tell you not only it’s possible, but give you a step by step guide on how to do it!
The home care industry is exploding. The 85 year-old-plus population is projected to more than triple from 6 million in 2015 to 20 million in 2060 in the US, making home care one of the fastest-growing and most essential industries. I’ve had a front seat to this. I launched my home care company NuevaCare in 2013 and within 4 years it quickly grew into one of the fastest-growing private companies in the United States per Inc. 500 rankings in 2017. NuevaCare was acquired in 2018, leaving me with a lot of knowledge on how I can help other home care business owners to do the same and put me on my path to starting my next venture, Captiva8.
Ready to get started on increasing your agency’s revenue by up to $1,000,000 a year? Let’s dive in!
STEP 1 – Define what $1,000,000 means for your home care business.
$1,000,000 sounds big but it has a different meaning from agency to agency. The real meaning of $1M additional revenue will depend on the following questions:
- Where is your agency located?
- What services do you offer?
- How much do you charge for your services?
Let’s reverse engineer $1,000,000 so you understand what I mean. To do that we have to make a series of reasonable assumptions.
Let’s assume your agency offers both hourly and 24×7 coverage. Let’s also assume you charge:
- $28 an hour for your hourly service or,
- $600 per day for your 24×7 service.
(You can replace these numbers to come up with your own customized outcome. Some agencies charge more or less for these services. Plug your own numbers in. For example if you charge $300 for 24×7 service replace $600 in the above line with $300.)
Another reasonable and educated assumption we need to make is how long a client stays with your agency and how often do they use your services. For this example, let’s say:
- Your average hourly client stays with you for 6 months and they use you for about 40 hours a week and,
- Your average 24×7 client stays with you for 3 months.
Again, this could be different for different agencies. With these assumptions, we can look at your agency’s Life Time Value (LTV) of a client.
Here is the formula for calculating the LTV:
LTV for hourly clients = $28/hour X 40 hours/week X 4 weeks/month X 6 months = $26,880
LTV for 24×7 clients = $600/day X 30 days/moth X 3 months = $54,000
STEP 2 – How Many Clients Do You Need to Generate $1,000,000?
Now let’s calculate how many hourly and 24×7 clients it takes to generate $1,000,000 of additional revenue. Another assumption we have to make here is half of your revenue will come from hourly clients and another half from 24×7 clients. Feel free to change the percentages for your agency. Therefore;
$1,000,000 ÷ 2 = $500,000/year from hourly clients
$500,000 ÷ $26,880 = 18.6 hourly clients/year (let’s round it up to 19 clients)
$1,000,000 ÷ 2 = $500,000/year from 24×7 clients
$500,000 ÷ $54,000 = 9.2 24×7 clients/year (let’s round it down to 9 clients)
So, with a total of 19 hourly clients and 9 24×7 clients you will add $1,000,000 to your revenue! Meaning, over the next 12 months, you will need an additional 28 clients with the above combination to reach that goal. We will now break that down even more to figure out how many clients you need per month so we can come up with a plan and a strategy.
28 clients ¸ 12 months = 2.3 new clients per month.
You are perhaps asking how do I find .3 of a client? Here is the way you have to think about it. It’s a combination of hourly and 24×7 clients. You will roughly need 1.5 (19 hourly clients ÷12 weeks = 1.5) hourly clients and .75 24×7 clients (9 24×7 clients ÷ 12 weeks = .75) per month. Since you can’t get fractional clients, it’s easier to spread these numbers out over a 12-month period to see how this will actually work. You want to start slow at the beginning of this campaign and ramp it up towards the end. For example;
Table 1 – Number of new clients over a 12-month period
By reverse engineering $1,000,000 based on the above assumptions, you now know your goal is to bring in 19 hourly clients and 9 24×7 clients over a 12-month period. That’s so much easier to digest now than constantly thinking about $1,000,000. Further looking at the details on a monthly basis, you know your objective for month 1 of this campaign is actually no new clients since you are preparing the ground work for the campaign. However, your goal for month 2 is to bring in 1 new hourly client. Month 3, another new hourly client, month 4 one more new hourly client and your first 24×7 client for this campaign, and so on and so forth.
Going forward, I want you to completely forget the intimidating figure of $1,000,000. Don’t think about it ever again until the end of this guide. Again, feel free to plug in your own numbers in the above formulas to figure out what your monthly goal is in terms of number of clients. Let’s say your agency doesn’t even do 24×7 and only provides hourly. In that case you will need to bring in approximately 37 new hourly clients over 12 months. Play with these formulas and have fun.
Stay tuned for step 3. In step 3 we will cover the details of how many leads you will need to hit this goal.