Starting a Non-Medical Home Care Agency: What Nobody Tells You About the First Year

Most "how to start a home care agency" guides will walk you through licensing, business plans, and LLC formation. Those are checkboxes. Important checkboxes, but checkboxes.

What they won't tell you is this: the day your license gets approved is not the finish line. It's mile one of a marathon where the terrain looks nothing like the brochure promised.

My agency does marketing for home care companies. Only home care, nothing else. That means we talk to a lot of new agency owners, sometimes in month two, sometimes in month fourteen when things haven't gone the way they expected. The ones calling at month fourteen almost always say some version of: "I wish someone had told me this before I started."

This is that conversation.

Licensing Is a Checklist, Not a Strategy

Thirty-four states require licensing for non-medical home care. Some states make it straightforward: a few forms, a background check, a fee. Others make you wait months for inspections and approvals.

Either way, licensing is procedural. You follow the steps, you get the license. Google "[your state] non-medical home care license" and you'll find the requirements within five minutes.

The problem is that most new agency owners spend 80% of their preparation time on licensing and 20% on everything else. It should be the reverse. By the time the license arrives, you should already have:

• A website that doesn't look like every other agency
• A Google Business Profile that's been claimed and optimized
• Three to five referral relationships in progress
• A pricing model that accounts for your real costs
• A plan for getting your first caregiver

Most people do none of this. They get the license, put up a basic website, and wait for the phone to ring.

The phone does not ring.

What Year One Actually Costs (And Where the Money Goes)

The standard answer is $40,000 to $80,000 for a non-medical home care startup. That number shows up in every guide and it's roughly accurate for the operational basics. But it hides more than it reveals.

What that number usually includes:

• Licensing and registration: $1,000-$5,000 depending on state
• Insurance: $3,000-$6,000/year (general liability, workers comp, professional liability)
• Office space and equipment: $5,000-$15,000
• Software (scheduling, billing, CRM): $2,000-$5,000/year
• Initial caregiver recruitment and training: $3,000-$8,000
• Working capital for first 3-6 months: $15,000-$30,000

What that number almost never includes:

• Marketing: $10,000-$20,000 (year one minimum if you're serious)
• Professional website: $3,000-$8,000
• Your own salary while building: $0 for the first 6-12 months
• Legal and accounting setup: $2,000-$5,000
• Unexpected costs (compliance surprises, emergency hires): $5,000+

When you add marketing and the founder's runway, the real number is closer to $60,000 to $120,000 for anyone building a serious agency. The ones who start at $25,000 exist, but they're either working another job simultaneously or they're not investing in growth.

Your First Clients Won't Come from Your Website

This is the one that surprises people the most.

You'd think building a great website and running some Google Ads would bring in your first clients. For established agencies with reviews and history, that works. For new agencies, the math is different.

When a family searches "home care near [city]," Google shows them agencies with 50+ reviews and years of history. Your brand new agency with zero reviews and a website that went live last week? It's invisible. Not because your website is bad, but because trust takes time to build online.

The vast majority of families searching for senior care don't type a company name. They search "home care near me" or "in-home care [city]" and choose from whoever Google shows them. And Google rewards the agencies that have earned that trust with reviews, longevity, and content.

Your first 5-10 clients will almost certainly come from one of three places:

1. Personal network: friends, family, former colleagues who know someone who needs care
2. Referral partners: hospital discharge planners, elder law attorneys, geriatric care managers
3. Local community connections: faith communities, senior centers, support groups

It takes six months to a year of consistent relationship-building before professional referral sources start sending clients your way. That's not a guess. That's the timeline every new agency owner eventually describes.

One thing I've noticed: the agency owners who land their first referral partner fastest aren't the ones with the best elevator pitch. They're the ones who show up consistently. If a discharge planner told me they finally referred to an agency because it was the only one that came back a third time, I wouldn't be surprised. Three visits. That's a common threshold. Most agencies quit after one.

This means your referral work should start before your license arrives. Attend two healthcare networking events per month. Introduce yourself to every elder law attorney within 20 miles. Drop off materials at senior centers. Start building the trust that will eventually generate revenue.

The Pricing Mistake That Bleeds New Agencies Dry

New agency owners almost always price too low. The reasoning seems logical: "I need clients, so I'll undercut the established agencies." It's a trap.

Run the math most people skip before setting their rates.

If you charge $28/hour for companion care and pay your caregiver $15/hour, your gross margin looks like $13/hour. Comfortable, right?

Wrong. You haven't accounted for:

Employer FICA taxes eat 7.65% of payroll. Workers comp adds roughly $2.79 per $100 of payroll. Then add your general liability insurance allocation, background checks and drug screening for every hire, training time you're paying a caregiver for but not billing anyone, scheduling gaps between clients, and your own overhead: software, phone, office, supplies.

By the time you add employer burden and overhead, that $13/hour gross margin becomes $4-$6/hour net. And if you have any scheduling inefficiency, it drops further. We wrote an entire breakdown of how this margin trap works for established agencies. For startups, the problem is worse because fixed costs are spread across fewer billable hours.

The agencies that survive year one typically price at the market rate or slightly above. They compete on trust, not price. The agencies that underprice spend their entire first year working themselves to exhaustion for margins that can't sustain the operation.

You Can't Serve Clients Without Caregivers

The home care industry has a staffing problem that hits new agencies disproportionately hard. Annual turnover across the industry runs 75 to 80%. For new agencies without brand recognition or referral networks, it's worse.

Think about it from the caregiver's perspective. They have dozens of agencies to choose from. Why would they pick the one that opened last month over the one that's been operating for ten years? The established agency has consistent hours, a reputation they can verify, and relationships with other caregivers who can vouch for management.

New agencies compete for caregivers the same way they compete for clients: trust. You build it through:

• Fast communication. Call applicants within hours, not days. The agencies that respond fastest get the best candidates.
• Honest expectations. Don't promise full-time hours if you only have 20 hours of work. Caregivers who feel misled quit immediately.
• Professional onboarding. Even if you're small, treat new hires like they matter. Orientation, introductions, clear expectations.
• Consistent scheduling. Erratic schedules are the fastest way to lose good caregivers.

I see this pattern at least once a month: a new owner celebrates landing their first client and then scrambles to find someone to staff the case. Sometimes they lose the client before they've provided a single hour of care. Recruitment should run in parallel with sales, from day one. If you're not building a caregiver pipeline before you have clients, you're setting yourself up for the worst possible first impression.

The Marketing Gap Every Startup Guide Ignores

I've read most of the "how to start a home care agency" content ranking on Google. The marketing advice typically amounts to one paragraph: "Build a website. Get on social media. Do community outreach."

Three sentences. In a 2,000-word article. About starting a business where your survival depends on people finding you.

Would you walk into a bank with a financial plan that said "make money somehow"? Of course not. But that's essentially what most agency owners do with marketing.

Before you serve your first client, your marketing should include:

A real website, not a template

Your website needs specific pages: Home, About (with your actual story), Services (describing what you offer in plain language), Service Areas, and Contact. The phone number needs to be visible on every page, clickable on mobile. Families want specific things when they visit a home care site, and most new agencies give them none of it.

A Google Business Profile from day one

This is free. It takes 30 minutes to set up. And for local searches, it matters more than your website in the first year. Claim it, fill out every field, add photos of your office and team, and start asking for reviews the moment you have a satisfied client or referral partner.

A review strategy that starts immediately

You will not rank on Google without reviews. 75% of families always check reviews before calling. Your first reviews will come from personal connections, community partners, and your earliest clients. Ask for them directly and personally. Every single time.

A referral tracking system

You should know exactly how many referral sources you've visited, how often, and which ones have sent clients. A spreadsheet works fine. The point is tracking it, because what gets measured gets managed.

A real marketing budget

Marketing costs money. The SBA recommends small businesses spend 7 to 8% of gross revenue on marketing. For a new agency with a first-year revenue goal of $200,000, that means $14,000-$16,000 budgeted for marketing. Build it into your startup plan, not as an afterthought once revenue starts coming in.

What the First Twelve Months Actually Look Like

Nobody publishes this timeline because it's not glamorous. But it's what actually happens for most new non-medical home care agencies.

Months 1-3: All output, no income

You're spending money, not making it. Licensing, insurance, website, initial marketing materials. You're networking aggressively, attending every event, introducing yourself everywhere. Revenue is zero or close to it. This is normal.

Months 4-6: The grind begins

You land your first 2-5 clients, mostly from personal connections. Revenue might reach $3,000-$10,000/month. You're doing everything yourself: intake, scheduling, marketing, billing, and sometimes filling in as a caregiver when someone calls out. The workload is unsustainable, but the revenue isn't enough to hire help. If you're wondering whether you can actually run an agency alone, this is the period that answers that question for most people.

Months 7-9: Referrals start producing

If your networking has been consistent, referral relationships start generating clients. Revenue grows to $10,000-$20,000/month. You hire your first part-time office support. You start accumulating Google reviews. This is also where burnout starts showing up, because you've been running at full speed for six months straight.

Months 10-12: The real business emerges

Revenue reaches $15,000-$30,000/month for agencies that invested in marketing from the start. You're still not profitable once you account for everything you invested in months 1-6. Break-even typically happens between months 12 and 18. Some franchise models report ROI within 2-3 years.

I used to tell people months 4-6 were the hardest stretch. I've changed my mind. Months 7-9 are worse, because by then you're exhausted and the growth still feels fragile. At least in months 1-3 you have adrenaline.

This timeline assumes you're working full-time on the business and marketing consistently from day one. Agencies that skip marketing or start networking at month six can add 6-12 months to every milestone above.

If Someone Asked Me Where to Focus

If a new agency owner called me tomorrow asking where to put their energy, this is the priority list I'd give them:

1. Spend less on branding, more on presence. A clean, professional website with a clear phone number beats a $5,000 logo package that nobody sees. Your brand will develop organically as you serve clients well. Your website needs to work right now.

2. Start networking before your license arrives. The license takes weeks or months. Use that time to build the relationships that will generate your first clients. Every week without networking is a week you'll pay for later.

3. Price for survival, not volume. Don't undercut the market. Price at market rate and compete on responsiveness, trust, and professionalism. You cannot build an agency on $4/hour margins.

4. Recruit in parallel with sales. Never land a client without a caregiver ready to work. The fastest way to lose a new client is telling them you need two weeks to find someone.

5. Budget for marketing like it matters. Because it does. The agencies that invest from month one reach profitability months before the ones that wait.

6. Build your Google Business Profile before your Instagram. Families searching for home care use Google, not Instagram. Prioritize where they actually look.

7. Track everything. Hours billed, revenue per client, cost per caregiver, referral source conversion. The agencies that know their numbers are the ones that make it past year one. Once you're past survival mode, the growth playbook gets much clearer.

The Industry Is Growing. The Opportunity Is Real.

None of what I've written should discourage you from starting. The home care market is $155.9 billion and growing. By 2030, every baby boomer will be 65 or older. The number of Americans who are 65 and older is projected to reach 22% of the population by 2040. 88% of adults over 50 want to stay in their homes as they age.

The demand is there and it's growing faster than the supply of agencies that can actually deliver quality care. There are already over 507,000 home care providers in the U.S., but the gap between what families need and what's available is widening every year.

The opportunity is real. The agencies that struggle aren't the ones that entered a bad market. They're the ones that thought licensing was the hard part and marketing was something they'd figure out later.

Starting a home care agency is straightforward on paper. The licensing has steps. The business plan has templates. The insurance has quotes. But the part that determines whether you're still in business at month eighteen is something most guides treat as an afterthought: convincing families to trust you when your track record is a blank page. Solve the trust problem first. Nothing else you build matters until families are willing to pick up the phone.