Most people in the United States think that their largest asset is their home. However, business owners should consider their business as their largest asset. Business ownership offers much more than the opportunity to earn income and secure a financial future. A successful business itself is an asset that can offer value in many other ways.
Learn more about how to leverage your home care business as an asset.
How a Business Is an Asset
Owning your own business isn’t just about making your own rules, setting your own schedule, or increasing your income potential. Much like a home, a business can accrue or lose value during its lifetime. Hopefully, with a solid business plan, you can grow your senior care business and increase profits long-term.
When the time is right, you can sell it to make a large profit. You can put this money toward retirement, giving you financial peace of mind. Or you can choose not to sell and instead pass the asset down to family.
Likewise, you could also choose to maintain ownership while delegating responsibilities to trusted employees during retirement. This allows you to have a form of passive income to support them through retirement years.
But how much will your business be worth?
Businesses are measured on revenue and the total value of assets, like equipment, furniture and office supplies, or inventory. However, potential buyers may also consider price-to-earnings (P/E) ratio. This ratio compares a company’s share price to its earnings per share. It is commonly used to determine the relative value of a company, and it can be used to compare multiple companies — even in different industries.
Another factor to consider is your cash-flow analysis. This takes into account your business’s annual cash flow and forecasts future cash flow. Therefore, the best way to build value in your business is steady and maintained growth.
If you aren’t a business owner yet, it can be difficult to determine if a franchise opportunity could become the asset you’re hoping for. You may want to consider the past and current financial status of the companies you are evaluating. The franchisor’s FDD (Franchise Disclosure Document) contains financial performance information. While that information may not be an exact indication of your business’s potential value, it’s a great place to start making estimations.
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How To Turn Your Franchise Business into a Strong Asset
Businesses aren’t worth thousands or millions over night — especially not new small business. Initially, you will start off in the red after taking into account your initial investment and start-up costs.
It will take time for your business to become an established and reliable asset for you and your family. However, here are some tips to help you increase the value of your home care business and minimize financial risk.
1. Diversify Your Client Pool
In the home care industry, franchise owners should maintain a steady pool of clients. These clients should have varied hours, from a few hours a week to 24/7 cases. By having a diverse customer base, owners can reduce their risk of taking a large hit if one or even several clients discontinue services.
For example, if your business relied on several 24/7 cases, and some of those clients passed away, your business could be in jeopardy. However, if you can balance those 24/7 clients with other seniors with shorter hours, you can mitigate risk.
Ultimately, this diversification strategy can help improve cash flow while also maintaining consistent hours for your caregivers.
2. Continually Hire Reliable Caregivers
Additionally, home care franchise owners must have enough caregivers to meet their shifts. If you have a large pool of clients but you can’t fill your shifts, then you won’t be able to increase your revenue.
We recommend that owners continually look for qualified caregivers to add to their team. You should also strive to build relationships with the caregivers you’ve already hired to build trust and maintain loyalty. This can help give you a competitive advantage over other agencies in your area.
3. Plan for Growth
To increase the value of your business, it’s important to create a plan while sticking to your franchisor's business model. There may be areas in which you can improve your office's process or efficiency to help you maintain caregivers or attract more clients. Evaluate the current state of your business and look for ways to improve.
At Caring Senior Service, we help our franchise owners with growth planning so they can identify areas of improvement or expansion to take their business to the next level. Perhaps your next step is to focus on a city in your existing territory. Maybe you need to focus on having more efficient processes before you expand. Our experts can help owners identify growth opportunities so that you can build your business into a strong asset.
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Why Now Is the Time To Create an Asset
You may think that you have time to build your portfolio or buffer your savings account. However, many are facing unforeseen threats to their financial future and retirement. Market fluctuations or a recession could negatively impact your financial situation down the road. Or changes in an employer’s pension plan could eliminate or reduce income during retirement.
Americans can no longer count on their employer’s retirement plans to build their assets to prepare for retirement. Instead, it’s time to consider other options to secure finances, like starting your own business.
With the senior population booming, the home care industry will grow as more seniors choose to age in place. Not only does this offer franchise owners the opportunity to build a successful business, but it also means that the resale market for healthcare-related businesses is robust. Owners can build their business and grow its value until they are ready to sell.
Join the industry while it’s still booming and before it gets over saturated. To learn more about opening your own home care franchise, reach out to us! We would love to dive deeper into how a Caring Senior Service franchise can become a strong asset for you.
