Do you want to start a drug & alcohol rehab facility? If YES, here is a complete guide to starting a drug & alcohol rehab center business with NO money and no experience.
Table of Content
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Write a Business Plan
- 14. Prepare a Detailed Cost Analysis
- 15. Raise the Needed Startup Capital
- 16. Choose a Suitable Location for your Business
- 17. Hire Employees for your Technical and Manpower Needs
- 18. Write a Marketing Plan Packed with ideas & Strategies
- 19. Work Out a Reasonable Pricing for your Services & Products
- 20. Develop Iron-clad Competitive Strategies to Help You Win
- 21. Brainstorm Possible Ways to Retain Clients & Customers
- 22. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
What Does It Take to Start a Drug & Alcohol Rehab Center Successfully?
Starting a rehab center for any entrepreneur can be described as a business that is two-fold, that is engaging in a noble cause which will bring forth profit for the entrepreneur. However, this is a very sensitive business to start up as a single mistake could have dire consequences for your clients and their families. This is also a business that shouldn’t be based primarily on profit.
As this is a delicate business, you would need to network with legal, medical, as well as criminal professionals so that those ones will refer patients to your rehab center; this does not however mean that you cannot source for your clients directly, your marketing however needs to be very sensitive especially as your potential customers and their families are in a vulnerable place.
If you intend to start this kind of business, you should know what licensing and certification requirements would be needed from you by the state in which you would be operating from, especially as licensing caries depending on the state.
Asides licensing, you would need to know the minimum personnel that would be needed for your rehab center depending on the scale of business you intend to run. At a minimum, you would require a licensed therapist, psychiatrist, nurses, and certified staff that would meet the staff-to-client ration that would meet the guidelines of the state you would be operating in.
Another factor to consider when starting your rehab center business is the location where the rehab will be located in. even though it isn’t compulsory that your rehab center be residential; however most of the successful rehab centers are those where patients can stay for a predetermined time and then leave.
Your location should be one that will pass health and fire code before you start taking patients so as not to run afoul of the law. Here is a detailed information about the Rehab center business;
24 Steps to Starting a Drug & Alcohol Rehab Center
1. Understand the Industry
According to the National Council on Alcoholism and Drug Dependency in the united states, over 23 million Americans which is from the age of 12 and above are addicted to alcohol and other drugs. Research from the Substance Abuse and Mental Health Services Administration (SAMHSA), has it that 2.5 million Americans received care at an addiction treatment facility as at 2012. The market for addiction treatment according to SAMSHA is estimated to be about $35 billion per year with more than 14,000 treatment facilities in existence.
Most of the rehab centers usually get paid by the government and state agencies as insurance coverage for this kind of business is limited. There are also high end niches that have emerged especially for celebrities and figure personalities such as internet addiction, sex addiction, nicotine addiction and problem gamblers. Also, some of these facilities are also diversifying into treating those with eating disorders, anxiety disorders, and post-traumatic stress for war Veterans.
According to a 2012 report by Columbia’s National Center on Addiction and Substance Abuse, out of America’s 18.7 estimated million alcoholics, only about 8.8% are treated in specialized rehab centers. This is because treatment is usually expensive and the system is not only fragmented but poorly regulated as well.
The rehab center industry comprises of clinics that have a medical staff who primarily provide outpatient services that are related to diagnosis as well as the treatment of alcohol, drugs and other substance abuse. The size scale for this business depends on what kind of firm it is as firms that are for-profit tend to be larger and more highly concentrated in the industry than public and nonprofit firms.
This industry is one that is highly fragmented as there are no companies with a dominant market share. The establishments in this industry are small, with the four largest companies accounting for less than 4% of total revenue in 2015.
The top 50 outpatient rehab centers account for less than 20% of segment revenue, while the top 50 residential rehab centers account for 25% segment revenue. Also, 60% of the firms in this industry have more less than 20 employees. The annual growth projected for this industry for the period of 2010 to 2015 is 1.8%. Also, 115,195 people were employed during the period of 2015.
Revenue and wages for rehabilitation centers have largely been affected due to the recession and also a slight fund drop in 2012 from federal funding of Medicaid and Medicare as a result of a rise in premiums but the effect is wearing off as the industry has largely recovered.
Also, the economy which is constantly improving is expected to boost revenue for the rehab center business industry from 2015 to 2021. More companies entering into this industry are doing so due to the fact that there is an increasing focus on outpatient services, which are considered less costly than inpatient care, and which is also more desirable for insurance providers.
The demand for rehab centers is largely driven by the availability of various factors such as new drugs and treatments, funding policies as well as insurance programs. Profitability for individual facilities depends on controlling costs as well as referrals.
Large scale rehab centers usually have more advantage when purchasing as well as marketing to sources that would provide these referrals. However, small scale companies have more leverage in competition by providing superior service to patients, integration of treatments with follow-up procedures, and specialist treatment.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who require the services of a rehab center are mostly;
- young adults
- corporate executives
- music and film celebrities
- sport players
- Wealthy personalities and other kinds of people.
Most of the people in rehab centers with the exception of others are those who are able to afford it or those who have families that can afford it on their behalf.
3. Decide Which Niche to Concentrate On
Due to more and more rehab centers cropping up, there are those who are striving to give services that are different from that offered by their counterparts. However, depending on the niche, services are usually the same for most of these rehab centers except for those offering additional services. Regarding the areas of specializations in the rehab business industry, some of the specializations are;
- alcohol and drug addiction
- internet addiction
- sex addiction
- nicotine addiction
- problem gamblers
- eating disorders
- anxiety disorders
- And post-traumatic stress for war veterans.
The thing about these areas of specializations is that small scale rehab centers can hardly handle more than one or two services. Medium and large scale rehab centers on the other hand can handle several services due to the large number of staff that will be available for the high influx of patients into the facility.
The Level of Competition in the Industry
Starting a rehab center business is a very delicate affair as it cannot be treated just like any other business. Your location, equipment and staff matter greatly in starting this kind of business and so if you are not one that is determined, you might need to look for another kind of business to go into.
In this industry, while it is much easier for larger companies to make cheaper purchases for drugs and treatments, and also get more referrals, smaller rehab centers have the leverage in providing specialist treatment to their patients, as well as providing superior service to patients.
4. Know Your Major Competitors in the Industry
In every industry, there are always brands that perform better or are better regarded by the customers and general public than the others. Some of these brands are those that have been in the industry for a long while and so are known for that, while others are best known for how they treat their patients. Listed below are some of the well-known brands in the rehab center industry in the United States of America;
- CRC Health Groups
- American Addiction Centers
- The Dunes
- The Betty Ford Clinic
- Silver Hill Hospital
- The Meadows
- Addiction Solutions of Florida
- Living Rebos
- Sober College
- APEX Recovery Rehab
- Betty Ford Center
- High Watch Recovery Center
- The Ranch at Clear Springs
- Serenity Malibu
- Retorno International Rehab
- New Life Addiction Treatment Center
- Orchid Recovery Center
- Beachside Rehab
- The Springboard Center
Before starting a rehab center business, you have to be sure that it is a business you are ready for, because apart from making profit like any other business, the primary cause of the business aims at achieving a noble cause of ensuring people become free of their addictions whatever they may be.
Even though a downturn in the economy plus a drop from federal funding such as Medicare and Medicaid affected the revenue and invariably wages for those in this industry, the rehab center industry is slowly on its path to total recovery and is therefore projected to be fully recovered before 2021.
In starting this business, you would need to be sure of the area you intend to go into as there are now enough niches for any intending entrepreneur going into this business. If the niche you intend going into is one that has many already established completion especially in the area you intend to operate in, then you might consider looking at another niche, offering additional services or moving to another area altogether.
However, this business is one that is guided by a lot of regulations and so you would need to know what licensing and permits are required by the state you intend to operate in.
5. Decide Whether to Buy a Franchise or Start from Scratch
If you intend to buy a franchise, the benefits that you would get are that it would help you speed up the start-up process since you would be using a proven system that has been developed by the franchisor. You might also not need to worry about attracting customers as the franchise would have had that covered.
Buying a franchise might not be an easy decision for you to make as an entrepreneur but it is a decision you need to think thoroughly on as the benefits might outweigh that of starting from scratch.
Most entrepreneurs take pride in starting their business thoroughly from the scratch. If you are one of such, then you would really need to ensure that you carry out your research as regards starting a rehab center business from the scratch, as this is not a business where you can afford to make mistakes.
Starting from the scratch means you would need to be involved with all the aspects of running the business. However, with starting from the scratch you can change strategies that you find are not working for your business, and draft new strategies to adapt to changing trends.
6. Know the Possible Threats and Challenges You Will Face
Every business faces challenges and threats and the rehab center business is no different. Some of the threats and challenges you are likely to face in your rehab center business include a drop in funding from the federal government which might be due to a downturn in the economy; more strict regulations from operating state, or more competitors in the same niche.
As earlier stated, every business faces threats and challenges; however, how you rise above the threats and challenges and ensures that your business comes out better is what will differentiate your business from others in the same industry.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
One of the most important decisions any entrepreneur has to make for their start-up business is choosing the legal structure that will suit the business and its specific needs. The legal entity decision is a profound one that will have an impact on how much tax is being paid, your personal liability, the amount of paperwork you would be required to carry out as well as your ability to source for start-up capital, which is why it is necessary for you to meet with an attorney who would best guide you on what legal entity would suit your business.
In choosing a business entity, your choice will depend on three primary factors which include taxation, liability and record keeping. For example, while a sole proprietorship is the easiest form of legal entity to start up, it is however prone to liability; while a Corporation involves more paper work, it however protects you from any personal liability.
Most rehab centers usually prefer to incorporate a Limited Liability Company (LLC), because not only does it have the advantage of partnerships and corporations, the owners are themselves shielded from any form of personal liability.
8. Choose a Catchy Business Name
- Horizon Center
- Guided Freedom
- The Entryway
- McCurrey Rehab Center
- Gentle Fort
9. Discuss with an Agent to Know the Best Insurance Policies for You
Insurance is a necessary decision for any entrepreneur that intends to go into business in the United States of America. If you are intending to start your own rehab center business, you would need to find out what insurance coverage your business is expected to have.
However, as this is a serious decision that might affect your business, you would need to talk with an insurance broker who should be able to guide you on the best insurance cover to buy for your rehab center business. Some of the basic insurance covers that you should consider purchasing if you want to start your own rehab center business in the United States of America are;
- Health Insurance
- General Insurance
- Hazard Insurance
- Workers Compensation
- Liability Insurance
- Business Owner’s Policy Group Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are thinking of starting a rehab center business, you would not need to apply for an intellectual property protection. Most of the services carried out by rehab centers are not considered something worth protecting intellectually, therefore most rehab center owners do not consider applying for an intellectual property a priority. You might however choose to secure an intellectual property for your logo, if you feel it is absolutely necessary.
11. Get the Necessary Professional Certification
While certain licenses are necessary for you to start your own rehab center business in the United States, you might not need a professional certificate especially if you are running certain kind of rehab centers.
If you are intending to start a rehab center in the United States of America, you should realize that since this is a closely regulated industry, those who you employ especially those who would help in treating the patients would be required to own accredited certifications since they would directly be in contact with the patients in helping them get over whatever addictions they might have.
12. Get the Necessary Legal Documents You Need to Operate
Every business requires certain legal documents if they intend to operate legally; therefore, some of the basic legal documents you would need to successfully run your own rehab center business in the United States of America include;
- Certificate of Incorporation
- Business License and Permits
- Business Plan
- Non Disclosure Agreement
- Operating Agreement
- Insurance Policy
- Employees Handbook
- Employees Agreement
13. Write a Business Plan
Every business especially one that is of this nature would require a business plan. Any serious entrepreneur that intends to start a business knows how important writing a business plan is especially if your business is one where you would not only need to compete with others but also to make profit.
Also, a business plan for an entrepreneur helps them prepare thoroughly for the business as it helps the investor know if the business he or she is about to venture is worth the financial risk. A comprehensive business plan would also help other stakeholders have a clearer picture of what you the entrepreneur intends to achieve in starting your own rehab center business.
Having a business plan is likened to having a clear guide that can propel a business to success. The business plan is one document that will influence your actions and decisions during the course of running your business. The whole idea of writing a business plan is because business plans are the entryway to a successful business and no matter the diversity a business plan would have, there are several essential elements which a good business plan no matter the business it is written for would have.
Some of the essential elements include start-up capital generation, marketing analysis, as well as how you intend to grow your business. Other essential elements that your rehab center business plan must have include; An executive summary which states clearly what your rehab center business is all about and what you intend to achieve, how you intend to attract clients, your target market, your company’s vision statement, goals and objectives, your services and how you intend to have an advantage over your competitors.
Finally, other components that should be contained in your business plan should include SWOT analysis, pricing, costing and financial projection for at least three years, budget, publicity and advertising strategy, as well as marketing goals.
To make sure that you have all the necessary elements needed to write out your business plan, consider getting business plan software which can be gotten for free or for a little fee online. If however, you feel overwhelmed with the whole process, you also have the option of getting a business plan writer to help you out in writing a comprehensive business plan.
14. Prepare a Detailed Cost Analysis
According to research and statistics, the cost of starting a rehab center business depends on the size and type of rehab center you intend to run. However, some equipment and personnel are necessary regardless of the size of rehab you intend to run.
This is not a business that can be run from home or from a very tiny facility even if it is an outpatient facility as your patients would increase as your brand also grows in strength. However, to keep costs down you will need to check your operating costs.
If you intend to start your rehab center business in the United States of America, you would need to ensure that some of the below listed items have been taken care of;
- Total fee for incorporation – $800
- Insurance, license and permits budget – $1,500
- Amount needed to acquire a facility for at least a year with reconstruction included – $60,000
- Cost of equipping the facility with administrative tools (filing cabinets, telephones, computers, fax machines, printers, electronics, safety and security gadgets) – $5,000
- Cost of acquiring the required working treatment and therapy tools and equipment would cost – $15,000
- Cost of launching an official website – $1,000
- Additional expenditure and miscellaneous expenses include – $2,000
From the above detailed report, if you intend to start a small scale rehab center in the United States of America, you would need nothing less than $86,000. If you are looking towards starting a medium scale rehab center in the United States of America, going by the above report, you would need nothing less than $170,000
For entrepreneurs who are looking to start the rehab center business on a large scale in the United States of America, you will need nothing less than $340,000 to raise in starting the business.
15. Raise the Needed Startup Capital
Financing your rehab center business is very important because no business or business idea can thrive without finances, no matter how noble or fantastic the business is. Finance helps the business not only become a reality but also to thrive and grow. Entrepreneurs who are seeking to start a new business are faced with the task of seeking finance which is not always an easy task but must be done all the same.
However, before you can think of getting finance that is necessary to start or grow your business, you need to think towards ensuring that you have a comprehensive business plan at hand. A business plan is the document that will show any financial institution how serious you intend taking your rehab center business.
No investor will listen to your business idea if they do not see a concrete plan on how you intend to move your business forward. When it comes to raising money for your rehab center business, there are several options that are available to you and they include;
- Approaching grants and donor organizations and Pitching your business idea to them.
- Getting a loan from banks and financial institutions
- Raising money from business partners or investors
- Sale of personal properties to raise money for your capital
- Approaching wealthy family members and friends to source for soft loans
16. Choose a Suitable Location for your Business
In choosing a location for your rehab center, you would need to ensure you pick a location that is not only convenient for your staff to get to but most importantly your patients as well. Also, picking a location should be dependent on the type of rehab center you intend to run.
If you are going to run a rehab center that is dependent on treating emotional disorders and breakdown, it would not be a good choice to pick a location that is prone to much vehicular, mobile, and air traffic. Another key factor that you would need to look out for when picking a location is dependent on the kind of rehab center you intend to run – outpatient or inpatient or both.
If you are intending to run an outpatient, then your location mustn’t be too far from patients that might need to come for treatment daily, otherwise it would be defeating the purpose of your starting rehab center business and might not see you getting many patients from referrals. Every entrepreneur knows the importance of having ‘customers’ as this helps improve the bottom line of the company.
The facility you might end up choosing should be one that has your patients in mine. Also, depending on the kind and type of rehab center you intend running, you might not need to rent a very large facility. This does not however mean that you’re your facility should be tiny and inconvenient for your patients and staff.
It must have room for storing equipment, an administrative area, and also different rooms where specialists can consult confidentially with patients. If you intend to run an inpatient rehab center, then the facility must have space for rooms where patients can use comfortably in addition to other things.
Getting a facility doesn’t mean you must break the bank as regards getting what you want. If you intend getting a place where you might need to admit patients, then it would be better if you scout for a facility on the outskirts of town.
17. Hire Employees for your Technical and Manpower Needs
Some of the equipment and tools needed to start a rehab center business are those that can be gotten for fairly used such as chairs, beds, computers and such other equipment, and if this equipment are well managed, it could last you for a very long time.
It is also economical if you purchase some of these equipment as fairly used especially if you are looking to start your business on a small scale and are trying to save costs. While some of these equipment can be gotten for cheap from rehab centers that are closing down, or other form of health homes or you can also get it cheaper online.
Some of the equipment that you would need so as to fully launch your rehab center business are:
- Filing Cabinets
- Storage Shelves
The rehab center business is a very sensitive one and therefore one must be careful of the location you intend to run this business. Also, the office facility you intend to get must be one that is not only convenient for your staff and patients, but shouldn’t be one that would make you break the bank especially if you are starting out on a small scale.
Regarding the number of employees you intend to use in starting this rehab center business, it would definitely vary depending on the size of the business you intend to run. Two or three people cannot effectively run this business. For your rehab center business, you would need to employ a Managing Director, Supervisor, Marketing Executives, and Psychiatrist, licensed therapists, nurses as well as other certified staff. This would be about 10 to 20 employees.
The Service Delivery Process of the Business
The process involved in the delivery of services for a rehab center business depends entirely on what kind of rehab center you intend to run. The processes range from seeking out patients and ensuring that they are admitted for the rehabilitant program which they came for.
Other processes involve, therapy, mental and physical evaluation, as well as other exercises designed to ensure the patient gets a cure.
18. Write a Marketing Plan Packed with ideas & Strategies
Marketing is the lifeblood of any organization, as it involves not only planning on how to attract customers to the company but also knowing intuitively what the customer wants and ensuring that they get what they came for. If you want to successfully market your rehab center business, then you must leverage on all your available contacts to source for business deals and referrals for your business.
Marketing is one of the most serious aspects of a business and if not taken seriously might have dire consequences on the growth of the business. This is why your marketing strategies should be thoroughly thought of by comparing to other marketing techniques of your competitors before using such strategies and ideas.
Some of the strategies that you would need to adopt if you intend starting your own rehab center business includes;
- Ensuring that you introduce your business and what you do to the right sources in the industry
- Advertising your rehab center business in health, physical and other related magazines and websites
- Ensure that your business is listed in local directories
- Leverage on social media platforms – Facebook, Twitter, and LinkedIn – to ensure that you promote your business.
- Using your official website to promote your business
- Direct Marketing
19. Work Out a Reasonable Pricing for your Services & Products
Factors that determine you setting the right price for your rehab center business are ones that will depend on your target market. Also, your prices are one that should cut your operational costs to the barest minimum. You also would need to know what your competitors are charging as this would help you determine what the rates for your rehab center should be.
20. Develop Iron-clad Competitive Strategies to Help You Win
The rehab center business industry is one that is a billion dollar industry and so there are bound to be many competitors in this field. Patients are likely to go for the centers where they can get affordable rates for their treatment. This means that you should package your rehab center business in such a way that you would have leverage over your competitors.
Part of the competitive strategy that you would need to adopt if you intend to favorably compete with others in the same industry is to design your business in such a way that your target market are given options that will allow them choose what they can afford.
Another strategy is to ensure that offer additional but related services that will help attract more patients to your rehab center business.
21. Brainstorm Possible Ways to Retain Clients & Customers
Customer retention is very important in a business as it is a way of businesses knowing that their customers are loyal and responding to the different retention strategies. Customers only move to other companies when they aren’t satisfied with the services offered by the present company they are patronizing.
The rehab center business is a noble one and so no entrepreneur hopes that patients have a relapse to continue coming back for treatment. So, most rehab centers depending on the kind of services they offer would prefer that their clients refer more clients to them as most clients will not like to repeatedly go back to the same rehab center after a relapse.
22. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Strategies that are needed to boost the awareness of your brand and help create a corporate identity for your rehab center are very important. If you intend starting a large scale rehab center business, then you might need to get brand experts to help promote your business.
Some of the platforms that you can use in promoting your rehab center’s brand while also promoting your business are;
- Ensure that your rehab center business is promoted on your official website
- Ensure that your satisfied patients refer others to your rehab center
- Advertise your business in health and other related magazines
- Ensure that you attend health seminar and expos
- List your rehab center business on local directories
- Make use of direct marketing
- Make use of social platforms like Facebook, LinkedIn, Twitter in promoting your rehab center business
- Ensure that you paste handbills and posters in strategic places
23. Create a Suppliers/Distribution Network
If you intend to run a standard rehab center business, then you would have to source for supply networks where you can get the needed treatment for use as well as other equipment for use in treating patients.
This is why it is necessary for you to be in good business relationships with those who are your suppliers, as it would ensure that your rehab center business runs smoothly without hitches. Having a good business relationship with your trusted vendors is not only beneficial in terms of operating efficiently, but you can also get tips and advices as well as discounts on some products thereby improving the bottom line of your company.
24. Tips for Running a Drug and Alcohol Rehab Center Successfully
Running a rehab center successfully requires the strategies that are needed to run any business as well. The first attempt at success should be internal. You must only employ staffs who understand the vision and goals of your rehab center business so that they are able to project this in dealing with the patients.
You must create schedules that are not difficult for both staffs and patients to adhere to, this way. Also, you must ensure that your patients’ needs and complaints are listened to. This way you get to treat patients who feel comfortable and are at ease with your staff and also enable them adhere to instructions that might be dished out.
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