By Lori Eberly
When Maria opened her home care agency, she did what most owners do — she trusted her gut.
She knew her clients, loved her caregivers, and figured the rest would “work itself out.” For the first year, it did. Her gut told her to hire extra caregivers before the holidays, and families called. Her gut told her to set her rates a little lower than the competition, and referrals came pouring in.
But then January hit. Referrals slowed, payroll loomed, and overtime costs from December drained her cash reserves. By spring, Maria was juggling credit cards just to cover expenses. “I thought I had a good business,” she admitted later. “Turns out, I just had good instincts — and no plan.”
Sound familiar?
Gut feelings can help you get started. But to scale, stabilize and truly lead, you need more. You need a financial plan.
Why Gut Feelings Aren’t Enough
Maybe you’ve been there: you green-light new hires because “you’ll find the hours,” or you sign off on marketing spend because “it feels worth it.” But then a slow month hits, and suddenly you’re cutting corners to make payroll.
Here’s why “winging it” financially can sink even the most passionate agency owners:
- Hidden costs: Recruiting ads, background checks, PTO and overtime don’t seem big at first — but they snowball.
- Cash flow gaps: A two-week delay in Medicaid payments can feel like a two-year headache without reserves.
- No room for growth: If you’re not budgeting for marketing or leadership, you’ll be stuck working in the business instead of on it.
Gut feelings are great for relationships. But financial plans? They’re what protect those relationships by keeping your business strong.
Budget Like a CEO: The 4 Essentials
1. Start With Revenue Reality
Look at the next 12 months of revenue — broken down by payor source (Medicaid, VA, private pay, LTC insurance). One owner I know realized 85% of her revenue came from Medicaid. When rates dropped, she nearly went under.
CEO tip: Never let one source exceed 50% of your revenue. Diversification = stability.
2. Know Your True Costs
It’s not just wages. Strong budgets include:
- Payroll taxes and workers comp.
- Recruiting and onboarding.
- Scheduling and back-office staff.
- Marketing and referral lunches.
- Technology (software, EMR, phones).
- Compliance and legal.
One agency owner discovered $7,000 a year in “ghost costs” — unused software subscriptions and over-ordering PPE. That’s money that could have gone straight into caregiver raises.
CEO tip: Compare your gross margin to benchmarks. If it’s under 35%, your costs are eating your growth.
3. Plan for Profit, Don’t Hope for It
Too many owners “see what’s left” at month’s end. CEOs do the opposite:
- Set your target profit margin (10–15%).
- Budget to hit it.
- Adjust fast if you’re off course.
Think of it this way: Profit isn’t selfish. It’s how you reinvest in caregiver wages, expand your reach and survive policy changes.
4. Build Growth into the Plan
Survival mode won’t get you far. CEOs budget for growth:
- Marketing: Consistent referrals, not wishful thinking.
- Leadership: Training schedulers or hiring managers so you’re not the bottleneck.
- Innovation: Adding new services or tech before competitors do.
CEO tip: Growth isn’t optional. If you don’t budget for it, it won’t happen.
From Owner to CEO
Here’s the transformation:
- Owner mindset: “I’ll spend where it feels necessary.”
- CEO mindset: “I’ll budget with intention to achieve profit, stability and growth.”
Maria eventually made that shift. She built her first 12-month budget, set aside reserves and hired an operations manager to take daily stress off her plate. Today, she doesn’t just run a business — she leads one.
And that’s the real lesson: Gut feelings start the journey. But a financial plan makes sure you — and your agency — arrive at the future of your dreams.
Lori Eberly is a college professor and program director of health sciences at Appalachian State University. She is also the founder of Senior Care Strategy, a consulting and coaching firm dedicated to helping home care agency owners and senior living leaders grow their businesses with purpose, efficiency and heart. With nearly two decades of experience as a multi-unit home care franchise owner, she blends academic insight with real-world expertise to shape the future of health care leadership and senior care.
