Anda di halaman 1dari 6

Bridges 1

Jodie Bridges
12/9/2015
Elizabeth Jones
According to the behavioral health barometer of 2014 In Utah, about 59,000 individuals
aged 12 or older (2.7% of all individuals in this age group) per year in 20092013* were
dependent on or abused illicit drugs within the year prior to being surveyed. The percentage
did not change significantly over this period. Drug and alcohol treatment centers are
important because they give addicts hope, it helps people develop skills needed to live sober
lives, this is my passion and I hope to have my own treatment center one day. There is a great
need to help these people and an equally great number of skills it will take to open and
operate a rehab facility including math. Having the knowledge of how to use quantative
reasoning and math helps me to understand how to open a business like this and the costs
involved, market research, and being able to look at statics etc.
I am going to look at all the costs associated with opening and running a drug and alcohol
treatment center. I will start with the building, other costs, and then I will figure in how much
the staff will be needed and paid each month and what kind of staff I need. I would need to
look at the cash flow and how much each patient will need to pay to keep the business
running. Once I have all my information on costs I will figure it in to a business loan; how
much I need for down payment etc. I will use resources on the internet and maybe over the
phone to gather my information.
The first thing I looked at was a property for my rehab center; these properties have to
meet certain requirement from the state and government zoning and licensing. Some states
require facilities prescribing drugs to patients to be so far from schools, some cannot be in
residential areas. When looking for a property I found that most commercial properties are
not equipped to have people living in them they did not have rooms or kitchens, showers and
were not in a good location, most of these properties were for lease only. In residential areas
it was difficult to find homes with enough bedrooms and space to hold a profitable amount of
people hold groups and one-on-one counseling. The facility would need to be in a
comforting, peaceful, safe area away from crime and distractions also the location would
have an effect on how many patients you would have. No one wants to go to a rundown
facility.
I searched for a house in Utah with 10 bedrooms from 100,000 thousand to 1,400,000
dollars, there were only 4 listings and the cheaper the house the more run down it was. I
found two houses one for $749,900 it was the cheapest house that wouldnt need a lot of
work, it was in the right location and enough space to accommodate ten to fifteen residents
and staff.

Bridges 2

Starting
principal

$749900$26246,50=
$723653.50

Cost of the
house
Down
payment
Interest rate
Equation
Payment
percost Property tax
at month
Pmt=
$6011
Px(APR\n) 3.5%
$749,900------------------$749,900 x 3.5%=
$26,246.50
-------[1-(1+APR\n)
(nY) ]
4.5%

I
Building cost
Cost per
lending
month
1.House
with 13
rooms
2.House
with 10
rooms

Equation
$3666.64
$723,653.50x(0.045\12)
-------------------------[1-(1+0.045\12)(-12)(30) ]

Cost per
Difference
month
in cost
per
month
$749,900
$4,167.56 H2.$6,033H1.$4167.56
=$1865.44
$1,350,000 $6,033

Difference
in cost per
month

Cost for 30
years

Total payment
a month

$6011/12months =
$500.90
3666.64+500.09=
Difference
in cost for
30 years.

$4,167.56

used the

Building
1.House $4,168
$10,600$723,652.5
$3,816,000with 13
$4,168
x 4.5% x 30 $976,932.23
bed
=$6,432
=
=$2,839,067.7
rooms
$976,932.23 7
2.Condo $1,325.00x8
$127,200x3
style
=
0=
leasing
$10,600
$ 3,816,000
option
information from the website it had a 3.5% down payment rate which made the down
payment $26,246.50. I then found the monthly payment amount using the web site
information and the loan payment formula. The interest rate was 4.5% fixed for 30 years. The
total payment a month is $4,167.56. I looked at one other house it was in a good location but
had two less bedrooms than the cheaper house above. The price of the second house was
1,350,000, I compared the monthly cost of the two properties and the thirteen bedroom house
was $1,865.44 cheaper a month. The bigger house was one hundred eight years newer had three
more bed rooms, more space, and a bigger yard. I looked at one other space that could be turned
in to a treatment center it is a commercial property that was used as office space and is lease
only. This building has sixteen individual condo style units in two buildings for $1,325.00 each a

Bridges 3

month. If I was to rent eight of them at that price it would be $10,600 a month and $127,200 a
year. I compared the leasing option to the thirteen bedroom house and found it would be cheaper
monthly and over 30 years to buy the house. The other option is to build, keep looking or
renovate an existing structure which would cost more money. The house could also be figured in
to a small business loan and might change things a bit. I will figure in another twenty to thirty
thousand dollars for other costs that would be for things like a business license, insurance and
other fees, furniture, washers and dryers, dcor, kitchen stuff, a computer, and office material.
Utility for one month
Gas
Electric
Garbage
Food 300 per person x15
Water
T.V. internet
Gasoline 35gal tank x
2.50 x twice a month.
Insurance
Advertising
Maintenance
Total
Total for 1 year

Cost
$200-500
$200-500
$60
$4,500
$500
$200
$175

There are a lot of other costs


when operating a treatment center.
There are all the usual utilities and the
maintenance that comes with owning a
vehicle and a house. Oil changes, lawn
care, things breaking on the property.
Plus you have different kinds of
insurance like property, general liability,
automobile, and umbrella insurance.
$2,083.30
Advertising is also important it lets the
$1,500
client know you exist and what you
$1,000
$11,018.30
offer. These costs are paid monthly. The
$11,018.30 x 12 =
treatment center would need at least one
$132,219.60
used van that would cost twenty five
thousand dollars initially and I will figure it in with the business loan.
I used the web site for Utah Administrative Services and found the rules or code on what
kind of staff I would need to hire for this facility then I called Cirque Lodge and asked them
about their staff. This is a twenty four hour operation there would need to be a staff member
there at all times. It takes a lot of people to run a facility. I accounted for 13 people on the
payroll, and most of the employees make a substantial amount of money. I researched median
pay for all of these titles using the Department of Workforce Services web site. The chart below
shows my finding on the cost. I took the amount of projected hours worked in a month multiplied
by the rate of pay multiplied by need of staff member. The amount needed for the payroll is
$66,938.24 just in one month. Its not likely that you will make money the first year; the total
cost for one years payroll was $803,258.88 this is a cost you would factor in to the business
loan. There could be differences like the hourly wage and the hours need for staff that could be
adjusted.
Staff

Hourly
rate of
pay

Pay a month

Amount a Total a
month x
month
Number
of staff

Bridges 4

Psychiatrist

$24.58

Psychologist $42.38
Substance
use disorder
counselor
Nurse

$17.94

Doctor

$34.36

Director of
Operations
Counselor
Aid
Director of
Admissions
Director of
Public
Relations
Receptionist

$36.30

$18.00

$10.25
$13.50
$15.50

$12.36

Kitchen
$10.00
staff
House
$10.00
keeping
Maintenance $10.00
Total cost
Cost for 1
year

96hrsx24.58=
$2,359.68
128x42.38=
$5,424.64
160x17.94=
$2,870.40

$2,359 x1 $2,359.68

60x18.00=
$1,080
128x34.36=
$4,398.08
160x36.30=
$5,808
120x10.25=
$1,230
120x13.50=
$1,620
120x15.50=
$1,860

$1,080 x2 $2,160

140x12.36=
$1730.40
140x10.00=
$1,400
140x10.00=
$1,400
100x10.00=
$1,000

$1730.40 $5,191.20
x3
$1,400 x4 $5,600

$66,938.24x12

$5,424.64 $10,849.28
x2
$2,870.40 $14,352
x5

$4,398.08 $4,398.08
x1
$5,808 x1 $5,808
$1,230 x4 $4,920
$1,620 x $3,240
2
$1,860 x1 $1,860

$1,400 x3 $4,200
$1,000 x2 $2,000
$66,938.24
$803,258.88

Getting a loan is not an easy thing. The lender would want to know that they are going to
get paid back. A
person needs to
Total
Down
Equations
Total
of
have good credit,
equity in the
requested
payme
business
business which is
usually twenty to
amount
nt
rate
equity
forty percent, and
collateral. Most
(look
up)
banks want to see
that the total
$1,740,378.
40%
$1,740378.
$696,151.4
liabilities or debt of
a business is not
48
48
x
.4
=
0
more than four times
the amount of
equity (7(a) Loan Amounts Interest Rates and Fees). They also want to know that you can pay

Bridges 5

them back if your business fails, what the market is like, and what the projected sales are. Banks
ask you for 14 different documents before they will be interested in doing business with you. A
person could also have other lenders and people that have stock in the business, in the future I
will look in to this aspect of lending. The most common small business loans are 7 (A) and are
for business with five hundred employees or less these loans can be up to five million
dollars.7(a)loans will cover things like a building, equipment, salaries, and operation costs.
According to the Small Business Association for loans more than $700,000 the interest rate is 3.5
percent plus .25 percent. The charts show the down payment for forty percent and the work for
the loan payment. I added up the costs for staff and utilities for a year, the house, other startup
costs and the van to get the total requested loan amount.
Total loan amount

Interest
rate

$1,740,378.48 $696,151.40 =
$1,044,227.08

3.5% + .
25% =
0.0375

Monthly
profit for
15,5,4
people
18,500x15
= $277,500

Equation
Pmt= Px(APR\n)
-------------------------[1-(1+APR\n)(nY) ]
1,044,227.08x(0.0375\12)
-------------------------------[1(1+0.00375/12)(12)(30)]

Payment
amount per
month
$4,835.97

Profit for 3
months

Actual
money =
The way you make money in a business like this
made in
Full
Half
thirdwho stay in your facility. The
is through theOne
people
one month
occupancy
occupancy
price of rehaboccupancy
can vary depending on the type of
277,500x3= 277,500facility, types of programs, care and amenities.
$832,500 82,792.51/15=
82,792.51= 82,792.51/8=
Rehab can be82,792.51/5=
a range of prices they are anywhere
$194,707.49
from low income
that are mostly government owned
$5,519.50
$10,349.06
$16,558.50

and operated that can cost zero to around ten


thousand, to a place like Cirque Lodge in Sundance,
18,500x 5= 92,500x3= 92,500Utah. This facility is very lavish with different types
$92,500
$277,500
82,792.51=
of treatment a lot of amenities, privacy and a great
$9,707.49
view at $30,000 for a stay for thirty days. I looked at
18,500x4= 74,000x3= 74,000different web sites on the cost to go to rehab. Then I
$74,000
$222,000
82,792.51=
figured up how much I would need to charge to pay
$-8,792.51
for monthly costs for the occupancy level. Full is
fifteen, one half is eight, one third is five. After researching the average cost of rehab and doing
some math I decide to charge $18,500 a month for a one to three month stay. I figured up how
much I would make if I had fifteen, five, or four clients. Five is the lowest amount of clients that
would make money for the facility; four you wouldnt be able to pay the month costs. The chart
shows how much profit is made in one month and three; it also shows how much would actually
be made after the monthly costs.

Bridges 6

As you can see there are a lot of costs and risks associated with opening this business. The
person starting the business needs to have a lot of money to put down and or lender invested in
the business. It is expensive to operate a facility this is a start but it takes more than just figuring
a few numbers out, I would need to go into more detail and create a finical plan for the next 3
years, a loan repayment plan to figure out how fast I could pay the loan back. That is one of the
first things I would do because it costs so much more than the amount you took out. A person
needs to have a lot of money to put down to open a facility this big. I think it would be better to
open a smaller facility and do a lot more research if this still sounds like a good idea in a few
years.

Anda mungkin juga menyukai