Inside the Finances with Jeff Vavricek

Right at Home's Chief Financial Officer, Jeff Vavricek, spoke with VP of Franchise Development Jen Chaney about the importance of understanding your business's financial data. They discussed payer sources, breakeven profit, and analyzing your numbers.

Right at Home just released an updated financial dashboard that franchisees can use to track weekly trends and compare their business to system averages. Learn more about how we support our franchisees and help them navigate their financial questions.

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Transcript

SPEAKER_00 0:02

Hello everyone, and welcome to this Tuesday talk. I am interviewing my friend Jeff this afternoon, and I'll have Jeff introduce himself in just a moment. But before we get started for our live listeners today, thank you for joining us. Uh but we love audience participation. So as Jeff and I are visiting over the course of the next 30 minutes, please type in a question. And you can do that by means of clicking on a button on most likely on the bottom of your Zoom screen, maybe the top of your Zoom screens, depending on how you have it set up. But there is a QA button that you can click on. If you don't see it, it's most likely in the more button. So that's a circle of three dots in it. Click on that and you'll see the QA button. So you click on that and then you can type in a question. You can even click this little box. It says anonymous. It said, I won't know your name. If you want to remain anonymous, that's completely up to you. But with the topic today being, or you know, I'm I'm interviewing our uh chief financial officer for Right at Home, um, we'd love to see some questions from the audience uh when it comes to that specific topic. Uh and uh, you know, getting Jeff's expertise over the course of the next 30 minutes. So take advantage of that. I know I will. Okay, Jeff, if you would please introduce yourself to our audience.

SPEAKER_01 1:23

I'd be happy to, Jen. Hi, everybody. My name is Jeff Bobberchuk. I am the Chief Financial Officer, as Jen just said. Chief Financial Officer of Right at Home. I've been with Right at Home for 16 years. So I've seen quite a bit of stuff here. A lot of things have changed, but a lot of things have not. So it's really, it's really great. But it's a great place to work. I love my job. I've got uh a lot of great responsibilities. I do a lot with budget, well, a lot of money stuff, right? A lot of budgeting, a lot of a lot of financial planning, a lot of uh looking at uh our actuals and doing monthly reportings, things like that. Uh it's also really active in working with our board. So uh we've got a board of directors that that uh that I work with. Uh we've got an ownership group that I work with, most responsible for risk management with the organization. That includes things like insurance, uh, insurance claims, legal, things like that.

SPEAKER_00 2:18

Okay, great. Lots of great information. I'm excited to visit with you today. So I didn't tell you this, but I um put together some fun questions for you at the end of this webinar. Just in case we don't any get any active questions from the audience, which of course, as soon as I say that, a question pops up into the QA box. So let me ask this question first, and then um I'll get to some of my um my other questions that I've put together. So it says, What are the most common financial or operational risks new franchisees underestimate?

SPEAKER_01 2:58

Well, I think uh all of our franchisees have a financial risk with the amount of caregivers that are out there. So uh our business is largely dependent. It's almost entirely dependent upon a caregiver providing care in the home, wherever home might be. It might be might be in a physical house, might be in assisted living, lots of different places. But we do our we do our business uh with with through through the use of a caregiver. So caregiver, I mean, just when if you if you watch kind of anything on the news, there's lots of uh challenges with uh with hiring in certain tranches of the job market. And healthcare is is one of them that is the is where most of the jobs over the last year have been hired. Just healthcare in general, that's where most of the the new jobs have been created. Uh but there's a lot of competition for those jobs. So getting caregivers is always is a is a potentially financial risk. If you don't get enough of them, you can't run your business. So that becomes a challenge. And that's something that we have, Jen, as you know, it's something that we at the corporate office focus on a lot. We have a lot of initiatives on how to how to uh increase hiring, how to increase retention of current caregivers. Uh, we really like to we we understand that that's the lifeblood of our business. We help out our franchisees to to do that and to to make sure they have plenty of resources to provide provide care.

SPEAKER_00 4:23

Yes. And I'm gonna add to that, Jeff. So I would say that it's it's not inevitable that you positively will have a challenge with that. Um, I suppose to to add to a a layer to that. We have a ton of resources and tools and and guidance and help to provide our new franchise owners or even you know tenured franchise owners with caregiver recruitment and retention. The franchise owners that that take advantage of all of those tools and resources that we have, um, I would say it's it's less of a risk uh for those franchise owners. It's gonna be a higher risk if you're like, you know what, I can do this on my own, which I think that's crazy because you're joining a franchise. Why not take advantage of all of the resources that we have to help and and support you?

SPEAKER_01 5:11

Yep, we provide a lot of resources to help out with that.

SPEAKER_00 5:13

Yes. Okay. So my question is, and um maybe a little bit related to this that last question that just uh came in. It says, What's one financial myth that you wish every new franchise owner would stop believing?

SPEAKER_01 5:31

Well, uh I think that the the myth is that this is an easy business. I think some people think that, I think. Uh and kind of in the same line, it's an easy business, it'll be easy to make money. And the reason I say that is because uh a lot of times when I talk about people to talk to people about what I do, and they go, Oh, wow, there's so many seniors, that's you know, it's it's it's must be easy to get clients, must be easy to get uh get rich doing this job. And and don't get me wrong, that it is very true. Obviously, demographics are that are certainly in our favor. And when you look at five, ten, fifteen years ago years from now, the the population of our client, kind of that 80 80-ish year old person, they just explode. So there's gonna be plenty of demand, but uh it is a myth to think that that the your phone's gonna run off the hook. It's a it's a myth to think this is gonna make a lot of money. We have a lot of super successful franchisees, and they work very hard to make successful businesses.

SPEAKER_00 6:36

Yes. And I would also add that I think that is applicable to anybody becoming an entrepreneur. You know, I don't I'm not sure that there's a business model out there that says, you know, like, it's true, it's so easy to do this. I think becoming an entrepreneur, it's it's hard work no matter what. Um matter, no matter the business model. Um, so that's that's a great um point to bring up. Okay, so another question actually just came in before I get back to my list. It says, How should I think about private pay versus third-party payers? For example, uh VA, uh long-term care, Medicaid, where applicable.

SPEAKER_01 7:17

Okay. So we uh Jen, we spend a lot of time kind of looking at that from a system perspective. So individual franchisees, independently owned and operated, they can have the payer mix. That's what we would call kind of those three examples you gave, the pair mix of some they get some of it's private pay. So it's clients writing a check, some of it is through the VA, as you said, or through a state waiver program. Uh there a franchisee is is able to kind of get the pair mix that they want in their their office and their location. However, we look at it from a perspective of we like to see at least 70% in private pay. So we feel pretty strongly about that. And the reason is, Jen, is because the uh the private pay is something that's within your control. In other words, the the bill rate, the rate that somebody charges you, that's something that you can control. With the other programs, you typically can't. You can't go to the VA and say, I'm only gonna do this for X dollars an hour. They they're gonna they're gonna tell you what they're going to pay you. And in some years, the margins are really attractive, uh, but then in some years they're not. So in other words, that they might change the prices, they might go up one one year, might go down the next year, they might hold them flat for five years. We've seen that before, sure to where business that has you know been pretty good and profitable sometimes is no longer good and profitable. So that's the way we look at it. We think a nice mix of everything, kind of a little a little diversification, if you will. I would definitely not put everything in one basket and would definitely would weigh heavily towards the private pay, is what we recommend.

SPEAKER_00 8:56

Yes, correct. And um, regarding um VA, uh Medicaid waiver, uh long-term care insurance, of course, it depends on what state you're in. Each one of those programs is going to be different as far as credentialing and uh reimbursement rate. Uh, so once you become a franchise owner, it's critical to work with um our license insurance specialist, which we have a team of people here uh who are going to be an excellent resource for you to educate you on the different programs that are um going to work best for you. Uh, but we encourage you to do your research on what's work what's going to work best for you and your business and in your specific state.

SPEAKER_01 9:37

Yep, for sure.

SPEAKER_00 9:38

Yes. Okay. So my next question it is if you had to describe a thriving right-at-home franchise owner in financial terms, what metrics would they excel in just beyond revenue?

SPEAKER_01 9:55

So revenue, and then I'll say profitability would be, you know, I'm going to say kind of put those in the same bucket. Not necessarily always, but lots of times profitability and revenue are tied pretty close together. I think uh so gross margin. So we just kind of got done talking about this a little bit. Gross margin. In other words, uh the margin you make on the on your on the on the care that you provide. And that gets tied to what I just talked about in the bill rate and how in some, you know, if the private pay is is you can you can control that much more than you can the other ones. But one of the metrics I would definitely watch is the gross margin on the business. Uh you're obviously your expenses, watching what your expenses are. We help you really key in on a couple key ones. So all expenses are important, right? But you you've got you spend more money on on office payroll than probably any any other expense. So really watching the office payroll, uh, how many employees you have in your office helping out versus you know kind of the ratio of business you have to the payroll is a is a number that we have you watch a lot for. And those then they're just basic things. Your your rent expense, your insurance expense, your health insurance expense, those are always numbers that you keep your eye on. And as you get into business, you'll see you'll you'll establish trends and you'll see uh you'll see when you're kind of in in uh in the right normal range or when you're outside those trends.

SPEAKER_00 11:21

Yes. And um this is I was hoping you would bring this up, um, but I'll bring it up for you. So we just revamped our right focus dashboard. So I've been with Right at Home for seven years, and I want to say when we we first started, when I first started, excuse me, is just when we were uh developing the right focus dashboard. Recently, within the past few months, we have really to take that up, um, taken that up on a couple notches and to improve it. I want to say there's 11 or 12 different team metrics. So it's a dashboard that you as a franchise owner will have that you can pull up with your coach or on your own, where it shows all of those relevant KPIs, a lot of the things that Jeff just mentioned, plus others to really help you keep your finger on the pulse of your business in in multiple areas. So it's a one-stop shop that shows you um all the relevant things to make sure that your business is functioning properly in all the areas, instead of just one or two specific things, because they're all kind of related and it's all in one spot. So it's it's an awesome resource and something that that we're incredibly proud of that we've it was great to begin with, and now it's even better.

SPEAKER_01 12:30

I I agree, and I have that on my list to bring up today for sure, because Jenny just brought up was just it's such a remarkable uh kind of a dashboard. And and it has so it has things in there about how many caregiver applications you have and what's your ratio of application to hire. It's got it's got lots of different things on there. I think what's best about it, it's none of the none of the metrics on there are are ones where you would go, wow, that's just amazing. I would have never thought of watching that. That's not the point of this dashboard. The point of this dashboard is it is it is you can just look and log in every morning and look and see how things are trending. You don't have to you have to get out your whatever your spreadsheets or your or your napkins, whatever you keep your notes on. You don't have to you don't have to go to any of that information. You just have to log in once. You see this dashboard. You can click through there and look at the different metrics. You can do it once a day, you can do it once a week. But what's what's great is it gives you lots of tools to look at what's going on. And then your coach, when he or she calls you or comes to visit with you, that's going to be kind of what the visit's gonna be built around is is your dashboard and the the metrics. And here are things that are that you're doing great in. Here are things that maybe can put some, you know, spend some time on to improve, and they'll talk about how to improve that with you.

SPEAKER_00 13:48

Yes. And a question came in, Jeff. It says, is this dashboard an additional expense for the franchisee?

SPEAKER_01 13:54

It is not. No, it's it's part of uh what would part of what we do as a franchise or we provide this.

SPEAKER_00 14:01

Yes. Okay, thank you. Another question from the audience. It says, How should a new franchisee think about ramp up timing to break-even and profitability in today's environment?

SPEAKER_01 14:13

Well, that's uh whether you can always take out the today's environment because it's it's it's every environment is challenging, has different challenges in their own way, but uh we cannot predict what break-even is going to look like for anybody on this phone. It's gonna be different for every franchisee. We don't so we don't say it's gonna take this many days, this many months, or anything like that, because it really, really does vary depending on the on the franchisee and the circumstances. It depends upon uh all kinds of things, how you how you've set up your mark, have you set up your market, who your employees are, how you're paying them, are you paying yourself or not? So it depends on a lot of those things.

SPEAKER_00 14:48

Okay, perfect. Thank you. Okay, back to my list of questions. Okay. Um, knowing that the audience um that is watching this uh today or listening to it on a recorded basis, um, knowing that the audience are people who are thinking about joining Right at Home? Um Relatively soon they could be attending a Discovery Day and shortly thereafter, starting a right start, you know, um ramp up uh program, eventually getting to opening a business. So thinking about like a brand new franchise owner who's just opened their business. So my question for you is early on, what is one smart financial habit that separates franchisees who really thrive versus those that may struggle just a little bit?

SPEAKER_01 15:32

So my answer is going to be around data, and that might be because might be a little bit biased because of my position, but but I mean, keeping track of your data, keeping track of your, for example, your sales visits, who who you've gone to see. So a lot of a lot of being successful is uh building that right-at-home brand in the community. Yes, we've got a great national brand, right? We've got a great website, uh, we've got a great brand, we've got great commercials, but it be it's really up to each individual franchisee to build a brand in their own local area. Get out and talk to the discharge discharge planners, get out and talk to the to the state agencies that support the agent, things like that. So that's that's super important to do. And and just so keep again keeping track of who you've talked to. Uh those metrics on your sales calls are super important.

SPEAKER_00 16:23

Okay. Okay. Next question from me. Um, how important is it for new franchise owners to visit with other existing ride-and-home franchise owners? So um during the education or approval process, um, each one of our prospective franchise owners goes through franchisee validation where they talk to existing ride-and-home franchise owners. From a financial perspective, how important is it to maintain those relationships with other existing franchise owners even after they've opened their business?

SPEAKER_01 16:57

Yeah, I think uh so we haven't done a study on it or anything like that, but there's a lot of correlation between the ones that that find kind of that mentor, uh form that mentor-mentee relationship and continue to talk after they open up, uh, after a new franchisee opens up. It might be their neighbor across town that they can they can uh talk with or go to coffee with or get you know get advice on with. I mean uh it could be somebody across the country as well. So it might be just somebody that they met in the right start training class, and they just they just stay stay friends and are able to communicate and kind of kind of work their way through problems together. But it's it's the validation process is is super important as a potential franchisee. We we give you a list of names, a list of franchisees. We don't say call these three. We give you a list of franchisees and you can pick and you can you can call. And that is that is such an important piece of kind of the due diligence process because it lets you, I mean, you and I are are are biased, Jen, and we can and we're you know we're super proud of where we work. And I think we got the best home care company out there, uh, hands down. But to hear it from our franchisees, that's I think what has the most value.

SPEAKER_00 18:18

Okay, thank you for that. Um, my next uh question is um regarding um the coach and the franchise owner. So every franchise owner has a specific coach that they are paired with. There's tons of subject matter experts, you know, behind that coach here to help you and support you as a as a franchise owner. So franchise owner and coach put together a strategic business plan. And part of that strategic business plan is is establishing those goals and and um establishing those KPIs and certain numbers to reach by by a certain date. How important is it to establish those goals? You know, that's that's just part of the support that we provide, but really just want to get your perspective on a franchise owner who wouldn't set any financial goals versus one who does and the importance of that.

SPEAKER_01 19:13

So it's probably not a big shock that that some people just aren't into setting goals. Like I'll just kind of shoot from the hip. You know, talking about any entrepreneur may or may not think that that's an important thing to do. Again, we see we we really emphasize the importance of it because we've found out that the ones that set the goals and then hold themselves accountable, and as and our coaches will help you as a franchisee be hold yourself accountable to the goals that you set. But it just makes so much sense. They'll set those goals out, and that could be a couple different things. It could be revenue-based, that could be profit-based, it could be uh number of client-based, uh, or there could be all the above. But just setting up those goals and and working towards them and and just monitoring kind of how you are doing. Like if it's over a 12-month period, and and if halfway through the 12 months, you're not halfway to what your goal is, for example, then that allows you and your coach to work together on okay, what's what's wrong? Maybe the goal was too high. Maybe you're not doing anything to maybe you're not doing enough to try and hit the goal. So it's just pieces that you can work on together with the with your coach. And then that great dashboard that we just talked about a couple minutes ago. Uh, probably the metric that you're gonna, probably all the metrics you're gonna set are gonna be right there on the dashboard, and you can keep track with them.

SPEAKER_00 20:37

Yes. Okay, thank you for that. So quite often I say, which sounds it sounds very cheesy, and even when I say it, I'm like, this why would I even repeat this? But you start with the end in mind. So, how important is it for a franchise owner who's just joining Right at Home to think about their succession plan from day one? And it's it's kind of difficult to explain to somebody who's just starting their business, like, wait, you want me to leave already? No, we want you to be in this business forever, but you have to have some type of a succession plan, a transition plan, whether that's five years from now or 50 years from now, whatever that looks like, you have to have a plan in place. And it includes lots of things in addition to just like financial uh plan. But really, just would love to hear your perspective on, you know, start with the end in mind and and what that means and how important it is to have that succession plan.

SPEAKER_01 21:35

Yeah, I think I think a lot of people, and and sometimes I'm surprised by the number of people that that might have a plan in mind, but lots of times that they do not. But I think it's uh you know, developing your plan the first day you're a franchisee, that's probably not necessary, but it's something to be thinking about, like right, and then like what am I gonna do with this someday? Because we've got hundreds of franchise. That have built really high value businesses, right? Very successful businesses. They're worth a lot. If they're to go sell them, they're worth a lot. So they need to kind of think about okay, what what will I do with this someday? Is this something that I want to give to my kids or sell to my kids? Or you know, bring bring family members in. And we see that happening a lot in the business, in our business, they're right at home. And I think that's one of the best, kind of the best validation points you can see is when you see so many of the franchisees that started up, say 20 years ago, and they've got their kids working now, and they're part owners, and they're going to take it over, and that's really awesome. But just having whether it's whether it's a family thing or whether it's uh it it's okay if your goal is to to build it up and then then sell in 10 years, that's that's fine too. But just have something in mind in terms of what what you want to shoot for long term.

SPEAKER_00 22:52

Yes. Okay, thank you for that. Thank you.

SPEAKER_01 22:55

Yeah, yeah.

SPEAKER_00 22:56

Okay. So uh as a member of the leadership team, it's important that you know these these uh potential franchise owners who are listening to this, it's important to them that they know that the franchise or has a strong, you know, leadership team in place and a strong team of people at corporate headquarters to to help and support them. But specifically being a member of the leadership team, uh it's important to our system that you know that there is a a um spelled-out strategic plan, an annual plan, a three-year plan, a five-year plan. So, as a member of the leadership team, can you give us some insight, you know, from a CFO perspective what the future of Right at Home looks like? Maybe just uh a couple of high pump points on um our you know 2026 plan and and goals for right at home, um how that relates to our franchise system, and then even more uh looking a little bit further into the future. And I know um you've heard Margaret, our our president and CEO, say this multiple times, you know, things get kind of fuzzy, you know, beyond five years. And because in the the the world of of home care, things are constantly evolving and changing. So it's tough to be like, this is our plan in five years. You know, whoever would have thought that, you know, COVID and a global pandemic was a thing. Yeah. Um that wasn't even on our radar right before COVID hit, right? So um just thinking about the next uh 12 months um for uh home care in general and maybe some things that Right at Home is working on right now as we look ahead to the future.

SPEAKER_01 24:26

Okay. So it that's an easy question because we spent a lot of time from a leadership perspective on our strategic plan. And actually, we're going to strategic planning in in about three weeks now. So uh for our 2020, kind of our 2027 run. But what's really important about the strategic plan is just just kind of from a high-level perspective, we want to really be focused on the future. We it's it's easy every day to, I mean, every day we come in and look at the numbers. I do, everybody comes and looks at the numbers, and you know, we get month weekly reports, monthly reports. It's easy to get caught up in that without looking down the road. So we we make sure that we put time, and I'm not just talking about what yeah, we have strategic planning in in in three weeks, like I said, but this is something we talk about weekly in our in our executive meetings, as you know, Jen. So so what's in store for us down the road? We have a couple things. One is I talked at the beginning of the hour about the fact that uh one of the things that we're constantly aware of and is always at the top of our list, is a workforce. Like what does the workforce look like? What does uh the ratio of of seniors to caregivers is is going to slowly decrease over the next 20, 10, 20 years. So how can we how can we provide more care with the workforce that we have, whether that's through technology or whether that's through uh something else, robots don't know what don't know what it is, but we're definitely looking and spending time on on expanding the care capacity that we have right now. That's right. So that's a that's a big one, what we do right now. Second is uh is AI. I was talking about AI, and I know it's I know it's a buzzword, but it's it's something that we're spending time and money on. And we feel like that that's so first of all, our franchisees they're asking for it. So it's not like we're pushing anything, we're developing AI that helps us both at the corporate office, but as well, we're coming up with things that will help the efficiency and the productivity of our franchisees as well, uh to help uh to help advance the system.

unknown 26:35

Yep.

SPEAKER_00 26:36

And I'm I'm I'm I'm just writing us like crazy because you're saying so many awesome things. I want to add to that. Yeah, you're absolutely right. We're we're focused on the future. It's it's very rare for us to just talk about the right here and now. We're constantly forward thinking. We're constantly looking at the home care industry in general, the the current state and future state. Um, it's no secret that this is a highly regulated business. So we stay on top of all of those rules and regulations and inform our franchise owners on yes, the right here and now, but also what's coming in the future. Um and um data-driven decisions, uh, first and foremost, you know, the numbers tell a story. Um, we're very focused on that. And I would say most importantly, we listen to our franchise owners. Um, so it's not just like, oh, we've done the research and you know, this is what the numbers say and this is what we're seeing in, you know, um the state of home care. Um, we're constantly listening to our franchise owners, the ones who are out there on the front lines working this business day in and day out. Um, so the feedback that we receive from them on here's what's happening and here's what we need, um, the majority of our decisions are really focused around that. So I wanted to make sure to mention that as well.

SPEAKER_01 27:52

Yeah, and I agree. We do we do we listen to our franchisees, as you said, and we've got a couple of different ways to do, but one is with our strategic leadership council. So we have geographically, we have the country divided up and we have representatives from each part of this the country that represent the franchisees in their particular state or states, however, they're divided up. And yeah, we we have calls with them weekly, I'm sorry, monthly calls with them, we have meetings with them to understand what uh what the what the franchise system is asking for.

SPEAKER_00 28:23

Yes. Okay, Jeff, you know, time flies when you're having fun. This has been fun because we have two minutes left. Yeah, I saw you look at your clock. You're like, wow, it's already been a so anyway, um, before we part ways, I always like to ask this question is there anything that we didn't talk about today that you'd like to bring up to our listeners? Uh, or if not, any um piece of advice that you'd like to leave with our listeners before we hang up here?

SPEAKER_01 28:48

So I can combine this into into one here. The the thing we didn't talk about today is really the why you do this business. And there's so many reasons why why you'd want to do this business and maybe maybe why you wouldn't as well. It this this has to be this is not an easy business to do. It's not an easy business to run. And you want to be uh this you have to have a passion for helping others, for helping seniors, for for for you have to be a caring person. You have to you have to be that person that really feels good when you've when you've you know when you've taken care of somebody's mother who lives three states away and and they're they're worried about mom or dad or whatever. That the why is a really important part of the job. So I would say make sure that your why is all squared away. We're Jen, we are a great company. We're I think we're the best one out there, but you got to make sure that the the that you're doing it for the right reason. That to me is at the top of the list.

SPEAKER_00 29:42

Yes. Okay, great advice. Thank you so much, Jeff. And thank you for doing this today. I know you're a busy guy. I appreciate you doing this, and I know that our listeners do as well. So thank you.

SPEAKER_01 29:52

All right. Anytime. Thanks, Jeff.

SPEAKER_00 29:55

Okay, until next time. Goodbye.

SPEAKER_01 29:57

Bye.