Do you have a passion for helping people and an inherent desire to make other people's lives better? Then you'll fit right in with the health care industry. In recent years, health care has expanded beyond hospitals and long-term care facilities to include various home health care business models.
Home health care is a diverse and segmented industry that covers both skilled and non-medical home care services. The industry was worth over $102 billion in 2020 and is estimated to grow to nearly $148 billion by 2025. The U.S. Bureau of Labor Statistics (BLS) also projects a 34% increase in home health care services professions by 2029. Of course, the key driver for the industry's growth is the over 69 million baby boomers and their strong desire to live in their own homes as they age.
This article will provide steps to help you get started with your own business.
Drawing Up Your Business Plan
As mentioned, the home health care industry is broad and diverse. It covers both skilled and non-medical home health care services. You can choose to operate either type of home care business depending on your experience, education, and license.
Before you apply for a business license, make sure you have an answer to the following questions:
What Services Will You Offer?
A non-medical home care business focuses on helping the elderly and people with disabilities or special needs with their daily activities in a non-medical capacity. On the other hand, skilled nursing care consists of administering medications, post-surgery care, management of chronic conditions, and other tasks.
To provide medical services and other skilled home care like physical therapy, you'll need to invest time and effort into getting licensure or accreditation. You'll also need to set up your business to accept health insurance, Medicaid, or Medicare. To accept Medicare, your services must be overseen by a physician and a registered nurse.
For the reasons listed above, most small business owners don't pursue this business opportunity until they're ready to open a home health care agency or buy a home care franchise. We'll focus on non-medical home care services in this article.
Examples of non-medical services you can offer include:
- Assistance with activities of daily living: This service involves helping your clients with bathing, dressing, eating, and using the restroom.
- Companionship and cognitive stimulation: Some older adults appreciate having a companion to read to them or play games like chess or checkers.
- Housekeeping: This service may include meal preparation, cleaning, and doing dishes and laundry.
- Shopping/errands: You can offer to take your clients to doctor's appointments, go grocery shopping, attend community events, and complete other tasks.
- Respite care: You can offer respite care to family caregivers so that they can take some much-needed rest from providing full-time care. In addition, your services can give families peace of mind that a professional is filling in to care for their loved ones.
- Transport services: You may also choose to offer transportation assistance for older and disabled individuals. This service would need you to invest in a large vehicle with specialized equipment capable of transporting wheelchairs.
What's the Size of Your Market?
The home health care industry is in demand everywhere, but you'll need actual numbers related to the area or community in which you'd like to serve. These two websites are excellent tools to conduct your market research. You can learn more about your customer base by demographic and location.
How Much Are Your Startup Costs?
If you want to keep your startup costs low, you can decide to offer non-medical services only. This will allow you to narrow down your initial expenses to state licensing fees, a reliable vehicle, a mobile phone, and maybe a computer to manage the administrative side of your business. If you already own a car, a mobile phone, and a computer, you won't need much for startup costs.
However, if you want to offer transportation services for older adults and people with disabilities, you will need to get a large vehicle outfitted with specialized equipment to carry wheelchairs.
How Much Will You Charge?
The national average for home care is around $21 per hour, depending on the level of care required. You can charge either more or less than the national average for home care depending on your location and operating expenses. Your ongoing monthly costs will most likely include insurance, gas, cell phone bill, and supplies.
Look at the going rate where you live to calculate how much you'll charge. For example, in-home care costs an average of $15 per hour in Louisiana. In North Dakota, however, the median hourly rate for the same services is almost $28.
State Licensing Requirements
Getting a license is your next step in starting your home health care business. Non-medical home care licensing requirements vary by state. Some states may also require you to get a personal care certification or CPR/first aid training. Check with your local business licensing office for information on the specific permits and licenses you'll need.
The following are also resources to start your research:
- Small Business Administration (SBA) database
- Internal Revenue Services (IRS)
- Personal Care/Caregiver Training by State
- Department of Health
Starting and Growing Your Home Health Care Business
Now that you've figured out which services to offer, how much to charge, and who your clients will be, you are ready to start and grow your home care business. Learn more about your next steps below.
Establish Your Business Legally
You need to legally establish your business regardless of how small your operations are. You can typically choose to register your business as one of four legal structures: sole proprietorship, partnership (if you have a co-owner), limited liability company (LLC), or corporation. The business structure you choose affects how you file taxes and your personal liability in case of a lawsuit. Seek the advice of an attorney if you are not sure which legal structure to pursue.
If you choose to register as an LLC or a corporation, you'd also need to apply for an employer identification number (EIN). Check the IRS requirements here. You can just use your Social Security number for sole proprietorships and partnerships. You will need either an EIN or your Social Security number to open a business bank account.
In the process of registering your business, you'll also need a business name. If you operate a sole proprietorship, you can conduct business under your own name or register for a "doing business as" (DBA) name. A DBA name will allow you to operate under a business name other than your own name. For instance, you could name your company "Wendy Cares for You" instead of "Wendy Murphy."
What Else Would You Need for Your Home Health Care Business?
- Professional liability insurance: Professional liability insurance protects you against lawsuits like professional misconduct or negligence. Remember that you will still be responsible for paying all legal defense costs or settlement costs even if you're not at fault.
- Sales tax license: A sales tax license or state tax ID allows your business to collect sales tax. Some states require it for certain service-oriented companies so make sure to find out if you need one via the licensing office in your county or the secretary of state's office.
- Business bank account: A business bank account will not only present your business professionally but will also ensure that you are not mixing your personal finances with your business transactions. The separation of your personal money from your business income will come in handy at tax time. The IRS also recommends that you separate your business transactions from your personal expenses.
Ultimately, the success of your business venture depends on how much income you earn to continue offering your services and eventually grow your company - and it all begins with marketing your services. Therefore, your marketing strategy should focus on reaching your ideal clients.
Since your ideal clients are older adults and people with disabilities or special needs, your main strategy should be going out in the community to meet them in person. You'll probably benefit from a website and setting up your business on platforms like Google My Business.
Still, simple ways of promoting your business can also get you your first clients. Handing out flyers, posting an inexpensive ad in the local paper, and getting referrals are all effective marketing strategies if you reach the right audience. Creating a business page on social media platforms can connect you with your potential clients' caregivers and family members, as well.
To make your day-to-day operations run smoothly, you should have systems to accept different modes of payment and track your income and expenses. Here are some recommendations on what you need to set up before meeting with your first client:
- Payment options: You need to be able to accept different modes of payment. Your clients may not always have cash or know how to do an e-transfer. With PayPal and Square, you can use handheld terminals to easily accept debit and credit cards.
- Invoicing: Since you'll probably see your clients on a daily, weekly, or monthly basis, you can offer to invoice them once a week or once a month depending on your agreement. Create professional-looking and personalized invoices with Skynova's invoice template.
- Receipts: You can also use Skynova's receipt template to create customized receipts. They're downloadable and printable, or you can send them through email.
- Accounting: To keep track of your business expenses and income for tax purposes, try Skynova's all-in-one invoicing and accounting software. Our software keeps all of your receipts organized and backed up. You can also use it to generate financial reports like income statements and cash flow statements to see how your business is doing.
Run and Grow Your Home Health Care Business With Skynova
There's a lot that goes into building a business. First, you have to make sure you have the correct permits and licenses to operate legally. You also need to make sure you're complying with tax requirements. Then, there's insurance coverage and business bank accounts.
The list seems endless. Reduce the stress of running your business and save time with Skynova's software products and business templates. Let us be your partners in building and growing your business.