How to Start a Substance Addiction Center

Start a substance addiction center by following these 10 steps:

1. Plan your Substance Addiction Center
2. Form your Substance Addiction Center into a Legal Entity
3. Register your Substance Addiction Center for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Substance Addiction Center
6. Get the Necessary Permits & Licenses for your Substance Addiction Center
7. Get Substance Addiction Center Insurance
8. Define your Substance Addiction Center Brand
9. Create your Substance Addiction Center Website
10. Set up your Business Phone System

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.

Exploring your options? Check out other small business ideas.

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 will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

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.

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:

• Utilities
• Marketing
• 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.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

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.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

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!

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.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money 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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

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.

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.

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.

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.