Recovery Bound Marketing Plan

By

Kristen Keeth, Anthony Lee, Edward Locke, & Albert Maina

In Partial Fulfillment of

The Requirements for

MKT 521

December 3, 2012

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Contents1. Executive Summary.........................................................................................................4

Management Team Summary..............................................................................................4

Company Overview.............................................................................................................4

Services Offered .................................................................................................................5

Market Opportunity ............................................................................................................6

Financial Overview .............................................................................................................7

Conclusion ..........................................................................................................................7

2 Situation Analysis.............................................................................................................9

2.1 Marketing Analysis.......................................................................................................9

2.1.1 Market Demographics................................................................................................9

2.1.2 Industry Analysis......................................................................................................12

2.1.3 Market Trends...........................................................................................................13

2.1.4 Positioning Statement:..............................................................................................14

2.2 SWOT Analysis...........................................................................................................15

2.2.1 Strengths...................................................................................................................15

2.2.2 Weaknesses...............................................................................................................16

2.2.3 Opportunities............................................................................................................17

2.2.4 Threats......................................................................................................................18

2.3 Competition.................................................................................................................18

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2.4 Environmental Factors.................................................................................................21

3.0 Objectives....................................................................................................................22

3.1 Mission........................................................................................................................22

3.2 Marketing Objectives...................................................................................................22

3.3 Financial Objectives....................................................................................................24

4. Marketing Mix...............................................................................................................25

4.1 Product/Services..........................................................................................................26

4.2 Price.............................................................................................................................27

4.4 Place:............................................................................................................................28

5. Information Sources and Control...................................................................................29

6. Contingencies................................................................................................................32

7. Budget............................................................................................................................33

8. Implementation..............................................................................................................35

9. Conclusion.....................................................................................................................36

Appendix A – First Year Budget.......................................................................................37

Appendix B – Break Even Analysis..................................................................................40

Appendix C – Example Brochure......................................................................................41

References..........................................................................................................................43

1. Executive Summary

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Management Team Summary: (qualifications exaggerated or fictitious for the purpose of the assignment)

The executive management team of Recovery Bound will consist of:

Chief Operating Officer: Kristen Keeth

Experienced operations manager at two separate Dallas outpatient treatment

facilities with over 10 years or relevant experience in substance abuse outpatient

treatment. Kristen holds an MBA with a concentration in Operations

Management from TAMU-C.

Chief Marketing Officer: Anthony Lee

Mr. Lee has over 10 years of experience with several established and startup

commercial and retail sales operations in the Dallas area. Anthony holds an MBA

with a concentration in Marketing from TAMU-C.

Chief Financial Officer: Ed Locke

Mr. Locke has over 20 years of experience in management in a variety firms

globally, ranging from manufacturing to service organizations. Ed holds an MBA

with a concentration in Finance from TAMU-C.

Director of Referral and Intake: Albert Maina

Mr. Maina has over 10 years of experience in customer management in a variety

of service firms globally. Albert holds an MBA from TAMU-C.

Company Overview:

Recovery Bound will be a nonprofit agency providing substance abuse outpatient

programs for adolescents and adults in the Greater Dallas area.  The program will create

coalitions with local school districts, the adult and juvenile court systems, and area hospitals to

establish a network of referrals and outreach training opportunities. The goal of Recovery Bound

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is to foster a commitment to adolescents and adults that will reduce substance abuse, educate on

causality and avoidance, promote safety and quality of life, promote pro-social friendships,

establish interpersonal skills, and instill hope in the future. Through these personal relationships

and a sense of individual responsibility and accountability, we will empower them to live a life

free of substance abuse and criminal justice involvement and promote a sense of pride and

accomplishment. (Sway’s Foundation, 2012)

By providing the tools to break the cycle of substance abuse, our clients will be afforded

the opportunity to live productive lives free of substance abuse and involvement in criminal

justice systems.

Recovery Bound is a program that is in direct response to the increasing number of youth

and adults who have been affected by substance abuse or who are already entangled with the

criminal justice system.  The aforementioned goals of the program offer positive support systems

enabling them to “avoid the pitfalls that can derail their lives.” (Fortress Academy, 2012) The

two targeted groups will be approached slightly differently, but the goal remains the same:

Empower our clients to live productive lives free of substance abuse and

involvement in the criminal justice system. 

Services Offered:

The services of Recovery Bound includes a comprehensive assessment to determine the

extent of the problem, individualized treatment planning, group counseling, individual and

family counseling, and parent education seminars.

1. Screening and Assessment – to qualify the exact needs of the client and tailor an

approach to treatment and aid

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2. Drug Education – to reduce substance abuse and educate on the medical implications

of substance abuse

3. Life Skills – to provide tools to manage emotions, develop and function in society,

and promote safety and quality of life

4. Anger Management – to supply a curriculum that helps the clients identify their

feelings and use consequential thinking and manage aggression

5. Trauma - PTSD and Seeking Safety - to be sensitive to traumatic issues that our

clients have experienced or are currently facing

6. Relapse Prevention – to help identify situations that can result in relapse and teach

coping skills and alternatives to use of substances

In addition, promotion of the programs and educational services will be offered through

various outreach services and educational seminars.

Market Opportunity:

With 8.9% of the US population suffering from substance abuse problems and

approximately 20% of those individuals seeking treatment for this condition (Mark, Levit,

Warren-Vanivort, Buck, & Coffey, 2011), The Dallas-Fort Worth area population of 4.3 million

(Dallas Region, 2012) provides for a service market of over 76,000 individuals.

With the current difficult economic climate, the market is growing (Ritter, 2011) while

many non-profit treatment facilities are raising fees or closing. (Petaschnick, 2009)

A growing market and reduced competition yields a business opportunity to attract and

maintain market share in the Dallas area.

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Financial Overview:

Recovery Bound will be a non-profit corporation, with financial goals of meeting the

costs associated with providing the targeted service levels, repayment of startup debt, and

securing enough residual capital to ensure financial health through varying economic climates.

Recovery Bound will be funded by a mix of governmental grants, public and private

donations, insurance, and client contributions. We will actively apply for governmental grants

with the expectation to have 30% of the necessary funding provided by grants by year 2

($195,000/yr.). Public and private donations will be solicited and will provide an additional 20%

of the required funding by the third quarter of year 2 ($130,000). A specialist will effectively

process insurance claim requests to provide another 30% of required funding, beginning in the

first month of operation ($190,000/yr.) 20% of the funding will be provided on an adjusted and

sliding scale basis by the clients, beginning in the first month of operation ($125,000/yr).

Additional fund raising projects will occur throughout the first five years to repay the loans

required until these funding programs reach their target levels.

Conclusion:

The management team assembled possesses the skills, professional contacts, and

credentials to effectively manage a solution to a growing need in the Dallas area. Recovery

Bound will be a non-profit outpatient substance abuse treatment facility serving clients within 75

miles of their facility and actively seeking referrals in the immediate area. This market is seeing

a growth in need and a decline in services, which opens the door for an effective solution-

oriented firm. They will offer training, tools, and counseling to break the cycle of substance

abuse and will achieve results far better than the statistical averages, while offering outreach

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training and seminars to aid in prevention. Funding will come from several sources, to include

governmental grants, donations, insurance, and client fees.

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2.0 Situation Analysis

Recovery bound is a start-up nonprofit company that will be opening in January of 2014.

The agency will offer substance abuse education and counseling, life skills, anger management,

and relapse prevention in the form of outpatient services. The primary market need is to provide

clients with excellent services that allow them to lead normal productive lives independent of

substance abuse and the criminal justice system.

Mission: Recovery Bound is dedicated to protecting and supporting individuals,

families, and communities influenced by dependency and substance abuse.

2.1 Marketing Analysis

We have extensive information regarding our market and we understand the primary

characteristics of our client base. We will exploit this information to better serve our customers’

needs and how we can effectively reach them.

2.1.1 Market Demographics

2.1.1.1 Geographics

Our primary geographic market is the Dallas-Ft. Worth area, with an estimated

population of 4,265,829 (Dallas Region, 2012). A 75 mile radius of geographic area will be the

primary location of clients in need of our services.

2.1.1.2 Demographics

In 2008 it has been determined that 22. 2 million or 8.9% of the population age twelve

and over in the United States have substance abuse and dependency problems. Of this number of

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people approximately 4 million of them received treatment for their substance abuse problem

(Mark, Levit, Warren-Vanivort, Buck, & Coffey, 2011).

In the Dallas area of those that received treatment 55% were male and 45% were female.

The breakdown of those receiving treatment by age and ethnicity are illustrated in the following

two graphs (States in Brief City Reports, 2008).

The target market will be these men and women 12 and over in the target geographical

area.

19.00%

17.00%

26.00%

21.00%

17.00%

Treatment Admission by age: Dallas: TEDS 2008

Under 1818-2425-3435-4445 & Older

(States in Brief City Reports, 2008)

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59.00%20.00%

20.00%1.00%

Treatment admissions by Race/Ethnicity

White Non-HispanicHispanicNon-Hispanic BlackOther

(States in Brief City Reports, 2008)

2.1.1.3 Referral Base Characteristics

Recovery Bound’s primary channel for new client acquisition is through strategic

partnerships and alliances with three main sources of referrals. These three sources are the

criminal justice system, community organizations and substance abuse providers (inpatient

facilities). These three strategic channels constitute 83% of the market for substance abuse

treatment referrals. The criminal justice system will be comprised of both the adult and juvenile

departments.

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30.00%

27.00%

26.00%

12.00%

3.00% 2.00%

Source of referrals for Treatment: Dallas TEDS 2008

Substance abuse ProvidersCriminal JusticeCommuniy OrganizationsIndividual SelfHealth Care ProvidersOther

(States in Brief City Reports, 2008)

2.1.2 Industry Analysis

In the Dallas/Fort Worth/Arlington region there are 78 Substance Abuse facilities with

estimated sales of $64.8 million in annual sales and 1,209 employees. Of the 78 firms in the

market 52 firms provide outpatient services. In 2012 estimated average sales per establishment

is $1.52 million.

The majority of the firms are fairly small in terms of employees with 64.10% having nine

employees or less. There are only 6 firms with 50 or more employees. The numbers of new

entrants into the market are relatively small. In Texas the number of treatment facilities reached

an all-time high of 556 in 2003 and a low of 518 in 2005.

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32

18

13

26

6

Number of Employees per Firm

1-45-910-1920-4950-99Uknown

2.1.3 Market Trends

The projected growth rate for the industry in the area for 2012 is 3.7% and in 2013 3.4%.

Sales in Millions/Establishment and % Change

Year Year Year Year Year % chg. % chg. % chg. % chg.

Industry Averages 2009 2010 2011 2012 2013 09-10 10-11 11-12 12-13

Sales($M)/Estab 1.38 1.43 1.46 1.52 1.57 3.5% 2.2% 3.7% 3.4%

(Barnes Reports: U.S. Mental Heath and Substance Abuse Centers Industry (NAICS

62142), 2012)

Spending for substance abuse treatment has grown at an average rate of 5% since 2002.

The largest funding source comes from state and local government agencies (non-Medicaid) and

account for 36% of funding. Medicaid is second with 21% and Federal is third with 16%. The

trend of increased public funding has remained constant due to the decrease in funding provided

by private insurance. Currently private insurance only provides 12% of the funding and has

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stabilized at this current rate since 2005 (Mark, Levit, Warren-Vanivort, Buck, & Coffey, 2011).

In 2006 57% of all providers in the state of Texas received some type of public funding from

state, county, local, and federal (States in Brief City Reports, 2008).

2.1.4 Positioning Statement:

Recovery Bound will serve an area of Dallas 150 miles in diameter, and will focus

primarily on youth and adults that are referred from the criminal justice system, community

organizations, and healthcare/inpatient treatment facilities. These clients will be seeking to break

their substance abuse issues and will be motivated to participate in our programs. They will

actively pursue this in an outpatient format based on the referrals from the sources noted.

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2.2 SWOT Analysis

The SWOT Analysis identifies the primary strengths and weaknesses of Recovery

Bound and characterizes the opportunities and threats that will affront Recovery Bound.

2.2.1 Strengths

Strong leadership in management High level of competence High level of competitive skill We are ahead on the experience curve Excellent recruitment of industry leaders Industry leaders have strong relationships with referral channels Excellent location procured that is in a central location to our desired market Excellent access to startup capital Access to additional capital if needed

CompetenceCompetitive Skill

Experience Curve

Financial Resources

Reputation

Market Leadership

Organizational Design

Economies of ScaleCompetititve Pressure

Proprietary Technology

Marketing Effectiveness

Product Development

Management

Technical Skills

Cost/Price

0

2

4

Strength Rating

(Seitz, 2006)

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2.2.2 Weaknesses

Our cost structure is higher because we are a startup

New entrant to the market

No established market image

No name recognition

Strategy

Facilities

Management

Key Competencies

Strategy Implementation

Internal Operations

R&DProduct/Service Line

Market Image

Marketing Skills

Financial Resources

Cost Structure

Profitability

0

1

2

Weakness Rating

(Seitz, 2006)

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2.2.3 Opportunities

Population growth in specific Dallas areas provide locations for future branch

operations

New treatment methods being developed provides for areas of expansion

Related complimentary services provide an area for portfolio growth

Rivals are somewhat complacent

Affordable Care Act should increase funding and increase outpatient programs

Prospects

Markets

Product/Service Enhancement

Product Line Expansion

Vertical IntegrationPolitcal enviroment

Rival Complacency

Market Growth

Regulatory Overhead

0

2

4

Opportunity Rating

(Seitz, 2006)

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2.2.4 Threats

The potential for substitute services are high

Market growth has not been strong

Increasing regulatory requirements

Currently the economy is in a recession

Foreign Competition

Substitute Services

Market Growth

Regulatory Overhead

Business Cycle/Climate

Buyer/Supplier Power

Market Requirements

Demographics

Entry Barriers

Technology

0

2

4

Threat Rating

(Seitz, 2006)

2.3 Competition

Competition in the area of Substance abuse centers comes from two main sources, larger

firms that offer both residential and outpatient services and small to medium sized firms that

offer outpatient only.

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Current local competitors:

Dallas Challenge: They are a primary competitor due to the fact they are the

leader in a market we are targeting. In the juvenile criminal justice market in

Dallas County, currently Dallas Challenge is a primary contract provider to Dallas

County Juvenile Department. Dallas Challenge has been in business since 1984

and has served over 147,000 youth and their families. They have a location in

Oak Cliff and Dallas and a separate Truancy enforcement location in Dallas. They

are currently a market leader in the Dallas market (Dallas Challenge Inc., 2009).

Phoenix House: They are a primary competitor since they are a market leader in

the markets we are targeting. Phoenix House was founded in 1967 and has been

in Texas since 1995. They accept private insurance, Medicaid, Medicare, private

pay, State and County Funding. They offer inpatient and outpatient services for

both adults and teenagers and serve more than 15,000 people each year. In Dallas

outpatient services their business is comprised of 75% juvenile and 25% adult (M.

O’Neill, personal communication, November 12, 2012). They have very strong

ties with the Dallas County Justice department both in juvenile and adult

jurisdictions. They operate the Dallas County Judicial Treatment Center in

Wilmer just outside of Dallas. This is an alternative to incarceration and is

mainly inpatient but does have a six month outpatient program as well. Their

other location is located on Northwest Highway in Dallas (Phoenix House Texas,

2012).

Pricing Structure: Their pricing structure is different for each funding

source, e.g. Private insurance or Medicaid.

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Self-Pay Pricing:

Screening and Assessments - $175/each

Individual Sessions - $150/session

Intensive Outpatient (IOP) – Individual -$2,700. This can be broken down

to $150 per day - 3 times per week (3 hours per session) for 6 weeks for adults

(M. O’Neill, personal communication, November 12, 2012).

Homeward Bound: Is a primary competitor since they have strong connections

with the Dallas County Justice departments. Homeward Bound offers both

inpatient and outpatient treatment and has been in Dallas since 1980 and they

serve over 6,000 people per year. They accept private insurance, Value Options

(Texas Northstar) and have funding for those that cannot pay. They are centrally

located near Methodist Hospital (Homeward Bound Inc. About Us, 2006).

First Step Counseling: Is a primary competitor since they operate in the same

target markets and have the same referral sources that will be our primary referral

sources. They have been in operation since 1991 and since inception they have

provided services to over 20,000 people. They are an outpatient treatment center

only and work with the justice systems and community based organizations. First

Step has location in Dallas, Plano and Oak Cliff (First Step Counseling, 2009).

Nexxus: Is a primary competitor since they operate in the same target market and

have some of the same target referral sources. They have been in Dallas since

1971. They only treat adult and adolescent women. They offer inpatient and

outpatient care. Their outpatient care consists of They feature Intensive outpatient

and Supportive outpatient care. They have two facilities in Dallas for outpatient

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care. They accept most private insurance, Medicaid and Northstar (Nexus

Recovery Center About Us, 2012).

Self-Pay pricing for medically indigent:

1) Detox-$150 per day

2) Outpatient $125 per week or $450 per month

Innovation 360: They are located in the Dallas area and have recently added

outpatient services to their portfolio. They primarily work with self-pay and

private insurance so they are a secondary competitor (Innovation 360, 2010).

Enterhealth Outpatient Center of Excellence: Their Dallas location is

outpatient only. They primarily work with self-pay and private insurance so they

are a secondary competitor (About Enterhealth, 2010).

Note: Due to budget and time constraints this is the best information available on the

competition.

2.4 Environmental Factors

Texas by far has the most people on probation with 418,678 with 94,535 of them

being DWI probations (Probation And Parole In The United States, 2010, 2011). Texas

took a huge step toward rehabilitation instead of incarceration with the passing of House

Bill 2335 in 1991 that allowed for the development of a statewide network of corrections

based substance abuse facilities. The political landscape in Dallas is shifting toward

rehabilitation rather than incarceration. Dallas has several specialty courts including

DWI Court for both misdemeanor and felony offenses and Drug Court for adults and

juveniles (Community Supervision & Corrections Department, 2012). These special

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courts have a rehabilitation aspect attached to them with Intensive Outpatient treatment a

tool for rehabilitation and relapse prevention. With the implementation of the affordable

care act the substance abuse sectors of healthcare will most likely be combined into

mainstream health care. It is expected that there will be more funding for treatment and

there will be a shift away from residential treatment to more outpatient programs (Buck,

2011). Meanwhile, substance abuse is increasing within the currently difficult economic

conditions (Ritter, 2011), while service are decreasing with both rate increases and

facility closings (Petaschnick, 2009).

3.0 Objectives

Our Marketing Strategy is grounded in becoming the premier resource for outpatient

substance abuse treatment in the Dallas-Ft. Worth Metroplex and surrounding areas. Our

Marketing Strategy is predicated in the superior execution of the following services:

Drug Education Life Skills Anger Management Relapse Prevention

3.1 Mission

Recovery Bound is dedicated to protecting and supporting individuals, families, and

communities influenced by dependency and substance abuse.

3.2 Marketing Objectives

Partnerships / Referral Base - Grow a base of schools, courts, and hospitals (including

inpatient treatment facilities) that actively refer clients into our program. The potential

referral sites will be prioritized geographically, starting with the facilities closest to our

treatment center. We will establish a partnership with 3 school districts, 2 court facilities,

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and 2 hospital/inpatient treatment facilities in the first six months of operation, and an

additional 2 school districts, 1 court facility, and 1 hospital/inpatient treatment facility in the

next 6 months. In the second year of operation we will increase these counts by 50%, and in

the third year we will increase these counts by another 25%. This may be accomplished by

education of referral authorities, since twice as many adolescents with substance abuse

problems are referred to mental health treatment than to substance abuse treatment due to

familiarity with the mental health system and unfamiliarity with the substance abuse

treatment system. (Scott, 2004)

Drug Education – Provide 2 outreach seminars per month, starting in the 2nd quarter of

operation, to total 18 seminars in the first year of operation. This outreach will be expanded

to 3 per month in the second year of operation. The focus of these seminars will be to reduce

Substance Abuse and educate on the medical implications of substance abuse. These

seminars will be presented at schools, hospitals, and correction facilities. This education is

important, since “Knowledge is the prerequisite for any behavior change”. (Sharma, 2005)

Life Skills – Collateral and training programs will be developed to provide tools to manage

emotions, develop skills to function in society, and promote safety and quality of life.

Adolescents will be provided counseling and support programs to increase school attendance

to at least 95% in at least 80% of the treated population. Adults will be provided similar

tools to increase employment to 75% and days at work to 90% of the employed segment in

the treated population. This training is critical in the prevention of relapse, as individuals

must learn or re-learn ways of living. (Parrish, Springer, & Rubin, 2009)

Anger Management – We will develop curricula that help the clients identify their feelings

and use consequential thinking and manage aggression in the first quarter of operation. The

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success of these curricula in adolescents will be measured by a decrease in the amount of

disciplinary referrals and/or suspensions in the school environment by 75% after 3 months of

outpatient service, to be monitored quarterly. Adult program success will be measured by the

reduction of criminal justice interactions by 75% after 3 months of service, to be measured

quarterly. Anger management is a key component in achieving and maintaining abstinence

in substance abusers. (Reilly & Shopshire, 2000)

Relapse Prevention Engagement – Establish aftercare services to help identify situations that

can result in relapse and to teach coping skills and alternatives to use of substances. Success

will be measured by a 95% attendance at the voluntary aftercare services for the first six

months and a 90% attendance at the aftercare services for the next year after that. Relapse

occurrence will be monitored and the program relapse rate will be 20% less than statistical

averages. Active continuing care has a significant effect in decreasing the relapse rate for

treated substance abuse clients. (McCay. et. al., 2010)

3.3 Financial Objectives

Funding – Recovery Bound will be funded by a mix of governmental grants, public and

private donations, insurance, and client contributions. We will actively apply for

governmental grants with the expectation to have 30% of the necessary funding provided by

grants by year 2 ($195,000/yr.). The bulk of these funds are expected to come from the

Substance Abuse Prevention and Treatment (SAPT) Block Grant program. (Center for

Substance Abuse Treatment, 2006)

Public and private donations will be solicited and will provide an additional 20% of the

required funding by the third quarter of operation ($130,000). Developing relationships with

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area foundations, local charities, community groups, and businesses will yield the revenue.

(Center for Substance Abuse Treatment, 2006)

A specialist will effectively process insurance claim requests to provide another 30% of

required funding, beginning in the first month of operation ($190,000/yr.) 20% of the

funding will be provided on an adjusted and sliding scale basis by the clients, beginning in

the first month of operation ($125,000/yr.). This will come from Medicaid and private

insurance. Medicaid has been reported to account for 20% of substance abuse treatment

funding overall (Center for Substance Abuse Treatment, 2006), and private insurance is

expected to fulfill any shortages.

Additional fund raising projects will occur throughout the first five years to repay the loans

required until these funding programs reach their target levels. Many avenues are open that

supply funds to institutions providing treatment. (Center for Substance Abuse Treatment,

2006)

4. Marketing Mix

The target market for Recovery Bound is adolescents ages 13 to 17 and adults who have

been affected by substance abuse or who are already entangled in the criminal justice system.

Recovery Bound will be a client-focused outpatient treatment and prevention program. It

is in direct response to the vast number of people that are trapped in dependency or caught up in

the criminal justice system. Recovery Bound will offer both youth and adults the opportunity to

confront addiction and achieve and sustain recovery. The program is designed to be accessible

to adolescents ages 13 to 17 and adults. Our adolescent programs will offer an array of services

ranging from early intervention to long-term aftercare. For adults, we will offer a comprehensive

array of programs based on evidence based, clinical best practices. (Minkoff, 2001) Our

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programs will provide substance abuse treatment in a safe and supportive environment with a

continuum of care that is tailored to meet the needs of each client. The goals of the program will

be to safeguard youth, strengthen families, and enable those trapped in dependency to confront

addiction and to achieve and sustain recovery.

4.1 Product/Services

1. Screening and Assessment – Level of care assessment and utilization management (Minkoff,

2001).

2. Drug Education – Outreach seminars will be offered. The focus of these seminars will be to

reduce substance abuse while educating on the medical implications involved. These

seminars will be presented at schools, hospitals, and correctional facilities. This service will

address substance abuse issues at the source, helping potential victims to avoid the pitfalls

before they occur. (Wells, Lemak, and D’Aunno, 2006)

3. Life Skills – Collateral and training programs will be developed to provide tools to manage

emotions, develop skills to function in society, and promote safety and quality of life.

Adolescents will be provided counseling and support programs to increase school attendance.

Adults will be provided similar tools to increase employment. (Miller and Hendrie, 2007)

4. Anger Management – We will develop curricula that help the clients identify their feelings

and use consequential thinking and manage aggression. (Reilly and Shopshire, 2002) The

success of these curricula in adolescents will be measured by a decrease in the amount of

disciplinary referrals and/or suspensions in the school environment. Adult program success

will be measured by the reduction of criminal justice interactions.

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5. Relapse Prevention Engagement – Establish aftercare services to help identify situations that

can result in relapse and to teach coping skills and alternatives to use of substances. (Wells,

Lemak, and D’Aunno, 2006) Success will be measured by attendance at the voluntary

aftercare services.

4.2 Price

Pricing will be market based and will be targeted between +/- 10% of similar programs

offered in the area. (See “Competitors” for competitive pricing references.)

1. Screening and Assessments - $175/each

2. Individual Sessions - $150/session

3. Intensive Outpatient (IOP) – Individual -$125 per session; Group - $50 per session

(intensive treatment 4 times per week for 4 weeks)

4. Supportive Outpatient (SOP) - Individual – $80 per session; Group - $35 per session

(supportive treatment 2 times per week for 10 weeks)

5. Family Counseling - $100 per session

6. Aftercare (group sessions) - $25 per session (1 time per week for as long as needed)

7. Parenting Groups - $30 per session

We anticipate the following payment structure, 47% of clients will pay with public

funding from Medicare and/or Medicaid, or other public payment. Of the remaining 53% of

clients, we anticipate one in five to have private health insurance and the remaining will be

self-pay. (Center for Substance Abuse Treatment, 2006)

4.3 Promotion:

Recovery Bound has a number of market focuses that are key to the program's success.

These include the following:

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1. Clients who are overcoming stressors in their lives, such as addictions, criminal

justice involvement, abusive situations, and issues in their scholastic life represent the

main marketing concentration for Recovery Bound. We foster positive changes

through substance abuse education, goal setting, self-discipline, and skill

development.

2. Ultimately, Recovery Bound is marketed to Dallas County as a critical support

system for substance abuse and criminal justice clients.

The marketing promotion strategy will be to successfully sell our services to the

criminal justice system, area schools, and healthcare facilities. This will be accomplished by

securing contacts within the DFW area and maintaining this network. These contacts will serve

as our referral sources for the program (Lee, Reif, Ritter, Levine and Horgan, 2001). The

Program Director and Marketing Manager will make presentations and create linkages with the

Dallas County Juvenile and Adult Probation Departments, area schools, area churches, area

hospitals, and other substance abuse providers.

In order to advertise and market the program to participants and referral sources,

brochures will be developed that showcase the services offered. (See example in Appendix C.)

The Program Director will maintain an open line of communication and provide progress reports

for the referring partners.  The goal will be to build and maintain a successful marketing program

based on the accomplishments of our clients and serving the needs of the greater Dallas County.

4.4 Place:

The program will focus on an area near North Dallas and will serve clients within an

approximate 75 mile radius. Referrals will be actively sought from institutions and referring

bodies within a 20 mile radius of the facility. Operations will consist of site-based outpatient

P a g e | 29

primary services and outreach services at the target locations within the 20 mile radius, or as

otherwise contracted.

Distribution will be through two channels. Outpatient services will be focused on

activities at the facility operated by Recovery Bound, and will be offered to those that come into

that facility primarily through referrals from other agencies. The outreach activities will be taken

to various sites in the area and will service clients via education on substance abuse and

information on how to access the outpatient services (Freeborn, McManus, and Cohen, 2009).

5. Information Sources and Control

The Chief Marketing Officer (CMO) will monitor all relevant information sources on an

ongoing basis and report quarterly to the senior management team. Sales and expense data will

be collected and passed to the CMO by the Chief Financial Officer (CFO), who has

responsibility for all Finance and Accounting functions.

The metrics and controls as listed previously will be monitored as follows:

Metric Information

Source

Data Obtained Responsible Control

Drug Education Outreach services log

Number of seminars each month

CMO If less than 2 per month after 2nd quarter of operation, or 3 per month in the second year of operation, increase promotion and offering to serviced area

Life Skills Attendance reporting from clients’ schools and workplaces

School attendance percentage, work attendance percentage, overall employment percentage

COO If less than 95% school attendance, 90% work attendance, or 75% employment, modify Life Skills curricula to address on a quarterly basis

Anger

Management

Discipline reports from schools and

Number of incidents

COO If after 3 months of service, if the client base incident rate does not drop by 75%, modify

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criminal justice interaction tracking

Anger Management curricula to address on a quarterly basis

Relapse

Prevention

Attendance at voluntary aftercare

Rate of attendance

COO If clients do not maintain a 95% attendance rate in voluntary aftercare for the first 6 months after services rendered, and/or 90% attendance for the next year. Affected clients will be contacted and surveyed to determine causation. Program changes will be implemented to address this causation on a semi-annual basis.

Grant Tracking Finance and Rolling Budget reports

Dollars received from Governmental grants

CFO A forecast and project plane will be in place to ensure $150K/year is obtained from government grants by year 2. If the quarterly review of this plan indicates slippage, additional resources will be applied as needed to ensure the target is met. If it is determined that it will not be met within this timeframe, a special committee will be formed to restructure the budget and/or trigger contingency plans to mitigate the financial impact.

Donation

Tracking

Finance and Rolling Budget reports

Dollars received from donations

CFO A donation solicitation committee will develop a plan and forecast to achieve donations at the rate of $100K/year. If by the second quarter the plan is not on track to deliver $25K per quarter by the third quarter, the committee will recommend corrective action. If by the third quarter there is no confidence that the funding will be achieved a special committee will be formed to restructure the budget and/or trigger contingency plans to mitigate the financial impact.

Insurance Claim Finance and Rolling Budget

Dollars received from insurance

CFO & COO

If by the second month of operation there is no evidence

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Revenue reports claims (collected, receivables, and past due), intake rate reports

that insurance claims will provide a revenue stream amounting to $150K/yr, intake rates will be reviewed and a determination made as to whether intakes are too low or insurance collection is a problem. If intake is too low, a special committee will be formed to increase promotional activities headed by the CMO. If collections are an issue, the CFO will work with the collections specialist to collect the delinquent insurance revenue.

Client

Receivables

Finance and Rolling Budget reports

Dollars received from clients (collected, receivables, and past due), intake rates

CFO & COO

If by the second month of operation there is no evidence that clients will provide a revenue stream amounting to $100K/yr, intake rates will be reviewed and a determination made as to whether intakes are too low or client collection is a problem. If intake is too low, a special committee will be formed to increase promotional activities headed by the CMO. If collections are an issue, the CFO will work with the collections specialist to collect the delinquent insurance revenue. If the sliding scale client charge rate is not allowing sufficient revenue to cover the budgeted income, the policy will be reviewed on a semi-annual basis and adjustments made to either the sliding scale policy or the budget.

Fund Raising

Projects

Finance and Rolling Budget reports

Dollars received from Debt Reduction Fund Raising Projects

CFO Debt reduction and its associated fund raising projects will be detailed in the budget for both current and 5-year financial planning. Goals will be set for each quarter, and performance to these goals will be presented to the management team. Should the

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goals fail to be met in two consecutive quarters, a response plan will be initiated to address the shortfall and determine the best way to achieve the debt reduction initiative.

6. Contingencies

The controls and metrics include items that relate back to the budget (discussed in the

next section). Various contingencies are outlined to address variances from plan that would have

a significant impact on the health and growth initiatives of the company.

Should client intake fall short of expectations, and escalating response plan may be

implemented to address the shortfall. The budget contains provisions for significant debt

repayment. This debt retirement could be slowed to retain revenue within the organization while

efforts are enacted to increase client intake. Should the average active client base drop below

911, further medium-term actions will be required to reduce costs, such as workforce reduction

or program suspension (primarily non-revenue generating programs such as educational outreach

– within the scope allowed by current grant agreements). After a period of 2 quarters, if the

client intake has not allowed the active client base to climb above 911, longer term actions may

be required, such as vacating portions of the building and sub-leasing.

If client intake greatly exceeds Recovery Bound’s capacity, a list of remote-site

properties will be maintained for quick adaptation and expansion. Active recruiting and

relationships with local agencies and educational institutions will provide quick access to

personnel to expand the workforce. The metrics and triggers for this action will include tracking

of hours worked by existing personnel and utilization of available property. Should the average

workweek remain above 50 hrs/week and/or the facility space necessitate the postponement of 2

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or more scheduled program sessions, the management team will meet immediately to assess

whether to implement this contingency.

If a new competitor enters the market and there exists a significant possibility for it to

threaten the financial health of Recovery Bound, the competitor will be contacted to explore the

possibility of joint-venture outreach and possibly co-managing outpatient services.

If governmental climate changes and funds no longer be as accessible, the management

team will attempt to fill the funding void through increased donation solicitation. If this proves

to not be sufficient after 2 quarters, further cost reduction activities will be enacted as described

in the first contingency mentioned (client short fall). The metrics and trigger for this will be the

monthly monitoring of the budget and specifically the Government Grant and Client Based

Revenue income streams.

7. Budget

A first year budget is presented in Appendix A. Assumptions made include:

Facility space required will be 10,000 sq-ft. This is based on the size of the

Phoenix House facility in Dallas located at 2345 Reagan St., Dallas, TX. This

location was referenced on Google Maps and the square footage estimated using

the supplied scale. (Phoenix House Map, 2012)

Rental/lease cost of office space estimated at $10/sq-ft/yr. (Backpage, 2012)

Fit-out cost of office space estimated at $40/sq-ft. (Office Space Guys, 2012)

Office space will be built out throughout the first 3 quarters of operation at a rate

of 50% up front, 25% more by the start of the second quarter, and remaining 25%

in the third quarter.

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Average revenue per client, target government funding, collection rate of

insurance, and target funding drive revenue based on personal experience of

similar activities of the management team. This is influenced by the pricing

structure as identified in Section 4.2 – Pricing, which is market priced based on

competitive offerings (see “Competitors”).

Average client based revenue of $700/client/year includes all client-based revenue

sources, such as client out-of-pocket, personal insurance, government per-client

funds, Medicaid, etc. (Center for Substance Abuse Treatment, 2006)

The break-even analysis appears in Appendix B, and identifies a need for an average

running client enrollment of 911 clients to break even with these projections.

Considering these calculations, it is projected that the company will be self-supporting by

the third quarter of operations and will enter Year 2 with a cash reserve of $149,567 and will

have retired $120,000 of the start-up financing of $350,000.

Based on the break-even analysis, the client intake could drop to an average of 911 (78%

of the budgeted average of 1,175) and the business would remain self-supporting.

The CFO is tasked with tracking financial performance to the budget and reporting

monthly to the management team. Key measures include performance of revenue streams and

client engagement levels. Based on significant deviations of either from the budget expectations,

corrective actions will be launched and/or the budget refined. The budget contains significant

working capital to allow variances mid-year without adverse affects on business health.

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8. Implementation

The table below illustrates the major tasks required for the roll out of the Marketing Plan.

The tasks are grouped by major functional area, and the various executive officers (COO, CFO,

and CMO) are charged with their specific are and successful completion of the assigned tasks.

Major Tasks

2013 2014Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

OperationsSeek office spaceSign contract on office spaceSearch for build-out GCSign contract for office spaceRecruit Employees

FinanceSecure Bank LoansSecure Governmental GrantsEstablish Business (Legal)Solicit DonationsFundraiser Drive #1Fundraiser Drive #2

MarketingContact Initial Referral SitesHire MarCom Company for BrochuresDistribute BrochuresSecure Additional Referral SitesCollect Testimonials

Collect Successes for 3rd Brochure

Print/Distribute 2nd Brochure (with Testimonials)

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9. Conclusion

A strong management team with backgrounds in Operations, Finance, and Marketing

have assembled and identified a need for a new outpatient Substance Abuse treatment facility in

the Dallas area. The market is well documented, and although there are several strong

competitors the economic climate has both increased the need and decreased the availability of

treatment centers. (Ritter, 2011) (Petaschnick, 2009)

A funding model has been presented and detailed budget for the first year of operation as

well. The plan calls for significant retirement of initial start-up debt and healthy cash reserves by

the end of the first year of operation. A break-even analysis has also been performed and

illustrates the significant financial safety built into the plan, ensuring the health of the operation

even if the initial estimates of revenue prove to be substantially in error.

A series of operational and financial metrics, feedback, and controls have been presented

to monitor and adjust this plan over time. In the event of significant events that would threaten

the viability of the enterprise, several contingencies are outlines and triggers identified to

mitigate or eliminate these risks.

Based on this healthy business plan and marketing initiative, a case is made to provide

these life-changing services to the people of the Dallas area. Satisfying this imminent and

significant need in the community while maintaining stable and self-sufficient operations qualify

this effort as necessary, socially conscious, and extremely achievable.

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Appendix A – First Year Budget

Schedule 1 – Revenue

Schedule 2 – Direct Materials

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Schedule 3 – Direct Labor

Schedule 4 – Overhead

Schedule 5 – Selling and Administrative

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Schedule 6 – Cash Budget

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Appendix B – Break Even Analysis

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Appendix C – Example Brochure

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