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How to Start a Drug and Alcohol Testing Business

Do you want to start a mobile drug & alcohol testing business? If YES, here is a complete guide to starting a drug & alcohol testing business with NO money and no experience.

With companies, government parastatals and even non-profit organizations adopting a sober policy to keep their absence and theft rates low in the firm, the demand for drug testing services is on the rise. Depending on where you live and want to start your business, the laws and regulations for starting a drug testing company may vary, and the success of your drug testing venture depends on both your compliance with those standards and your management skills.

The need for drug testing service businesses has become a necessity these days due to job candidate pre-screening, parental-ordered testing on teens, and steroid testing for athletes to mention a few.

Some of these businesses are entirely sustainable with certified labs and technicians on the premises, some are low-cost franchise opportunities, and finally, some drug testing companies partner with certified labs but perform the initially required testing.

If you are interested and considering starting a drug testing business, you should focus attention on most common types of drugs that raise the red flag, which are marijuana, hash, cocaine including crack cocaine, amphetamines, opiates like heroin, morphine and opium and phencyclidine or PCP. More extensive drug testing businesses may also test for barbiturates, hydrocodone, methaqualone and benzodiazepines.

To understand the subject, it better to start out with some basic information about the drug testing industry to help you know what you are getting into and what your options for your Business model will be.  First off, we are talking about drug testing regarding testing individuals for illegal drugs or illegal abuse of legal drugs.

Major uses of drug testing are to detect the presence of these drugs in applicants selected to be hired for a job, existing employees, individuals involved in sports, probationers, parolees, students, parents in child abuse cases, and in many other unique situations.

Steps to Starting a Mobile Drug & Alcohol Testing Business 

1. Understand the Industry

With the astronomical growth in abuse of recreational and prescription drugs in many nation’s youth populace, and there are some parents who regularly drug test their teens. Another is the court-ordered testing for drug and alcohol offenses, and it is clear that the drug testing business is a growth industry.

Interesting Statistics About the Industry

The world drug and alcohol testing market are projected to climax at $6.3 billion by 2019 from $4 billion in 2014, with a CAGR growth rate of 9.5% from 2014 to 2019.

It is estimated that an approximately 54 million full-time civilian workers asserted that their employer had test workers for drug use. So there is a huge market for drug testing services, in fact, the united states drugs of abuse testing market division generated revenues of .4 billion in 2007; it reached $2.0 billion in 2014.

The report divided the drug and alcohol testing market based on products and services, sample types, end users, and regions. In the samples division, urine samples accounted for the largest share in 2014. The breath sample segment should grow at the highest CAGR during the forecast period.

Breath testing is the most common test carried out on drivers for driving under influence (DUI) cases. Factors such as; the increase in the number of roadside accidents caused by DUI and government initiatives to curb driving under influence are the factors driving the growth of drug and alcohol testing market for breath testing.

The oral fluid testing segment also has a large percentage of the market. This is attributed to the noninvasive nature of this test where samples collected under direct observation, and the adulterating of said sample will be prevented. Furthermore, with oral fluid testing, the concentrations of many drugs can be closely correlated with blood concentrations.

In the region, the market is hugely dominated by North America, followed by Europe, Asia-Pacific, and the Rest of the World (RoW). North America is estimated to account for the largest share of the market in 2014, while Asia-Pacific is likely to witness the highest growth in this market.

Testing blood for illicit drugs only in extreme or unique cases, for instance, testing individual is unconscious, due to an accident and in some court-ordered cases.

In 2008, an estimation of 55 million drug tests were performed in the US on job applicants, and existing employees who were randomly selected and tested, employees who had and caused a workplace accident or injury, certain federal and state prisoners, recovering addicts, parents who were drug tested by court order as a result of child custody cases et al.

More than 95% of those 55 million drug tests were performed with urine specimens, not blood. Urine testing is favored over blood testing and hair testing primarily because of the drug testing cost differences. Hair specimen drug testing cost is about $105-$125 per test nationally. This greatly increases overall drug testing cost but does offer some advantages over urine specimen testing.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

Your clientele consist of mostly companies; many multinational corporations request for drug screenings for employees according to their rules and regulations for hiring and consistent employment. The demographic and psychographic components of others who make use of drug testing services are;

  1. Employers
  2. The Police
  3. Parents
  4. Counsellor
  5. Schools and Educational Facilities
  6. Sports and Athletics Regulatory Organizations
  7. Rehabilitation Centers
  8. Hospitals
  9. Intelligence Agencies
  10. The Armed Forces
  11. Paramilitary Forces
  12. Traffic Police

3. Decide Which Niche to Concentrate On

There are several areas of the drug testing business that you may want to delve into. Here are some of them;

  1. Immunoassay Analyzers
  2. Chromatography
  3. Breath Analyzers
  4. Rapid Testing Devices
  5. Assay Kits and Reagents.
  6. Lab-based urine testing
  7. Instant urine testing
  8. Hair testing
  9. Lab-based oral fluid testing
  10. Instant oral fluid testing
  11. Mobile Drug Testing
  12. Drug-Free Workplace Policy Development
  13. Training and Consulting to Implement Corporate Drug Testing Program
  14. Steroid Testing and Hair Follicle Drug Testing
  15. Workplace Drug Testing
  16. Drug detection assessments

The Level of Competition in the Industry

There’s always going to be competition, it is even normal when healthy.  Some of it is good for you, and some of it will definitely be bad for you. Accept it as part of life.

Just keep in mind that you are in business because you feel you can do a better job; you can do it more efficiently, and you can do it with greater satisfaction to your customers than anyone else. Be aware of the competition, but don’t worry about it. Just stick to your business plan and you will be okay.

4. Know Your Major Competitors in the Industry

There will always be some brands that do well over pothers. Here is a list of such brand in the drug testing field;

  1. Quest Diagnostics (U.S.)
  2. Laboratory Corporation of America Holdings (U.S.)
  3. Alere, Inc., (U.S.)
  4. Roche Diagnostics (Switzerland)
  5. Thermo Fisher Scientific, Inc. (U.S.)
  6. Drägerwerk AG & Co. KGaA (Germany)
  7. Siemens Healthcare (Germany)
  8. Express Diagnostics Int’l Inc. (U.S.)
  9. Shimadzu (Japan)
  10. MPD, Inc. (U.S.).

Economic Analysis

Once the feasibility checklist is completed, entrepreneurs should conduct a market analysis. A market analysis based on the market survey is conducted and gathering information about potential locations and the community.

Some of the key driving factors for the drugs of abuse testing market are globally rising consumption of illicit drugs, adoption of drug of abuse (DOA) testing at organizational level, increased production of illicit drugs and their trade and increasing death rates/road accidents due to drug abuse.

However, the market faces some restraints such as social concerns associated with illicit drugs testing, legalization of various drugs, and economic volatility and cost concerns.

5. Decide Whether to Buy a Franchise or Start from Scratch

Another significant consideration, are you able to purchase an existing business?  You might want to speak with a business broker (one that specializes in the drug testing industry).

Are you going to start from scratch or perhaps you will want to look at possibilities for franchising and business opportunities? There are franchise opportunities in the drug testing industry along with business opportunities. What’s the difference?

A franchise is the right granted to an individual or group to market a company’s goods or services within a certain territory or location. Franchising allows entrepreneurs to be in business for themselves, but not by themselves.

There is usually a much higher likelihood of success when an individual opens a franchise as opposed to a mom and pop business since a proven business formula is in place. The products, services, and business operations have already been established; the franchisor provides ongoing support.

A business opportunity is like a “business in a box,” as you are provided everything you need to get started.  You are granted a license to do business in a way that has everything set up for you in advance. 

The license is the only purchase made, rather than purchasing an entire business model with franchise fees and marketing fees. It is important to keep in mind that there are positives and negatives to both franchises and licensed business opportunities.

Evaluate each type of opportunity thoroughly to decide what would work best for you. A search of members of the Drug & Alcohol Industry Association (DATIA) lists several franchise and business opportunities including A & D Tests, Inc., Conspire, Lab Test MD and USA Mobile Drug Testing LLC.  Additional information on these opportunities and others that is found available are listed in the box to the right.

6. Know the Possible Threats and Challenges You Will Face

Most new drug testing services face difficulties in starting and can achieve success only after several hurdles have been overcome. Knowing ahead of time what to expect can help. Below are some of the usual stumbling blocks to consider beforehand as a drug tester:

  1. The biggest problem is that in some states this service is illegal outside of a laboratory or must be conducted by a physician. So, this business may not be an option in your state. You can easily check with OHS Inc. to ensure that in your state you are eligible to operate this type of service.
  2. You may be consistently dealing with drug addicted individuals
  3. You may not like working with blood and urine samples
  4. It takes time to build a good reputation and gain market share.

7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

choosing a legal entity for a business is a huge determinant of the size the business will grow into, so choosing the right entity is very straightforward especially if you decided to grow the business big in the long term. While many business owners remain as a sole proprietor, there are others who form a corporation or a Limited Liability Company (LLC).

There are a number of tax and legal protections that you are afforded when you do so. Therefore, check with a tax or legal professional on the benefits of the different types of business entities and whether you should consider having your business become such an entity.

There are several legal forms of operation to consider: sole proprietorship, partnership, limited partnership, corporation, or an S Corporation. It is a good idea to consult with an attorney when considering which form of business ownership is right for your small business.

  • Sole proprietorship

A sole proprietorship is any business that is wholly owned and totally operated by just an individual. The advantages of this form of business structure include ease of formation, relative freedom in governance and minimum government controls and restrictions. Disadvantages include less access to capital and financial resources.

Also, this form of business organization provides less protection with regard to personal liability (if the owner’s company should get into a position of owing more to others than the amount of cash and other assets it has, the owner’s personal assets — home, car, etc. — may be required to be sold to pay the obligations of the business).

  • General Partnership

A general partnership is defined as two or more individuals carrying on an association as co-owners of a business for profit. Types of partnerships include general and limited.

Before starting the company, the partners should agree on how much owner equity each partner must contribute the extent to which each partner will work in the company, and the share of the profits or losses to be assigned to each of them.

This agreement should be prepared by an attorney in writing to avoid any future misunderstandings. As with one man business, a general partnership exposes the owners to liabilities. If the business is unsuccessful and the partnership cannot pay all it owes, the general partners may be required to do so using their personal assets.

  • Limited Partnership

A limited partnership is an organization made up of a general partner, who manages a project; and limited partners who invest money but have limited liability and are not involved in day to- day management.

Usually, limited partners receive income, capital gains, and tax benefits; the general partners collect fees and a percentage of capital earnings and revenues. Typically, limited partnerships are in real estate, oil and gas, equipment leasing, family partnerships but can also finance movies, research and development and other projects.

8. Choose a Catchy Business Name

Every business needs a suitable name to run their business; you can consider any of these names for your new drug testing firm;

  1. Vigilance Testers
  2. Test Clear
  3. Quest Drugs
  4. Mobile Drug
  5. Drug-Free
  6. VeriTest
  7. Sober Test

9. Discuss with an Agent to Know the Best Insurance Policies for You

Drug tests are susceptible to been contested, and liability insurance will cover your legal costs if you’re sued. Purchase business insurance such as general liability, workers’ compensation if hiring employees, product insurance or home-based business insurance to protect business assets in the event of a lawsuit or settlement.

Worker’s compensation insurance covers employee accident or injury while on the job. You may also need to purchase a surety bond. A surety bond helps promote an honest relationship between business owner and customer. In the event of a lawsuit or settlement, the state may use the bond to pay for legal expenses.

Proper insurance only helps manage risk, but no business can eliminate it. It is important to know what kind of insurance and how much of it to carry.

Factors to consider are the probability of loss, resources available to meet the loss and size of the potential loss. Considering the size and frequency of loss to the laboratory will help determine if insurance is required or if the loss should be regarded as part of normal business.

10. Protect your Intellectual Property With Trademark, Copyrights, Patents

If you are considering starting your own drug testing business, then you should consider filing for intellectual property protection. Filing for intellectual property protection for your firm is not only limited to your company’s logo and other documents, and but also protecting of course the name of your company.

If you want to file for intellectual property protection and also register your trademark in the United States, then you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subjected to the review of attorneys as required by USPTO.

11. Get the Necessary Professional Certification

All you are required to do is to inform the authorities concerned about your intention. In most cases, an inspector will be sent to your business premise to ascertain if all the necessary safety and business regulatory measures have been met.

If he/she is satisfied, then you can go on with other plans for starting the business. Before the commencement of any business, permits and licenses must be obtained from the relevant authorities.

While learning how to start a drug testing business, don’t forget that you will need special training and certification. Each time a sample is taken, specific procedures and protocols must be followed to establish a chain of command and indicate any signs of tampering.

If you are going to provide testing services for government agencies, they will have strict laws on both the state and Federal level that must be followed, or the entire case can be thrown out of court. In fact, you may even have to testify about the conditions of the sample collection in a court of law.

While no special training is required to accept a hair or urine sample, only a certified phlebotomist is allowed to draw blood.

To stay up to date on all new regulations, you should join professional associations like the Drug and Alcohol Testing Industry Association (DATIA). They offer certification programs for sample collectors along with annual exams for renewals.

12. Get the Necessary Legal Documents You Need to Operate

Register your business with the government. Laws vary by state. Talk to your local Department of Commerce and Department of Licensing to receive the forms that you need to establish your business and to learn if you need a license to do bookkeeping.

You can notify the federal government of your business by applying for an Employer Identification Number (EIN). You can also create a business name for yourself and file a “Doing Business As” or “DBA” notice. These are some of the basic legal document that you are expected to have in place if you want to start a Grocery Store business in the United States of America;

  • Certificate of Incorporation
  • Business License
  • Business Plan
  • Non – disclosure Agreement
  • Memorandum of Understanding (MoU)
  • Apostille
  • Employment Agreement (offer letters)
  • Operating Agreement
  • Company By laws
  • Operating Agreement for LLCs
  • Insurance Policy

13. Write a Business Plan 

The creation of a business plan is essential to obtaining financing and gives the business direction. The business plan is an excellent way to communicate to bankers, partners, suppliers, and other business people.

Creating a business plan gives the owner a realistic approach to short-term implementation of the firm for the next three to five years. Contact the SBA for help or check Appendix C for the location of the nearest Small Business Development Center.

Business plans vary with the type of business for which the plan is prepared and with the business’s reputation and age. However, business plans generally follow a similar format.

The aid of an accountant or a local Small Business Development Center is helpful in preparing a thorough plan. A Small Business Development Center business plan checklist is provided in Appendix D. Generally, a business plan includes the following components:

  • Cover or Title Page
  • Plan Summary
  • Operating or Management Plan
  • Market Analysis
  • Marketing Plan
  • Human Resource Management
  • Financial Data
  • Owner(s)’ Experience and Expertise

Record keeping, payroll, and accounting are all necessary for the success of the business. Record keeping and payroll are functions provided for or by the business. Accounting is the analysis of those functions. Accounting gives the owner a clear picture of the strength and status of the business.

Accountants may assist in establishing the type and arrangement of books most suitable for the business. Accountants may also provide tax advice and reminders. Attorneys generally cover a variety of specialties.

It is important to hire one with the specific expertise needed. Among those most important are availability and time for clients, and expertise in the grocery or retail field. It is important to choose bankers, accountants, and attorneys wisely in order to utilize the services of these skilled professional consultants.

14. Prepare a Detailed Cost Analysis

Start-up expenses include any expense the business may face during the first few weeks and months of the businesses life.

Some may be one-time costs while others may be the first month of an extended contract. Below are examples of some of the initial costs that may be incurred. Each situation is unique but this list is representative of typical start-up expenses for a drug testing venture.

Starting is relatively inexpensive. You can start for just under a couple thousand dollars if you have a location. All you need is supplies, and certification, basic office equipment, signage etc, to get started. However, this is what it would cost us to set up a drug testing business in the United of America;

  1. Business incorporating fees in the United States of America will cost – $750.
  2. The budget for Liability insurance, permits and license will cost – $3,500.
  3. Acquiring a vast acre of laboratory space – $10,000.
  4. The amount required purchasing the needed testing gadgets – $10,000
  5. Equipping of office facility (computers, printers, projectors, markers, servers / internet facility, furniture, telephones, filing cabinets, and electronics) will cost – $2000
  6. Amount required to purchase the needed software applications to run the business – $1500.
  7. Launching an official Website will cost – $500.
  8. Amount need to pay bills and staff members for at least 2 to 3 months – $10,000.
  9. Additional Expenditure such as Business cards, Signage, Adverts and Promotions will cost – $500.

Going by the report from the market research and feasibility studies, about $50,000 to successfully set – up a medium scale but standard drug testing business in the United States of America.

15. Raise the Needed Startup Capital

Beyond traditional financing, you have a range of options when it comes to raising money. Some suggestions:

a. Your resources

Do a thorough inventory of your assets. People have more assets than they immediately realize. This could include savings accounts, equity in real estate, retirement accounts, vehicles, recreation equipment, collections and other investments.

You may opt to sell assets for cash or use them as collateral for a loan. Take a look, too, at your personal line of credit. Many a successful business has been started with credit cards.

b. Friends and family

The next logical step after gathering your resources is to approach friends and relatives who believe in you and want to help you succeed.

Be cautious with these arrangements; no matter how close you are, present yourself professionally, put everything in writing, and be sure the individuals you approach can afford to take the risk of investing in your business. Never ask a friend or family member to invest or loan you money they cannot afford to lose.

c. Partners

Using the “strength in numbers” principle, look around for someone who may want to team up with you in your venture. You may choose someone who has financial resources and wants to work side-by-side with you in the business.

Alternatively, you may find someone who has money to invest but no interest in doing the actual work. Be sure to create a written partnership agreement that clearly defines your respective responsibilities and obligations.

d. Government programs

Take advantage of the abundance of local, state and federal programs designed to support small businesses. Make your first stop the U.S. Small Business Administration; then investigate various other programs. Women, minorities, and Veterans should check out niche financing possibilities designed to help these groups get into the business. The business section of your local library is an excellent place to begin your research.

16. Choose a Suitable Location for your Business

There can be several factors to consider in determining a location. You do not need a large, fancy facility; just make sure it has multiple cubicles for client privacy. You need only to have a bathroom and a place for the collector to fill out paperwork and to consult with test-takers.

The bathroom can be a single-stall type with a full-length door, which is preferred, or a multi-stall bathroom with partial-length doors, according to DOT. You need to pay particular attention to ensure the person being tested does not have access to water because that can be used to tamper with the urine specimen.

If a sink is located in the toilet, you need to tape it off. If you have a stall with multiple toilets, you need to put bluing in the toilet bowls. You cannot have any substance available that can tamper with the specimen. This includes liquid soap, for example.

If you are running a mobile drug testing service, make sure you have a vehicle that is large enough to carry your equipment, such as a minivan or SUV.

17. Hire Employees for your Technical and Manpower Needs

Personnel will include individuals licensed to draw blood and a manager responsible for overseeing labeling and laboratory outsourcing. This can be an expensive way to start a drug testing business, as you have to consider qualified personnel, overhead, and lab partnerships, but is cheaper than going it alone.

Your best bet for finding a lab you can partner with is to visit other drug testing business websites in your area and see who they’re in partnership with.

18. Equipment Needed to Start a Mobile Drug & Alcohol Testing Business

You will need a convenient location with a layout similar to a doctor’s office. A comfortable waiting room should be provided with an office area for a receptionist to check in clients.

In the testing area, you should have separate rooms for each client along with bathroom facilities for urine collection. An assortment of sample containers and labels will be required as well as forms and information sheets. Cleaning and sterilization supplies, needles, bandages, and other first-aid items will also be required.

You will also need computer equipment and software to keep track of client records, insurance information, invoices, and contracts. If you plan on doing the actual testing on-site, you’ll need laboratory equipment and chemicals as well.

19. Write a Marketing Plan Packed with ideas & Strategies

Now you need customers.  Get out into the business community and meet people, network and network some more.  Be prepared with business cards, and with your elevator speech on what you do and how it can help a business owner. Contact all laboratories that do drug testing, let them know that you do specimen collection and BAT in your area.

Join DATIA so you get listed in the searchable database, so when someone goes to the DATIA web site looking for a collector, your name comes up in your area.

Contact third-party administrators (TPA’s) and let them know you are available for collections in your area. You have a service to provide, you will have to do everything possible to make sure that anyone who needs your service knows who you are and how to contact you.

20. Develop Iron-clad Competitive Strategies to Help You Win

Starting up a drug testing business is both risky and wise. Since the issue of drug abuse remains prevalent, businessmen perceive drug testing as a ceaseless business. However, like all other businesses around the world, drug testing business may also have downfalls.

The following are the strategies and mechanisms for winning over your competitors, which will help bring the drug testing business on its peak.

  1. Good finance management and planning strategy
  2. Positive image and efficient customer relations
  3. Ability to deliver high-tech outputs
  4. Competitive and persistent character
  5. Attention-grabbing and strong attitude

21. Brainstorm Possible Ways to Retain Clients & Customers

The first step to building better customer retention is to set client expectations early. The earlier, the better. Don’t wait. An excellent way to foster loyalty among customers is to under promise and deliver on the expectations you originally laid out.

By setting what expectations early and a tad lower than you can provide, you can eliminate every uncertainty as to the level of service you need to offer to ensure your clients are happy. An excellent way to improve customer retention is to improve customer service.

As outlined at the beginning of this post, 68% of your clients leave because they are dissatisfied with the service. Finding new and available ways to create a partnership with customers.

Firstly, you should track customer feedback on an individual basis. Comparing feedback across a broad range of customers would be a waste of time. You must slim the data down to a specific client, see what that client thought, and take specific action from there.

Secondly, you need to trend feedback across a period. You should track feedback survey to survey so you can see which areas have improved and which have suffered. Thirdly, you want feedback from customer surveys to provide intelligence.

They need it to provide you with data regarding what customers are at risk, which areas of your business need improvement, and where your strengths lie.

This feedback will help you retain clients. By understanding all your client feedback, you can take action before it is too late and make business decisions based on real data-driven feedback. People will care when they share. Help customers put skin in the game by:

  1. Involving them in the design and delivery of service
  2. Soliciting their ideas and suggestions
  3. Begging for feedback on ways to improve their experience
  4. Create forums for customer participation (like boards of customers, customer advisory teams, VOC initiatives)
  5. Spend time with customers on their turf or neutral
  6. Crafting chat rooms aimed at beta testing, experimenting, piloting products and services with customers.
  7. Invite customers to company functions—picnics, meetings, social outings, etc.

22. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

Clients prefer a drug testing service that has exceptional qualities. Since drug testing is linked to different ethical issues of privacy and discrimination, the following are the qualities that can create a real brand identity for your firm;

  1. Trustworthiness
  2. Traceability
  3. Secured confidentiality and guarantee of accuracy
  4. Registered and Legitimate
  5. Fast and reliable services
  6. Proper documentation control
  7. Complete Data Processing Equipment (Computers, printers, scanners, software, phone systems, etc.)
  8. Complete drug testing kits and other necessary Equipment
  9. Carefully structured drug testing policy
  10. Good bonds with other Drug Testing Programs
  11. Good public relations
  12. Complete Verification and Confirmatory test

23. Create a Suppliers / Distributors Network

Simple provision of a service is no longer sufficient as competitors enter your market, you need to start building values with clients and showing you take an interest in them and their success. An anticipatory service is a proactive approach to customer service.

Instead of waiting for problems to occur, a company that implements anticipatory service can eliminate problems before they happen.

Companies are typically bound by contracts and agreements that guarantee their services and make them accountable to clients. By leveraging on automation tools and streamlining repeatable processes, businesses can better meet their commitments.

By standardizing your processes and setting expectations for service levels, you can increase customer loyalty, which assures of improved customer retention rates.

24. Tips for Running a Starting a Drug & Alcohol Testing Business

To operate a drug testing service successfully, you should ensure that you maintain an enabling environment in which clients are comfortable coming to you for their drug testing needs. Frequently, the client has a choice of equipment.

This process can be embarrassing in some circumstances. If your office makes it more so, the client can simply go somewhere else. You will also want to follow all regulations closely. If you have a reputation of carelessness, it will become very hard to find or retain customers.