Nada Deluca, a nurse with private health care provider Nurse Next Door, walks with her patient Joan Mosdell, who suffers from dementia, outside her Mississauga home on April 10, 2011.JENNIFER ROBERTS/The Globe and Mail
THE CHALLENGE
John DeHart and Ken Sim started Nurse Next Door, a Vancouver-based provider of home care services in 2001. After reaching 1,000 staff members, they started franchising their business in Canada in 2007.
Success came quickly, and they had 50 franchises by 2010. But expanding south of the border would prove to be a challenge because, unlike Canada, the U.S. market had many in well-established players.
THE BACKGROUND
In early 2001, Mr. DeHart moved to Vancouver and had difficulty finding professional home care for his Nana who had Alzheimer's disease. The negative experience got him thinking about the opportunity to start his own business.
When Mr. DeHart approached his long-time mentor Milton Wong with his idea, Mr. Wong directed him to Ken Sim. It just so happened that Mr. Sim had contacted Mr. Wong with the very same idea and so Mr. Wong introduced the two entrepreneurs.
Mr. Sim had experienced a similar challenge with finding suitable home care for his wife, who had to go on bed rest while pregnant with their first child
When Mr. DeHart and Mr. Sim met, they learned that in both of their cases, the home care company had not done criminal record checks or even met the person they sent to provide home care.
The home care industry, they soon realized, was fragmented. And because of dissatisfaction in the market, they saw an opportunity.
In early September 2001, they purchased two cell phones, hired six of the caregivers they met and ran criminal record checks. The Starbucks in Vancouver's Kerrisdale neighbourhood became their head office.
Within four years, Nurse Next Door had 1,000 employees and decided to franchise the business across Canada.
"Running a franchise business is very different from running a home care business, and it took us almost a year to build out the systems, processes, and infrastructure needed," says Mr. DeHart.
In 2006, they launched with two pilot franchises; one of the owners was a friend of Mr. Sim's, and the other was a couple who answered an ad looking for early franchise partners. They worked side by side with these franchise owners for nine months before expanding their search for more partners.
In November of 2007, they started awarding franchises in Canada and over the next three years grew to almost 50 franchises.
At this point, Nurse Next Door had more Canadian franchises than any American competitors had in Canada, and Mr. DeHart and Mr. Sim started thinking about expanding into the U.S.
After talking to numerous Canadian entrepreneurs who had ventured into the U.S., and researching the U.S. market for two years, they realized just how competitive the market was down south and that nearly 70 per cent of all franchises are sold by brokers.
In late 2011, they approached U.S. business brokers looking for American franchisees.
"The business brokers told us that, even though we had more Canadian franchisees than any of our U.S. competitors, we had to have either a value proposition that was very different from our competition or at least 25 U.S. franchises before they would talk to us," says Mr.
DeHart.
THE SOLUTION
Mr. DeHart and Mr. Sim spent the next six months understanding what made them different from their U.S. counterparts. They focused on two key areas: brand positioning and communicating the value of their 24/7 centralized booking and on-call logistics.
"Competitors were all focused on home care tasks, which to most people meant the cooking, bathing, vacuuming etc. needed to allow a senior to stay in their home. What we discovered was that over 50 per cent of those who needed home care were depressed or lonely," says Mr. DeHart.
"Now our challenge was how to deliver happiness."
They chose to focus on how they could help clients live life again by finding out what they once loved doing, but for whatever reason had stopped. Now the business became helping people get back to swimming, golfing, or biking again – while also taking care of their medical needs.
They also learned how to articulate why their centralized approach was so compelling to franchise owners.
"The industry suffers from very high burnout because of the administrative burden. By managing the logistics of the business, Nurse Next Door is able to dramatically lighten the administrative burden on franchise partners which allows them to grow quicker and ultimately enjoy owning the business more," says Mr. DeHart.
Next they created content and collateral around what they called the "Care Services Center" to communicate the value of this approach to business brokers and prospective franchise partners.
Once this was in place, in the summer of 2012, they went back to the U.S. broker system and reintroduced their franchise opportunity.
THE RESULT
Business brokers now understood how Nurse Next Door was different, and started introducing them to high-quality prospective franchise partners.
The company now has close to 25 U.S. franchises, 60 Canadian franchises and maintains two corporately owned locations.
Their head office, affectionately known as HeartQuarters, houses 55 employees and is just three blocks from the Starbucks in Kerrisdale where Mr. DeHart and Mr. Sim started their business.
"What has been great about our U.S. expansion efforts is that it helped us better understand our value proposition and strengthened our business in Canada," says Mr. DeHart.
Craig Elias is the founder of Shift Selling Inc. and an entrepreneurship instructor at the Haskayne School of Business at the University of Calgary.
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Small Business website.
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