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Transcription

1 2014% Start%Up(Manual( In#Home(Care( (Assisted(Living(Placement( (

2 Start-Up & Operations Manual U.S. Edition Copyright The Launch Company LLC All rights reserved. With the exception of the blank forms, no part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any other information storage and retrieval system.

3 Introduction A golden opportunity lies right before your eyes! If you have ever considered starting and operating a Home Care and Assisted Living Placement Business, conditions have never been better for success. The senior population is one of the fastest growing segments and, consequently, the demand for non-medical Home Care and Assisted Living Services is greatly expanding and will continue to expand well into the 21st Century. This means there is a business opportunity in the Senior Care industry open to you. Yet, the task of turning this opportunity into a reality remains as challenging as ever. The competition in the Senior Care field is stiff and will continue to increase, as baby-boomers age. Therefore, getting off on the right path is critical to your success. This manual, Launch Homecare - Start-Up Manual will help you along your journey by saving you time, money and by offering tips and guidelines in starting a successful Senior Care Business. Diligently researched and backed by many years of hands-on experience, the manual will put you on the fast track. It is generically presented and is tailored for the Non-Medical Home Care and Assisted Living Placement Business. It provides an introduction to Home Care, outlines the necessary steps for setting up a Senior Care Business. The Launch Company LLC - Start-Up & Operations Manual i P age

4 Cover & Introductory Pages Whether your intention is to operate a Senior Care Business by yourself or in partnership with another person or to establish a larger scale Senior Care Business, you will find the manual to be extremely helpful. While the manual is geared for the Non-Medical Home Care and Assisted Living Placement Business, the practices and tips it provides will also benefit a Medical Home Care Business. It is recommend that you start your business on a smaller scale and build from there, as it is easier to control and make modifications to a less complicated business than it is to a larger one, especially as you work through the learning curve. Icons Throughout the manual, various icons are used to make the document more user friendly. The icons used are illustrated below: Tip Tips to improve the effectiveness and efficiency of your business. Many of which have been learned from first hand experience. Web sites, which may be helpful on the subject being discussed. Suggestions for improving your chances of success. The Launch Company LLC - Start-Up Manual ii P age

5 Cover & Introductory Pages Additional information on a topic that the author feels is worth mentioning. Indicates certain material is provided in the Appendices. Advises of a value-added feature. Bonus Fictional Senior Care Business Also, throughout the document, a sample business Mystic Meadows Home Care Services - is used for illustrative purposes, which will assist the reader in relating theory to practice. The name is strictly fictional and does not represent a particular person, agency or other type of business. Form Usage For added value, the forms utilized and/or suggested throughout the manual are included in blank format in the Appendices. Although this document is Copyrighted, persons who purchase it may duplicate and use these blank forms, without obtaining permission from the author, providing they are used solely for the purchaser s own business and providing he/she does not sell them. Purchasers can use the forms as they are or they can modify them to suit their unique circumstances and desires. BEST OF LUCK IN YOUR ENDEAVORS!! The Launch Company LLC - Start-Up Manual iii P age

6 Cover & Introductory Pages Disclaimer Launch Homecare - Start-Up Manual is intended to provide general information and guidance only. Because legislative requirements for Home Care Standards, employment law and business operations vary, the information presented should not be interpreted as being universally applicable. Our manuals and training are sold with the understanding that they do not constitute legal, medical, accounting or other professional advice. Legal advice & other professional assistance should be sought prior to commencing your Senior Care Business in order to determine the impact of all levels of government legislation, rules and regulations, local laws, licenses, etc. upon the operation of your business. It is the user s responsibility to determine what is applicable in his/her area and to keep updated on changes in legislative and other criteria. The concepts, examples, and content should be used at the user s own discretion. The author shall not be held responsible for any losses, monetary or otherwise, which the user may incur. Neither shall the author be held responsible for any contracts resulting from the use of the sample forms or for the usage of various assessments, which are provided as a guide only. We have taken all necessary steps to ensure that our electronic products (downloads) virus free and will not accept liability for losses or damages as a result of viruses, worms etc., which may be transmitted through downloading, s, copying and/or other means. The Launch Company LLC - Start-Up Manual iv P age

7 Cover & Introductory Pages Manual Site Map Chapters Chapter 1A - Homecare Overview Chapter 1B - Assisted Living Placement Overview Chapter 2 - Mission, Vision & Goals Chapter 3 - Feasibility Study Chapter 4 - Business Plan Chapter 5 - Financing Your Business Chapter 6 - Business Start-Up Requirements Table of Contents A Table of Contents can be found at the beginning of each Chapter. If you ve purchased the Launch Homecare Start-Up Package, you will have access to all of our manuals which, all together, will give you all of the information, tools, and resources needed to start your own home care and assisted living placement company. The Launch Company LLC - Start-Up Manual v P age

8 Chapter 1A Homecare Overview Chapter 1A HOMECARE OVERVIEW Table of Contents What Is Home Care?... 1! Non-Medical & Medical Home Care Services... 2! Is There A Need for Home Care?... 2! What Are The Goals of Home Care?... 3! What Are The Advantages And Disadvantages Of Home Care?... 3! What Are the Differences Between Medical & Non-Medical Personnel?... 5! Medical Personnel... 5! Non-Medical Personnel... 6! Who Purchases Home Care Services?... 7! What Types of Agencies/Organizations Provide Home Care Services?... 8! Home Health Agency... 8! Non-Medical Home Care Agency/Private Duty... 9! Registry/Staffing Agency... 9! Social Service Agency... 10! Companies... 10! Medical Equipment/Supplies... 10! Public Authorities... 10! Hospices... 11! Independent Contractor/Self-Employed Individual... 11! Who Pays for Home Care Services?... 11! Self /Private Pay... 13! Public Third Party-Payers... 13! The Launch Company LLC - Start-Up & Operations Manual i P age

9 Chapter 1A Homecare Overview Older Americans Act (OAA)... 13! Veterans Administration... 13! Social Services Block Grant Program... 13! Community Organizations... 14! Religious Associations... 14! Private Third-Party Payers... 14! Commercial Health Insurance Companies... 14! Medigap... 14! Long-term Care Insurance... 15! Health Insurance and Managed Care Organizations... 15! Civilian Health & Medical Program of the Uniformed Services (CHAMPUS)... 15! Health Maintenance Organization (HMO)... 15! Automobile Insurance Companies... 15! Workers Compensation... 15! Disease/Condition Focused Organizations... 16! Limited Government Payers... 16! Medicare... 16! Medicaid... 18! Medicaid Waiver... 18! Who Pays for Non Medical Home Care Services (i.e. Services You Provide)?... 19! Where Can Inquiries About Home Care Be Directed?... 20! The Launch Company LLC - Start-Up & Operations Manual ii P age

10 Chapter 1A HOMECARE OVERVIEW What Is Home Care? Home Care can mean different things to different people, so having a common understanding is an important first step in the planning and development of your Home Care Business. Home Care is a general term used to reflect a wide range of social, medical and non-medical support services that are conducted for purposes of enabling compromised individuals to live safely and independently in their own homes and communities. Home Care Services are provided by a number of different types of Home Care organizations/agencies and the skills and duties performed by Home Care personnel vary. Home Care that is not paid for by a governmental source (Medicare and/or Medicaid) is called Private Duty Home Care. Private Duty Home Care Agencies may provide highly skilled nursing services and/or non-medical support services. Private duty Home Care Services are usually paid for by the client and in some cases by third party payers as explained below. This segment of the Home Care market is vast and spending is expected to surpass Medicare spending in the not too distant future. The Launch Company LLC - Start-Up & Operations Manual 1 P age

11 Chapter 1A Homecare Overview Non-Medical & Medical Home Care Services Is There A Need for Home Care? There is a need for Home Care Services and that need is escalating and will become a factor to reckon with, as the elderly population numbers continue to increase. Part of this upsurge is due to: Senior citizens are living longer and baby-boomers are swiftly approaching their retirement years. The development of Health Care Teams and Health Care Providers enable people to be managed and monitored in their own homes and communities. Because of the high costs of health care in hospitals, patients are being discharged early. Many require short-term assistance at home, as they recuperate. Care in the home is more cost effective than care in hospitals/institutions. The quality of life improves for those people who are able to remain in their own homes. The burden on caregivers (family and/or friends who are providing direct care to someone) is increasing. Often this can result in caregiver burnout, which, in turn, leads to the need for outside support. The Launch Company LLC - Start-Up & Operations Manual 2 P age

12 Chapter 1A Homecare Overview There are global changes in health care needs, as a result of non-communicable diseases, mental illness, injuries and the continual growth of HIV and AIDS. Research is increasing the availability and effectiveness of treatments, medications and technology, which makes it possible for people to be cared for at home rather than being cared for in hospitals/institutions. These issues continue to place an increasing demand on the need for long-term care. Since health care costs will become even more staggering, the provision of effective in- Home Care continues to be a strong option. What Are The Goals of Home Care? The goals of Home Care include: assisting individuals to improve and maintain their health and quality of life; promoting the individual s independence; enabling individuals to receive care in their own home; enabling individuals to leave a facility to receive rehabilitation or palliative care at home; providing support to the family, which will help them handle an individual's need for care; and, providing informal caregivers with support to meet their own related needs. What Are The Advantages And Disadvantages Of Home Care? Advantages: Clients are happier when they are able to remain in their own homes and communities, as they can maintain their independence. Government subsidization costs are a mere fraction of what they would be if clients were hospitalized or institutionalized. Clients can choose the amount of care they receive (within established limits). Hospital stays can be shortened if the level of care they require can be delivered at home. The client s quality of life is enhanced when dignity, privacy and freedom are factored into the treatment program. The quality of care provided at home is often better than the care provided in institutions and hospitals. Terminally ill people can elect to spend their last days in their own homes, which provide a familiar and comforting environment. The Launch Company LLC - Start-Up & Operations Manual 3 P age

13 Chapter 1A Homecare Overview Relief can be provided to caregivers. Disadvantages: The client may have a number of caregivers, especially when an agency is utilized. Often there is a long-term expense required for in-home Care, especially when clients are not eligible for funding assistance. In addition to the costs of care, home maintenance and living expenses still must be met. Many people, especially pensioners, simply do not have sufficient financial resources for such extras. Staying at home can sometimes be lonely; consequently, social activities are often limited. The Launch Company LLC - Start-Up & Operations Manual 4 P age

14 Chapter 1A Homecare Overview What Are the Differences Between Medical & Non-Medical Personnel? Medical Personnel Medical Home Health services are delivered by medical personnel, which include: OCCUPATION Registered Nurses (RN) Licensed Practical Nurses (LPN) Physiotherapists Occupational Therapists Speech Therapists Social Assistants Dieticians DUTIES - provide skilled medical services including the insertion & monitoring of IV s, dispensing medications, giving injections, dressing wounds, monitoring vial signs and conducting catheterizations. - provide non medical and medical care, take vital signs, assist with personal care, ambulation, enemas, catheter care, range of motion exercises, tube feedings, and monitor/discontinue IV s. In some states, they may be permitted to administer medications and conduct other limited duties performed by an RN. - Work with people, who have disabilities or problems caused by disorder and accidents, to restore function and independence. - provide medical services such as training the client with disabilities or injuries on how to carry out his/her activities of daily living & determine if there is a need for special equipment, devices and/or home adaptations. - provide medical services such as assisting clients who have difficulty communicating as the result of stroke or other cause or have swallowing problems. - provide medical services such as assisting in the assessment of the social, emotional and environmental factors which affect the client & provide counseling & referrals. - provide medical services such as counseling on food choices & assist with developing diets specific to a client s medical conditions & individual likes & dislikes. The Launch Company LLC - Start-Up & Operations Manual 5 P age

15 Chapter 1A Homecare Overview Non-Medical Personnel Non Medical Home Care Services are delivered by Non Medical Personnel including: OCCUPATION Paraprofessionals such as: Certified Nurse s Aides/Assistants (CNA) & Home Health Aides (HHA) - Non Certified Assistants Homemakers Home Companions Chore Persons Volunteers DUTIES - are non medical assistants who are involved with the client s personal care & assist with activities of daily living such as transferring, mobility, dressing, grooming, bathing, toileting, doing exercises, taking vital signs, ensuring medications are taken and monitoring other activities. - provide non medical care such as custodial, personal care services housekeeping and homemaking. Note: A few states presently do not require that personnel, who perform personal care services, be certified. - deliver non medical services such meal preparation, housekeeping, laundry, shopping, general household, chores, running errands & accompanying clients to appointments. - provide non medical services such as companionship & social activities to housebound clients. Generally, they do not carry out any of the duties performed by homemakers and home health assistants, although they may help with minor chores. - deliver non medical services such as installing grab bars, railings on stairways, build wheelchair ramps, widen doors for wheelchair accessibility, lower cupboards and conduct a variety of minor renovations; - provide non medical services such as maintaining the grounds and ensuring safe access to the home through snow shoveling, shrub trimming, lawn cutting etc. - provide non medical services such as respite to the caregiver, errands, companionship, reading etc. The Launch Company LLC - Start-Up & Operations Manual 6 P age

16 Chapter 1A Homecare Overview Who Purchases Home Care Services? Home Care Services are purchased by a wide range of individuals and organizations. They include: the elderly; the housebound; the disabled; those with chronic illnesses; those with terminal illness; those who are recovering from acute illnesses or surgeries; those who are mentally or emotionally handicapped; family caregivers; accident victims; those requiring guidance with life skills; those seeking assistance with outdoor maintenance; those requiring transportation and errand running; and, those who require social outings. The Launch Company LLC - Start-Up & Operations Manual 7 P age

17 Chapter 1A Homecare Overview What Types of Agencies/Organizations Provide Home Care Services? Home Health Agency A Home Health Agency is a provider of home health services which include skilled nursing services, home health aides, and at least one other Home Care service such as medical social services, and therapies such as physical, occupational or speech therapy. It coordinates and provides health care services to individuals in their homes, rather than in an institutional setting. To be eligible for reimbursements from Medicare and Medicaid, these agencies need to be certified. Certification confirms that an agency has met the guidelines and criteria established by the federal government for patient care and management. These agencies must apply through the Centers for Medicare and Medicaid Services. The Launch Company LLC - Start-Up & Operations Manual 8 P age

18 Chapter 1A Homecare Overview The centers for Medicare and Medicaid Services can be accessed through: Home Health Agencies are appropriate for clients who require skilled assistance. Care plans are closely scrutinized and managed and require a Physician s order. If a client requires care from more than one type of service provider, a multidisciplinary team often will be assembled to assess and develop simple and comprehensive care plans tailored to meet the individual s needs. The types of services that Home Health Agencies might deliver include nursing, physiotherapy, occupational therapy, speech therapy, medical supplies, social work, home health assistants and nutrition. These types of agencies may also provide nonmedical services as well. Non-Medical Home Care Agency/Private Duty A Private Duty Home Care Agency is generally an agency that provides Home Care Services that are not reimbursable under Medicare or Medicaid. This type of agency may provide skilled nursing skills or what is termed non-medical\custodial care or care that can be provided by a non-medical professional. The types of services available are wide ranged and can be provided by non-professional personnel and include activities such as personal care, respite, housekeeping, meal preparation, laundry, shopping, companionship, errand running, chores and transportation. The care is usually paid for privately by the client or, in some cases, by private insurances or other third party payers as outlined below. A physician s order is not mandatory to receive care and the type of care is determined by the client and the agency. These agencies may or may not be licensed and regulated, depending on each state s requirements and legislation. Most of these agencies hire the staff, conduct background checks, administer payroll and taxes and provide supervision. Registry/Staffing Agency Registry/Staffing Agencies assume the role of an employment service for Home Care nurses and Home Care Assistants. They refer individuals to the client, who makes the actual selection. A fee is levied for their efforts. The Launch Company LLC - Start-Up & Operations Manual 9 P age

19 Chapter 1A Homecare Overview Generally, these agencies do not have a Health Care License and they do not conform to government regulations. While not usually the case, some agencies hire nurses to determine care needs, to develop care plans, and to supervise assistants. When a client obtains the services of a registry provider, the person employing the assistant becomes responsible for supervising the care provided, for paying the assistant directly, and for ensuring all payroll tax requirements are met. Social Service Agency Non-profit, social service agencies (often religion affiliated) will, on occasion, provide Home Care. Initial assessments usually are conducted by a nurse or social assistant, who may also manage the client s care plan. Companies Pharmaceutical and Infusion Therapy Companies These companies deliver drugs, equipment and professional services for individuals receiving intravenous or nutritional therapies through tubes. Medical Equipment/Supplies Dealers provide clients with items such as respirators, wheelchairs, walkers, dressings, catheters etc. In most cases, these companies merely provide and service the product and do not deliver the actual care. Public Authorities Public Authorities for Home Care Services are sponsored by state or county governments. They are the employees of record for Home Care Assistants (HCAs) in a geographic area and serve as a clearing house for available assistants. These Home Care Assistants have the status of public employees. Acting as employees of record, the Public Authorities (PAs) are responsible for issuing paychecks, complying with state and federal health and safety laws, and for withholding taxes from the Home Care Assistant s pay (including Social Security payroll taxes). They also perform background checks and take on all liabilities for the HCA. Responsibilities such as these may be very difficult for frail, elderly clients to assume on their own. Public Authorities are a relatively new concept in Home Care. While they operate primarily in western states, such as California and Oregon, the concept is moving eastward. The Launch Company LLC - Start-Up & Operations Manual 10 P age

20 Chapter 1A Homecare Overview Hospices Hospice organizations provide care for terminally ill patients, either in their home or in special care facilities. Hospice care allows terminally ill individuals to live their final days in as natural and comfortable a setting as possible. This provides the family with an opportunity to participate in care giving. A professional team and volunteers work as a unit attending to the patient s medical, psychological and spiritual needs. Many hospice programs are certified by Medicare and are licensed according to the individual state s requirements. Independent Contractor/Self-Employed Individual Individuals may hire themselves out as independent contractors to perform Home Care Services. In this case the worker is responsible for their own payroll deductions, withholding taxes, Workers Compensation, bonding etc. The contractor is responsible for any liabilities. The client and/or family may become the employer and hire a Home Care worker as an employee. This process renders the client and/or family responsible for recruiting, hiring, and supervising. They also are responsible for paying for wages, unemployment taxes, social security, paying for Workers Compensation and withholding taxes. The client is also responsible for any liability issues such as injuries, which may arise, and assumes responsibility for training and supervising the Home Care worker. Who Pays for Home Care Services? Service providers may be funded by the federal government, state government, local cities, and private and non-profit organizations. Most people are not aware that an aging network exists throughout the USA. The Administration of Aging is the federal organization responsible for senior citizens. It supports state agencies on aging with resources and funding. All state departments on aging work with planning units or Area Agencies on Aging. They are responsible for coordinating senior services on a county level. The Launch Company LLC - Start-Up & Operations Manual 11 P age

21 Chapter 1A Homecare Overview Most states require that Home Care Agencies be licensed to assure that care is provided within health and safety standards. Each state can establish its own licensing criteria and regulations. Consequently, the requirements will often vary depending on the state. The exception is that agencies, which have been certified by Medicare, must conform to federal regulations. Home Care Services can be obtained from various sources. Clients or their families can purchase services directly from the service provider or they can purchase services from an assortment of public and private sources. Usually, hospice care is provided whether or not clients and/or their families have the required finances to purchase the care. Funding payers include: Self-funding or private source payers. Public third-party payers. e.g.: the Older Americans Act; the Veterans Administration; Social Services Block Grant Program; Community Organizations; and, Religious Associations. Private third-party payers. e.g.: commercial health insurance companies; Medigap; long-term care insurance; health insurance and managed care organizations; Civilian Health & Medical Program of the Uniformed Services (CHAMPUS); Health Maintenance Organization (HMO); automobile insurance companies; Workers Compensation; and, Disease/condition focused organizations. e.g.: local chapters of the American Cancer Society; the Alzheimer s Association; and, the National Easter Seal Society, Limited Government Payers Medicare Medicaid Medicaid Waiver The Launch Company LLC - Start-Up & Operations Manual 12 P age

22 Chapter 1A Homecare Overview Self /Private Pay Individuals who do not meet the eligibility requirements for financial assistance from the government must pay for the service either themselves or obtain the assistance of another contributor. In these scenarios, the client and the service provider negotiate the fees. Most of your clients will be paying for services directly from their own funds. Public Third Party-Payers Older Americans Act (OAA) The Older Americans Act makes federal funds available for state and local social service programs. The purpose is to enable frail and disabled people, who are 60 years or older, to remain independent in their communities. Service covers Home Care Aids (HCA), personal care, chores, escort, meal delivery and shopping services to individuals with the greatest social and financial need. Those who can afford to pay for some of the services are charged in proportion to their income. Service is often requested by contacting an Area Agency on Aging. This agency either provides the services directly or in cooperation with local organizations. Veterans Administration The Veterans Administration supplies funds to veterans who have a disability classed at 50% or more due to a service-related condition. The services must be authorized by a Physician and must be delivered via the VA s system of hospital-based Home Care units. Veterans Administration does not cover non-medical services provided by HCAs. Social Services Block Grant Program Based on state analysis, states receive annual federal social services block grants. Allotment is determined on federal limits and population stats. Some of the funding is often directed into programs which provide HCA and homemaker or chore services. Additional information can be obtained from the state health department and/or local offices on aging. The Launch Company LLC - Start-Up & Operations Manual 13 P age

23 Chapter 1A Homecare Overview Community Organizations In conjunction with state and local governments, some community organizations provide funds for home health and supportive care. They may pay for all or a portion of the services, depending on the person s financial status and eligibility. For more information, contact hospital discharge planners, social workers, local offices on aging and the United Way. Religious Associations Many religious groups and organizations are supportive in supplying funds to assist persons requiring Home Care Services. Contact the local religious organizations in your area to determine if assistance is available. e.g. Churches, synagogues, kingdom halls, temples, mosques, etc. Private Third-Party Payers Commercial Health Insurance Companies Basically, commercial health insurance policies cover some Home Care Services for acute needs, but benefits for long-term services may from differ plan to plan. Commercial insurers, such as Blue Cross and Blue Shield, generally pay for skilled professional Home Care Services with a cost-sharing provision. These policies sometimes cover personal care services. Most commercial and private insurance plans will cover comprehensive hospice services, including nursing, social work, therapies, personal care, medications, and medical supplies/equipment. Cost sharing varies with individual policies, but often is not required. If additional Home Care coverage is wanted, clients may need to purchase Medigap insurance or long-term care insurance policies. Medigap Medigap is an insurance policy offered by private insurance companies to fill the gaps in coverage for original Medicare. The purpose of Medigap is to compensate for some of the shortfalls in Medicare coverage. Some Medigap policies offer benefits to facilitate athome recovery, which pay for some personal care services when the policyholder is receiving Medicare-covered skilled home health services. The policyholder s physician must order this personal care in conjunction with the skilled services. It is most beneficial to people recovering from an acute illness, an injury or from surgery. It is not meant for extended long-term care. The Launch Company LLC - Start-Up & Operations Manual 14 P age

24 Chapter 1A Homecare Overview Long-term Care Insurance Initially, long-term care insurance was meant to help people with the costs of facility care. However, as the needs and wants for Home Care grew, these policies have been extended to cover personal care, companionship and other in-home services. These policies are quite diversified and the provider should check with their client to see if they have such a policy. Health Insurance and Managed Care Organizations Some health insurance and managed care plans might cover Home Care Services. The eligibility and qualifying criteria vary according to the plan. Usually the assistance is medically necessary and/or requires skilled workers. Sometimes personal care is covered, other times it is not. Some plans require pre-approval of services. Managed Care Organizations, which are contracting with Medicare, must provide the full range of Medicare-covered home health services available in a particular geographic area. Only pre-approved services will be paid for by these organizations. Civilian Health & Medical Program of the Uniformed Services (CHAMPUS) CHAMPUS provides for skilled nursing care and other professional medical Home Care Services for dependents of active military personnel/military retirees and their dependents/survivors. It does so on a cost sharing basis. Health Maintenance Organization (HMO) HMO, usually a legal entity, arranges payment for the provision of basic and supplemental health services to its members from a network of independently contracted providers (e.g. physicians & other health professionals) and facilities on a prepaid or reduced fee basis. It offers consumers a comprehensive range of benefits at one annual fee but they can only see providers in the network. Individuals are assigned to a primary care doctor or nurse who decides what health services are needed and when. Automobile Insurance Companies An individual s auto insurance policy may cover the cost of Home Care Services if an individual was involved in a motor vehicle accident. Workers Compensation Workers Compensation will provide medically necessary homemaking services to those who were injured while working on the job. The Launch Company LLC - Start-Up & Operations Manual 15 P age

25 Chapter 1A Homecare Overview Disease/Condition Focused Organizations Organizations such as the American Cancer Society, Multiple Sclerosis Society or Alzheimer s Association may sometimes assist with funding. A quick way to find out what is available in your area, is to contact the National Association of Area Agencies which has a list of 655 Area Agencies on Aging: Tip find_agencies.aspx Limited Government Payers Medicare and Medicaid programs are government programs created by the Social Security Act of Medicare Medicare is one of the primary public payers in the United States. It is available to retired individuals who are over 65 and who have worked for at least 10 years in a position, which contributed to Medicare. To qualify for Medicare there are four main conditions that a person must meet: The home health care agency must be certified by Medicare. i.e. Medicare only covers Home Care provided by home health care agencies, which have been approved by Medicare. Unfortunately, this leaves out registry nurses, private therapists and independent caregivers. The client must be pretty well confined to his home, with the exception of going out for medical appointments or for religious purposes. The client must require nursing, physiotherapist or speech pathologist services at least on an intermittent basis. The client s doctor has assessed the client s condition as warranting in home support and he has developed a care plan for the provision of these services. Additionally, the client s doctor and the Home Care Agency must evaluate his care plan at least every 60 days. The Launch Company LLC - Start-Up & Operations Manual 16 P age

26 Chapter 1A Homecare Overview The services qualified people may obtain from Medicare include: skilled nursing services on a part-time or intermittent basis by a licensed nurse; home health aid services such as personal care on an intermittent or part-time basis; physical therapy as often and for as long as it is medically necessary and reasonable to restore physical movement and strength; speech language therapy designed to restore speech; occupational therapy as long as it is medically necessary and reasonable to achieve independence in carrying out the activities of daily living; medical social services to assess any social and emotional factors and to provide counseling and referrals to community resources; medical supplies such as wound dressings; and, some types of medical equipment such as walkers, wheelchairs and oxygen. (Medicare will pay 80% of the approved amount while the client pays the other 20 %.) Medicare s definition of intermittent or part-time care is that the combination of skilled nursing care or home health aide services is less than 8 hours per day or 28 hours per week. Medicare does not cover: 24 hour in-home Care; prescription drugs; meals delivered to the home; homemaker services such as shopping cleaning and laundry except that some home health aides will do a few chores when they are in the home for covered services; and, personal care provided by home health aides such as bathing, toileting, dressing, unless the patient is also getting skilled care such as nursing or therapy and the personal care is required because of the illness or injury. i.e. If personal care is the only care needed, Medicare does not cover the costs. The Launch Company LLC - Start-Up & Operations Manual 17 P age

27 Chapter 1A Homecare Overview Medicaid Medicaid is a joint federal and state assistance program that helps with medical costs for some people with low income and limited resources who do not have the money or insurance to pay for health care. To qualify for Medicaid, the applicant must have a low income and few savings or other assets. Medicaid coverage varies from state to state. Each state sets it own guidelines, subject to federal rules and regulations. Certain services must be covered by the states in order to receive federal funds. Other services are optional and are elected by the states. In all states, Medicaid pays for basic home health care and medical equipment. It may pay for homemaker, personal care and other services that are not covered by Medicare. Medicaid has programs that pay some or all of Medicare s premiums and may also pay Medicare deductibles and co-insurance for certain people who are entitled to Medicare and have low income. To determine if Medicaid covers any Home Care Services in the state wherein your business is established, contact the State Department of Health. Before some health care plans, including Medicare and Medicaid, will pay for covered home health services they will require agencies be certified. This means the agencies must meet defined federal requirements for patient care and are able to provide services to those who are covered by Medicare or Medicaid. These agencies are supervised, controlled and assume liability for all care. Periodic assessments are conducted to ensure that standards are being met. To determine what the requirements in an area are, check with the local Department of Health. Medicaid Waiver Medicaid waiver funds are federal and/or state joint programs. The purpose of the Medicaid Waiver is to enable individuals who require long-term care services to remain in a community setting even though their advanced age or disability would warrant placement in a long term care facility. The Waiver allows services that are typically covered by Medicaid only in a nursing facility, to be provided to eligible persons in their own homes or in assisted living facilities The Launch Company LLC - Start-Up & Operations Manual 18 P age

28 Chapter 1A Homecare Overview To obtain a telephone number for information in your state, call: TTY/TDD or (for the hearing and speech impaired). Who Pays for Non Medical Home Care Services (i.e. Services You Provide)? The Launch Company LLC - Start-Up & Operations Manual 19 P age

29 Chapter 1A Homecare Overview Where Can Inquiries About Home Care Be Directed? National Association for Home Care and Hospice or Centers for Medicare and Medicaid Services (CMS) The National Association of Area Agencies on Aging or , Local Area on Aging List of local areas can be found at: es/find_agencies.aspx Eldercare Locator at or Local Legal Network (LSN) attorney. A list of LSN attorneys can be obtained by phoning or accessing website National Alliance for Caregiving (NAC) or [email protected] Local Seniors Centers (Check your local postings for details.) Learn all you can about the Home Care industry and the various organizations/agencies that are responsible for providing & paying for Home Care Services in your area. The Launch Company LLC - Start-Up & Operations Manual 20 P age

30 Chapter 1B Assisted Living Placement Overview Chapter 1B ASSISTED LIVING PLACEMENT OVERVIEW Table of Contents What Is Assisted Living?... 2! Assisted & Independent Living Facilities... 3! Is There A Need for Assisted Living?... 3! What Are The Goals of Assisted Living?... 4! What Are The Advantages And Disadvantages Of Assisted Living?... 4! What Are the Differences Between Independent & Assisted Living?... 6! Independent Living... 6! Assisted Living... 7! Who Purchases Assisted Living Services?... 8! Who Pays for Assisted Living Services?... 9! Self /Private Pay... 10! Public Third Party-Payers... 10! Veterans Administration... 10! Religious Associations... 11! Private Third-Party Payers... 11! Long-term Care Insurance... 11! Automobile Insurance Companies... 11! Workers Compensation... 11! Disease/Condition Focused Organizations... 11! Limited Government Payers... 12! Medicare... 12! Medicaid... 13! Where Can Inquiries About Assisted Living Be Directed?... 14! The Launch Company LLC - Start-Up & Operations Manual i P age

31 Chapter 1B Assisted Living Placement Overview Chapter 1B ASSISTED LIVING PLACEMENT OVERVIEW What Is Assisted Living? Assisted Living can mean a lot of things to a lot of people. It really has evolved greatly over the years. There was a time in history when we did not have the resources and options available to seniors that are available today. At one point in time, assisted living was perceived to be nothing more than a nursing home where those too frail and sick to care for themselves were given medical attention, a place to sleep, and little to nothing else. Today, there are many options for seniors beginning with Independent living, The Launch Company LLC - Start-Up & Operations Manual ii P age

32 Chapter 1B Assisted Living Placement Overview facilities designed to provide very minimal services but giving the senior the peace of mind that they no longer need to cook or clean and can still remain independent. In addition, there are assisted living facilities providing greater levels of care, memory care units attending to those with mental challenges, and care homes providing a more residential environment while also maintaining a high level of care. Assisted & Independent Living Facilities Independent! Living! Memory! Care! Care!Homes! Skilled! Nursing! Assisted! Living! Facili3es! Senior! Living! Board!&!Care! Is There A Need for Assisted Living? There is a need for Assisted Living Services and that need is escalating and will become a factor to reckon with, as the elderly population numbers continue to increase. Part of this upsurge is due to: Senior citizens are living longer and baby-boomers are swiftly approaching their retirement years. The options have increased in number and variety providing seniors with incentive to utilize these types of services earlier in their aging process. The Launch Company LLC - Start-Up & Operations Manual 3 P age

33 Chapter 1B Assisted Living Placement Overview Because hospitals are looking to lower their re-admission rates, they are becoming increasingly careful how a patient is discharged. Often times, placement is a requirement for the patient to be successfully discharged. Assisted Living can be more affordable than homecare if the patient requires a high level of care. Living in an assisted living facility or home provides interaction with other people in a similar stage of life. This can increase the client s morale. It is becoming increasingly difficult for the children of elderly parents to provide the care as the cost of living rises. Statistically, people are living longer yet this doesn t mean that the need for care is decreasing. It is actually the opposite. For many people, life-sustaining medical treatment is allowing them to live longer but they are fully dependent on receiving care to do so. These issues continue to place an increasing demand on the need for long-term care. Since health care costs will become even more staggering, the provision of effective assisted living continues to become a more viable option. What Are The Goals of Assisted Living? The goals of Assisted Living include: assisting individuals to improve and maintain their health and quality of life; promoting the individual s independence; assisting individuals with all activities of daily living to ensure safety; preventing individuals from being readmitted to the hospital by managing the preventative and care maintenance plans established by the individual s primary care physician; providing support to the family, which will help them handle an individual's need for care; and, providing informal caregivers with support to meet their own related needs. What Are The Advantages And Disadvantages Of Assisted Living? Advantages: Clients are living around other people in a similar stage of life and can find friendship, support, and camaraderie. The Launch Company LLC - Start-Up & Operations Manual 4 P age

34 Chapter 1B Assisted Living Placement Overview The cost of assisted living is far less than hospitalization or acute care. Maintaining health inside of an assisted living facility drives down the client s overall healthcare accost. Clients can choose the amount of care they receive (within established limits). Rehabilitation and outpatient care can be provided inside of an assisted living facility or home. The client s quality of life is enhanced when dignity, privacy and freedom are factored into the treatment program. Family members can visit their loved ones living in assisted living giving the family and the client the dignity of having their own place while still being close. Disadvantages: The client may not be given as much attention as he/she would if receiving homecare, as, within a facility, the client-to-caregiver ratio is often 15-1 and up to 30-1 as opposed to homecare where the ratio is 1-1. Assisted Living costs generally rise as the level of care rises. This often times causes clients to have to move as their level of need increases. Living in an Assisted Living facility or home is never really home and can be challenging for some people to adjust. The Launch Company LLC - Start-Up & Operations Manual 5 P age

35 Chapter 1B Assisted Living Placement Overview What Are the Differences Between Independent & Assisted Living? Independent Living Independent Living facilities do not provide hands-on care to their clients. They assist with cooking, cleaning, laundry, transportation, and many provide activities as well. The purpose of independent living is to provide a place for seniors who are beginning to feel the affects of age but are not ready for complete hands-on care. Below are some of the types of independent living: Facility Low-Income or Subsidized Senior Housing Senior Apartments (the more traditional independent living model) Retirement Homes/Retirement Communities Continuing Care Retirement Communities (CCRCs) Description In the U.S., there are senior housing complexes subsidized by the U.S. Department of Housing and Urban Development (HUD) for low-income seniors. These are apartment complexes restricted by age, usually 55 and older. Rent may include community services such as recreational programs, transportation services, and meals served in a communal dining room. Laundry services and community activities are also provided. Retirement communities are groups of housing units restricted for those over a certain age, often 55 or 62 and older. These housing units can be single-family homes, duplexes, mobile homes, townhouses, or condominiums. If you decide to buy a unit, additional monthly fees may cover services such as outside maintenance, recreation centers, or clubhouses. These facilities offer a spectrum of care from independent living to nursing home care in the same community. If residents begin to need help with activities of daily living, for example, they can transfer from independent living to an assisted living or skilled nursing facility on the same site. The main benefit of a CCRC is that you only need to relocate once to a new environment and can maintain your independence for as long as possible. Descriptions provided by HelpGuide.org The Launch Company LLC - Start-Up & Operations Manual 6 P age

36 Chapter 1B Assisted Living Placement Overview Assisted Living Below are some of the types of Assisted Living: Facility Assisted Living Facility Care Home Memory Care Skilled Nursing Description This type of facility typically is licensed for more than 10 beds and is designed to provide all levels of handson care. This would include assistance with all activities of daily living including bathing, dressing assistance, medication management, transportation, ambulation assistance, transferring, toileting assistance, etc. A Care Home provides the same level of assistance that a facility provides but the environment is where the greatest change lies. Instead of a large building, a care home is a residential home in a residential neighborhood. This gives the client the perception that they are home instead of in a facility. The caregiver to client ratio is also much lower. Because a care home typically does not have more than 10 licensed beds, you will typically find a 5-1 client to caregiver ratio. Memory Care facilities are similar to assisted living facilities except that they focus on caring for clients who have mental illness typically from Alzheimer s, Parkinson s, or some other form of dementia. Often times, these units are locked from the inside which prevents clients from wandering outside and getting lost or hurt. Skilled Nursing facilities are typically for short-term stays (30-90 days) and provide intense medical care 24/7 while a client is recovering from an injury or acute illness. Medicare will pay for these short-term stays for a set amount of days/year. Very rarely, a client is prescribed a long-term stay in a skill nursing facility due to severe medical treatment needs. In most circumstances, long-term stays at a skilled nursing facility require the client to pay privately. The rates at a skilled nursing facility are much higher than assisted living and it is always preferred to keep these stays short-term with a plan to move to assisted living after recovery. The Launch Company LLC - Start-Up & Operations Manual 7 P age

37 Chapter 1B Assisted Living Placement Overview Who Purchases Assisted Living Services? Assisted Living Services are purchased by a wide range of individuals and organizations. They include: the elderly; the housebound; the disabled; those with chronic illnesses; those with terminal illness; those who are recovering from acute illnesses or surgeries; those who are mentally or emotionally handicapped; family caregivers; accident victims; those requiring guidance with life skills; those seeking assistance with outdoor maintenance; those requiring transportation and errand running; and, those who require social outings. The Launch Company LLC - Start-Up & Operations Manual 8 P age

38 Chapter 1B Assisted Living Placement Overview Who Pays for Assisted Living Services? Service providers may be funded by the federal government, state government, local cities, and private and non-profit organizations. Most people are not aware that an aging network exists throughout the USA. The Administration of Aging is the federal organization responsible for senior citizens. It supports state agencies on aging with resources and funding. All state departments on aging work with planning units or Area Agencies on Aging. They are responsible for coordinating senior services on a county level. ALL states require that assisted living facilities and homes be licensed to assure that care is provided within health and safety standards. Each state can establish its own licensing criteria and regulations. Consequently, the requirements will often vary depending on the state. The exception is that facilities, which have been certified by Medicare, must conform to federal regulations. Assisted Living and Independent Living are services that are typically paid for out of the client s own funds or private long-term care insurance. Only when the client s income falls below the state-mandated minimum with no assets (as determined by each state s Medicaid fund), will Medicaid subsidize the cost for assisted living. Funding payers include: Self-funding or private source payers. Public third-party payers. e.g.: the Older Americans Act; the Veterans Administration; Social Services Block Grant Program; Community Organizations; and, Religious Associations. Private third-party payers. e.g.: commercial health insurance companies; long-term care insurance; health insurance and managed care organizations; Civilian Health & Medical Program of the Uniformed Services (CHAMPUS); Health Maintenance Organization (HMO); automobile insurance companies; Workers Compensation; and, Disease/condition focused organizations. e.g.: local chapters of the American Cancer Society; the Alzheimer s Association; and, the National Easter Seal Society, The Launch Company LLC - Start-Up & Operations Manual 9 P age

39 Chapter 1B Assisted Living Placement Overview Limited Government Payers Medicaid Medicaid Waiver Self /Private Pay Individuals who do not meet the eligibility requirements for financial assistance from the government must pay for the service either themselves or obtain the assistance of another contributor. In these scenarios, the client and the assisted living provider negotiate the fees. Most of your clients will be paying for services directly from their own funds. Public Third Party-Payers Veterans Administration The Veterans Administration supplies funds to veterans who have a disability classed at 50% or more due to a service-related condition. The services must be authorized by a Physician and must be delivered via the VA s system of approved providers. The VA also has a program called Aid and Attendance. It only applies to veterans who have served on active duty in a specific war. Included with your Launch Homecare membership is in-network status with our senior care financing partner. This allows your agency to provide financing to seniors who need financial assistance. When a veteran is waiting on benefits from the VA to be approved, financing can be the stop-gap solution allowing them to receive the care when they need it most. The Launch Company LLC - Start-Up & Operations Manual 10 P age

40 Chapter 1B Assisted Living Placement Overview Religious Associations Many religious groups and organizations are supportive in supplying funds to assist persons requiring Assisted Living. Contact the local religious organizations in your area to determine if assistance is available. e.g. Churches, synagogues, kingdom halls, temples, mosques, etc. Private Third-Party Payers Long-term Care Insurance Initially, long-term care insurance was meant to help people with the costs of Assisted Living. While homecare has been added, the benefit provided by long-term care insurance usually goes much further in an assisted living setting as the cost for 24-hour care is much more affordable in this route. Automobile Insurance Companies An individual s auto insurance policy may cover the cost of Assisted Living Services if an individual was involved in a motor vehicle accident. Workers Compensation Workers Compensation will provide medically necessary assisted living services to those who were injured while working on the job. Disease/Condition Focused Organizations Organizations such as the American Cancer Society, Multiple Sclerosis Society or Alzheimer s Association may sometimes assist with funding. This assistance usually comes in the form of grants and do not typically reoccur. A quick way to find out what is available in your area, is to contact the National Association of Area Agencies which has a list of 655 Area Agencies on Aging: Tip find_agencies.aspx The Launch Company LLC - Start-Up & Operations Manual 11 P age

41 Chapter 1B Assisted Living Placement Overview Limited Government Payers Medicare and Medicaid programs are government programs created by the Social Security Act of Medicare Medicare does not cover the cost of traditional assisted living whether in a facility or in a care home. Medicare does cover short-term stays at a skilled nursing facility for the purposes of rehabilitation or for healthcare treatment related to an acute illness. Medicare is one of the primary public payers in the United States. It is available to retired individuals who are over 65 and who have worked for at least 10 years in a position, which contributed to Medicare. To qualify for Medicare there are four main conditions that a person must meet: The skilled nursing facility must be certified by Medicare. The client must need skilled nursing as prescribed by a physican. The client must require nursing, physiotherapist or speech pathologist services at least on an intermittent basis. The client s doctor has assessed the client s condition as warranting skilled nursing and he has developed a care plan for the provision of these services. Additionally, the client s doctor and the skilled nursing facility must evaluate his care plan at least every 30 days. The services qualified people may obtain from Medicare include: skilled nursing services on a part-time or intermittent basis by a licensed nurse; home health aid services such as personal care on an intermittent or part-time basis; physical therapy as often and for as long as it is medically necessary and reasonable to restore physical movement and strength; speech language therapy designed to restore speech; occupational therapy as long as it is medically necessary and reasonable to achieve independence in carrying out the activities of daily living; medical social services to assess any social and emotional factors and to provide counseling and referrals to community resources; medical supplies such as wound dressings; and, some types of medical equipment such as walkers, wheelchairs and oxygen. (Medicare will pay 80% of the approved amount while the client pays the other 20 %.) The Launch Company LLC - Start-Up & Operations Manual 12 P age

42 Chapter 1B Assisted Living Placement Overview Medicare does not cover: Assisted Living; Independent Living; prescription drugs; Medicaid Medicaid is a joint federal and state assistance program that helps with medical costs for some people with low income and limited resources who do not have the money or insurance to pay for health care. To qualify for Medicaid, the applicant must have a low income and few savings or other assets. Medicaid coverage varies from state to state. Each state sets it own guidelines, subject to federal rules and regulations. Certain services must be covered by the states in order to receive federal funds. Other services are optional and are elected by the states. In all states, Medicaid pays for basic assisted living and medical equipment. Medicaid has programs that pay some or all of Medicare s premiums and may also pay Medicare deductibles and co-insurance for certain people who are entitled to Medicare and have low income. To determine if Medicaid covers any assisted living services in the state wherein your business is established, contact the State Department of Health. Before some health care plans, including Medicare and Medicaid, will pay for covered assisted living services they will require the facilities or homes be certified. This means the facilities/homes must meet defined federal requirements for patient care and are able to provide services to those who are covered by Medicare or Medicaid. These facilities/homes are supervised, controlled and assume liability for all care. Periodic assessments are conducted to ensure that standards are being met. To determine what the requirements in an area are, check with the local Department of Health. To obtain a telephone number for information in your state, call: TTY/TDD or (for the hearing and speech impaired). The Launch Company LLC - Start-Up & Operations Manual 13 P age

43 Chapter 1B Assisted Living Placement Overview Where Can Inquiries About Assisted Living Be Directed? The Assisted Living Federation of America or Centers for Medicare and Medicaid Services (CMS) The National Association of Area Agencies on Aging or , Local Area on Aging List of local areas can be found at: es/find_agencies.aspx Eldercare Locator at or Local Legal Network (LSN) attorney. A list of LSN attorneys can be obtained by phoning or accessing website Local Seniors Centers (Check your local postings for details.) Learn all you can about the Assisted Living industry and the various organizations/agencies that are responsible for providing & paying for Assisted Living in your area. The Launch Company LLC - Start-Up & Operations Manual 14 P age

44 Chapter 2 Mission, Vision & Goals CHAPTER 2 Mission, Vision & Goals Table of Contents Mission, Vision and Value Statements... 2! Mission Statement... 2! Examples: Mission Statements... 3! Vision Statement... 3! Examples: Vision Statements... 3! Values and Beliefs... 4! Example: Value and Belief Statement... 4! Goals and Objectives... 4! Business Objectives... 4! Criteria for Effective Business Objectives... 5! Example: Objectives Your Business Might Choose... 5! Advantages and Disadvantages to Owning a Business... 6! Keys and Obstacles to Successful Business Operations... 6! Keys to Success:... 6! Obstacles to Success... 6! Home-Based Businesses... 7! Advantages and Disadvantages of Having a Home-Based Business... 7! Sources of Additional Information on Home-Based Businesses... 8! Community-Based Businesses... 9! The Launch Company LLC - Start-Up & Operations Manual i P age

45 Chapter 2 MISSION, VISION & GOALS Starting & operating a home care and assisted living placement business is an exciting and challenging experience. As a potential senior care business owner you should possess entrepreneurial flair, willing to take a calculated risk, willing to put in a lot of hard work to get your business off the ground and running and have a genuine interest in serving the needs of the senior population. Before making a hasty decision, conduct an honest personal assessment. Take into consideration your likes, dislikes, habits, working ethics, skill sets and suitability for this line of work. Also consider your goals, expectations, and commitment, all of which will largely contribute to the success or failure of your venture. To that end, a Personal Suitability Questionnaire will be very helpful in assisting you to determine your suitability. The Launch Company LLC - Start-Up & Operations Manual 1 Page

46 Chapter 2 Mission, Vision & Goals A blank Personal Suitability form is provided in the Launch Homecare Business Plan Kit. Mission, Vision and Value Statements Creating vision, mission and value statements are very important because they are the essence of what you want your business to represent. They will serve as the standard for all future planning and will guide your decisions on the delivery of your in-home care and assisted living placement services. When used properly, mission, vision and value statements can be very powerful tools, especially for new businesses. They provide direction for a business, without which it is difficult to develop a cohesive plan. Mission Statement Mission and vision are core building blocks necessary for business planning and development. Although they are often used interchangeably, mission and vision are two separate concepts. A mission statement documents the essence or purpose of your business. It is a focused, practical description of what your business is attempting to accomplish. The mission statement is a starting point that drives planning and provides focus for your business over time. The mission statement should be a concise statement of business strategy and developed from the client's perspective and it should fit with the vision for your business. The mission statement should answer three questions: 1. What do we do? 2. How do we do it? 3. For whom do we do it? The Launch Company LLC - Start-Up & Operations Manual 2 P age

47 Chapter 2 Mission, Vision & Goals Examples: Mission Statements Example 1: To provide quality service to help our clients lead dignified, independent lifestyles in the comfort and safety of their own homes by carefully assessing their needs and selectively placing trained personnel to meet these needs. Additionally, for those unable to stay home, our mission is to find the best assisted living option for our clients. Example 2: To provide a high standard of in-home care to individuals in need to enable them to remain living in the comfort of their own home or community. Vision Statement The vision statement describes what you would like your business to achieve. A vision statement is more fluid than a mission statement and likely to change over time. It should include clear, attainable goals to guide decision-making, yet remain general enough to allow alternative responses to changing conditions. Simply put, the vision statement should reflect what you ultimately envision the business to be, in terms of growth, values, employees, service delivery and contributions to your community. Review vision statements from organizations that have mission statements similar to yours. This will help organize your thoughts and articulate your vision. Examples: Vision Statements Example 1: "To be known as the agency of choice for providing quality home care and assisted living placement services in the community." Example 2: To provide home care and assisted living placement services that will meet the social, spiritual, emotional and physical needs of clients and families in the community." The Launch Company LLC - Start-Up & Operations Manual 3 P age

48 Chapter 2 Mission, Vision & Goals Values and Beliefs Values can be defined as principles, standards or qualities considered worthwhile or desirable. The manner and way in which you deliver home care services for you clients will be based on the values and beliefs that you set for your business. These values and beliefs shape the vision, mission, and objectives/goals of your agency. Example: Value and Belief Statement Our mission and vision is achieved through the application of our core values, which include: keeping our client s safety, health, quality of life and well-being central in the design and delivery of services; treating and interacting with our clients with respect, dignity, compassion, empathy, honesty, and integrity, while recognizing confidentiality of client information; showing respect for all cultures, religions and ethnicities; recruiting, training and retaining competent staff; valuing, supporting, recognizing and appreciating our staff, who are our greatest asset; developing positive relationships with the community including local homecare/ healthcare organizations; providing continuous quality improvement throughout the organization; recognizing that client satisfaction is the critical benchmark of our success, measured by attracting new clients and retaining our existing clients; believing that excellence is an essential means of sustaining our values in a competitive marketplace; and, Priding ourselves in the way we communicate and work with each other and with our clients; and always striving to ensure clear understanding of the situations and issues that come our way. Goals and Objectives Goals and objectives provide a focus for the services you will provide, processes and activities, and a framework for evaluation to ensure and sustain quality services and financial viability in your community. Your goals and objectives should be clearly defined and based on the mission, vision, values and beliefs of your business. Business Objectives Business objectives are the stated, measurable targets of how to achieve business aims. E.g. your goal is to achieve $200,000 in billings in your first year. The Launch Company LLC - Start-Up & Operations Manual 4 P age

49 Chapter 2 Mission, Vision & Goals Objectives give the business a clearly defined target. Plans can then be made to achieve these targets and can also motivate employees. They enable a business to measure the progress towards its stated aim, which is the direction that the business wants to go in the future. In other words, an aim is its goals or statement of purpose. Criteria for Effective Business Objectives The most effective business objectives meet the following criteria: S - Specific: M - Measurable: A - Agreeable: R - Realistic: T - Time Specific: Objectives are aimed at what the business does, e.g. you might have an objective of finding 10 new clients the first month of business. The business can put a value to the objective, e.g. you may want to achieve $10,000 in client billings in the first month. Objectives are agreed upon by all those involved in trying to achieve them. Objectives should be challenging but should also be able to be achieved with the resources available. Objectives have a time limit for achievement. E.g. Objectives should be met by the end of the year. Example: Objectives Your Business Might Choose The Launch Company LLC - Start-Up & Operations Manual 5 P age

50 Chapter 2 Mission, Vision & Goals Advantages and Disadvantages to Owning a Business Advantages You are your own boss. You have control over the how s, why s, when s, where s, what s, and, who s of running the business. You have creative rights. You make your own decisions. You have taxation benefits. Disadvantages There is a relatively high risk of failure, largely due to a lack of managerial experience and competence. The workload is heavy and the hours are long. You have sole responsibility. Income might be inconsistent and varied. Keys and Obstacles to Successful Business Operations You, the business entrepreneur, can have a great impact on whether your business is a success or not by what you do and/or what you do not do. Keys to Success: You research and understand the home care market. You undertake a feasibility study and develop a business plan. You conduct a self-assessment. You hire the right staff. You provide superior client service. You choose the appropriate geographical area. You advertise effectively. You develop a strong and effective marketing plan. You have a positive attitude. Obstacles to Success You do not evaluate personal suitability or not being truthful during self-analysis. You do not have sufficient expertise and/or capability. You do not conduct a feasibility study or not preparing a business plan. The Launch Company LLC - Start-Up & Operations Manual 6 P age

51 Chapter 2 Mission, Vision & Goals You do not keep records. You do not have sufficient cash flow. You do not provide good management. You do not hire the right staff. You do not pay attention to the competition. You do not provide adequate delivery of services. You expand too quickly. Home-Based Businesses Advantages and Disadvantages of Having a Home-Based Business Advantages It is less expensive than a community situated business, as overhead costs are lower. There is a lower risk of expensive mistakes. There is an opportunity to use household resources for business use. There is a gradual start-up and growth. The owner can set his/her own hours. Commuting time is reduced. Work can be conducted around family needs. There are no assigned standards for dress code. It provides a relatively inexpensive way to test the market. The owner has flexibility in the working hours. The business can start off on a part-time basis, until enough reserves are obtained to make it a full time venture. Individuals who use their homes for business purposes may claim a portion of the related expenses on their income tax... Expenses for the business use of a home may be claimed if the work space is: the taxpayer s principal place of business; or, used exclusively for business on a continuous and regular basis for meeting clients or customers. The amount that may be claimed for income tax purposes: is the portion of costs for heating, insurance, power, cleaning materials, property taxes, mortgage interest or rent that specifically relates to the area used for business purposes. A reasonable basis, such as the area of the workspace divided by the total area of the house, is normally used. may not exceed the income from the business. However, amounts not deductible in one year may be carried forward and claimed in the following year (subject to some limitations). The Launch Company LLC - Start-Up & Operations Manual 7 P age

52 Chapter 2 Mission, Vision & Goals Disadvantages The business will be less visible than it would be in a commercial place. A lot of discipline to work the required number of hours is required. There is an isolation and loss of contact with colleagues. Family can infringe on work time (if permitted). There can be an increase in family stress, as the demands of work and family are juggled. A person s motivational level can drop. Dress can become sloppy. Sometimes the professional image is compromised. Existing by-laws and zoning restrictions and leases can affect development issues There could be conflict with neighbors over noise, traffic and parking problems. There may be limitations and/or regulations to operating a home-based business. Ensure that no housing, zoning, or lease restrictions exist, which may prohibit setting up such a business in the location or it may affect developmental plans. There could be some additional considerations to review such as licenses, permits, and insurance coverage. Check with local ordinances to ensure there are no restrictions that would prohibit clients from being seen in the home office. Sources of Additional Information on Home-Based Businesses Publication 587 Business Use In Your Own Home Topic 509 Business Use of Home The Launch Company LLC - Start-Up & Operations Manual 8 P age

53 Chapter 2 Mission, Vision & Goals Community-Based Businesses If your decision is to operate a business at a location other than your home, then a site needs to be chosen. While location is not as critical for a Senior Care Business as it would be for a retail store, there still are some factors that should be considered. The objective is to find a spot that is convenient and accessible for clients. It should suit the needs of clients in the market for home care services. Some examples of a suitable place would be close proximity to one or more the following: Health Units; Medical Clinics; Senior Citizen Clubs; Care Facilities; Social Services; Veterans Administration; Community Resource Offices; Legions and other Veteran Organizations; Neurological Societies; Hospices; and, Mall or downtown locations. Other considerations include: by-law and zoning conformance; good visibility including effective signage; easy accessibility (e.g. elevator access if not a ground floor location); adequate parking with reserved spaces for the handicapped; close proximity to public transportation; and, area safety. The Launch Company LLC - Start-Up & Operations Manual 9 P age

54 Chapter 3 Feasibility Study CHAPTER 3 FEASIBILITY STUDY Table of Contents The Feasibility Process... 3! Market Research... 4! Conducting Test Market Research... 5! Primary Research... 5! Secondary Research... 5! Value and Format of a Test Market Survey... 6! Things to Consider When Designing a Test Market Questionnaire... 7! Things to Research When Evaluating the Market... 7! Market Area (Geographical)... 8! Market Profile (Potential Clients)... 9! Competition... 10! Market Status... 13! Market Analysis... 13! Market Share... 14! Example: Estimating Your Share of the Market... 14! Determine Price Structure for Senior Care Services... 15! Things to Consider When Pricing Assisted Living Placement Services... 15! Things to Consider When Pricing Home Care Services... 16! Direct Labor (Variable) Costs... 16! Overhead (Fixed) Costs... 16! Formula: Determining Total Costs... 17! Pricing to Actual Costs... 17! Formula: Determining the Cost per Hour to Deliver Service... 18! The Launch Company LLC - Start-Up & Operations Manual i P age

55 Chapter 3 Feasibility Study Formula: Calculating the Amount to Charge for Service per Hour... 18! Example: Determining How Much to Charge for Service per Hour... 18! Pricing to the Market... 19! Pricing by Position... 20! Determine Start-Up Expenses/Costs... 20! Main Start-Up Expenses... 21! Main Advertising Expenses... 22! Online... 22! Newspaper, Yellow Pages, Business Directories... 22! Brochures, Stationery and Business Cards... 22! Introductory Letters... 22! Equipment and Supplies... 22! Office Equipment/Supplies... 23! Housekeeping Equipment/Supplies... 23! Window Washing Equipment/Supplies... 24! Yard & Garden Maintenance Equipment/Supplies... 24! Personal Care Equipment/Supplies... 25! Vehicle... 25! Example: Worksheet for Projecting Start-Up Costs... 26! Funds... 27! Determine Operating Expenses/Costs... 27! Main Operating Expenses... 28! Insurances... 29! Forecast/Project Service Revenues... 31! Calculate the Break-Even Point... 31! Determining Service Hours Required to Meet Expenses... 32! Formula: Estimating the Break Even Point in Service Hours (Homecare)... 32! Example: Estimating the Break Even Point in Service Hours for One Month... 32! Determining Service Hours Required to Provide a Salary... 33! Formula: Determining Service Hours Required to Provide a Salary... 33! Determining Revenue Dollars Required to Meet Expenses... 33! Formula: Determining Break-Even Point in Revenue Dollars... 33! The Launch Company LLC - Start-Up & Operations Manual ii P age

56 Chapter 3 Feasibility Study Example: Estimating Break-Even Point in Revenue Dollars for One Month... 34! Project Profit and Loss... 34! Project Cash Flow... 35! Analyze Cash Flow Projections... 35! Analyze Other Factors... 36! Analyze Feasibility Study and Make Decisions... 36! The Launch Company LLC - Start-Up & Operations Manual iii P age

57 Chapter 3 FEASIBILITY STUDY After you have determined your personal suitability, set up your goals and objectives, created your mission, vision, values and beliefs statements, you should undertake a feasibility study. A feasibility study will help you determine if your senior care business will have a chance of succeeding. In other words, a feasibility study will help you determine if starting a home care business makes sense. There are three objectives that should be met by the feasibility study in order for the study to be of value: 1. Learn more about your prospective client s needs, wants, and desires. 2. Clearly define the service(s) that you wish to offer these clients. In other words, find a need and fill it. 3. Estimate how much revenue the service(s) will generate. After completing your feasibility study, you will have an idea of market opportunity and growth potential for your senior care business. Although you won t know for sure until you actually get your business started, a feasibility study will help you analyze the risks and rewards involved. You will want to gather as much information as possible about the The Launch Company LLC - Start-Up & Operations Manual 1 P age

58 Chapter 3 Feasibility Study homecare and assisted living industry, the senior market, and competition before investing your own and/or other people s money. A thorough feasibility study will provide a great deal of information for your Business Plan. At the feasibility stage, you are not looking at specifics but rather you are looking at an overview. The specifics will come in your Business Plan. The Launch Company LLC - Start-Up & Operations Manual 2 P age

59 Chapter 3 Feasibility Study The Feasibility Process The Launch Company LLC - Start-Up & Operations Manual 3 P age

60 Chapter 3 Feasibility Study Market Research No other factor is more important to your senior care business than knowing the senior market. Identifying your market, assessing the wants and needs of the market and evaluating the competitive mix are all essential to the process. Market research will help you determine: the geographical boundaries of your service area market; who your potential clients are; who your competitors are; and, market demographics. Demographics are common characteristics, which are used to identify certain segments of the population such as age, gender, ethnicity, and income. Market research begins with: identifying the potential client base (target market), who will be using your services; determining if potential clients have enough money to purchase your services; determining who has decision-making powers; determining who has purchasing powers; assessing wants and needs; determining how to provide the services, which will meet any unmet wants and needs; and, knowing who your competition is. These characteristics will become evident through your market research. The more information you can gather about the senior care market and competition, the better your chances for success will be. (You can do your own market research, which doesn t have to be overly expensive or technical.) In addition to identifying potential clients, unmet needs, desires, competitors and service implementation strategies, a market analysis will give you an indication as to whether or not your business will be successful. Furthermore, it will provide an opportunity early in the game, to minimize obstacles by making adjustments. The structure and functions of your business will, to a large extent, be based on market research. Another advantage of conducting a market analysis is that it will be very helpful, should you need to obtain financing. The Launch Company LLC - Start-Up & Operations Manual 4 P age

61 Chapter 3 Feasibility Study Conducting Test Market Research When conducting market research, two main methods of research are recommended, as they will provide a lot of valuable information about your market. They are: Primary Research; and, Secondary Research Primary Research Primary Research refers to the information that you collect first hand. It can be done informally, simply by approaching potential clients and discussing their needs and wants and by listening to people in your community or those who are involved in the home care industry. It may also involve mail, personal surveys or telephone surveys. Surveying and gathering information from your competitors is doing primary research. It is important because it provides up-to-date information. Secondary Research Secondary research refers to information that has been collected by somebody else (i.e. second-hand) and is presented in a statistical or descriptive manner. It is usually less time consuming and less expensive. The Internet is an excellent source for obtaining secondary research information. Tip The United States Census Bureau provides demographic information. Its web address is: The federal& state governments have their own websites, as do most cities, towns, municipalities, chambers of commerce, etc. They are also useful in helping you to gather information about your community. You can also find information at your local library, government agent s office, local chamber of commerce, business development offices, etc. Google Your City s demographics. The Launch Company LLC - Start-Up & Operations Manual 5 P age

62 Chapter 3 Feasibility Study Try to find the most up-to-date information. If the material is outdated, you may have to make some allowances in the data you collect. Value and Format of a Test Market Survey Value A test market survey tries to estimate how many people might be willing to purchase your services. It will not guarantee your success but will help you to determine if you are on the right path. Information is collected by means of a questionnaire, interview or survey. As many seniors as possible should be interviewed or surveyed in order that you can assess their reactions towards your proposed business venture. For Assisted Living placement, you will want to survey and interview assisted living facilities and care homes. Because this is a free service to seniors, your paying client is the facility or home that you are placing the senior into. We cover this in detail in another chapter, but you will want to determine how many assisted living homes and facilities are in your service territory and find out what they are accustomed to paying for referrals. For instance, if most facilities (10 or more licensed beds) are used to paying 50% of 1 month s rent as a referral fee and care homes are used to paying 100%, then you will want to consider matching these prices for the assisted living placement portion of your business. Format There are three main methods of conducting a Test Market Survey: by mail; by telephone; and, by personal interview. Respondents are more likely to respond if the questions asked are simple, clear, easy to answer and personally relevant to them. A rule of thumb is to design the questionnaire at a Grade 6 or 7 reading level. The Launch Company LLC - Start-Up & Operations Manual 6 P age

63 Chapter 3 Feasibility Study Things to Consider When Designing a Test Market Questionnaire A good questionnaire: needs a strong introduction conveying to the respondent what the questionnaire is all about; should indicate why the questions are being asked; needs easily answerable questions; should provide a congenial and friendly conclusion; and should express thanks for the respondents time and effort. Some typical questions a questionnaire might include are: Homecare Are you currently purchasing any home care services? If so, which one(s)? Would you purchase any services that are not currently listed? Are you satisfied with your present service provider? If no, what is the reason(s) for your dissatisfaction (e.g. high cost, low quality)? How can services be improved? How much would you be willing to pay for our services? Assisted Living Placement What are your typical rates for assisted living? Do you currently work with assisted living placement agencies? If so, which ones? What is the typical fee that you pay for a move-in? (move-in = client referred by your agency that moves into their facility or home) What do you like or dislike about the agencies that you have worked with? Would you be open to working with another placement agency? Things to Research When Evaluating the Market There are several areas to review, when researching the market. Each has its own specific questions that need to be answered in order to give you the most accurate information possible. Take the time to explore each one, as doing so will enhance your chances of having a successful Senior Care Business. The main areas to review are: market area (geographical area); market profile (potential clients); competition; market status; market analysis; and, market share. The Launch Company LLC - Start-Up & Operations Manual 7 P age

64 Chapter 3 Feasibility Study Market Area (Geographical) What is Your Service Area? The market area refers to the physical area where you will be offering your services. It may be a city, town, county, region, municipality, neighborhood etc. Think of it as a geographical area that you can plot on a map. Within the boundaries of your market area will be your target market (the segment of clients who are most likely to purchase your home care services). The market you will be targeting for your home care business will primarily be the senior citizen market. Once you have determined your market area, you can gather demographic information for that area. In selecting a geographical area for your business to service, the distribution of client groups will play an important role in the area you select. Some things to think about when selecting the geographical boundaries are: competition (existing and planned); demographics; and, maximum distances you and/or your staff are prepared to travel. The Launch Company LLC - Start-Up & Operations Manual 8 P age

65 Chapter 3 Feasibility Study Market Profile (Potential Clients) Who is Your Target Market? Homecare Once you have decided on the market area in which you will be operating your business, you can start collecting some basic demographic data to include in your market profile. (A market profile is a snapshot of the characteristics of your target market and uses both primary and secondary research.) It should include demographic information. Important characteristics to include in your market profile are: age; gender; income: household income pension income, social security income population in private households; households with one or more people who are 65 years or older; population 65 years and older who have a disability; marriage/partner status; and, cultural, ethnic, racial background. Potential clients can be found in all age groups, ethnic backgrounds, and religious faiths. They include: the elderly; the frail; the housebound; the terminally, chronically and acutely ill; the physically and mentally challenged; accident victims; family caregivers requiring assistance with caring for their loved ones; those recently discharged from hospital; those needing assistance in developing life skills; and, anyone who, simply, does not have the time or desire to conduct his/her own home maintenance. Some clients needs are short-term while others are long-term. Although Senior Care Businesses provide service to all segments of the population (young, middle-aged and seniors), the majority of clients will come from the senior category. Therefore, seniors should be your major target, as they will be the primary users of your services. The Launch Company LLC - Start-Up & Operations Manual 9 P age

66 Chapter 3 Feasibility Study Although seniors may be the users, keep in mind that they are not always the purchasers or the decision-makers. Many times, someone other than the person actually using our services hired my agency. That someone else might be a family member such as a son, daughter or spouse. Other parties, who may request or recommend your services, are professionals such as doctors, lawyers, community nurses, hospital discharge planners, social workers, etc. In order to develop a senior profile, you will need to collect all the available information about the senior market in your area. Assisted Living Placement Additionally, your assisted living placement segment of your business will also target assisted living facilities and care homes. As covered in another chapter, you do not charge seniors or their families a fee to work with you in finding the right assisted living option. Instead, you will charge a fee to the facility or care home that your client, the senior, chooses to move into. So, to determine your target market for this division of your business, you will want to look up all of the licensed assisted living options in your service territory. You can do this by vising your local state department of health website. You will want to build a list of these types of facilities: Assisted Living Facilities (10 or more licensed beds) Independent Living Facilities (facilities providing housekeeping, meals, and activities but excluding personal care) Care Homes (10 or fewer licensed beds) Senior Apartments Memory Care Facilities (facilities specializing in memory care: i.e. Alzheimer s care, Parkinson s care, etc.) Boarding Homes (group homes designed to care for seniors who are lowincome but lack the care requirements necessary to qualify for a state-funded nursing home or state-funded assisted living) Competition Who Is The Competition? Your competition is comprised of the businesses who are offering similar services to the same clients you have selected as your target market. Not only do you want to study the market in terms of potential clients and geographical area but you also should do a thorough study of your competition. You will want to know as much as you can about their business operations, client service, image and reputation. By researching your The Launch Company LLC - Start-Up & Operations Manual 10 P age

67 Chapter 3 Feasibility Study competition, you can better determine their strengths and weaknesses to help you design your own marketing plan. When determining existing and potential competitions, you need to look at: Home Based Service Providers; Assisted Living Placement Agencies; Self-employed/Independent contractors; Home Care Agencies private, Home Health Care Agencies, franchises and governmental; Family Care Homes; Assisted Community Living Facilities; Care Facilities and the level of care they provide (I.e. Personal Care, Intermediate Care, Extended Care and Multi-Level Care); and, Any other business that offers a service such as window washing or yard work, which you intend to offer. Where Might Information On The Competition Be Obtained? Information on home care service providers can be found in a variety of places: telephone and similar directories; yellow pages; licensing bureau for your local area; newspapers and magazines; radio and TV ads; libraries; trade associations; chambers of commerce; local service clubs; churches, synagogues, temples, halls and other places of religious worship; colleges and universities; employment agencies; health units; hospitals; community bulletin boards; home based business directories; licensing bureaus; and, the Internet. The Launch Company LLC - Start-Up & Operations Manual 11 P age

68 Chapter 3 Feasibility Study In addition to identifying the competition, other aspects of their businesses should also be reviewed, if possible. Try to obtain as much information as possible about their business (not necessarily easy). These details will help determine your ability to compete with them. E.g.: major strengths and weaknesses; services; geographical area; promotional activities; client base; client satisfaction levels; plans for expansion; length of time in business; profit levels; growth pattern; fee structure; number of employees; and, appearance of business office. The Launch Company LLC - Start-Up & Operations Manual 12 P age

69 Chapter 3 Feasibility Study Tip When comparing service providers, the majority of clients will usually look first at the Fee Schedules. Therefore, it is to your advantage to obtain a price list from your competition. Some methods of getting these details are: Phoning for oral detail (pretend that you are calling on behalf of an ailing family member); Requesting printed price list handouts; Asking people who have purchased their services from the agencies; and, Viewing their web site (if they have one). It would also be helpful if you can find out if the competition is planning a price increase, and, if so, to what amount. This information can be asked at the same time you request details about the current rates. Market Status What is the status of the market in terms of growth, stagnancy or decline? Your local licensing bureau will have historical and existing stats on home care and assisted living businesses. You could also check yellow page listings. Check back over a period of years for a better picture. Home Care Agencies would also be able to tell you how their client numbers have changed over the years. Additionally, professionals working in the health care field should also be familiar with the evolution of home care needs. Market Analysis A structured form will help you focus more sharply on data collection and analysis in conducting your market research. A blank Market Analysis for a Home Care Business is provided in the Launch Homecare Business Plan Kit. The Launch Company LLC - Start-Up & Operations Manual 13 P age

70 Chapter 3 Feasibility Study Market Share What is your market share? Your market (geographical) area and your target market within it will support a certain level of revenue for home care and assisted living placement services. The portion of total revenue that any one competitor has is called market share. Your potential client volume (how many clients you can reasonably hope to gain) is your estimated market share. This estimate can be given as: the number of clients; the money value generated; or, a portion of the total market. Estimating market share is not easy but you should attempt to make the effort. To sell your services, you should know what share of it you hope to obtain. Estimating market share involves: estimating (in numbers) the total market (seniors) in your chosen service area; considering your competitors and how much of the total market each competitor has; and, deciding on a figure for your market share. Your goal should be to capture part of your competitor s market share so keep this objective in mind when estimating what portion of the total market your business expects to secure in the first three years of operation. Example: Estimating Your Share of the Market Suppose the population in your planned service area is 500,000: Step 1: Determine the breakdown of the population according to age groups. Let s say of the 500,000 people in the designated area:! 217,750 fall within the ages of: 1 to 35! 217,750 fall within the ages of: 36 to 64! 64,500 fall within the ages of: 65 and over Step 2: Estimate what percentage of each age group will purchase home care or assisted living services and translate it into the number of potential clients. E.g.: Ages %. (of 217,750) = potential clients Ages % (of 217,750) = potential clients Ages 65 and over 3.0% (of 64,500) = 1,935 potential clients! Total = 2, potential clients The Launch Company LLC - Start-Up & Operations Manual 14 P age

71 Chapter 3 Feasibility Study You can estimate your potential revenue as being equal to that of your smallest competitor or equaling the average home care competitor in your area. In any event, it is important to estimate your own economic feasibility for your home care business with a good, conservative estimate of your projected revenue. This information will come in handy when preparing your Business Plan. ** Included in the Launch Homecare Business Plan Kit are the financial forecast spreadsheets that can be used to gauge the financial feasibility of your business based upon the market size and market share that you calculate using the processes outlined in this chapter. Determine Price Structure for Senior Care Services Pricing your services is a very important business decision you will need to make. You must offer your services for a price that your target market is willing to pay and one that produces a profit for you. You will not be in business long if you cannot generate a profit. Your clients will ultimately determine your prices and they will only be willing to purchase your services within a specific price range. Remember that the image of your business is crucial to obtaining and keeping clientele and that your pricing structure and policies are a major component of your image. Things to Consider When Pricing Assisted Living Placement Services When determining the prices that you will charge for your assisted living placement services, you must be aware of: What your competitors are charging assisted living facilities and care homes for referrals; What your costs are to provide these services (Assisted Living Placement Services can be provided at a very low cost. You must consider the price to obtain a client (marketing) and then your cost to serve the client (coordinating the placement). Your sales strategy and goals When setting your fee structure for assisted living placement services, determine what the market will pay, set your goals to obtain a profit based upon your cost structure, and then proceed further. ** The financial forecasting spreadsheets included in the Launch Homecare Business Plan Kit will assist you in setting your goals and estimating your costs. The Launch Company LLC - Start-Up & Operations Manual 15 P age

72 Chapter 3 Feasibility Study Things to Consider When Pricing Home Care Services When determining a price for your home care services, you must know: what it costs -- direct labor (variable) and overhead (fixed) costs; what your clients are prepared to pay; your marketing strategy and immediate goals; the competitors prices and the senior market; the market demand for the services; and, the need to cover costs and provide an adequate profit. Pricing is a key factor in marketing and is extremely important because if prices are too high or too low, the success of your business could be compromised. Before you can understand pricing, you have to know about costing. Direct Labor (Variable) Costs Variable expenses increase when revenue increases. They also decrease when revenue decreases. Variable costs are any expense incurred as a direct result of providing your home care service(s). Direct labor costs include those wages and labor related expenses identified with a specific job. The labor cost is calculated by multiplying the number of direct labor hours delivered by the direct labor cost per hour. As the number of service hours provided increases so do the costs of labor. We can, therefore, consider labor costs as a variable cost. Remember to include not only the amount paid directly to your employee but also all other labor-related expenses. (You will need to look up these labor-related expenses for your state.) To assist you in determining your labor costs, refer to the worksheet provided Projecting Labor Costs in the Launch Homecare Business Plan Kit. Overhead (Fixed) Costs The Launch Company LLC - Start-Up & Operations Manual 16 P age

73 Chapter 3 Feasibility Study These costs do not vary directly with revenue. These business expenses must be paid even if you have no clients and therefore no money coming in. They include but are not limited to: insurances; rent/lease payments; utilities; advertising; interest and any debt for start-up costs; labor costs for office employees and other salaries employees; and, a salary for yourself. Formula: Determining Total Costs Variable costs per service hour x Number of service hours + Fixed Costs = TOTAL COSTS Three commonly used Pricing Methods are: pricing to actual costs; pricing to the market; and, pricing to position. Pricing to Actual Costs This method takes into account all your costs, your desired profit, and then totals these into a price. Prices must cover all costs of supplies, materials, services, goods, overhead, labor, debt servicing etc. The home care industry is service oriented and labor intensive; consequently, your labor costs will be the major expense. This is the preferred method to establish your prices. The Launch Company LLC - Start-Up & Operations Manual 17 P age

74 Chapter 3 Feasibility Study Formula: Determining the Cost per Hour to Deliver Service Hourly Direct Labor Cost + Hourly Overhead (Fixed) Costs + Desired Profit = SERVICE FEE PER HOUR Formula: Calculating the Amount to Charge for Service per Hour Direct labor Costs + Fixed Costs per Hour + Desired Profit = HOURLY FEE FOR SERVICE Example: Determining How Much to Charge for Service per Hour You have determined the following: You offer an employee $10.00/hour. You determine the cost of labor-related expenses to be $2.00/hour. (This is based on what is specific to your business and state.) Total direct labor cost will therefore be $12.00 ($ $2.00). Your projected number of service hours delivered per month is 200. Your monthly fixed (overhead) expenses are $ or $1.50 per hour (monthly fixed expenses projected number of service hours ($ hours). You want an hourly profit of 35%. Using the figures listed in the example, you can calculate an hourly price for your services: Step 1: Step 2: Calculate the total labor costs per hour: Direct labor costs (variable) per hour ($ $2.00). $ Fixed costs per hour.. $ 1.50 = Total Costs: $ Calculate your desired hourly service fee: Desired dollar profit (0.35 X $13.50) $ Total Costs. $13.50 = Total Hourly Service Fee: $18.23 The Launch Company LLC - Start-Up & Operations Manual 18 P age

75 Chapter 3 Feasibility Study Pricing to the Market A guide to setting your own prices is to determine what the competition is charging, as most likely these are the price ranges that potential clients will expect and accept. Be careful, however, not to just automatically adjust your own rates to theirs without doing an in-depth analysis of what your actual costs will be. Also, in your effort to compete, don t undercut your prices so much that you do not realize the profit you need to make, or take in sufficient funds to cover expenses. The negative side of pricing to the market is that your actual costs may be higher than your competitors costs. If you base your prices strictly on what the competition charges, then you risk ending up with a loss. The Launch Company LLC - Start-Up & Operations Manual 19 P age

76 Chapter 3 Feasibility Study Pricing by Position When pricing your home care services, consider the image you want to portray. In other words, How do you want to be perceived in the market? This is an important question because your price positions your service(s) in your prospects minds. If you're positioning your agency as a high-end service-provider, you should choose prices towards the higher end of the price ranges already found in your market. If, on the other hand, your service will be more modest, sacrificing additional features and the finer touches, you ll price lower. Determine Start-Up Expenses/Costs All costs related to getting your business to the point where you start delivering services to your clients are considered to be part of start-up costs. Start-up costs are figured separately from operating costs, which take over once your business opens its doors. It is important that you obtain reliable estimates for your start-up expenses wherever possible. e.g. Your insurance agent can give you advice on the types of coverage you need and estimated costs for that coverage. By joining the Launch Homecare membership community, you are also entitled to incredible discounts by going with our carrier. Printers can give you estimates on the cost of printing your business cards and brochures. The Launch Company LLC - Start-Up & Operations Manual 20 P age

77 Chapter 3 Feasibility Study Main Start-Up Expenses The Launch Company LLC - Start-Up & Operations Manual 21 P age

78 Chapter 3 Feasibility Study Main Advertising Expenses Advertising is essential for business promotion purposes. The main ways that you might want to consider for advertising your Senior Care business are outlined below. Online It is crucial that your agency have a well designed website along with a search engine optimization and social media marketing plan. With your Launch Homecare Membership, this is included and will become one of the leading sources for credibility that your agency will have. When consumers and their families are looking for care options, they are turning more and more to the Internet for their research. Newspaper, Yellow Pages, Business Directories It is recommended that you place a continually running ad in the business portion of your local newspaper(s) and submit yearly entries for the Telephone Yellow Pages and other Business Directories that may serve your area. A good place to advertise is in the seniors Directories and Home Based Businesses Directories. Usually, the seniors and Home Based Business Directories are produced twice a year, the Yellow Pages once per year and newspapers daily. If you can manage to purchase a year s advertising in advance, your rates would be considerably cheaper. Brochures, Stationery and Business Cards By joining the Launch Homecare membership community, your first set of 1,000 brochures, business cards, and letterhead is included. Our large-volume discounts are passed on to you for re-ordering so you never have to pay retail rates for quality printing. Introductory Letters Mail out advertising is a good way to jump start your advertising campaign. Talk with your local Post Office to determine rates. One of the most economical methods is to package the letter, brochure and business cards together and distribute them as flyers. Once again, rates are based on volume. The more you send out, the cheaper the rate. Equipment and Supplies Equipment needs are determined by the services you intend to provide. Whether you start out providing only one type of service or a smorgasbord of them, you need to have equipment to do the job(s). The Launch Company LLC - Start-Up & Operations Manual 22 P age

79 Chapter 3 Feasibility Study Office Equipment/Supplies Equipment Some office equipment will be needed, especially if you plan to establish a full service, multi-client business, do a lot of advertising, and use the Internet. Listed below is the wish list but you can modify it to suit your individual needs. You may already have some of these items on hand: computer, software and printer; business telephone; calculator; cell phone; fax machine; photocopier; chair; filing cabinet; and, desk. Supplies paper products (paper, file folders, labels, writing pads, accounting records, journals, etc.); and, miscellaneous items (stapler, pens, pencils. ruler, eraser, 3-hole punch, etc.) Housekeeping Equipment/Supplies In most cases you will be using your client s equipment and supplies for performing cleaning tasks. Some clients may want you to use your own equipment so you should be prepared to stock at least the following in your inventory: Equipment vacuum cleaner; floor mop; dust mop; toilet scrub brush; pails; and, cleaning caddy. Supplies cleaning agents for floors, bathroom, windows, ovens; furniture polish; disposable rags; The Launch Company LLC - Start-Up & Operations Manual 23 P age

80 Chapter 3 Feasibility Study garbage bags; and, gloves. Window Washing Equipment/Supplies These supplied will need to be considered if you plan to offer this service. Equipment 12 or 18-inch window scrubber; aluminum telescopic handle & brushes; 6, 10, and 18 inch squeegees with replacement rubber blades; plastic or galvanized water pails (2 gallon and 5 gallon capacities); and, 8-foot step ladder Supplies: liquid soap; clean rags, towels; and, sharp razor blade scrapers. Yard & Garden Maintenance Equipment/Supplies These supplied will need to be considered if you plan to offer this service. If your clients have their own lawn and garden equipment and tools you can possibly use theirs, otherwise you will have to furnish your own. The price you charge should be less if the client supplies the tools and equipment. The following should handle most of the basic yard and garden care requests: Equipment lawn mower; weed eater; wheel barrel; pruning shears; dirt shovels; snow shovel; hedge trimmer; and, garden tool set. Supplies oil and gasoline; and, garbage bags (or other similar products) for disposing clippings. The Launch Company LLC - Start-Up & Operations Manual 24 P age

81 Chapter 3 Feasibility Study Personal Care Equipment/Supplies Usually, the client is responsible for purchasing any equipment that is required such as commode, wheelchair, walker, bedpan, raised toilet seat, etc. However, it would be a good idea if you were to obtain a few personal care supplies to have on hand. Equipment and supplies should include: Equipment transfer belt; blood pressure monitor; temperature monitor; and, watch or clock with second hand. Supplies disposable soaker pads; disposable peri wipes; disposable incontinency pads; and, disposable gloves The need for supplies is minimal since most clients provide their own. However, you will need to have some inventory on hand to use on those occasions when the client does not want to provide them; or, when you get a late night call for assistance, there are no stores open, and the client does not have any personal care supplies on hand. In these situations, you could offer them to the client at cost, as a good will gesture. Product profit should not be the goal here. Instead, you will benefit more by charging the client your cost only than you would benefit if you added a little extra for profit. This is because these clients are more apt to give you repeat business, as well recommend you to other potential customers. Vehicle It is essential that you have a vehicle(s), which meets the needs of the services you will be providing. E.g. You may need a vehicle such as a van, which is capable of transporting clients and their equipment (walker, wheelchair). Or you may need something like a truck if you are going to offer grounds keeping services, which enables you to transport items such as lawnmower, hedge trimmer, etc. Assisted Living Placement: You will need a good, reliable vehicle for transporting clients and their family members when touring them through assisted living facilities and care homes with the intention of determining which one the client wants to move into. If the client needs medical transport, we suggest that you contract with a medical transport company to provide this service. The Launch Company LLC - Start-Up & Operations Manual 25 P age

82 Chapter 3 Feasibility Study Example: Worksheet for Projecting Start-Up Costs EXPENSES DETAILS TOTAL + Launch Homecare Membership Insert the cost for your Launch Homecare Membership Package. Package Insert costs for advertising in newspapers, yellow pages, business + Advertising directories, senior citizens publications, etc. + Brochures & Business Cards These are included with your Launch Homecare Membership Fee. Insert costs for mailing introductory letters and enclosures such as + Introductory Letters brochures, business cards, fee schedules, etc. Insert costs for various insurances such as liability insurance, + Insurances employee bonding, vehicle insurance, premise insurance, disability insurance, etc. This is also provided through your Launch Homecare membership. Insert costs for any mandatory fees, licenses & permits such as business license, state seller s permit, home care agency license, + Fees, Licenses & Permits fidelity bonds, Worker s Compensation Insurance, fire insurance, premise insurance, business name registration, vendor s permit, vehicle insurance, commercial vehicle insurances etc. Insert costs for equipment and supplies required such as office equipment/supplies, personal care equipment/supplies, + Equipment & Supplies housecleaning equipment/supplies, window washing equipment/supplies, yard maintenance equipment, etc. Insert costs for any vehicles required such as truck for yard + Vehicle maintenance or car for transporting clients. + Office Space Insert the monthly cost for an office space. If starting in a Home Office, leave blank Months Operating Expenses Using the financial forecast spreadsheets found in the Launch Homecare Business Plan Kit, determine what is will cost you to run your business for 3-6 months and insert that amount here. + Other Insert any other miscellaneous costs incurred. Add cost totals for each expense area and insert here. = Total Start-Up Costs Sum of all start-up costs. A blank worksheet for Projecting Start-Up Costs is provided in the Launch Homecare Business Plan Kit. The Launch Company LLC - Start-Up & Operations Manual 26 P age

83 Chapter 3 Feasibility Study Funds Operating Money You should have enough money on hand to carry you and your business for as long as it takes to reach your break-even point. Be realistic about your break-even point and consider a longer start-up period (up to six months) before you expect significant operating revenue from your business. Contingency Money Allow yourself additional funds, a cushion, for the things you may have overlooked or can t predict. Determine Operating Expenses/Costs Operating costs are the costs required to keep your business going after the start-up. Operating costs are ongoing and are incurred in the daily operation of your business. One of the main reasons new businesses fail is because they do not have enough cash flow available to cover their operating expenses. Therefore, it is important to project early what your monthly expenses will be and ensure that you have enough cash on hand to carry you while your business is being built up. You may have to take out an operating loan to accomplish this. The Launch Company LLC - Start-Up & Operations Manual 27 P age

84 Chapter 3 Feasibility Study Main Operating Expenses Included in the Launch Homecare Business Plan Kit are the financial forecasting spreadsheets that can be utilized to determine your labor costs, operating expenses, revenue forecast, and other tools to plan financially for the launch of your senior care business. The Launch Company LLC - Start-Up & Operations Manual 28 P age

85 Chapter 3 Feasibility Study Insurances Tip Before starting your Senior Care business, get business insurance coverage to provide risk protection for you, your business, your clients and any employees. Part of being a Launch Homecare Member, you have the option of joining our group insurance program. This will provide you with all of the insurance that you need at a fraction of the price that you would be able to obtain it on your own. Insurances, which should be considered for a Senior Care Business, include the following: General Liability Insurance and Employee Bonding You should not commence service delivery until you have obtained liability insurance and employee bonding. This cannot be stressed enough. There are numerous insurance companies that would be pleased to review your needs with you and offer tailored packages. Professional Liability Insurance If you are offering personal care/hands-on services such as dressing, bathing and transferring a client from the bed to the bathroom etc. you should make sure your insurance policy covers such activities. A general liability policy usually does not cover these types of activities so you may have to take out a professional liability insurance policy. You will want to be protected in case an accident occurs. Insurance coverage might also be conditional. I.e. if you have Certified Care Aids dispensing medication to clients, insurance companies will not cover them unless the medication is presented in a Blistopax, which was prepared by a Pharmacist or other qualified and insured professional (e.g. Registered Nurse). People working as professionals (e.g. registered nurses) are required to carry professional liability insurance specific to their profession. If you are a professional, be sure to check out what is required in your state. The Launch Company LLC - Start-Up & Operations Manual 29 P age

86 Chapter 3 Feasibility Study Disability Insurance Disability insurance replaces a portion of your regular income when an illness or accident prevents you from working. It can be important for a self-employed person, although it is relatively expensive and the payments may not be enough to keep you going in case of disability. Tip Ensure that the policy you obtain covers the situations you want it to cover. Be sure it cannot be cancelled and that renewals are guaranteed as long as you pay your full premiums on time, regardless of whether or not there are changes in your condition. If a policy seems to be too expensive, look into one that offers lower premiums at younger ages with increasing premiums as age advances. Vehicle Insurance (Business) Cars and other vehicles, used in your business, have to be insured for business purposes. Insurance claims may not be valid if a vehicle is involved in an accident under conditions the policy doesn t cover. Ensure that employees have the appropriate coverage if they are using their own vehicles for the delivery of home care services, especially if they are transporting clients. Homeowner s Insurance Regular homeowner s insurance does not usually cover losses, which are related to home-based businesses. Since insurance companies vary in what they cover, it would be wise to determine the specifics of your personal homeowner policy by consulting with an insurance company representative. Be sure to advise him/her that you have a home-based business so that he/she can ensure you have adequate coverage. Shop around for the best prices available to suit your business needs. Tip The Launch Company LLC - Start-Up & Operations Manual 30 P age

87 Chapter 3 Feasibility Study Forecast/Project Service Revenues Revenues are the amounts of money earned from servicing your clients. In order to forecast revenue you will need to project the number of service hours and placements delivered and determine what price you will be charging for your services. i.e.: Homecare Placement If you charge a fee of $20.00/hour and provide 10 hours of service, your revenue will be $ ($20.00 x 10). If you provide 20 hours of service at $15.00/hour, your revenue will be $ ($15.00 x 20.) If you place 5 people with monthly assisted living fees of $2500/each and your fee to place each person is 50% of 1 month s fees, then your total revenue would be: $ ($1250 X 5 placements) List all the services you will be offering, the number of projected service hours and the hourly price you will be charging for the different services provided. Forecast your estimated revenue for each service for each month during the first year. You must forecast revenue, costs and profits using assumptions from your market research. Included in the Launch Homecare Business Plan Kit are the financial forecasting spreadsheets that can be utilized to determine your labor costs, operating expenses, revenue forecast, and other tools to plan financially for the launch of your senior care business. Calculate the Break-Even Point The break-even point in your business is the point at which your revenue is equal to your total expenses. At that point you neither make any money, nor do you lose any. The break-even point shows what it is going to take in service revenue just to survive. The Launch Company LLC - Start-Up & Operations Manual 31 P age

88 Chapter 3 Feasibility Study Once you determine what your variable costs and fixed costs are for your business, you can determine your break-even point. The break-even point can be determined in: service hours; number of placements; or, revenue dollars. An important term used with break-even analysis is gross margin. A gross margin is service revenue minus variable costs (service price/hour variable labor costs/hour). It is the amount available to pay for fixed costs and provide any profit after variable costs have been paid. Determining Service Hours Required to Meet Expenses Formula: Estimating the Break Even Point in Service Hours (Homecare) Use the following formula to estimate the amount of service (billing) hours needed to cover your total fixed and variable costs for the month. (You may also wish to project this figure for the year.) Fixed Costs Gross margin (Service Price/Hr. Variable Costs/Hr.) = Hours Needed to Break Even Example: Estimating the Break Even Point in Service Hours for One Month Using the figures provided in the Pricing Services example: Fixed monthly expenses = $300.00/month Variable costs (direct labor) = $ 12.00/hour Service price/fee = $ 16.50/hour The number of service hours to break-even can be determined: $ ($ $12.00) = hours From this example, you can see that you will need to have monthly billings of hours if you charge $16.50 an hour for your services, have direct labor costs of $12.00/hr. and have $ of fixed expenses per month. The gross margin per service hour is $4.50 ($ $12.00). The gross margin per service hour lets you know that, after the variable expenses are covered, each hour of service delivered will provide $ 4.50 toward your fixed expenses of $ per month. The Launch Company LLC - Start-Up & Operations Manual 32 P age

89 Chapter 3 Feasibility Study Once the $ of monthly fixed expenses has been covered, your profit will increase by $ 4.50 per hour of service delivered. Determining Service Hours Required to Provide a Salary Let's assume you would like to earn a salary of $2,000 per month, rather than merely breaking-even. You can consider your salary of $2,000 per month as another fixed expense. In other words, the fixed expenses will now be $2,300 per month. (The $300 listed earlier plus your $2,000 salary.) The new break-even point, needed to provide you with $2,000 per month, is shown by the following break-even formula: Formula: Determining Service Hours Required to Provide a Salary Fixed Expenses per Month Gross margin per Hour of Service = Hours Needed Per Month to Break Even Using the above figures, the number of service hours required for you to make $2,000 is: $2,300 per month $4.50 per hour of service = Service Hours Determining Revenue Dollars Required to Meet Expenses You can also determine the break-even point in revenues dollars (instead of service hours) by dividing your agency s total fixed expenses by the gross margin ratio (gross margin divided by revenues). The ratio can be calculated using company totals or per unit amounts. Formula: Determining Break-Even Point in Revenue Dollars Total Fixed Expenses Gross margin Ratio = Break Even Point in Revenue Dollars The Launch Company LLC - Start-Up & Operations Manual 33 P age

90 Chapter 3 Feasibility Study Example: Estimating Break-Even Point in Revenue Dollars for One Month Using the same data that is provided above: Revenues per service hour = $ Variable Expenses per service hour = $ Gross margin per service hour = $ 4.50 Step 1: Calculate the gross margin ratio by using per service hour amounts: Gross margin divided by Revenues = Gross margin Ratio $4.50 $16.50 = 27.7% (0.277) Step 2: Calculate the break-even point in revenue dollars Total Fixed Expenses divided by Gross margin Ratio = Break Even Point in Revenue Dollars $ = $1,083 Project Profit and Loss To project profit and loss, utilize the financial forecasting spreadsheets found in the Launch Homecare Business Plan Kit. The P&L spreadsheet found in that document will allow you to calculate your total revenue, your variable costs, your fixed costs, and your net profit. Included in the Launch Homecare Business Plan Kit are the financial forecasting spreadsheets that can be utilized to determine your labor costs, operating expenses, revenue forecast, and other tools to plan financially for the launch of your senior care business. The Launch Company LLC - Start-Up & Operations Manual 34 P age

91 Chapter 3 Feasibility Study Project Cash Flow A cash flow projection is a forecast of the cash your business anticipates receiving and disbursing during the course of a given period of time -- frequently a month. It is useful in anticipating the cash portion of your business at specific times during the period projected. Cash flow projections are prepared to determine shortages or excesses in cash from the amount deemed to be necessary to operate your business during the period the projection covers. If projections indicate there is a cash shortage, then financial arrangements must be made to generate more cash. Ways in which additional funds can be obtained include: owner puts in more cash; a loan is taken out; and, increase the selling price of your service(s). Ways to reduce the amount of cash being paid out include: reduced purchase of equipment and other fixed assets; and, reducing and/or eliminating some operating expenses. Analyze Cash Flow Projections At the end of each month, the cash position should be adequate to meet the cash requirements for the following month. If there is insufficient cash, then additional cash will have to be infused or the amount of cash being paid out must be reduced. If there is too much cash on hand, then this money is not working for the business. By projecting cash flow, analyzing the breakeven point and obtaining good cost control information, you will be better equipped to make decisions, which will increase profits. The cash flow projections become more useful when the estimated information can be compared with the actual information. Projecting cash flow will assist you to set new goals and plan operations for more profit. Included in the Launch Homecare Business Plan Kit are the financial forecasting spreadsheets that can be utilized to forecast your cashflow. The Launch Company LLC - Start-Up & Operations Manual 35 P age

92 Chapter 3 Feasibility Study Analyze Other Factors When conducting a feasibility study, there are other factors that you should analyze including: Legal Issues Determine the need for licenses, permits, insurances or certification necessary. Do you have what you need? If not, can you meet the requirements to get them? Determine Your Staffing Needs Do you have the necessary skills to be an effective manager or do you need to hire someone whose strengths balance your weaknesses? If you offer personal care services, you will need someone who is certified and/or trained to perform such services. Financing Your Business Finding the necessary funds is a challenge for every new business. Sources to consider are personal savings, friends and relatives and bank loans. Analyze Feasibility Study and Make Decisions After you have completed your feasibility study, you can examine it and decide if your business venture can be profitable. Review your objectives/goals/mission statement, which you prepared earlier and ask yourself these questions: Do your market research, competitive analysis, personal skills and financing needs suggest that your business will be profitable? Does your research allow you to achieve your objectives? If your market research indicates that your senior care business has a strong possibility of being successful, you can then compile your collected information into a Business Plan. If, on the other hand, your research displays negative results, your business idea may need to be modified. Various conditions may cause a negative decision. e.g.: You set your price too low. Your costs may be greater than your projected revenue. Or, You don t invest enough money into sales and marketing. Even though you may be disappointed with the negative findings, it is much better to learn this early in the game before you spend additional time and money on a business that won t be profitable for you. The Launch Company LLC - Start-Up & Operations Manual 36 P age

93 Chapter 3 Feasibility Study Conduct a feasibility study before starting your business. Research the senior market in your area. Study your competition. Shop around for the best prices for your advertising, etc. Use different scenarios when doing financial projections. Don t underestimate the amount of money needed to operate and don t overestimate service revenue in the first few months. Be realistic about the point at which your business can reasonably be expected to generate significant revenue. The Launch Company LLC - Start-Up & Operations Manual 37 P age

94 Chapter 4 The Business Plan CHAPTER 4 THE BUSINESS PLAN Table of Contents Purpose of a Business Plan... 2! Information Required in a Generic Business Plan... 2! Table of Contents... 2! Executive Summary... 2! Business Concept... 3! Description of the Home Care Industry... 3! Description of Business Venture... 3! Business Goals... 3! Marketing Plan... 3! Revenue Forecast... 4! Corporate Structure... 4! Risk Assessment... 4! Action Plan... 4! Financial Plan... 4! Financial Statements... 5! Financial Forecasts... 5! Financing and Capitalization... 5! Operating Loan... 5! References... 5! Appendix... 6! The Launch Company LLC - Start-Up & Operations Manual i P age

95 Chapter 4 THE BUSINESS PLAN After you complete your feasibility study and decide to proceed with your senior care business opportunity, your next step is to develop a sound Business Plan. Your goal in writing a Business Plan is to create an organized view of your business ideas a road map to follow. The length of your Business Plan itself is immaterial. The key is quality, not quantity. By expressing your ideas on paper you often identify weaknesses to be considered and anticipated. Most important, the Business Plan guides you to your company s future and lends focus and direction to your ideas. The Launch Company LLC - Start-Up & Operations Manual 1 P age

96 Chapter 4 The Business Plan Purpose of a Business Plan A Business Plan is vital to a successful business not only because it will help you keep on top of things but also because it is essential if you plan to seek financial backing. It will: summarize your goals and objectives and delineate how you intend to meet them; help identify financing needs; help attract investors; be a requirement when seeking financial backing; improve your managerial skills; help identify your client base; help define your market area; and, will help with establishing your fee structure. Information Required in a Generic Business Plan The following outline covers what is needed for a very detailed and thorough Business Plan. Unless your senior care business is very large or you need to borrow a lot of money, you can probably get away with a much simpler and basic Business Plan. Table of Contents Number the pages of your Business Plan and include a Table of Contents to make it easier for your readers to find what interests them. Executive Summary The Executive Summary should capture the reader s attention and lure them to read further. It should be limited to two pages and summarize the key points providing the reader with an immediate snapshot of what the rest of the plan entails. Some things to include are: company name, address, phone number, and fax number; name and phone number of the contact person; nature of the business and the market area; securities offered to investors; business loans sought; and, highlights of the Business Plan i.e. the project, competitive advantage, and bottom line. The Launch Company LLC - Start-Up & Operations Manual 2 P age

97 Chapter 4 The Business Plan Business Concept The Business Concept identifies the market potential within the senior care industry and outlines the action plan for the coming year. It forms the basis for the cash flow forecast and projected income statement. It also contains an assessment of business risks and a contingency plan. Description of the Senior Care Industry Provide details on: what the senior care industry outlook and growth potential are; market and clients/customers; competition; and, national and economic trends. Description of Business Venture Provide details on: services; target market(seniors); competitive advantage of your business; business location and size; staff and equipment needed; and, brief history about the principals involved and the development work done. Business Goals Provide details on: short-term specific goals (one year); and, long-term specific goals (over one year). Marketing Plan Provide details on: sales strategy: distribution; pricing; promotion; and, guarantees. The Launch Company LLC - Start-Up & Operations Manual 3 P age

98 Chapter 4 The Business Plan Revenue Forecast Provide details on: all assumptions made in developing the forecast; monthly forecast for coming year; and, annual forecast for following 2-4 years. Corporate Structure Provide details on: legal form of business; share distribution; list of contracts and agreements; directors and officers; background of key management personnel; contract professionals/consultants; organizational chart; and, duties and responsibilities of key personnel. Risk Assessment Provide details on: competitors reactions; list of critical external factors (labor shortage, recession, new competition, etc.); list of critical internal factors e.g. revenue is lower or higher than predicted, loss of management, etc.); and, contingency plans to handle the most significant risks. Action Plan Provide details on: steps to accomplish this year s goals; and, checkpoints for measuring results Financial Plan It is recommended that the borrower review the financial statements with an accountant prior to presenting them to a lender. The Launch Company LLC - Start-Up & Operations Manual 4 P age

99 Chapter 4 The Business Plan Financial Statements Provide details on previous years balance sheets & income statements (2-3 years, if applicable). Financial Forecasts Provide details on: opening balance sheet (new businesses only). A balance sheet gives a snapshot of the business s financial position. It shows assets (what you own) and liabilities (what you owe) and your equity (your investment in the business). projected income statements for next 3 years. An income statement shows money transactions over a definite period of time, e.g. one month or one year. It shows how much money came in (revenue) and how much money was paid out (expenses). cash flow forecast. A cash flow forecast presents a business s cash position by showing when money is collected and spent. Financing and Capitalization Provide details on: Term Loan applied for (amount, time and when required); owner s equity; and, summary of Term Loan requirements. Operating Loan Provide details on: Line of Credit applied for; maximum operating cash; present financing (if applicable); Term Loans outstanding; and, current operating Line of Credit. References Provide details on: name of present lending institution (branch and account types); lawyer s name, address and phone number; and, accountant s name, address and phone number. The Launch Company LLC - Start-Up & Operations Manual 5 P age

100 Chapter 4 The Business Plan Appendix Provide the following documents: personal net worth statement; letters of intent; list of inventory; list of leasehold improvements; list of fixed assets; price lists; description of insurance coverage; accounts receivable summary; accounts payable summary; copies of legal agreements; appraisals; and, financial statements for associated companies, where appropriate. A basic Business Plan for setting up an LLC is presented in the Launch Homecare Business Plan Kit. The example represents a "dummy" business with fictitious information, and is intended as a guide only. You will need to provide your own data, which reflects the specifics of your own business The United States Small Business Administration The Launch Company LLC - Start-Up & Operations Manual 6 P age

101 Chapter 5 Financing Your Business CHAPTER 5 FINANCING YOUR BUSINESS Table of Contents Criteria for Borrowing... 1! Start-Up Capital and Operating Capital... 3! Funding Sources for Setting up Your Business... 4! Types of Financing... 5! Equity Financing... 5! Debt Financing... 5! Collateral or Security... 5! Small Business Administration (SBA) Loans... 6! Dealing with Loans... 6! Shopping Around... 7! The Launch Company LLC - Start-Up & Operations Manual i P age

102 Chapter 5 FINANCING YOUR BUSINESS As discussed in Chapter 3 (Feasibility Study) and also in the Launch Homecare Business Plan Kit, after preparing a Projected Income Statement and filling out a Cash Flow Projection, you should be able to determine if you need additional funds to get your business up and going. Depending on your own financial resources, you may find yourself in a position where you need to obtain additional financing. Criteria for Borrowing Finding funding is a challenge for every new business owner. Before you get too excited about borrowing money, realize that although financial institutions are in the business of lending money, they are not in the business of taking risks. They usually have some basic and conservative guidelines that they follow. A general rule of thumb about how much The Launch Company LLC - Start-Up & Operations Manual 1 P age

103 Chapter 5 Financing Your Business a financial institution will lend is that the owner/investors must supply one-half or 50%; (this figure may vary) of the requested capital. This simply means that if your business needs $20,000 in start-up capital, a financial institution expects you to invest at least $10,000. That way the lender knows that you have a great deal to lose should your business fail. In addition to you having to come up with at least 50 % of the money requested, you will probably have to meet some other common loan criteria. They are generally known as the Five C s : FIVE C s Character CRITERIA Are you the kind of person who pays your bills? Are you reliable? Can you run the business? Do you have a good reputation? Are you committed? Do you have the skills necessary to run a business? Credit Do you have a good credit rating? Lenders will usually do a credit check on you. Capacity Can your business generate enough to pay the lender back? Capacity represents your ability to repay the loan based on the business cash flow. Since you are a start-up business, capacity will be based on your cash flow projections. Collateral Do you have things of value, which can be used to secure or guarantee a loan? Conditions Are the terms of the loan (loan amount, interest rate, credit policies, etc.) structured so they can be paid back without restricting cash flow? The Launch Company LLC - Start-Up & Operations Manual 2 P age

104 Chapter 5 Financing Your Business These things help a lender decide whether or not you and your business are a good risk for a loan. Your Business Plan is your key to convincing a lender that you are a good risk. Consider revising your Financial and Business Plan if the feedback you get suggests you need to. Keeping your goals in mind will keep you from getting discouraged. Failure to get a loan should not prevent your start-up. You may need to change your time frame, but if you re determined to reach your goals you ll find ways to obtain money. If you can t get credit, then maybe you ll have to earn the money some other way e.g. by: postponing your business start-up until you have enough money; scaling down the business; or, finding ingenious ways to reduce the amount of start-up capital you require. Start-Up Capital and Operating Capital If you are considering a Senior Care Business, and need money, what you are looking for first is start-up capital. Capital in business means money. Funding needed to run a business, to keep it going once started, is called operating money or working capital. Start-up capital and operating capital are treated separately for purposes of business finances. Begin to think about them separately now, each one representing a different stage in your business development. Start-Up Capital Start-up capital is the total amount of money you need to open your doors for business and to keep them open until sufficient revenue can be relied on. Operating Capital Operating capital is the amount required to keep the business going after the start-up. It includes salaries, wages, rent, expenses, supplies, utilities, advertising, depreciation, and interest payments. Small business advisors recommend that start-up expenses include at least six months operating capital, because even though revenue will come in during that time, the start-up phase also brings unexpected expenses with it. The Launch Company LLC - Start-Up & Operations Manual 3 P age

105 Chapter 5 Financing Your Business Funding Sources for Setting up Your Business Many individuals initially do not have sufficient cash on hand to meet start up costs and operational expenses to carry them for the first year(s) while the business is being built up. Consequently, they need to raise the required funds. There are a number of possible sources of funding for starting up including: family; friends; inheritances; business associates; lawyer (may know of possible investors); accountant (may know of possible investors); shareholders; re-mortgaging the home; drawing on savings; borrowing against life insurance; using credit cards to get cash; selling personal assets; and, selling investments. Whichever source you access, the loan needs to be treated professionally with a structured repayment plan outlining interest rate and time frame. If none of these are feasible or desired, financial institutions can be approached for shortterm or long-term loans. Examples of financial institutions include: commercial banks; credit unions; factoring companies; trade credits; commercial finance companies; insurance and trust companies; and, SBA (Small Business Administration); and/or community futures development corporations. The Launch Company LLC - Start-Up & Operations Manual 4 P age

106 Chapter 5 Financing Your Business Types of Financing Financing refers to obtaining funding. In financing loans are made for specific purposes as indicated below. Equity Financing Equity means ownership. With equity financing, a lender makes money available for use in exchange for an ownership share in your business. This could be as a silent or limited partner (not actively involved in the business) or as a shareholder. Whether equity financing is possible or a good option depends on the business structure and relationship between you and the lender. Debt Financing With debt financing, the lender charges interest for the use or rental of money loaned, but does not get a share or equity in the business. Debt financing is familiar to most people because it is the basis of most personal credit. A Line of Credit, which is very common in business, is a type of debt financing. With a Line of Credit, a bank gives a business an upper limit to which it can borrow, for a set interest rate. The business usually doesn t get the loan in a lump sum but draws on the Line of Credit for funds as it needs them. Interest is only paid on the amounts borrowed. A Line of Credit can be an important tool for coping with cash flow problems. It may also be the only financing arrangement that a home-based business needs as a back-up for operating capital. Collateral or Security Collateral is what you have to put up to secure a loan. This security reassures the bank or other lender that if circumstances make it impossible for you to repay, the lender has the right to take some identified item that covers at least part of the value of your loan. As you consider different kinds of financing and research what is available, pay attention to the collateral each requires. The usual collateral for home-based business loans is mortgages and personal guarantees. The Launch Company LLC - Start-Up & Operations Manual 5 P age

107 Chapter 5 Financing Your Business Small Business Administration (SBA) Loans The SBA offers numerous loan programs to assist small businesses. It is important to note, however, that the SBA is primarily a guarantor of loans made by private and other institutions and does not offer loans to small businesses. A bank loan guaranteed by the U.S. Small Business Administration is similar to a traditional commercial loan. Both loans are processed and funded by and repaid to financial institutions, but they differ in that the government guarantees repayment of some percentage of an SBA loan. If you default on an SBA loan, the government pays the guaranteed portion after liquidating the assets you put up as security. A SBA loan gives the bank a second source of repayment. However, the financial institution often uses the same or similar loan criteria for both SBA loans and traditional commercial bank loans. The following link provides more information: Dealing with Loans If you successfully get a loan, make it a rule of business to keep your lender informed about business developments. Even if things don t go according to plan and hardly anything does it is better that your lender knows how things stand before you need additional help. The better the relationship between you and the bank or other lender, the better your business s chances are of getting advice and possibly obtaining an additional loan in a tight situation. The Launch Company LLC - Start-Up & Operations Manual 6 P age

108 Chapter 5 Financing Your Business Shopping Around Banking is a business just like any other business. There are very real differences between what financial institutions offer. Keep good records, and use these first interviews to test the waters and to get a feel for how future meetings with lenders may go. If the lender for whatever reason would never give you money for your Senior Care Business, it is better that you find out now than find out later. Loan Officers at banks can help you assess your business idea(s), too. If people you speak to express reservations about some aspect of your plans, consider their input carefully. These contacts have experience you can benefit from. If bank contacts are generally positive, you can feel reassured that you are probably on the right track. Become knowledgeable about the various types of loans available. Seek professional financial advice. Show your Business Plan to your lender & make sure you are very familiar with every part of it. Be specific about your financial needs. Shop around for the best borrowing rates. The Launch Company LLC - Start-Up & Operations Manual 7 P age

109 Chapter 6 Business Start-Up Requirements CHAPTER 6 BUSINESS START-UP REQUIREMENTS Table of Contents Business Law... 1! Determine Professional Consultations Needed... 2! Legal Issues... 2! Insurances... 3! Financing... 3! Accounting... 3! Decide Which Business Structure/Form To Use... 4! Common Business Structures... 5! Sole Proprietorship... 5! Partnerships... 5! General... 5! Limited and Limited Liability Partnership (LLP)... 6! Limited Liability Company (LLC)... 6! Corporation... 7! Choose, Search & File Your Business Name... 8! Fictitious Business Name (FBN)... 10! Choose Your Fictitious Business Name & Logo... 10! Search Your Fictitious Business Name for Previous Registrations... 10! Register Your Fictitious Business Name (FBN)... 11! Sole Proprietorship... 11! Partnership... 11! The Launch Company LLC - Start-Up & Operations Manual i P age

110 Chapter 6 Business Start-Up Requirements Limited Partnership, LLC, Corporation... 11! Register Your Business with the State... 12! Apply for An Employer Identification Number (EIN)... 13! Open a Business Checking Account... 14! Obtain a State Seller s Permit... 14! Obtain a State Home Care Agency License... 14! Obtain a Local Business License/Permit... 17! Determine Insurances Needed... 18! Business Liability Insurance... 18! Professional Liability Insurance/Errors and Omissions Insurance... 18! Commercial Crime Coverage... 18! Disability Insurance... 19! Vehicle Insurance... 19! Fire Insurance... 19! Site Insurance... 19! Check Zoning By-Laws... 20! Determine Whether to Hire as Employee or Independent Contractor... 20! When Individuals are Hired as Employees... 20! When Individuals are Hired as Independent Contractors (ICs)... 21! Should Your Care Team Be Independent Contractors or Employees?... 22! Complete Required Forms... 24! The W ! The I ! The W ! IRS Form ! IRS Form ! Set-Up Your Record Keeping System... 26! Purpose of Accounts and Records... 26! Components of an Effective Accounting System... 26! Tips for Maintaining Good Records... 27! Record Storage... 28! Comply With Required Regulations... 28! The Launch Company LLC - Start-Up & Operations Manual ii P age

111 Chapter 6 Business Start-Up Requirements Federal Labor Law... 28! State Labor and Employment Laws... 29! Occupational Health and Safety Administration (OSHA) Requirements... 30! US Equal Employment Opportunity Laws... 31! Discrimination... 31! Harassment... 31! Employer Responsibilities for Collecting/Paying Income Taxes, WCB and UI... 32! Federal Income Tax Withholding... 32! Social Security and Medicare Taxes (FICA)... 32! Federal Unemployment Taxes (FUTA)... 33! State Income Tax Withholding and Registration... 34! State Unemployment Insurance... 35! Workers Compensation Insurance... 35! The Launch Company LLC - Start-Up & Operations Manual iii P age

112 Chapter 6 BUSINESS START-UP REQUIREMENTS Business Law There are a number of legal issues and requirements that must be addressed and certain procedures to be followed before starting your Senior Care Business. You will need to deal with various levels of government (local, state and federal) and register your business with a number of different government agencies for tax and employer purposes. Requirements (i.e. business registration, employer registration, licensing, etc.) for starting a business vary somewhat from state to state so it is important to be familiar with your state s requirements, regulations and procedures. The Launch Company LLC - Start-Up & Operations Manual 1 P age

113 Chapter 6 Business Start-Up Requirements The information presented is meant to familiarize you with a number of the legal issues involved and to suggest a process for you to follow. By following the procedures in this chapter, you will find the process of setting up your Senior Care Business less intimidating. Determine Professional Consultations Needed Depending upon the size of business you intend to establish and your own areas and levels of expertise, you may want to seek professional advice for legal issues, insurances, financing and/or accounting. Legal Issues The services of a lawyer may be required if you opt for a legal form of business other than a Sole Proprietorship. It may also be worth your while to consult one even if you intend to operate your business as a Sole Proprietor. Here, again, it depends on your own level of expertise in legal matters as well as in the complexity of your business. A lawyer can provide assistance by: Discussing organizational structure options that may be taken now to prepare for a possible disposition of the business in the future e.g. death or sale of the business. these measures could affect: the legal form of business you establish including franchises; and, the income tax that may be levied upon your retirement, upon the sale of the business, or upon the business passing to your estate, should death occur. preparing the legal documents specific to the type of legal organization you have chosen; providing information about landlords and tenants, should you plan to lease a business site; providing advice about purchasing a business site, should you opt to buy; offering suggestions about borrowing money; providing advice about the rights of employers and employees; investigating licensing requirements and specific requirements for your business; and, developing service agreements and employee contracts. The Launch Company LLC - Start-Up & Operations Manual 2 P age

114 Chapter 6 Business Start-Up Requirements Insurances Before deciding what insurances you will obtain, you should consult with an Insurance Agent for input, particularly in respect to Professional Liability, Fidelity, Bonding and Disability. (Refer to the Section Determining Insurances Needed on Page 15.) Through your Launch Homecare membership, you will be provided with a very large discount on our group insurance program. Please speak with your Launch Advisor on how to get signed up with this. It is not a requirement for you to participate in this program and thus we will provide detailed information in this chapter regarding insurance in general. Financing Advise your banker about your business plans as early in the process as possible and continue to keep him informed of developments. He can provide services, which are both essential and helpful to you, primarily: financing for start-up and operating expenses; disbursement of financial advice; and, setting up a business account. Accounting If you do not have the expertise to set up your own accounting system, it is advisable to seek the services of an accountant. An accountant can assist by: creating an accounting system; organizing and simplifying financial record keeping; designing a format which will meet your needs; ensuring that your accounting system meets government s requirements; incorporating controls, which can protect you against possible losses of cash and other assets; providing a professionally designed system, which will meet the needs of a growing business. preparing financial statements; and, evaluating financial data. The Launch Company LLC - Start-Up & Operations Manual 3 P age

115 Chapter 6 Business Start-Up Requirements Decide Which Business Structure/Form To Use A decision has to be made about the legal form of business you will set up (i.e. Proprietorship, Partnership, Corporation, Limited Liability Company, other). If you are an individual just starting out and want an uncomplicated, easy to set up structure, then a sole proprietorship may be a suitable choice. If your business will consist of two or more persons and you want the business to be relatively simple and largely unregulated, then a partnership may be suitable. If you are concerned about protecting your personal assets from business debts and obligations then you should consider a Corporation or Limited Liability Company. You might end up switching from one form to another, as your business grows (i.e. switch from a Sole Proprietorship to a LLC or Corporation). Larger Senior Care Agencies are either a Corporation or a Limited Liability Company. Each form has its own advantages and disadvantages but the key to selection revolves around the issue of taxation and liability. You must decide which form best suits your Senior Care Business needs. Limited! Liability! Company! (LLC)! Corpora;on!! (S!&!C)! Partnerships! Limited! General! Business! Structures! Sole! Proprietorship! The Launch Company LLC - Start-Up & Operations Manual 4 P age

116 Chapter 6 Business Start-Up Requirements Common Business Structures The main types of business structures include: sole proprietorship partnership (general and limited) limited liability company (LLCs) corporations (S and C) Sole Proprietorship This form is the simplest and is very easy to set up. It is a common form for a selfemployed person and a home-based business. A sole proprietorship is a business that is owned and operated by one person and is free to operate more or less as he or she chooses. There is no legal distinction between the individual and the business. An individual benefits from all the profits and is personally responsible for all the debts and liabilities of the business. The fact that the owner of a proprietorship is personally responsible for any business related debt means that if your business doesn t pay any of its financial obligations, you, personally can be forced to pay. Personal liability for business obligations is an attribute of a sole proprietorship. Insurance is available to cover these pitfalls but the cost may be prohibitive. Partnerships Partnerships, like sole proprietorships, are subject to relatively little regulation and are fairly easy to establish. Usually, when you hear the word partnership, it refers to a general partnership. By carrying on a business with the objective of making a profit, you and your partner(s) create a partnership. Formal or informal, a partnership is a legally binding business relationship in which each partner takes responsibility and becomes liable for the actions of the other partner. This includes actions that may be taken without a partner s knowledge. This risk is part of the business structure, so choose your partner(s) wisely. There are two main types of partnerships: General A partnership exists when two or more persons join together in the operation and management of the business. Individually, they are liable for all debts and obligations, which mean each partner is responsible for the consequences or actions taken by the other partner(s). All profits are taxed as income to the partners based on their percentage of ownership. A general partnership, like a sole proprietorship, must file a fictitious business name (assumed name certificate) with the appropriate government agency. The Launch Company LLC - Start-Up & Operations Manual 5 P age

117 Chapter 6 Business Start-Up Requirements A partnership, like a sole proprietorship is not a separate legal entity from its owners. A partnership does not pay income tax but rather it passes through any profits or losses to its partners. Each partner includes his or her percentage of the partnership s income or loss on his or her own personal tax return. A partnership has the advantage of bringing to it the knowledge, expertise, and financial resources of another individual(s). A formal partnership agreement is recommended to avoid any potential conflicts before they arise and help clarify the terms and conditions of the partnership. By drafting a partnership agreement you can structure your partnership pretty much how you like. You and your partners can determine the shares of profits (or losses) each will receive, what the responsibilities are, what will happen if one partner decides to leave, procedures for making decisions, procedure for adding new partners, and other important issues you feel are necessary. Limited and Limited Liability Partnership (LLP) These are special types of partnerships and are relatively uncommon and operate under different rules, so they will be only briefly discussed. A Limited Partnership is a particular type of partnership consisting of one or more general partners plus one or more limited partners. It is usually established when limited partners wish only to invest in a company and obtain a return on their investment without being personally involved in the day-to-day operations. Limited partners contribute cash only. They cannot act on behalf of the company nor be held responsible for any debts beyond their own investments. A Limited Liability Partnership provides all of its owners with limited personal liability. This business structure protects each partner from debts against the partnership arising from professional malpractice lawsuits against another partner. Limited Liability Company (LLC) A LLC is a blend of some of the best attributes of corporations, partnerships and sole proprietorships. It is a separate legal entity like a corporation but is entitled to be treated like a partnership for tax purposes. It is very flexible and simple to run and like a proprietorship, there is no statutory obligations to keep minutes hold meetings or make resolutions. The limited liability company is becoming the business structure of choice and is gaining momentum as more people learn of its existence. The Launch Company LLC - Start-Up & Operations Manual 6 P age

118 Chapter 6 Business Start-Up Requirements LLCs are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC. Other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation. Like a sole proprietorship or a partnership, any income or any loss pass through the business to each LLC member, who pays taxes on their share of profit or deducts their share of losses on their own individual tax return. The business itself does not pay any taxes. For additional information on the kinds of tax returns to file, how to handle employment taxes and possible pitfalls, refer to: Publication IRS Tax Issues for Limited Liability Companies. Check your state s requirements and the federal tax regulations for further information. Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states permit single member LLCs, those having only one owner. Massachusetts is the only state that requires at least two members ands some states (i.e., California) do not allow licensed professionals to form an LLC. Corporation A Corporation is a legal entity separate from its owners, the shareholders of the company. Each shareholder has limited liability. It has its own rights and duties and can be created for any size of business. Although it is more complex and legally costly than a proprietorship, partnership or LLC, it is an effective way of operating a business. It is an ongoing organization even though employees and owners come and go. If you decide to incorporate you must file Articles of Incorporation with your Secretary of State or other corporate filing office. This is a common business form for larger Senior Care agencies and franchises. If you are unsure about the right business structure that is most suitable for your business then, by all means, seek assistance from a professional (account, lawyer). We will advise you on our suggestion as to how you should form your business, but if you are looking for expert legal advice, we will encourage you to seek this from an attorney. The Launch Company LLC - Start-Up & Operations Manual 7 P age

119 Chapter 6 Business Start-Up Requirements Choose, Search & File Your Business Name Once you have decided upon a legal business structure and have come up with some potential business names for your business, you will need to undertake a name search to see if it is available for filing/registering. You will need to conduct a name and/or trademark search to make sure no one else is using the name you want to use to market similar Senior Care services. You should also check with your county clerk's office to see whether your proposed name is already on the list of fictitious or assumed business names in your county. If you find that your chosen name is registered as a trademark, or is listed on a fictitious or assumed name register, you shouldn't use it and choose a different one. If you decide to have a website, your domain name should be the same as your business name. Your domain name is simply your web address and like your business name it must be registered. Refer to the section on Basic Steps In Setting Up A Website. Part of your Launch Home Care membership is the initial design and setup of your website. Your Launch Advisor will assist you with this process. If you're organizing your business as a corporation or LLC, you must also make sure your business name isn't the same as that of an existing corporation or LLC, in your state. If a name that is identical or very similar to your proposed business name turns up in your state's database, you will have to choose another. From getting into trouble, you should understand the basics of trademark law, which prevents a business from using a name that is likely to be confused with the name of a competing business. If you choose a business name that's too similar to a competitor's name, you might find yourself accused of violating the competitor's legal rights (called "trademark infringement" or "unfair competition"), and you could be forced to change your business name and possibly pay monetary damages. If you are concerned about someone else using your business name you may want to consider registering your name as a trademark in your state. Trademark registration will protect you if another business decides to use your name. You can try your state s Secretary of State s web site for trademark registration information. The Launch Company LLC - Start-Up & Operations Manual 8 P age

120 Chapter 6 Business Start-Up Requirements There's only one way to ensure that you won't violate someone else's trademark rights: Do some searching to find out whether another business is already using a name that's identical or similar to the one you want to use. The Launch Company LLC - Start-Up & Operations Manual 9 P age

121 Chapter 6 Business Start-Up Requirements Fictitious Business Name (FBN) Any business that doesn t use its own legal name (official name of the person or entity that owns the business), as part of its business name, is required to file a fictitious business name (FBN) certificate. Fictitious business names are sometimes referred to as assumed names or doing business as (DBA). This means registering with a government agency. In most states you register your fictitious business name at the county level but in a few states you register with the Secretary of State or other government agency. Choose Your Fictitious Business Name & Logo Business Name Determine what name you will call your business. The purpose of a business name is to identify your business. Although the name you select is a personal choice, there are certain things you will want to keep in mind. These are discussed on Pages 7 & 8 in Chapter 7 Marketing. Logo Select or design a logo for your business. The purpose of a logo is to illustrate a business. It is the tool which gives the first impression of your business and should be chosen to reflect the theme of your business i.e. Home Care. Designing a logo is discussed on Page 8 & 9 in Chapter 7 Marketing. As a part of your Launch Homecare Membership, a custom-designed logo is included and will be provided to you to begin using on all of your marketing and sales collateral. Search Your Fictitious Business Name for Previous Registrations You will need to search your county or state database before registering your FBN to insure it isn t already registered. If you are close to a county clerk office you can perform your own search using their database. You can also take a look at your state s official website or county website to see what resources they have available for performing a name search. On some state web sites you can perform a name search as well as registering online. The Launch Company LLC - Start-Up & Operations Manual 10 P age

122 Chapter 6 Business Start-Up Requirements Register Your Fictitious Business Name (FBN) The rules for registering your fictitious name depend on the type of business structure you decide to use for your business. Your FBN registration will usually be good for a certain period of time (usually five years) so you will want to note the expiration date and renew it. Also, if certain aspects of your business change, such as the legal structure or an address change you should notify the appropriate government agency. Sole Proprietorship Any individual doing business as a sole proprietorship using a name other than their own legal(real) name must file with the county clerk, Secretary of State, or other state agency. Although the process varies from state to state it is relatively simple to register your fictitious business name. Many states require that you search the state or county fictitious name database to see if your chosen name is available. Once you re certain that your name is available, you must obtain a registration form (in person, by telephoning, or from a government website) and submit it with the appropriate fee which is very modest ($10- $50). Depending on your state s law, you may have to publish a legal notice of your business name in your local newspaper. The best thing to do is contact your County Clerk s Office to see what the procedures, requirements, and fees are for conducting a name search, filing, and registering your business name. Partnership If a partnership uses a name different than the legal (last name) name of the partners then a FBN certificate must be filed/registered. Check with your county clerk for your state s requirements. Limited Partnership, LLC, Corporation A limited partnership, LLC, or corporation are not required to file an FBN statement unless it operates under a name that is different from its official name as stated in its Articles of Incorporation, Articles of Organization, or Certificate of Limited Partnership. Check with your county clerk, Secretary of State, or other government filing office to determine the requirements for your state. The Launch Company LLC - Start-Up & Operations Manual 11 P age

123 Chapter 6 Business Start-Up Requirements The following link provides the requirements for fictitious name filing in all 50 states and territories. Register Your Business with the State Generally, businesses operating as limited partnerships, registered limited liability partnerships, limited liability companies, corporations, professional corporations, nonprofit corporations, and professional associations must register with the Secretary of State or other state agency. In some states if you form a sole proprietorship or a general partnership, you don't need to register your business with the state. Tip Your state s government official web site is a great place for information. From your state s government official web site, navigate to the business section where you can get information on just about everything required to start a business in your own state. On some state sites you can do a name search, register your business name, and register for tax purposes on-line. The following is a portal of all the individual states official web site: Below is a collection of links to State government Web sites with useful information for businesses. The Launch Company LLC - Start-Up & Operations Manual 12 P age

124 Chapter 6 Business Start-Up Requirements Apply for An Employer Identification Number (EIN) An Employer Identification Number is a federal identification number issued by the IRS to identify a business entity. It is also known as a Federal Tax ID number. Legally, you are required to identify your business with one of two numbers: either your social security number or an Employer Identification Number. Generally you need an Employer Identification Number when your business: is new; hires, or will hire, employees; is a Limited Liability Corporation or Corporation; opens a bank account; and/or, changes its type of business structure. If you are a Sole Proprietor and do not have any employees, your social security number can be used on all of your government forms and other official documents, but it is recommended that you apply for an Employer Identification Number and use that number instead. It will be used on many of your business documents. You will commonly use it on your local tax registration forms, your federal tax return, opening a bank account and any business application license(s). You can apply for and obtain your Employer Identification Number from the Internal Revenue Service (IRS). Application can be made via mail, telephone, fax or online. How to Apply for an EIN: Employed/Apply-for-an-Employer-Identification-Number-(EIN)- Online Understanding Your EIN: The Launch Company LLC - Start-Up & Operations Manual 13 P age

125 Chapter 6 Business Start-Up Requirements Open a Business Checking Account You should open a separate business account for your Senior Care Business. You will have to provide the bank with your original fictitious name statement (discussed above) before the bank will open a business account for you. By having a separate bank account for your business it is much simpler to keep your personal and business transactions separate. Once your business account is open you can have your clients make payments to your business name and you can make deposits. You can also write all business checks to cover business expenses from this account. You will probably require an EIN to open a business account. Your bank statements will provide a record of all your revenues and expenses in one convenient place and make your bookkeeping fairly easy to maintain. You may also wish to acquire a business credit card. Obtain a State Seller s Permit If you plan on selling any tangible goods (equipment, Home Care products, etc.) to the public in your Senior Care Business most states require you to have a state seller s permit. To obtain a seller s permit, contact your state s agency that governs sales tax. The process is pretty straightforward and involves submitting an application form and usually paying a fee. If you only plan to offer In-Home Care and Assisted Living Placement services, then you won t need a state seller s permit. Obtain a State Home Care Agency License Non-medical Home Care agencies licensing requirements vary from state to state and consequently there are no uniform licensing standards for non-medical Home Care Businesses. Each state has its own requirements for doing business as a non-medical Home Care agency and has the authority to license and regulate its Home Care system. Licensing requirements also depend on the type(s) of services you provide. Some states do not require companion/sitter and personal care agencies to be licensed with the state health department. A person need only advertise, get a business license, and start hiring employees. On the other hand, some states require those agencies who wish to provide personal care services to meet the more stringent rules under which traditional home health agencies operate. This might include hiring trained employees, the use of service/care plans, criminal background checks on employees, periodic inspections by the The Launch Company LLC - Start-Up & Operations Manual 14 P age

126 Chapter 6 Business Start-Up Requirements state health department and bonding. Some states even require you to have a license if you provide companion/sitter services only. In other states you may only require a license if you provide personal care services. The licensing fees vary from state to state. As part of your Launch Homecare Start-Up Package, your Launch Advisor will assist with the licensing process. A packet will be provided that will include the instructions on how to become licensed in your state. There currently is not a requirement for licensing to provide assisted living placement services. Here is a website which lists all State Health Department and Services, which would be a good place to start in seeking licensing requirements: State requirements for home care licenses are depicted in the table on the next page. They are current as of May 15, Since some states are considering changes, be sure to re-check the licensing requirements in your state, early in the Start Up phase of your business. Con means conditional. In other words, a license may or may not be required, depending on various conditions unique to different states.? means uncertain, as conclusive information could not be verified. In these cases, website addresses are provided with contact information to enable you to start your inquiry into licensing requirements. The Launch Company LLC - Start-Up & Operations Manual 15 P age

127 Chapter 6 Business Start-Up Requirements State License Web Site Alabama No Alaska Con. and Arkansas Yes and Arizona No California? Colorado Yes Connecticut No Delaware Yes District of Yes Columbia Florida: Yes l Georgia: Yes Hawaii Yes Idaho No Illinois Yes Indiana Yes Iowa? Kansas: Yes Kentucky Yes Louisiana new.dhh.louisiana.gov/assets/medicaid/hss/docs/hha_mls_st_regs.pdf Maine? Maryland? Massachusetts No & Michigan No Minnesota Yes Mississippi? Missouri No Montana? Nebraska No New Yes Hampshire New Jersey No New Mexico No The Launch Company LLC - Start-Up & Operations Manual 16 P age

128 Chapter 6 Business Start-Up Requirements ncies.html New York Yes Nevada Yes North Carolina Yes North Dakota Cond. Ohio No Oklahoma Yes es_division/licensure_applications_and_forms/index.html Oregon Yes es_division/licensure_applications_and_forms/index.html Pennsylvania Yes Rhode Island Yes South Carolina Yes South Dakota No Texas Yes Tennessee Yes Utah Yes Vermont? Virginia? Washington Yes West Virginia Yes Wisconsin No Wyoming Yes Obtain a Local Business License/Permit Most cities require all businesses (including home businesses) to register and obtain a business license for which a small fee is charged. A home-based business is subject to many of the same laws and regulations affecting other businesses. Beware of local zoning regulations. Since your home is most likely in an area zoned for residential use only, the types of businesses allowed may likely be somewhat limited. But most cities and counties allow home businesses. If you are operating your business from your home you will probably require what is commonly called a home occupation license/permit. Every city, municipality has different requirements for operating a home business so you should check with your local planning department, township, county clerk or city hall for licensing information. Your cities web site is a good source of information and in some cases you can even register The Launch Company LLC - Start-Up & Operations Manual 17 P age

129 Chapter 6 Business Start-Up Requirements for a business license on-line. Businesses located in rural, unincorporated areas must usually register with the county clerk. A business license is usually issued on a yearly basis and it is your responsibility to renew your license annually. Determine Insurances Needed Business Liability Insurance Comprehensive General Liability Insurance is designed to provide general coverage for liability to other people. Contact some local insurance companies for advice regarding your business insurance needs. Some states do not require homemaker and companionship businesses/individuals to carry insurance (e.g. Florida). It is a wise move to carry liability insurance, even if it is not required by the state. This will give both HCAs and clients reassurance. This type of insurance is included in our member group insurance policy. Professional Liability Insurance/Errors and Omissions Insurance If your agency provides personal or hands-on care such as bathing or assisting clients to the bathroom you should consider professional liability insurance. It is important to be covered should a client have an accident due to your negligence. Talk to an experienced insurance carrier and explain the types of services you plan on providing in order that you have the proper coverage. All professionals such as a registered nurses, physical therapists, occupational therapists, etc., are required to carry professional liability insurance. This type of insurance is included in our member group insurance policy. Commercial Crime Coverage Commercial crime coverage is an assurance, generally purchased by an employer, to cover employees who are entrusted with valuable property or funds. This insurance provides protection against losses that may occur as a result of theft. There usually is a maximum amount that may be paid. Often this policy is written as a blanket bond to cover all employees, although in some cases, it may be preferable to bond a specific employee(s). There is usually a maximum amount that may be paid. This type of insurance is included in our member group insurance policy. The Launch Company LLC - Start-Up & Operations Manual 18 P age

130 Chapter 6 Business Start-Up Requirements Disability Insurance Disability insurance is a good protector should an accident or illness cause the owner to be temporarily or permanently incapacitated. It will provide peace of mind to know that loans and expenses will be, at least partially covered, should such misfortune happen. Vehicle Insurance For business vehicles, it is imperative that more than basic insurance be obtained. The vehicle(s) should be insured for Business Purposes with the insurance covering all losses from collision damage, fire and theft. Additionally, Public Liability Insurance should be obtained to cover claims for bodily injury, and/or property damage resulting from the operation of the business vehicle. Public Liability is especially crucial if you plan to transport clients in your vehicles. Employees who use their own vehicles to transport clients must carry adequate amounts of public liability insurance. Many of your care team members will utilize their personal vehicle to transport clients to and from doctors appointments. We suggest an insurance policy called Non-Owned Auto. This type of insurance is included in our member group insurance policy. Fire Insurance Whether you own a separate building for your business or operate your business from your home, adequate Fire Insurance needs to be obtained. It is mandatory to carry insurance if the building or home is mortgaged. Generally, this insurance covers losses to the building and its contents. If you lease a building then it is your responsibility to insure your own contents. It is the Lessee s responsibility to carry insurance on the building. Site Insurance Businesses that are set up in the home will usually have some protection through the existing homeowner policy. If a community site is used for the business, it is a good idea to have, in addition to fire protection, coverage for malicious damage on the building and its contents as well as burglary protection. Boiler insurance may also be indicated. Depending on the size of your business, as well as individual circumstances, you may want to take out an employees benefit package that covers such things as group life insurance, disability insurance and medical/dental insurance. However, few Senior Care Businesses are able to offer these benefits (at least in the start-up stages). Employees will have some protection under Worker s Compensation, should they suffer job related injuries or illness. The Launch Company LLC - Start-Up & Operations Manual 19 P age

131 Chapter 6 Business Start-Up Requirements Check Zoning By-Laws Check with the local authorities to determine what the zoning by-laws are for your area. Zoning may impact such things as whether or not Senior Care Businesses are permissible in your chosen area, what types of buildings can be used, etc. Usually, there are defined criteria, which must be checked out early in the process. Determine Whether to Hire as Employee or Independent Contractor One of the issues, you should consider, when hiring somebody to provide service, is whether to hire a person(s) as an employee or as an Independent Contractor. When Individuals are Hired as Employees In an employer-employee relationship, you control what will be done and how it will be done. This is the case even when you give the employee freedom of action since you have the right to control the details of how the services are performed. In such relationships, the: the Employer provides required job training; the Employer controls and supervises; the employer directs what work will be done and how it will be done; the employer sets work hours and define work priorities; the Employer pays wages either by the hour or some salary arrangement;. the Employee works mostly for only one employer; the Employer s business name is used; and, the Employer withholds money for income taxes, pays Social Security and Medicate taxes and pays unemployment tax on employee wages. Some Senior Care Agencies and or some employees want to have a formal, signed agreement, which outlines conditions, roles and responsibilities. This is up to the individual Agency and the employee and is something that you need to consider when setting up your Senior Care Business. The Launch Company LLC - Start-Up & Operations Manual 20 P age

132 Chapter 6 Business Start-Up Requirements A blank Employer-Employee Agreement is provided in the Launch Homecare Forms Packet. (Only available if you purchase the Launch Homecare Start-Up Package.) When Individuals are Hired as Independent Contractors (ICs) In a relationship with an Independent Contractor, you only have the right to control or direct the result of the work. i.e. You do not control or direct the means and methods of obtaining the results. In these relationships, the: IC works by the project. IC uses his/her own business name. IC has his/her own employees. IC controls the method by which service is performed. IC controls and supervises service delivery. IC establishes work hours and sets priorities. IC advertises their business' services. IC submits invoices for services rendered. IC also works for others. IC uses his/her own supplies and equipment. IC keeps his/her own business records. IC is responsible for any training needs. And, IC is responsible for paying income tax other mandatory taxes. When dealing with Independent Contractors it is wise to have a signed agreement so the roles and responsibilities of the Senior Care Agency and the Independent Contractor are clearly defined and agreed upon, as verified with signatures. A blank Independent Contractor Agreement is provided in the Launch Homecare Forms Packet. (Only available if you purchase the Launch Homecare Start-Up Package.) The Launch Company LLC - Start-Up & Operations Manual 21 P age

133 Chapter 6 Business Start-Up Requirements Should Your Care Team Be Independent Contractors or Employees? It is more advantageous, financially, to hire Independent Contractors, rather than employees, to work in your business, as not only are you able to gain considerable payroll tax savings but also you will have far fewer administrative headaches. Unfortunately, just because you hire someone and both of you agree that he/she will be an Independent Contractor this is not necessarily the case for tax and legal purposes. Therefore, before you hire anyone to work for you as an Independent Contractor, take a hard look at whether the IRS would consider that person to be your employee rather than an Independent Contractor. At Launch Homecare, we don t require that you follow one set of procedures or another. The beauty of this membership program is that you can operate your business in any way that you would like. But we do have years of experience and following our advice will save you in the long-run. We do not recommend hiring your caregiving team, your CNA s, home health aides, or any other care providers in your business as independent contractors. There are many reasons but here is our main reasoning in summary: When you hire an independent contractor, you can not treat them as an employee. Most specifically, you can t dictate as to when they should arrive at work and when they should leave. You can t enforce them to represent your company as opposed to just representing themselves in the community. When building a company where your goal is to build a reputation of high quality, it is very important that you manage your employees in such a way where they are accountable to strict standards and measurements. The only way to do this is to hire them as employees. If you hire your staff as independent contractors, yet you still manage them as if they are employees, you run the risk of being audited by the department of labor. If they deem that your staff should have been employed as legal employees, they will charge you with steep fines, back-taxes, and back-wages (where applicable). Again, the decision is yours, but we highly recommend hiring your staff as employees. The Launch Company LLC - Start-Up & Operations Manual 22 P age

134 Chapter 6 Business Start-Up Requirements If you are unsure how to classify an individual, you can file Form SS-8 with the IRS, and the IRS will provide the classification. The form can be obtained from: Unless you are absolutely certain that the working relationship you establish will not be considered to be an employer-employee relationship, be very cautious about hiring somebody as an Independent Contractor. The consequences of classifying a worker wrong can be severe. The Launch Company LLC - Start-Up & Operations Manual 23 P age

135 Chapter 6 Business Start-Up Requirements Complete Required Forms There are several forms, which should be completed. They include: The W-4 Have each new employee fill out a W-4, which is an employee's withholding allowance certificate. At the time of hire, an employee is entitled to specify what withholding allowances should be taken from their income depending upon their filing status and the number of dependents. W-4 forms can be obtained from: The I-9 Complete Form I-9 for each new employee and retain for your records. The I-9 is a U.S. Citizenship and Immigration Services form. It is used by an employer to verify an employee's identity and to establish that the worker is eligible to work in the United States. Form I-9 can be obtained from: Handbook for Employers & Instructions for completing Form 1-9 can be found at The Launch Company LLC - Start-Up & Operations Manual 24 P age

136 Chapter 6 Business Start-Up Requirements The W-2 Issue each employee a W-2 at the end of the year. A W-2 is a record of each employee s earnings and tax withheld for the year. They use the information found on their W-2 to file their federal, state, and local tax returns. IRS Form 941 This quarterly report details the wages, federal income tax and social security tax applicable to your company s payroll. It tells the IRS what your payroll tax liability was for the quarter and when it was due for payment Your payroll deposits should be made payable to your bank using IRS Form 8109.You will find the schedule for making these deposits on the back of IRS Form 941. IRS Form 941 can be found at: IRS Form 940 This annual report to the IRS computes the total year s federal unemployment tax (FUTA) liability for your company s payroll. It differs from the TWC report in that wages are submitted in total, not per employee. Payment for FUTA is made to your bank using IRS Form Generally, you can take a credit against the FUTA tax for amounts you have paid into the state unemployment fund, but this credit is limited to 5.4 percent of taxable wages. IRS Form 940 can be found at The Launch Company LLC - Start-Up & Operations Manual 25 P age

137 Chapter 6 Business Start-Up Requirements Set-Up Your Record Keeping System Purpose of Accounts and Records Regardless of size, all businesses are required to keep written records of transactions that occur. Accounts and records are a managerial responsibility and are critical components of any business as they: advise the owner if the business is operating with a profit or a loss; provide the owner with accurate tax information; provide the owner with information on where improvements can be made; enable the owner to keep close tabs on the status of the business on a daily basis; assist the owner to keep an eye on the welfare of the business; allow the owner to estimate future earnings more accurately; enable the owner to take action immediately, if problems surface; point out possible problems with the business plan, which enable the owner to take quick, remedial action; and, are a requirement of financial institutions and federal, state and local government agencies. Components of an Effective Accounting System The Senior Care Business owner will need some organized method to track business activity generated by each transaction, which will provide the reports and information required by taxing and other regulatory authorities. Good bookkeeping practices do not need to be complicated, as too many records can be as futile as too few. For an accounting system to be effective, it should: document all business transactions by tracking: a daily summary of cash receipts; a disbursement journal; a business checkbook; an employee compensation record (including withholding social security and other taxes); a general ledger (a summary of all subsidiary ledgers, including ash receipts, disbursements and other transactions; and, an asset register, which should include amounts receivable, accounts payable and an inventory system. display operating results and financial conditions in a method that is easily understood by the business owner; protect the assets of the business from mistakes, deception and negligence; The Launch Company LLC - Start-Up & Operations Manual 26 P age

138 Chapter 6 Business Start-Up Requirements provide a foundation for business planning by delineating the consequences of previous decisions and facts required for future decisions; be designed to generate information that is periodically required by taxing and other regulatory authorities. Tip The easiest method of record maintenance is to utilize accounting, payroll and scheduling software as everything is set up and you basically just enter data. A good program to use is Quick Books by Intuit. However, if you do not have access to a computer, you can keep manual journals. As a part of your Launch Homecare Membership, QuickBooks training is included and is the suggested route for your internal accounting. Tips for Maintaining Good Records Set up a separate checking account for the business instead of using your personal checking account. Pay all bills by check, (which will provide a written record); or, pay by a business credit card, (as a credit card will generate an itemized statement of expenditures each month). Don t make a habit of making payments from petty cash. (If you do, get a receipt which indicates the purpose of each expenditure. Write a check to petty cash.) Record all billings (use duplicate receipts, copies of invoices or some system that itemizes each sale). Endorse all checks immediately. Deposit cash or checks often, (as keeping them on the business site may lead to theft or loss and the money can be put to work for you immediately). Label bank deposit slips completely as they provide a good record of income sources and will support billing records. Balance the bank account monthly. The Launch Company LLC - Start-Up & Operations Manual 27 P age

139 Chapter 6 Business Start-Up Requirements For more information on record maintenance, refer to Publication 583 (Starting a Business and Keeping Records) at: You may want to consult with an Accountant about setting up a Record Keeping system. How an Accountant can help you set up one up was addressed on Page 3. Record Storage Books, records, and supporting documentation such as sales, payroll and service invoices, purchase receipts, bank statements, cancelled checks and contracts must be kept at the business site and should be stored in a safe location. The length of time that you must keep your business records is determined by the government and must not be destroyed unless written permission is given by the relative governing authority. Comply With Required Regulations As an employer you should be familiar and comply with required laws, regulations and standards. The main ones the Senior Care Industry needs to follow are outlined on the following pages. Federal Labor Law The US Department of Labor administers a variety of Federal labor laws including those that guarantee workers rights to safe and healthful working conditions; a minimum hourly wage and overtime pay; freedom from employment discrimination; and unemployment insurance. All businesses are subject to federal minimum wage, overtime and child labor laws. Information on these and related federal laws may be obtained from the U.S. Department of Labor. The Launch Company LLC - Start-Up & Operations Manual 28 P age

140 Chapter 6 Business Start-Up Requirements Department of Labor: Department of labor: Office of labor Management Standards: Department of Labor: Employment Law Guide State Labor and Employment Laws Your state department of labor administers state employment and labor laws for which it's responsible and which might differ from the Federal equivalents. The department is responsible for establishing the Employment Standards for your state. These standards are usually made law via an Act or Regulations. Standards include regulations on: minimum wage; hiring of employees; payment of wages; record keeping; hours of work; overtime; flexible work schedules; statutory holidays; vacation; complaints; variances enforcement measures/penalties; leaves and jury duty; election day time off; termination of employment; special clothing; and, maternal and parental leave. List of State Labor Offices & contact information: It is essential you are familiar with the legal requirements in your state in these areas not only to ensure that you do not break any laws but also to assist you in your negotiations regarding conditions of employment and wages with perspective employees. The Launch Company LLC - Start-Up & Operations Manual 29 P age

141 Chapter 6 Business Start-Up Requirements Occupational Health and Safety Administration (OSHA) Requirements The US Occupational Safety and Health Administration (OSHA) is an agency of the United States Department of Labor whose purpose is to prevent work-related injuries, illnesses, and deaths by issuing and enforcing rules (called standards) for workplace safety and health. OSHA federal regulations cover most private sector workplaces. The OSHA Act permits states to develop approved plans as long as they provide protection equivalent to that provided under Federal OSHA regulations. You should understand and comply with all health and safety regulations. Occupational Safety and Health Administration (OSHA) website: The following link provides a list of approved State Occupational Safety and Health Plans: OSHA has a Standard on Blood-borne Pathogens ( ) which you should ensure you and your staff are familiar with in the event that there is exposure to blood or other potentially infectious materials when delivering services. The Launch Company LLC - Start-Up & Operations Manual 30 P age

142 Chapter 6 Business Start-Up Requirements US Equal Employment Opportunity Laws As an employer you must comply with the anti-discrimination laws. You must ensure there is no discrimination or harassment on the job site. Discrimination Discrimination is the denial of opportunity to a person or group of persons based upon group characteristics such as: race; color; ancestry; place of origin; political belief; religion; marital or family status; physical or mental disability; sexual orientation; age; and, criminal conviction Harassment As an employer you are obligated to provide a working environment free from harassment. This applies to harassment by supervisors, co-workers, and clients. The commonest forms of harassment are: sexual; personal (usually resulting from discrimination); bullying; and, abuse of authority. The US Equal Employment Opportunity website is: The Launch Company LLC - Start-Up & Operations Manual 31 P age

143 Chapter 6 Business Start-Up Requirements Employer Responsibilities for Collecting/Paying Income Taxes, WCB and UI The responsibility for collecting and paying payroll taxes (state and federal), obtaining and paying Workers Compensation Insurance and obtaining and paying unemployment insurance are often overlooked by new business owners. Many employers do not budget for payroll taxes and insurances when hiring new employees and subsequently get caught with cash shortfalls, which can lead to unpaid payroll taxes and trouble with the Internal Revenue Service and other authorities. Understanding your responsibility in this area as well as areas concerning labor, safety and health is essential to running a successful Senior Care Business. As an employer having employees, you are responsible for several federal, state, and local taxes. You must withhold certain taxes from your employees paychecks. Federal employment/payroll taxes include the following: Federal income tax withholding Social Security and Medicare taxes (FICA) Federal unemployment tax act taxes (FUTA). Federal Income Tax Withholding You must withhold federal income tax from your employee s wages. To determine the correct amount necessary to withhold from each employee s paycheck, you need to have a signed Form W-4 from each employee. The amount of income tax withheld is based solely on the employee s claimed marital status and number of dependents. Social Security and Medicare Taxes (FICA) Generally, you are required to withhold social security and Medicare taxes commonly called FICA (Federal Insurance Contributions Act) taxes from your employees' wages. Social security and Medicare taxes have different rates (6.2 % Social Security tax; 1.45% Medicare tax) and only the social security tax has a wage base limit. To calculate the amount you need to withhold from each employee, multiply an employee s gross wages by the tax rates. As an employer you must also pay a matching amount of these taxes. These matched amounts are paid to the IRS along with the other withholdings and are allowed as a tax deduction to the employer. The Launch Company LLC - Start-Up & Operations Manual 32 P age

144 Chapter 6 Business Start-Up Requirements Federal Unemployment Taxes (FUTA) As an employer you must also contribute to the federal unemployment tax fund on behalf of your employees. The collected funds are used to compensate individuals who have lost their job. The Federal Unemployment Tax Act (FUTA) imposes the tax on the first $7,000 of wages paid to each employee annually. The FUTA tax rate is 6.2% per employee. However, you are given a credit if you contribute to a state unemployment fund on a timely basis. You as the employer pay this amount; it is not withheld from the employee. The Launch Company LLC - Start-Up & Operations Manual 33 P age

145 Chapter 6 Business Start-Up Requirements Go to the Internal Revenue Service Web site for Form 940, (Employer's Annual Unemployment Tax Return): For information on Federal payroll tax requirements, refer to IRS Publication 15, Circular E. The Internal Revenue Service (IRS) web site provides detailed information and publications on Federal Tax requirements for individuals and businesses: Publication 583 (Starting a Business and Keeping Records) is a particularly useful website: Small Business Video and Audio Presentations Check out the Small Business/Self-Employed, Virtual Small Business Tax Workshop, which is designed to help new and existing small business owners understand and meet their federal tax obligations: State Income Tax Withholding and Registration As an employer you will need to register your new business with your state s taxation department (which is usually your state s Department of Revenue) for Employee Withholding Tax. Most states have a personal income tax (nine do not - Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, New Hampshire and Tennessee), which means you are also required to withhold this tax from your employees wages in much the same way as withholding federal income tax. The Launch Company LLC - Start-Up & Operations Manual 34 P age

146 Chapter 6 Business Start-Up Requirements State Unemployment Insurance As an employer you will have to register with the appropriate state unemployment department/agency that is responsible for unemployment insurance. Each State administers a separate unemployment insurance program within guidelines established by Federal law. As an employer you must also pay unemployment taxes to your state unemployment fund. These tax rates vary by state (ranging from 0.5% to 10%) and are usually paid on a quarterly basis. And like the FUTA tax, these amounts are paid by the employer and are not withheld from the employee (except in Alaska).The state unemployment tax rate fluctuates depending on the industry the company is in, how long the company has been in existence and the number of former employees who have filed unemployment claims. While the federal government sets basic guidelines, each state administers its own unemployment insurance program. Workers Compensation Insurance It is a legal requirement that employers carry Workers Compensation insurance. In most states, coverage can be obtained through private/common carriers while some states have a state agency that sells Workers Compensation Insurance (e.g. North Dakota, Ohio, West Virginia, Washington and Wyoming) If you wish to be personally covered by Workers Compensation you will have to apply for coverage for yourself. Many states give you the option to self-insure. The following web site has portals for Workers Compensation Agencies for all states: Under state law, employers are required to provide Workers Compensation for their employees. Workers Compensation Insurance covers individuals who are injured while working. It generally pays for medical care and physical rehabilitation and replaces injured workers lost wages while they' are unable to work. In most states it is a legal The Launch Company LLC - Start-Up & Operations Manual 35 P age

147 Chapter 6 Business Start-Up Requirements requirement that employers carry Workers Compensation Insurance. Premiums are generally based on payroll and on the type of work being conducted A checklist, presented as a Start-Up Work Plan, is provided in the Launch Homecare Business Plan Kit, which lists activities to be performed when setting up your Home Care Business, (as outlined in Chapter 6 - Business Start-Up Requirements and in Chapter 11 - Preparation Activities.) The Launch Company LLC - Start-Up & Operations Manual 36 P age