Hi folks I’m Steve “The Hurricane.” And in for today’s episode, of A Drink With “The Hurricane.” We are going to discuss financial opportunities for you and your home care business in 2022.

All right so in the last episode, of A Drink With “The Hurricane” I was talking about the caregiver recruitment retention as part of the Home Care Evolution Business that I own, where we help home care business owners adapt to changing circumstances, transforming their business so they can thrive in the brave new world. With that being said, the different areas of our business, that we are going to be helping you to discuss and grow sales & marketing, operations, recruitment & retention, financial and exit planning.

Today we’re going to talk about financial. All right. And in the last episode I was talking about having multiple operations, multiple locations. Well in order to be able to do that, this is where you want to be able to grow and promote people from within. You heard me talk about the caregiver career path, where a caregiver can start out with you work several years as a caregiver, put it in their due diligence. They can evolve to become a caregiver mentor from a caregiver mentor. They can become a care coordinator, which is a field supervisor. They can eventually become a recruiter. They could become a scheduler. They could even become a marketing representative. And I did not say this in the last video, this person can also be developed into an executive director. And I want you to write that down an executive director.

You see, something that I’ve been helping a lot of the members of my Home Care Elite Academy, which are my top top clients that I work with very closely. I traveled to their offices. We get together for board meetings every two months, and I have conference calls and everything else. I helped my home care business owners and the members of the Home Care Lead Academy scale and open up multiple locations. Because as you’re growing your finances, as you’re growing your revenue, you’re going to start to reach a plateau. The plateau number that I find that most locations reached where it becomes very difficult to go beyond is 3000 billable hours per week. And I want you to write that down for yourself, 3000 billable hours per week. Once you get to that point, then it becomes very difficult depending on your market and your territory to get above that number.

So if I want to continue to scale and grow and make more revenue and have more multiple revenue streams, the best thing I can do is open up a satellite office in a new territory. Well how am I going to open up a satellite office in a new territory? It’s going to be a big investment. So this is why you have to have an 18%, 20% profit margin. If you think about what I’m saying, and you’re doing the math and you follow with me along all these Drink with “The Hurricanes” that I’ve been putting together here for your week in and week out, I’m talking about the 18 to 20% profit margin, 3000 billable hours, average hourly rate of $30 an hour. You should be generating close to $5 million a year in total annual revenue. If you are doing what I’m saying right now. So at $5 million, 20% of that $5 million is profit. That’s a million dollars in profit. You have the resources to be able to open up a satellite office somewhere I want to say about an hour’s drive away from your main office. So this way, there’s a little bit of an overlap between the two. There’s a recruiting overlaps that you can run out of your main office.

The reason why I mentioned an executive director at the very beginning here is ’cause the executive director should be the one man, one woman, contra guerrilla warrior. Who’s going to open this branch, this person, if you grew them from a caregiver all the way through following that career path that I discussed in the last video, then this person knows how to be a caregiver. This person knows how to recruit caregivers. This person knows how to schedule cases and staff them. This person knows how to do sales and marketing. They are the perfect person who you’ve grown probably five plus years, working with your organization to be able to go out and be a branch manager or an executive director of a satellite office. When this person goes out there, you’re still doing your billing. You’re still doing your staffing from your main hub location, but this person is going out there and they are going to be recruiting and marketing, and then assigning on new cases, recruiting, marketing, and signing on new cases, recruiting, marketing, and signing on new cases, repetitively again and again and again and again, eventually, they will start to staff their own cases and then they’ll start to bring on their own staff out of that location. That’s the business model in a nutshell, there’s a lot more to it. Don’t just take this video and go out there and do it. If you need help, I can help you. This is what we do with home care evolution. This is what we do with the home care lead academy. We’ll make it happen.

Here’s the financial aspect of it in order to get an executive director to be able to do this for you, you’re going to have to have what I call revenue share really profit share model. The profit share model is this person that you’ve now grown. You’re not going to give them a hefty fat salary because most executive directors yeah in order to keep them, because you got to think about it from this perspective, what do I mean by the order to keep them? If I have somebody that I groomed and grew along the way in order to keep that person loyal with me, they should be earning more money. Most executive directors think assisted living think skilled nursing facilities and other healthcare entities, good executive directors make six figure incomes. They usually have a 90 to a hundred, maybe even 120 plus thousand dollar base salary, plus commissions, revenue bonuses on top of that right? So again, remember what I’m saying here, let’s go all the way back. I’m going to retrace all the footsteps here.

You got a five plus million dollar business, 20% profit margin. You’re making a million dollars in profit every single year. You can afford to pay somebody 90,000, a hundred thousand base salary, right? This is part of this because this is a person who well-developed well-skilled why am I telling you to pay somebody so much? It’s real simple. This person has an executive director of this brand is going to be marketing right? As they’re marketing their seasoned other businesses they’re marketing to will more than likely try to poach your executive director and you don’t want that to happen. So you want this person to be well compensated so that they can’t be poached. They can’t be bought to go somewhere else, but they stay loyal to you. So they got a nice salary on top of that salary. You want to give them revenue share and the revenue share. And I learned this myself. I do this with my own staff. People say to me all the time, Steve, you have the best staff ever. If my staff were a quarter as productive and good as your staff, I’d be a multimillionaire. And I say, thank you.

Part of the reason why my staff is amazing is because they are amazing people. Another part of the reason why they’re amazing is because I interview well to find the best person and another reason. And a big part of it is I do revenue profit share with all of my staff here. Every quarter. I look at the profits in the business and I take a percentage of those profits. And I divvy it up amongst all of my staff.

I learned this many, many years ago from one of the richest men that I ever spent time with. Not going to say his name. He’s a private man, but this guy was money, money, money, money, money. I’ll never forget. I spoke to him on a phone and we were talking business on the phone. And I said, you know what? This is going well why don’t you hop on a plane tomorrow and come fly to New York. I’ll pick you up at the airport. I rented a hotel like a conference room. And we had an eight hour all day brainstorming session. And this man was a m… I mean I’ve never seen anything like this in my life, man has got a plane. The next day flew to New York city, spent eight hours with me. We had lunch and, and meals and stuff whatever got on the plane went back home that night. I’ve never seen anything like it. I learned so much from him and he learned so much from me ’cause he wanted to open up and start a franchise, right? He want to do a whole bunch of things. So it was amazing meeting that I had, but he and I were talking about the profit share model. And I was telling him what I was doing. And he told me how to perfect it.

The smartest entrepreneurs out there the Jeff Bezos of the world, the Mark Cubans, the Mr. Wonderful from the Shark Tank and all those other multi-million and multibillionaires that exists out there. The reason why they’re so wealthy is because they have multiple businesses bringing in multiple revenue streams and they share the profits of each of those individual businesses, with the person who is the head of each of their companies, the maximum number that you want to give away, ’cause you’re the ones funding this is 35%. That’s what I want you… that’s your ceiling. No more than 35%. Which makes sense because if you scale and grow this business, if you’re the one who invested, you’re the one who’s paying for it. You’re the one who’s doing. You’re the one who grew it and everything. You should keep 65% of the profits for yourself. But if you want somebody to go out there and run a business for you and manage it and treat that business, and you’re going to give this person full authority over this branch, they should have up to 35%, but they don’t start there. That’s your ceiling.

What you want to do is start them at like 10%. So they go out there and they grow. What does 10% profit mean? That means that if we have a hundred thousand dollar profit quarter, this person gets $10,000 as their bonus. And if you do that four times in a year, meaning you generated $400,000 in profit, $40,000 was given as bonuses to this executive director. This executive director made 90,000 as a base salary plus $40,000 in bonuses. They made $130,000 salary and they ran your branch. When they comes to a raise next year, don’t give them a raise in salary, give them a raise in percentage profit share, profit share.

You can even get into what I call Phantom stock, which means that if you were to eventually sell this business and I’ll talk about this in another episode I promise at some point during this year, if you were to sell this business, a percentage of what you sell this location for will be given as a bonus. It’s compensated, it’s taxed I know you don’t want to get into ownership. I don’t want to do ownership. I’d rather do taxes. Even though you pay a little bit more in taxes at some point, it’s better ’cause you don’t want to get into ownership. And then the K1 and all this other stuff. And then somebody, you know, you have a business partner. You don’t want to get into all of that.

Pay a little bit more when you exit your business and give this person a bonus salary. But what’s called Phantom stock. For as long as this person is working for you and with you. If you sell the company, they get a percentage of the cut of the money that you collect minus all your expenses associated with it. This is all stuff that I do with my clients when I helping them exit their business, because that’s how you build your organization. Another thing I’m going to touch on, and I know I’m spending a lot of time.

There’s a long episode here. I want to give you real good content. All right, you couldn’t take this executive director. And instead of having them go out and run a branch, they can be the manager or the executive director of your existing business. And then you go and you run the satellite, just throwing it out there as food for thought in other episodes, I’ll talk about that going forward. But as you can see folks, you know, I got hope I got the wheels turning I hope I got you thinking about what’s possible in scaling and growing your home care business. I hope I got you thinking about how you can evolve your home care business by adapting, transforming it and thrive going forward. This is everything that you need to blow away the competition