Using the Numbers to Grow Your Business
What does your P&L have to do with your ability to grow your business?
The two big factors that affect your business growth are your caregiver recruiting and retention strategy and your sales and marketing process. How much you spend on recruiting and retention, and how you manage those processes will determine whether you have enough caregivers to grow your business.
How you spend your sales and marketing dollars, and how you manage your sales system will determine whether you are bringing in enough new clients.
Let me give you an example of how this can work. This past fall, we conducted in-person meetings of our four Home Care CEO Mastermind Groups. These are groups of ten to twelve similar sized companies who do not compete with one another. The groups come together regularly to share ideas, solve problems, and support one another. For our fall meetings, we gathered benchmarking data from each member company and displayed it on a spreadsheet. Each participant could see each company’s data.
Then we held in-depth conversations about where each company was spending money and what results they were getting. This led to more discussion around marketing techniques and recruitment methods. Our Mastermind Members are committed to our mantra, “What gets measures gets managed, what gets rewarded gets repeated.” Their discussions led to looking at other metrics they are tracking to learn more about their businesses, what works, and what doesn’t.
For example, they discussed their Employee Referral Programs, how much incentive they pay employees for caregiver referrals, and what their caregiver pipeline tracking looks like. They compared notes on how their own caregivers reacted to the bonus they receive for referring a friend to the company. Prior to this, we had conducted a “Best Caregiver Study”, and we learned what attracted the best caregivers to their company, what they like about working here, and why they stay. By comparing spending on recruiting and best caregiver feedback, members of the Mastermind can refine their processes and grow their businesses.
Using the Numbers to Improve Profitability
Most of us in the home care business are not here just for the money. We’re here because what we do makes a difference in the lives of our clients, their families, and our caregivers. However, as owners and key leaders, we all would like to make more money. Owners want to get an increased return on their investment of time, talent, and treasure in their business.
The Home Care Pulse Benchmarking Study gives us median numbers for home care companies in various categories. One of the new categories accounted for from 2019 on is the “Masters”. These are companies with revenue of $5 million or more. The median revenue for companies in the Master class was $6,627,000 Their net income from operations was 9.9%. That’s $656,073. What if you could improve your performance and earn net income of 15%? That’s another $317,577.
One Key Metric for improved Growth and Profitability
As the folks at Home Care Pulse like to say, “Success leaves clues.” When we looked at the fastest growing and most profitable companies in our mastermind groups, one of the clues that stands out is average hours per client per week. We have seen that the home care companies with the highest average hours per clients per week are also the faster growing companies and the more profitable companies.
So how do you grow average hours per client? We’ve searched for clues to this question. Some of it has to do with your referral sources. We’ve been able to track clients with higher hours per week and longer lengths of stay to what we call the “Trusted Advisors,” which are bank trust officers, geriatric care managers, elder law and estate attorneys, and financial advisors. We’ve also tracked higher hours per week to companies that offer disease-specific programs such as Alzheimer’s and Dementia.
Study the Benchmarks and Compare Your Own Data
It is very clear to us that the largest, fastest growing, and most profitable home care companies are led by owners and CEOs who understand their financial performance, who have clear metrics for measuring performance, and who can discuss with their peers ways to improve growth and increase profitability. These are leaders who use the benchmarking data to help understand how their business is doing. You can too!