Looking for a senior care business plan? You're in the right place.
A senior care agency pays its caregivers every week and is paid later, so a bank, an investor or a partner will push on the numbers. How many billed hours does the agency need before it makes a profit? What does an hour of care cost once payroll taxes, travel and turnover are counted? What happens when caregiver pay rises faster than the rate a family will pay? A blank template answers none of these.
In this article we'll walk through a complete sample plan for a non-medical in-home senior care agency in Tucson, Arizona, section by section. We'll cover the executive summary, the SWOT analysis and, above all, the financials.
Here's what you'll take away:
- The executive summary: see how to put a care agency, its payers and its raise on one page, so a reader knows the ask in a minute
- The rules section: learn how to state what the state and federal rules require, and what is still to be confirmed, without weakening the plan
- The cost of an hour: see a bill rate set against caregiver wages, payroll taxes, travel and overtime, so the margin is not a guess
- The start-up budget: find out why most of the raise is a payroll reserve and not equipment, so cash does not run short before the hours arrive
- The caregiver and client counts: work out how many caregivers a given number of billed hours needs and what turnover costs in hiring
- The five-year profit, cash flow and balance sheet: understand how each pay, price and hiring decision reaches the bottom line
- The stress tests and downside case: have an answer ready for "what if hours are 20% short?" and "what if wages rise a dollar?", along with what the owner asks the bank for
If you're planning a senior care agency, read this before you write your own. The agency is fictional, so keep what fits and change the rest.
In this plan
Need asenior care business plan for your own business? Book a free consultation and we write it for you.
Desert Porch at a Glance
Desert Porch Senior Care is a non-medical in-home care agency that opens in Tucson, Arizona, on January 1, 2027. Caregivers help older adults with bathing and dressing, meals, light housekeeping, medication reminders, companionship and overnight cover, so that a family can keep a parent at home. The agency provides no skilled nursing and bills neither Medicare nor Medicaid. Founder Denise Ortega, a hospital discharge social worker for ten years, owns 100%.
Opening takes $180,000: $100,000 of Denise's savings and an $80,000 bank term loan. Most of it, $145,000, is a payroll reserve, because caregivers are paid every week and families and insurers pay later. Office equipment is $11,000 and the remaining $24,000 covers registrations, legal work and the launch campaign.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $500,903 | $1,016,300 | $1,347,489 |
| Net income after start-up costs | ($80,122) | $34,480 | $63,298 |
| Closing cash | $57,618 | $54,869 | $90,484 |
Revenue is hourly. Most households pay from their own funds, and a smaller group bills a long-term-care policy. Weekly billed hours rise from 76 in January 2027 to 445 in December, by which point 32 clients are in care. Year 1 loses money because payroll for the owner, a scheduler and the first caregivers comes before the hours do. Monthly operating profit appears in September 2027, and Year 2 is the first profitable year.
The plan also runs a 20% shortfall in billed hours. Denise answers it with later hires, a smaller marketing budget, a pay cut and no distributions, and cash stays positive through Year 5. Only Year 1 falls under a 1.25x debt cover test, so the loan needs a first-year waiver, and a standby line sits behind it.
Company Profile
Legal name: Desert Porch Senior Care, LLC, an Arizona limited liability company. Owner: Denise Ortega, 100%. Office: 1,100 square feet of leased space in central Tucson, with an interview room used for family meetings and caregiver orientation. Opening: January 1, 2027. Five families have asked to be called when care can start.
Purpose
Make it possible for an older adult to stay at home with reliable help, and take the scheduling off the family.
Targets
- 32 clients in care by December 2027 and 54 by the end of 2029.
- A profit after tax in 2028 and 2029.
- Repay the bank on its seven-year schedule, with the first distribution in 2030.
- About 39 caregivers on the books by the end of 2029, losing no more than the 65% a year that the budget allows for.
Services and prices
| Service | How it is billed | Year 1 share of revenue |
|---|---|---|
| Private-pay personal care and companionship | $37 an hour, four-hour minimum visit | 85.0% |
| Hours paid by long-term-care insurance | $36 an hour, billed to the insurer | 6.9% |
| Overnight and respite shifts | $34 an hour in ten-hour shifts, $340 a shift | 8.1% |
The in-home assessment is free. Prices rise 3% a year from Year 2.
Rules the agency answers to
Four sets of rules shape the plan. Each is stated with what the agency does about it.
| Area | What the source says | What Desert Porch does |
|---|---|---|
| State licensing | The Arizona Department of Health Services licenses home health agencies, which give skilled care. The state's business guide, quoting a state industry association, reports no state body regulating non-medical home care. | Operates as a non-medical agency and stays inside that line: no skilled nursing, no wound care, no medication beyond reminders. Counsel asks the Department in writing before opening. A different answer would delay the opening, which the two-month slip case prices. |
| Medicaid | Arizona's Medicaid agency, AHCCCS, pays for in-home attendant care through its long-term care program (ALTCS) and registers the agencies that provide it. | Does not bill AHCCCS. Registration, program standards and rates are not quoted, and the revenue lines leave them out. |
| Caregiver screening | A.R.S. 36-594.01 requires fingerprint clearance cards for providers under certain state programs, such as developmental disability contracts. | Whether a private-pay agency's caregivers need a card is a question for counsel. Every caregiver gets a fingerprint-based check anyway, costed inside the $550 per hire. |
| Pay | The Department of Labor says its 2013 rule barred third-party employers such as agencies from the companionship and live-in exemptions. It proposed on July 2, 2025 to return to the 1975 rules, and its page lists no final rule. Travel between job sites during the day is hours worked (29 CFR 785.38). Tucson's minimum wage is $15.45 in 2026 and $16.00 from January 1, 2027, indexed each January. Arizona sick time accrues at one hour per 30 worked. | Pays minimum wage and overtime as though the 2013 rule were in force, counts travel between clients as paid time, and sets pay above the Tucson floor. All caregivers are W-2 employees, because the agency sets their schedules, rates and training. |
Tucson's Older Adults and the Care Market
Who lives in the service area
The Census Bureau's QuickFacts table lists 15.8% of Tucson city residents as 65 or older, against 19.3% for Arizona as a whole. The city is younger than the state, partly because of the university, and the households nearest the agency's target are often outside the city limits. Cushman & Wakefield's second-quarter 2026 office report puts median household income in the Tucson market at $78,000. A client who buys 12 hours a week at $37 spends about $1,924 a month, or $23,088 a year, which is about 30% of that median. Families therefore pay from savings, a policy or the parent's own income, which is why insurance-paid hours matter to the model.
What caregivers earn and what care costs
Nationally, home health and personal care aides had median pay of $35,800 a year ($17.21 an hour) in May 2025, and the Bureau of Labor Statistics expects 18% job growth from 2025 to 2035. In Tucson the O*NET table, built on 2025 BLS data, shows a median of $16.55 for personal care aides, spanning $14.70 at the 10th percentile and $18.30 at the 90th. Desert Porch's $17.25 average is a planning figure: 4% over that median and 8% over the $16.00 city floor for 2027, to be tested against local job postings.
For prices, CareScout's 2025 survey shows an Arizona median of $38 an hour for non-medical care ($86,944 a year at 44 hours a week). Desert Porch's private rate is $37. Medicare says on its own site that it does not pay for long-term care, so household money and private policies fund the work.
Alternatives a family has
| Alternative | What it offers | Why a family picks it | How Desert Porch differs by design |
|---|---|---|---|
| Other private-duty agencies in Tucson | Hourly care, usually with minimum visits | Established names and referral ties | A named care manager for each client and a posted rate sheet |
| National franchise networks | Branded care with a central office | A recognized name | A locally owned office where the owner answers calls |
| Medicaid-funded in-home programs | Attendant care for eligible adults | Little or no cost to the family | Private-pay care for families that do not qualify or want a faster start |
| Skilled home health agencies | Nursing and therapy ordered by a doctor | Medical care that insurance covers | Non-medical help between and after nursing visits |
| Assisted living, memory care and adult day programs | Care in a facility | One monthly fee, with meals and activity | Care at home |
| Privately hired caregivers and family | The lowest hourly cost | Control and familiarity | Screening, backup cover and payroll handled by the agency |
Rows are categories, not a league table. No agency is named, since rates change often and few agencies publish them.
SWOT
| Strengths | Weaknesses |
|---|---|
| A founder who knows local discharge planners from ten years on a hospital floor | No nursing credential; complex cases need a contract nurse |
| Hourly pricing that families can compare | Year 1 loses money and draws on the reserve |
| An owner-operator who takes the first assessments | Equity at the end of Year 1 is thin against the bank debt |
| Opportunities | Threats |
|---|---|
| Long-term-care policies claimed for the first time | A competing employer raising caregiver pay |
| Hospital discharges that need a home plan within days | Insurers that pay slowly or only through a licensed agency |
| Out-of-town families who want a local contact | A change in wage rules or in state licensing |
Who Calls and Why
The adult child
Most first calls come from a son or daughter aged 45 to 65 who works, lives within an hour's drive and has just realized a parent cannot cope alone. The parent, often past 75, needs help bathing, eating, moving around the house and getting to appointments.
The spouse who needs a break
A second caller is the husband or wife who has been the only caregiver. Respite care and overnight shifts are priced for this client, and these shifts are 8.1% of Year 1 revenue.
What starts the search
A discharge from hospital, a fall, a new diagnosis, a spouse too frail to lift, or a parent up wandering at night. Relatives of winter residents add calls from about November to April, and the Year 1 hours lean toward those months.
Who pays
Households paying directly supply 85.0% of Year 1 revenue and long-term-care policies 6.9%. Policies tend to impose an elimination period, a daily cap and a written care plan. Desert Porch therefore checks each policy's terms before the first visit and starts the claim file in the first week, since whether a given insurer reimburses an agency depends on the policy.
What families ask of an agency
Someone who turns up on time, a named person to phone, a price quoted before care begins and the freedom to stop without a fee.
Getting the Phone to Ring
From first call to first shift
The office takes the call and runs a 20-minute screen that day. Denise then visits the home for a free assessment within 48 hours and leaves a written care plan and rate sheet. Care begins when a caregiver is matched, usually in about three days. Denise carries out every assessment until the field care supervisor arrives in month 12.
Where the first 39 clients come from
| Source | New clients in Year 1 | Share |
|---|---|---|
| Hospital, rehab and physician discharge planners | 12 | 31% |
| Local search and the website | 8 | 21% |
| Senior centers, faith communities and events | 7 | 18% |
| Word of mouth from families | 6 | 15% |
| Elder-law attorneys, fiduciaries and financial advisers | 6 | 15% |
Setting the rate
Daytime care is $37 an hour for private pay and $36 for insurer-billed hours, with a four-hour minimum so that a visit covers a caregiver's drive. Overnight care is $340 for a ten-hour shift. Rates are posted on the website. Arizona's $38 statewide median is the benchmark, and the local rate comparison happens before opening.
Who stays
About 60% of the clients in care during a year leave it, mostly for health reasons, so the pipeline has to replace them every year.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| New clients | 39 | 35 | 39 | 43 | 45 |
| Clients in care at year end | 32 | 44 | 54 | 62 | 68 |
Where the Marketing Dollars Go
Year 1 marketing is $40,000: $14,000 of launch work paid from start-up capital and $26,000 of running spend. That is 8.0% of Year 1 revenue, falling to 2.8% in Year 3 and 2.1% in Year 5 as referrals compound. Spread over 39 new clients, it costs about $1,026 a client, roughly half a month of a typical client's billing ($1,924).
| Channel | Year 1 spend | What it is expected to do |
|---|---|---|
| Website, logo and brochures (launch) | $7,000 | A site with rates posted and a call button |
| Discharge-planner lunches and in-service talks (launch) | $4,000 | Introductions to the local hospital and rehab teams |
| Local print and community launch (launch) | $3,000 | Name recognition in the outlying neighborhoods |
| Referral partner visits and thank-yous | $7,500 | About 12 clients |
| Google Business Profile and search ads | $6,500 | About 8 clients |
| Community events and senior-center sponsorships | $4,000 | About 7 clients |
| Attorney, fiduciary and adviser outreach | $3,500 | About 6 clients |
| Family guides and a short newsletter | $2,500 | Prompts for word of mouth, about 6 clients |
| Local directories | $2,000 | Presence where families look for a number |
Marketing milestones
- January 2027: website live and five waiting families start care.
- June 2027: about 249 billed hours a week and 21 clients in care.
- September 2027: operating profit turns positive.
- December 2027: 32 clients and $70,574 of monthly revenue.
Shifts, Caregivers and Compliance
The office
The office costs $27,300 in Year 1 for 1,100 square feet and moves to about 1,350 square feet in Year 4. Caregivers rarely visit it. Schedules reach them on a phone app, which also records clock-in and clock-out times for payroll and billing.
What an hour earns
Each billed hour is priced against the cost of staffing it. The figures below are Year 1 dollars.
| Per billed hour | Private-pay day | Insurance-paid day | Overnight |
|---|---|---|---|
| Rate billed | $37.00 | $36.00 | $34.00 |
| Caregiver wage | $17.25 | $17.25 | $17.25 |
| Payroll taxes, workers' compensation and sick time (17.3%) | $2.98 | $2.98 | $2.98 |
| Paid time that is not billed | $1.21 | $1.21 | $0.40 |
| Overtime allowance | $0.43 | $0.43 | $0.41 |
| Cost of the hour | $21.88 | $21.88 | $21.05 |
| Gross profit per hour | $15.12 | $14.12 | $12.95 |
| Gross margin | 40.9% | 39.2% | 38.1% |
Components are rounded, so a column can differ from its total by a cent. An overnight shift bills $340 and costs $210.50.
Minimum shifts and overtime
A four-hour minimum keeps unbilled time near the 6% the model carries. A two-hour visit would bill $74 while the drive and the paid travel stay the same, and a caregiver cannot build a day of two-hour visits without gaps. Overnight shifts run ten hours and are paid as working hours. Caregivers average about 19 billed and 20 paid hours a week, so overtime comes from covering sick calls and overnight gaps, not from regular schedules. The 2% allowance equals overtime on 4% of paid hours at a 50% premium.
Caregiver supply
A new caregiver goes through a fingerprint-based check, reference calls, screening and paid orientation, at about $550 in all. Annual hires cover net growth in the bench plus replacement of 65% of the average bench, a turnover rate that is a planning figure.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Billed hours in the year | 13,661 | 27,012 | 34,776 | 40,992 | 45,760 |
| Caregivers at year end | 24 | 32 | 39 | 45 | 49 |
| Caregiver hires in the year | 32 | 26 | 30 | 33 | 35 |
| Recruiting cost | $17,600 | $14,300 | $16,500 | $18,150 | $19,250 |
How Year 1 staffing builds
| Month | Billed hours a week | Clients in care | Caregivers needed | Office staff |
|---|---|---|---|---|
| March | 152 | 13 | 8 | Denise alone |
| June | 249 | 21 | 14 | Denise and the scheduler |
| September | 340 | 27 | 18 | Denise and the scheduler |
| December | 445 | 32 | 24 | Denise, the scheduler and a field care supervisor |
January to March are the thin months. Denise is the only office person, doing assessments, scheduling and on-call cover herself, and a sick caregiver in those weeks means she covers the shift.
Payments
Households pay by card or bank transfer, and checks are accepted. Processing costs about 1% of private-pay receipts, carried as its own line: $4,300 in Year 1 and $14,500 in Year 5.
Mileage
Caregivers drive their own cars and are repaid for miles between visits, not for the commute. Tucson's sprawl is why the line exists: the model allows one mile per daytime billed hour at $0.75, or $9,346 in Year 1 and $30,420 in Year 5. The IRS business rate rose from 72.5 cents to 76 cents on July 1, 2026. Auto cover for staff driving on the agency's behalf is part of the insurance line, and caregivers do not carry clients in their own vehicles.
Software and records
Visit-verified scheduling, a family update portal and, until the billing clerk starts in month 22, an outside payroll service. Software costs $8,500 in Year 1 and $16,500 in Year 5.
Registrations, insurance and safeguards
- Arizona and Tucson business and tax registrations, confirmed by counsel and a CPA before opening.
- Cover for liability (general and professional), abuse and molestation, employee theft, staff driving for the agency and workers' compensation, plus life and disability cover on Denise as the key person. Year 1 insurance is $9,500, a planning figure for a broker to replace with a quote.
- A signed service agreement and a written care plan for each client.
- Services stay non-medical. Nursing, wound care and anything beyond medication reminders are referred to a home health agency.
Outside help
An elder-law attorney drafts the service agreement. A CPA covers payroll tax and entity questions. A contract nurse reviews complicated care plans at a fee per review, and the regional Small Business Development Center advises on pricing.
Ownership and Management
Denise Ortega, founder and care manager
Denise spent ten years as a hospital discharge social worker in Tucson, the last four as the lead on her unit. She arranged home care, rehab and facility placements and knows how families decide. She holds a master's degree in social work. Her $100,000 investment is most of her savings.
Where the team is thin
Denise has no nursing credential and has not run payroll for a staff of twenty or more. A contract nurse reviews complex care plans, an outside payroll service handles the first year, and a CPA reviews the accounts each quarter.
If Denise is out
Before the supervisor starts in month 12, nobody else can assess a new client, so an absence by Denise would stall growth. The key-person policy covers her, and the contract nurse can take assessments for a fee.
The office team
Hiring order: scheduler and intake coordinator (month 4), field care supervisor (12), part-time billing and payroll clerk (22), second supervisor (30), client care coordinator (40).
Ownership and the bank
Denise owns all of Desert Porch Senior Care, LLC. The bank's security is her personal guarantee and a lien on the equipment, over a seven-year term.
Hours, Wages and Cash
The model runs five years: month by month through 2027, then year by year. Billed hours drive nearly every line, so the inputs start with what an hour of care sells for and what it costs to staff.
Opening costs and the payroll cushion
| Use of funds | Amount |
|---|---|
| Office furniture, computers, phones and tablets | $11,000 |
| City and state business registrations, bond and agency set-up | $2,500 |
| Legal: entity, client service agreement, employment documents | $7,500 |
| Launch: website, brochures, referral-partner lunches, local print | $14,000 |
| Cash reserve for payroll that runs ahead of collections | $145,000 |
| Total uses | $180,000 |
| Source of funds | Amount |
|---|---|
| Denise Ortega's savings | $100,000 |
| Bank term loan | $80,000 |
| Total sources | $180,000 |
Of the $180,000, Denise contributes $100,000 from savings (56%) and a bank supplies $80,000 (44%) as a seven-year term loan at 10.5%, with interest only for the first six months. The rate illustrates the example and is not a quoted rate. A bank will probably want her personal guarantee and a lien on the office equipment, and an SBA-guaranteed loan may be an alternative; terms need confirming. The $145,000 payroll reserve is 81% of the raise. It exists because weekly payroll runs ahead of the date a household or insurer pays, and because Year 1 loses $56,122 before start-up costs ($80,122 after them). In the base case the Year 1 month-end balance bottoms out near $37,000 in December 2027; in the 20% shortfall case it bottoms out near $36,000 in the same month. Both figures count each hire's pay from the month the hire starts and treat 21 days of revenue as unpaid, as the monthly note explains, and the engine's own even spread of payroll gives a different picture, set out there. A $25,000 minimum-cash floor is proposed to the bank. Every cash figure here includes the reserve, and no refundable lease deposit is modeled. Year 1 ends with $19,878 of equity against $75,588 of bank debt, a cushion a lender will call thin.
The figures behind each billed hour
- Price list: private-pay daytime care bills at $37 an hour, insurer-billed daytime care at $36, and overnight or respite care at $34 an hour in ten-hour shifts ($340 a shift). Daytime visits have a four-hour minimum, and every price rises 3% a year from Year 2. CareScout's 2025 survey (fielded July to November 2025) reports an Arizona median of $38 an hour for a non-medical caregiver, so $37 sits a dollar under it. The survey covers the whole state, so Tucson agencies' posted rates are compared before opening.
- Hours: the average client buys 12 hours of care a week, delivered as three four-hour visits. Month-end clients in Year 1 are 7, 10, 13, 16, 19, 21, 23, 25, 27, 29, 31 and 32, beginning from five signed families, and year-end counts across the five years are 32, 44, 54, 62 and 68. Billed hours total 13,661 in Year 1 (including 1,200 overnight hours, or 120 shifts) and 27,012, 34,776, 40,992 and 45,760 after that. Revenue doubles in Year 2 (up 103%) only because Year 1 is a ramp from 331 hours in January to 1,930 in December; the Year 2 monthly average of 2,251 hours is 17% above that December.
- Seasonal shape: Year 1 monthly hours run roughly 5% to 6% above the yearly pattern from January to March, when winter residents are in town, and about 5% below it in June and July. These are planning figures. Years 2 to 5 are annual entries with no seasonality.
- Client departures: a planning figure puts them at 60% of the average number in care each year (deaths, moves to a facility, recoveries), which is not a published rate. Replacing them while growing takes 39 new clients in Year 1 and 35, 39, 43 and 45 in Years 2 to 5.
- Cost of a daytime hour: $21.88, built up as follows. The caregiver is paid $17.25. Employer payroll taxes (about 9.0%), workers' compensation (about 5.0%) and paid sick time (3.3%) add $2.98. Unbilled paid time adds 6%, or $1.21; it covers travel between clients, which federal rules count as work, plus orientation and short gaps. An overtime allowance adds 2%, or $0.43. That is 59.1% of the $37 private rate. An overnight hour carries 2% unbilled time and costs $21.05 against $34. The split between payroll taxes and workers' compensation is a planning figure for a payroll provider and an insurer to confirm, and the 3.3% is Arizona's sick-time accrual of one hour per 30 worked. The $17.25 wage is 4% above the $16.55 Tucson median for personal care aides (O*NET, built on 2025 BLS data) and 8% above the City of Tucson's $16.00 floor for 2027.
- The engine charges one direct-cost rate in all five years: the Year 1 blend of 59.47%. Insurer-paid and overnight hours cost slightly more per revenue dollar and grow as a share, so the real blend is 59.62% to 59.63% from Year 2. That difference, $1,503 in Year 2, $2,140 in Year 3, $2,688 in Year 4 and $2,935 in Year 5, is costed on its own line in the profit and loss ("Direct-cost mix adjustment"). Caregiver pay rises 3% a year alongside prices, which keeps the percentage steady.
- Overtime: time and a half applies beyond 40 hours a week. The 2% allowance corresponds to 4% of paid hours worked as overtime at a 50% premium. Caregivers average about 19 billed and 20 paid hours a week, so overtime arises from sick-call cover and overnight gaps and not from standing schedules.
- Bench size: year-end caregivers equal December's weekly billed hours divided by 19 hours per caregiver, giving 24, 32, 39, 45 and 49. Annual hires are growth plus 65% of the average bench (a planning figure for turnover): 32, 26, 30, 33 and 35. At $550 a hire for a fingerprint-based background check, screening, advertising and orientation materials, recruiting costs $17,600, $14,300, $16,500, $18,150 and $19,250.
- Mileage: caregivers are repaid one mile of between-visit driving for each daytime billed hour, at $0.75 a mile, which gives $9,346 in Year 1 and $30,420 in Year 5. The IRS business rate was 72.5 cents through June 2026 and 76 cents from July 2026, so $0.75 is a planning rate. Commuting is not repaid.
- Collections: receivables are set at 21 days overall. Private-pay households are billed weekly and typically settle within about 10 days, while insurers take 30 to 45 days, so the blend lengthens as insurer hours grow. Bad debt is 0.6% of revenue ($3,000 in Year 1, $11,300 in Year 5). Households pay by card or bank transfer, and processing costs about 1% of private-pay receipts, shown on its own line ($4,300 in Year 1, $14,500 in Year 5). The balance sheet applies 21 days to the year's average monthly revenue, which understates receivables in a year of fast growth.
- Office wages carry a 27% on-cost covering employer taxes, workers' compensation, health cover and a retirement match (15% for the part-time clerk). The personnel table shows launch-year wages, and 3% raises from Year 2 appear on a separate line. Until the clerk joins in month 22, an outside payroll service inside the software line runs payroll, and Denise and the scheduler do the billing.
- Premises and insurance: office rent starts at $27,300, which is 1,100 square feet at $24.81, the average full-service asking rent across Tucson office property in Cushman & Wakefield's second-quarter 2026 report. It escalates 3% a year and steps up to about 1,350 square feet in Year 4. Insurance (liability for the business and its professional services, abuse and molestation cover, a fidelity bond on employees, auto cover for staff driving on the agency's behalf, and key-person cover) is $9,500 in Year 1 and rises to $16,000, as planning figures for broker quotes to replace.
- Tax and payouts: income tax uses a 21% federal rate plus 4.9% for Arizona (a planning figure to confirm), after setting the Year 1 loss against later profit. Start-up costs and the federal 80% cap on using prior losses are outside the engine's tax base, so tax from Year 3 is approximate. A pass-through LLC would shift the tax to its owner, and corporate rates are kept as the cautious choice. Distributions are $20,000 in Year 4 and $30,000 in Year 5.
Revenue by kind of care
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Private-pay personal care and companionship | $425,759 | $795,241 | $1,044,177 | $1,258,412 | $1,452,620 |
| Hours paid by long-term-care insurance | $34,344 | $105,493 | $151,815 | $199,327 | $230,063 |
| Overnight and respite shifts | $40,800 | $115,566 | $151,497 | $178,333 | $198,990 |
| Total revenue | $500,903 | $1,016,300 | $1,347,489 | $1,636,072 | $1,881,673 |
| Growth on prior year | – | 103% | 33% | 21% | 15% |
Out-of-pocket hours make up 85.0% of Year 1 revenue and 77.2% of Year 5. The insurer-paid share climbs from 6.9% to 12.2% as more clients arrive with a policy, and the wait for payment lengthens with it. Overnight and respite shifts move from 8.1% to 10.6%.
January to December 2027
| Month | Private-pay personal care and companionship | Hours paid by long-term-care insurance | Overnight and respite shifts | Total revenue | EBITDA |
|---|---|---|---|---|---|
| Jan 2027 | $12,247 | $0 | $0 | $12,247 | ($15,776) |
| Feb 2027 | $17,353 | $0 | $0 | $17,353 | ($13,706) |
| Mar 2027 | $23,236 | $0 | $1,020 | $24,256 | ($10,908) |
| Apr 2027 | $26,788 | $1,080 | $1,700 | $29,568 | ($8,755) |
| May 2027 | $31,043 | $1,584 | $2,380 | $35,007 | ($6,550) |
| Jun 2027 | $34,373 | $2,124 | $3,060 | $39,557 | ($4,706) |
| Jul 2027 | $37,407 | $2,736 | $3,740 | $43,883 | ($2,953) |
| Aug 2027 | $40,774 | $3,456 | $4,420 | $48,650 | ($1,020) |
| Sep 2027 | $44,622 | $4,284 | $5,100 | $54,006 | $1,150 |
| Oct 2027 | $48,470 | $5,256 | $5,780 | $59,506 | $3,380 |
| Nov 2027 | $53,428 | $6,408 | $6,460 | $66,296 | $6,132 |
| Dec 2027 | $56,018 | $7,416 | $7,140 | $70,574 | $7,866 |
January 2027 brings in $12,247 and December $70,574. Operating profit (EBITDA) first turns positive in September 2027, at $1,150, after eight negative months. Weekly billed hours go from 76 to 445 over the year. The monthly view has no collection timing and spreads each year's annual costs, payroll and loan payments evenly. Two adjustments give a cash low that can be read: each role's pay is counted from the month the hire starts, and 21 days of each month's revenue is treated as unpaid. On that basis month-end cash falls steadily to $39,740 in November and $37,035 in December 2027, the low. Using the engine's own even spread instead, which charges later hires' pay from January, the low is about $33,600 in November. The cash table's $57,618 at the end of December is higher than $37,035 because it uses the balance-sheet receivables of $28,819 (21 days of average monthly revenue) in place of $49,402 (21 days of December revenue). All of these are approximations.
Office team
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder, administrator and care manager | $66,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Scheduler and intake coordinator | $42,000 | Month 4 | 1 | 1 | 1 | 1 | 1 |
| Field care supervisor | $52,000 | Month 12 | 1 | 1 | 1 | 1 | 1 |
| Billing and payroll clerk (part time, 20 hours a week) | $23,000 | Month 22 | – | 0.5 | 0.5 | 0.5 | 0.5 |
| Second field care supervisor | $52,000 | Month 30 | – | – | 1 | 1 | 1 |
| Client care coordinator (family contact and referrals) | $46,000 | Month 40 | – | – | – | 1 | 1 |
| Total payroll incl. on-costs | $129,328 | $209,813 | $268,173 | $339,505 | $354,110 |
Denise opens alone. She takes every assessment and builds the early schedules herself through month 3, when about 13 clients and 8 caregivers are active. The scheduler and intake coordinator starts in month 4. A field care supervisor starts in month 12 with about 32 clients, a part-time billing and payroll clerk in month 22, a second supervisor in month 30 with about 49 clients, and a client care coordinator in month 40. Between months 12 and 29 one supervisor carries 32 to about 48 clients, which is the thin stretch. Caregivers are not in this table because their cost sits in direct costs. Denise's $66,000 salary is inside the costs, so profit is what remains after she is paid.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $500,903 | $1,016,300 | $1,347,489 | $1,636,072 | $1,881,673 |
| Direct costs (caregiver wages, payroll taxes, workers' compensation, unbilled paid time, overtime allowance) | ($297,875) | ($604,369) | ($801,319) | ($972,932) | ($1,118,985) |
| Gross profit | $203,028 | $411,931 | $546,170 | $663,140 | $762,688 |
| Payroll incl. on-costs | ($129,328) | ($209,812) | ($268,173) | ($339,505) | ($354,110) |
| Rent | ($27,300) | ($28,100) | ($28,900) | ($36,500) | ($37,600) |
| Utilities | ($3,000) | ($3,100) | ($3,200) | ($3,700) | ($3,800) |
| Marketing | ($26,000) | ($34,000) | ($38,000) | ($38,000) | ($40,000) |
| Insurance | ($9,500) | ($11,500) | ($13,500) | ($15,000) | ($16,000) |
| Professional fees | ($6,000) | ($6,500) | ($7,000) | ($7,500) | ($8,000) |
| Software subscriptions | ($8,500) | ($11,500) | ($14,000) | ($15,500) | ($16,500) |
| Caregiver mileage between visits, at a planning rate of $0.75 a mile | ($9,346) | ($17,784) | ($22,932) | ($27,144) | ($30,420) |
| Caregiver recruiting, background checks and orientation materials | ($17,600) | ($14,300) | ($16,500) | ($18,150) | ($19,250) |
| Training, renewals and professional dues | ($2,500) | ($3,500) | ($4,000) | ($4,500) | ($4,500) |
| Phones, supplies and postage | ($2,500) | ($3,500) | ($4,000) | ($4,500) | ($4,500) |
| Equipment replacement and new-hire kit | $0 | ($2,500) | ($3,500) | ($5,000) | ($3,500) |
| Bad debt allowance | ($3,000) | ($6,100) | ($8,100) | ($9,800) | ($11,300) |
| Card and bank processing fees on private-pay receipts | ($4,300) | ($8,000) | ($10,400) | ($12,600) | ($14,500) |
| Direct-cost mix adjustment (rising insurer and overnight share) | $0 | ($1,503) | ($2,140) | ($2,688) | ($2,935) |
| Annual pay raises (3% a year) | $0 | ($6,294) | ($16,332) | ($31,481) | ($44,444) |
| EBITDA | ($45,846) | $43,938 | $85,493 | $91,572 | $151,329 |
| Depreciation | ($1,971) | ($1,971) | ($1,971) | ($1,971) | ($1,971) |
| Interest | ($8,304) | ($7,486) | ($6,434) | ($5,266) | ($3,969) |
| Income tax | $0 | $0 | ($13,790) | ($20,975) | ($36,160) |
| Net income before start-up costs | ($56,122) | $34,480 | $63,298 | $63,360 | $109,229 |
| Start-up costs expensed at opening (registrations, legal, launch marketing) | ($24,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($80,122) | $34,480 | $63,298 | $63,360 | $109,229 |
Year 1 loses $56,122 before start-up costs and $80,122 after them. After start-up costs and tax, Year 2 earns $34,480, Year 3 $63,298, Year 4 $63,360 and Year 5 $109,229, which is net margin of 3.4%, 4.7%, 3.9% and 5.8%. EBITDA margin eases from 6.3% in Year 3 to 5.6% in Year 4 because the client care coordinator, the larger office and the accumulated pay raises all land that year. Income tax is zero in Years 1 and 2, as the Year 1 loss carries forward, and is $13,790 in Year 3. Direct costs are about 59.5% of revenue in every year before the small mix-adjustment line, card and bank fees run at 0.8% to 1.0% of total revenue, and payroll with raises falls from 26% of revenue in Year 1 to 21% in Year 3.
Cash in and out
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($106,970) | $6,799 | $46,215 | $48,728 | $97,070 |
| Office equipment and fit-out | ($11,000) | $0 | $0 | $0 | $0 |
| Funding received | $180,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | ($4,412) | ($9,548) | ($10,600) | ($11,768) | ($13,065) |
| Owner distributions | $0 | $0 | $0 | ($20,000) | ($30,000) |
| Net change in cash | $57,618 | ($2,749) | $35,615 | $16,960 | $54,006 |
| Closing cash | $57,618 | $54,869 | $90,484 | $107,444 | $161,450 |
Cash closes above zero every year, and the lowest year-end balance is Year 2's, $54,869. Principal repayments begin once the six interest-only months end. Cash grows more slowly than profit in Years 2 and 3 because unpaid invoices build from $28,819 to $77,527. The $20,000 distribution in Year 4 and $30,000 in Year 5 are smaller than net income after start-up costs in those years ($63,360 and $109,229), than the cumulative totals of $81,016 and $190,246, and than cash from operations less principal ($36,960 and $84,005).
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $57,618 | $54,869 | $90,484 | $107,444 | $161,450 |
| Accounts receivable | $28,819 | $58,472 | $77,527 | $94,130 | $108,261 |
| Office equipment and fit-out (net) | $9,029 | $7,057 | $5,086 | $3,114 | $1,143 |
| Total assets | $95,466 | $120,399 | $173,097 | $204,689 | $270,853 |
| Bank loan | $75,588 | $66,040 | $55,440 | $43,672 | $30,608 |
| Paid-in capital | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 |
| Retained earnings | ($80,122) | ($45,641) | $17,656 | $61,016 | $140,246 |
| Total liabilities and equity | $95,466 | $120,399 | $173,097 | $204,689 | $270,853 |
Margins, break-even and debt cover
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -9.2% | 4.3% | 6.3% | 5.6% | 8.0% |
| Net margin (before start-up costs) | -11.2% | 3.4% | 4.7% | 3.9% | 5.8% |
| Payroll incl. pay raises as share of revenue | 26% | 21% | 21% | 23% | 21% |
| Revenue per full-time equivalent at year end | $166,968 | $290,371 | $299,442 | $297,468 | $342,122 |
| Average monthly revenue | $41,742 | $84,692 | $112,291 | $136,339 | $156,806 |
| Monthly revenue needed to cover operating costs | $51,168 | $75,658 | $94,714 | $117,512 | $125,693 |
| Debt service cover (EBITDA / interest + principal) | -3.6x | 2.6x | 5.0x | 5.4x | 8.9x |
Year 1 brings in an average of $41,742 a month against the $51,168 needed to cover operating costs, so it loses money. Year 2 averages $84,692 against $75,658 required; at $37.62 of revenue per billed hour, that requirement is roughly 2,010 hours a month, compared with a Year 2 average of 2,251. Debt cover is negative in Year 1, then 2.6x in Year 2 and 5.0x in Year 3. The per-employee row counts office staff only, because caregivers are inside direct costs, so it measures office leverage and not caregiver output.
If billed hours run 20% short
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $400,722 | $813,040 | $1,077,991 | $1,308,858 | $1,505,338 |
| Net income before start-up costs | ($67,103) | $20,851 | $51,425 | $39,312 | $81,209 |
| Net income after start-up costs | ($91,103) | $20,851 | $51,425 | $39,312 | $81,209 |
| Closing cash | $52,401 | $41,953 | $69,506 | $85,739 | $144,550 |
Here billed hours are 20% lower in every stream and year, and mileage, recruiting, bad debt, card fees and the mix adjustment shrink with them. Denise reacts once the gap is visible. She stays on full pay for six months, then takes 20% less from month 7. Four hires slip: the scheduler to month 6 (from 4), the field care supervisor to month 18 (from 12), the billing clerk to month 28 (from 22) and the second supervisor to month 38 (from 30). The client care coordinator is not hired. Apart from those five lines, Year 1 costs match the base case, including marketing; from Year 2 marketing is 20% lower, the office stays the same size in Year 4 and no distributions are paid. The smaller team can carry the load. Year 2 billed hours are 21,610, under the 23,160 a year implied by December 2027's 1,930 hours a month, and at the end of Year 3 one supervisor looks after about 43 clients, within the 32 to 48 the base case asks of one supervisor between months 12 and 29. Lowest year-end cash is $41,953, in Year 2. The Year 1 month-end low is about $36,000 in December 2027 on the re-timed basis described in the monthly note, $1,100 below the base case's $37,035. On the engine's own even spread the downside low (about $35,100) sits above the base case's (about $33,600), for two reasons: the engine charges the delayed hires and the founder's pay cut from January, months before they happen, and 20% less revenue leaves fewer unpaid invoices. Re-timing removes the first reason, and the second leaves the small remaining gap. Year 1 equity closes at $8,897. Profit continues from Year 2, at $20,851 against $34,480 in the base case, and net income and closing cash stay below the base case every year. Debt cover reads -4.47x, 1.78x, 3.61x, 3.50x and 6.69x across Years 1 to 5, so a 1.25x test fails only in Year 1. The bank ask follows the stress cases below. Only Year 1 has a monthly view.
Stress Tests and the Bank's Questions
One change per row
Every row is a separate engine run with a single change and no management response. Hires, marketing, rent and wages stay at base-case levels unless the row says otherwise. In the hours row, mileage, recruiting, bad debt, card fees and the mix adjustment fall in proportion. The wage and overtime rows scale all three direct-cost rates: the wage row takes the blended rate from 59.47% to 62.91% and the overtime row, which lifts the allowance from 2% to 5% of caregiver cost (caregiver cost up 2.94%), to 61.22%. The private-rate row leaves caregiver cost unchanged in dollars, which moves the blend to 62.33%, scales card fees with the lower private revenue and bad debt with the private-pay share only (insurer and overnight bad debt is unchanged), and keeps the mix adjustment at its base values, which is cautious. Each blended rate then applies to all five years. A distribution is held back in any year where paying it would push cumulative distributions above cumulative net income after start-up costs; that holds both payments in the hours, wage and private-rate rows and the Year 4 payment in the office-wage row. The Year 1 month-end low is the December 2027 balance on the re-timed basis (each hire's pay counted from its start month, 21 days of revenue treated as unpaid, 35 days in the receivables row) and is approximate; every row's low falls in December. Lowest year-end cash comes from the balance sheet.
| Case | Year 1 net income | Year 2 net income | Year 3 net income | Year 2 debt cover | Year 3 debt cover | Year 1 month-end low (December) | Lowest year-end cash |
|---|---|---|---|---|---|---|---|
| Base | ($80,122) | $34,480 | $63,298 | 2.58x | 5.02x | $37,035 | $54,869 (Year 2) |
| Billed hours 10% lower in every year | ($97,000) | ($1,945) | $28,478 | 0.44x | 2.17x | $25,098 | $7,414 (Year 2) |
| Caregiver wage $18.25 instead of $17.25 | ($97,390) | ($555) | $30,635 | 0.52x | 2.29x | $19,767 | $2,565 (Year 2) |
| Overtime allowance 2% to 5% (caregiver cost up 2.94%) | ($88,883) | $16,705 | $52,191 | 1.54x | 3.64x | $28,274 | $28,333 (Year 2) |
| Office wages 10% higher | ($93,055) | $12,869 | $48,638 | 1.31x | 3.35x | $24,103 | $20,325 (Year 2) |
| Rent 10% higher | ($82,852) | $31,670 | $62,504 | 2.41x | 4.85x | $34,305 | $49,329 (Year 2) |
| Private-pay rate $35 instead of $37, caregiver cost unchanged in dollars | ($102,766) | ($10,127) | $18,138 | -0.04x | 1.56x | $16,511 | ($31,467) (Year 4) |
| Caregiver turnover 85% instead of 65% (hires = growth plus 85% of average caregivers) | ($81,222) | $31,180 | $61,500 | 2.39x | 4.79x | $35,935 | $50,469 (Year 2) |
| Receivables 35 days instead of 21 | ($80,122) | $34,480 | $63,298 | 2.58x | 5.02x | $4,101 | $15,888 (Year 2) |
The base case is fragile. Adding a dollar to the caregiver wage turns Year 2 into a small loss and takes the Year 1 low and the Year 2 year-end balance under the proposed floor. A 10% hours shortfall with no response does the same to Year 2, and a private rate two dollars lower leaves cash negative from Year 2 on. Slower collection is the harshest cash test, and insurer-paid hours, which settle in 30 to 45 days, grow as a share of revenue. A lender would try these rows first, which is why the reserve is large and the ask below includes a standby line and a covenant waiver. The $35 row cannot be fixed with borrowing: it needs a price response. The turnover row prices recruiting only; the orientation hours sit in the 6% unbilled allowance. The wage row is a likely case and not a remote one, because Tucson indexes its floor. As an illustration and not a forecast, a floor rising 3.4% a year from $16.00 would reach about $18.29 in 2031, when the planned wage is about $19.42.
Two-month opening slip
In this row the whole Year 1 ramp starts two months late. January and February earn nothing, every later month takes the revenue of the month two before it, and December repeats October's $59,506, so Year 1 revenue is $364,033 instead of $500,903. Every hire after month 1 also starts two months later, which shifts later hires too, so only Year 1 is read. Fixed costs such as rent, Denise's pay and insurance keep their original dates; mileage, recruiting, bad debt and card fees move with Year 1 revenue. Net income after start-up costs for Year 1 is ($111,706), closing cash is $33,909, and Year 1 equity is ($11,706). The Year 1 month-end low is $13,199 in December. Cash holds up, but the low sits $11,801 under the proposed floor and equity goes negative, so the standby line has a job to do.
What the bank is asked for
Year 2 debt cover is 2.58x in the base case and 1.78x in the shortfall case, but three stress rows fall under 1.25x in Year 2: the hours shortfall (0.44x), the wage rise (0.52x) and the lower private rate (-0.04x). A standby line alone would not cure a covenant breach in those cases, so the ask pairs the line with a waiver.
| Term | Request | Why |
|---|---|---|
| Debt cover test | 1.25x from Year 3, waived in Years 1 and 2 | Year 1 cover is -3.61x in the base case and -4.47x in the shortfall case. Year 2 is 2.58x and 1.78x, but the hours, wage and private-rate rows miss 1.25x in Year 2. In Year 3 every row reads 1.56x or better, and the shortfall case reads 3.61x, 3.50x and 6.69x in Years 3 to 5. The private-rate row falls to 1.18x in Year 4. |
| Minimum cash | $25,000 at each month end | The shortfall case clears it by about $11,000 at its Year 1 low, and its lowest year-end balance is $41,953. |
| Standby line | $30,000 | Five rows breach the floor at the Year 1 low (wage rise, office wages, lower private rate, slower collection, opening slip) and five at a year end (hours shortfall, wage rise, office wages, lower private rate, slower collection). The line lifts any one of them except the private-rate row to the floor, which needs $56,500 and a price response. |
| Distributions | None until trailing debt cover is at least 1.25x and year-end cash is above $50,000; none in the shortfall case | Base-case payments of $20,000 (Year 4) and $30,000 (Year 5) sit below cumulative net income after start-up costs in both years. |
The model does not estimate cash lows inside Years 2 to 5.
What a lender would still ask
| Question | Where the plan stands |
|---|---|
| Collateral | Equipment is $11,000 against an $80,000 loan. A personal guarantee from Denise is the likely answer, and an SBA-guaranteed structure may help; terms are unconfirmed. |
| Caregiver supply | At 65% turnover about 18 caregivers leave in Year 2 and 26 hires are budgeted. The applicant pool is the open question while Tucson's floor is $16.00 and rising and rival employers pay alike. |
| Referral concentration | Discharge planners bring 31% of Year 1 clients, so losing one hospital relationship would show quickly. |
| Payer risk | Insurers are 6.9% to 12.2% of revenue. A policy that reimburses only a licensed agency, or a 45-day claim cycle, slows cash as the receivables row shows. Medicaid would add volume at program rates and is excluded. |
| Licensing and rules | The Department of Health Services answer, the federal overtime position and the Tucson wage floor each need written confirmation. The slip row prices two months of delay and no more. |
| First-year equity | $19,878 at the end of Year 1 against $75,588 of debt, negative in the slip row. |
| Owner record | Denise has led discharge planning but has never owned a business or run her own payroll. The contract nurse and the quarterly CPA review cover only part of that. |
| Receivables | The 21 days blends payer terms and is not a measured figure, and seasonality after Year 1 is not modeled. |
Sources
- Bureau of Labor Statistics, Home Health and Personal Care Aides, Occupational Outlook Handbook: May 2025 median pay of $35,800 a year ($17.21 an hour) and 18% projected growth from 2025 to 2035.
- O*NET OnLine, Local wages for personal care aides, Arizona, drawing on 2025 Bureau of Labor Statistics data: Tucson 10th percentile $14.70, median $16.55 and 90th percentile $18.30 an hour.
- City of Tucson, Tucson Minimum Wage Act: $15.45 an hour for 2026 and $16.00 for January 1 to December 31, 2027.
- CareScout (formerly Genworth), 2025 Cost of Care Survey state table (surveyed July to November 2025): Arizona non-medical caregiver, $86,944 a year at 44 hours a week, or $38 an hour.
- U.S. Census Bureau, QuickFacts, Tucson city, Arizona: persons 65 and over, 15.8% for the city and 19.3% for Arizona.
- Cushman & Wakefield, Tucson Office MarketBeat, Q2 2026: $24.81 per square foot average asking rent (all property classes, full service), 8.5% vacancy and median household income of $78,000.
- Medicare.gov, Long-term care: Medicare does not pay for long-term care.
- U.S. Department of Labor, Direct care workers: the 2013 rule on third-party employers and the proposed rule of July 2, 2025 (90 Fed. Reg. 28976), with no final rule listed.
- Electronic Code of Federal Regulations, 29 CFR 785.38: travel from one job site to another during the workday counts as hours worked.
- Arizona Legislature, A.R.S. 23-372: earned paid sick time accrues at one hour for every 30 hours worked.
- Arizona Legislature, A.R.S. 36-594.01: fingerprinting of contract providers and home and community based service providers.
- Arizona Commerce Authority, Non-Medical Home Care: the state business guide's statement, attributed to an industry association, that no state body regulates non-medical home care.
- AHCCCS, Attendant care company provider registration: the starting point for registering to provide attendant care under the Medicaid program.
- IRS, Standard mileage rates: 72.5 cents a mile for January to June 2026 and 76 cents from July 2026.
- Tax Foundation, State corporate income tax rates and brackets: Arizona's 4.9% corporate rate, used as a planning figure.
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