Start a substance addiction center by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your substance addiction center. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a substance addiction center?
A number of costs are involved with opening a substance addiction center. Land and facilities must either be purchased or constructed. An entire medical care team and specialists will need to be hired and trained. Facilities must be comfortable and encourage healing, which can come at a hefty price. Furthermore, some amenities will need to be available to help establish positive routines for patients.
What are the ongoing expenses for a substance addiction center?
Aside from real estate, the largest ongoing expense will be staff salaries. Other ongoing expenses include:
- Land Maintenance
Who is the target market?
The target market for substance addiction centers is incredibly broad. Substance addiction affects people of all genders, orientations, ages, and races. Areas that are known for having drug problems and substance abuse are exceptional areas to target first. The target market will consist of individuals who need treatment and facilities (like hospitals) that already provide treatment for accidents related to substance abuse.
How does a substance addiction center make money?
This business generates revenue by having patients come through the door to receive treatment. The method of payment and payment plan will depend entirely on the business. Monthly installments, insurance, and full payment upfront are typical methods of payment that are accepted.
How much can you charge customers?
The price you can charge patients will depend entirely on the level of treatment and the length of their stay. A 30 day in-patient program can range anywhere from $14,000 to $20,000. This cost covers treatment, housing, food, and amenities.
How much profit can a substance addiction center make?
The amount of profit will depend entirely on how many patients are in the addiction center at any given time. The ongoing expenses will typically be the same from month to month. Enough patients must be in the facility in order to make a substantial profit. Addiction centers that retain 75% capacity often make over $1 million in profit every year.
How can you make your business more profitable?
This business will be more profitable by remaining at 100% capacity throughout the year. In addition to higher capacity numbers, paying off expenses (like real estate) can improve the annual bottom line.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your substance addiction center is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
How to promote & market a substance addiction center
Hospitals, police stations, and shelters often have individuals who need help come through their doors. Promoting your substance addiction center at these facilities will help your services reach the right individuals. You may also consider running ads online or sending out postcards. Family members may receive this information and speak with their loved one about seeking out treatment.
How to keep customers coming back
In order to appeal to the public, the addiction center must look inviting. Reaching the decision to receive help with an addiction is not an easy mindstate to achieve. If your facility looks miserable and does not promote healing, you will not attract individuals. At all times, the sense of safety and inclusion is important for all patients. It is also important to note that unlike other businesses repeat customers may not be the best thing for your business.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Substance Addiction Center In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This business is intended for individuals who have a strong desire to help those who cannot help themselves. This is not an easy business to run or be a part of. Many individuals who come through the center's doors will be at one of the lowest points in their life. The individual who starts this business and hires those to assist with running the business needs to have the drive to change people’s lives for the better.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a substance addiction center?
A typical day will consist of intakes, paperwork, counseling, and cleaning. Substance addiction centers are heavily focused on routines for patients, and the individual(s) running the business will need to stick to a rigid routine of their own. These routines help patients find replacements for their substance addiction, which is necessary before they exit the center and go back to their day-to-day lives.
Some days will be simpler than others due to the number of patients in the facility and the severity of their addictions. However, each day will require face-to-face interactions with patients and making them feel good about their decision to be in the program.
What are some skills and experiences that will help you build a successful substance addiction center?
In order to build a successful business, some knowledge and skills in handling mental health disorders and substance addiction will be required. These patients need dedicated care and attention as they heal from their past and grow into a person that is not dependent on substances.
What is the growth potential for a substance addiction center?
Due to the nature of the world today, the growth potential for addiction center businesses is on the rise. As mental health and addiction become more heavily discussed topics, the negative stigma surrounding these centers will continue to decrease. This decrease may lead to more people seeking out help with their addiction.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a substance addiction center?
Purchasing an old building and remodeling it may be more cost-effective than building a complete facility from scratch. The further the facility is from everyday life, the better it will be for promoting healing and less dependence on substances. This also helps keep individuals inside the program for the entirety of their stay.
How and when to build a team
A team is required from the very beginning. Trained and licensed medical professionals and mental health care providers will be crucial for providing the right treatment plans to patients. As the number of patients grows, an outreach team may be beneficial for the center. This team would be responsible for speaking with individual medical care and community centers to explain the services and benefits the addiction center offers.