ComForcare Home Care continues to grow, welcoming new entrepreneurs looking for a way to make a difference in the lives of others through their work. One question many potential home care business owners have is how to finance the start-up process. This article featured in the Daily News walks through the experiences of one start-up office in Michigan and offers insight into the early stages of planning and funding.
Ken and Dawn Stoll opened ComForcare Home Care in Stanton last February. They took out a line of credit with Isabella Bank. The home care business now has 37 clients and 40 employees, mostly part time.
STANTON — When Ken and Dawn Stoll decided to purchase a home care service franchise, they did their research. The Stolls looked at the top 12 companies in the country and chose ComForcare Home Care, a non-medical home care agency for senior citizens and those needing help at home. They had taken a business franchise class at Montcalm Community College (MCC) to learn some of the basics.
The Stolls used their savings to fund the start-up costs of the Stanton home care business. They also created an extensive business plan to present to various banks for a line of credit to keep their cash flow positive. The Stolls went to five banks. They were immediately turned down by two, which did not do small business loans. The Stolls negotiated between the other three banks for the best rate.
“The (MCC) class taught us that banks can be like car dealers, meaning negotiable,” Ken Stoll
Seppala suggests submitting a comprehensive business plan as the first step in obtaining a commercial loan. He recommends taking advantage of organizations that help individuals prepare a business plan at little or no cost, including the Michigan Economic Development Corp. (MEDC), Michigan Small Business Technological Development Center (MI-SBTCD) and SCORE (a nonprofit association dedicated to educating entrepreneurs and helping small businesses start, grow and succeed nationwide).
“We find that a better prepared plan not only helps new entrepreneurs, but also established businesses which usually ensure success or options to improve in the future,” Seppala said.
The timeline for financing a small business depends on the complexity of the request and the detail of the business plan, but generally the timeline can be fairly quick, according to Seppala. He said lenders take the following items into consideration before approving financing:
• The depth of the business plan and whether it’s realistic or obtainable.
• The repayment source.
• A secondary source of repayment if a primary source of repayment is not established.
• Personal credit history.
• Collateral to support the request (liquidation value).
Regarding personal finance risk, Seppala said an entrepreneur will typically be required to guarantee the loan either through the bank or a government program. He said in a majority of these cases, the guarantee is secured by personal assets, such as a home or vehicle. In addition, life insurance is typically required to match the requested loan as the success of the business is dependent on the entrepreneur being able to achieve the goals of the project.
When the Stolls opened ComForcare Home Care in Stanton last February, they began with one home care client and one caregiver. They now have 37 home care clients and 40 employees (mostly part-time). They are contracted with four Medicaid agencies covering Clare, Clinton, Gratiot, Isabella, Ionia, Montcalm and Newaygo counties, as well as with the Michigan Department of Human Services statewide.
“Our business has grown beyond our expectations and projections that we presented to the banks,” Ken Stoll said.
– Daily News by Elisabeth Waldon
About ComForcare Home Care
ComForcare is a premier provider of private-duty home care services to people of all ages with offices conveniently located nationwide. Each ComForcare location provides caregivers who make life easier for those coping with a chronic medical condition, recovering from an illness or injury, or dealing with the challenges of aging – in the comfort of their own home. ComForcare offers elderly care services including personal care, homemaking, transportation, companionship and family respite services to improve the quality of life and level of independence for every individual and family receiving its home care services. Each ComForcare office is independently owned and operated.
2510 Telegraph Road, Suite 100
Bloomfield Hills, MI 48302