Halfway house, also known as a residential treatment center, refers to community-based facilities that have been set up to provide access to community resources and offer transitional opportunities for individuals who are attempting to return to society as healthy, law-abiding, and productive members.
Halfway houses got this name because they are halfway between completely independent living and in-patient or correctional facilities where residents are highly restricted in their behavior and freedom.
Statistics has it that in the United States of America, there are now about 400 halfway houses around the country, serving an estimated 10,000 offenders and responsible for employing about 34,369 employees, and the industry rakes in a whooping sum of $6 billion annually with an annual growth rate projected at 2.8 percent between 2016 and 2022.
Steps on How to Start a Halfway House for Ex-Offenders in 2021
Table of Content
1. Conduct Market Research
The first step in the market research process for your Halfway House is to develop a market-based research question in line with your overall business goal and objective. In this regard, you should source information that will help you maximize your business, information that will give you easy access to reliable marketing techniques that will help you operate your Halfway House with less stress.
a. Who is the Target Market for Halfway House?
The target market for halfway house for ex-offenders include former prisoners and psychiatric patients, or others unused to non-institutional life.
b. Is Halfway House a Profitable Business?
No, Halfway House is not a profitable business because they are operated as a non-profit organization hence requires that no profits be pocketed by the owners or board of directors. Any profits must be re-invested into the facility.
c. Are There Existing Niches in the Industry?
There is no niche area in the halfway house business. This is because halfway house is a niche idea in the correctional facilities industry.
d. Who are the Major Competitors?
- The Doorway to Recovery – Premier Michigan Sober Living
- Cirque Lodge
- Caron Foundation
- Hazelden Treatment Centers
- Betty Ford Center
- Halfway House of Los Angeles
- Co-Ed Recovery Homes | New You Sober Living
- Sober Living America
- Oxford House of Shadow Mountain LLC
- Camelback Recovery – Sober Living Scottsdale AZ
- TDCJ Halfway House
- New Jersey Halfway Houses | Riverbend Residence
- Rebos Halfway House
- Attic Correctional Services Inc
- New Friendships Fort Lauderdale | Sober Living Halfway House
- Arch Halfway House
- City Houses Inc
- Talbert House Spring Grove Center
- Fellowship Living Facilities
- Ayres Halfway House
e. Are There County or State Regulations or Zoning Laws for Halfway House?
Yes, there are county or state regulations for halfway houses. The law in the United States states that before a non-medical home care facility such as a halfway house can commence operations, there should be at least six residents and at least one trained caregiver there 24 hours a day and 7 days a week. Also, a halfway house is expected to have a house manager, night manager, weekend activity coordinator, and 2 or more caregivers depending on the size of the facility.
f. Is There a Franchise for Halfway House?
No, there are no known franchise opportunities for Halfway Houses for ex-offenders.
g. What Do You Need to Start a Halfway House?
- A Feasibility Report
- Business and Marketing Plans
- Supplies and Inventory.
- Licenses and Permits
- Big Facility
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
- Startup Capital and Community Support
Memorable Business Name ideas for a Halfway House
- Silver Sky© Halfway Housing Facility
- Boys Den® Halfway Housing Facility
- All Lodge© Halfway Housing Facility
- Gap Center® Halfway Housing Facility.
- The Bridge™ Halfway Housing Facility.
- Jefferson Memorial™ Halfway Housing Facility.
- Paul© Halfway Housing Facility
- Good Guys® Halfway Housing Facility.
- Lugard Lodge© Halfway Housing Facility.
- Hyden Abode© Halfway Housing Facility
- Golden Castle© Halfway Housing Programs
- Good Boys® Halfway Housing Programs
- Excon Abode© Halfway Housing Programs.
- Royal Courts® Halfway Housing Programs
- Green Tower™ Halfway Housing Programs
- Hero Now™ Halfway Housing Programs
- Excon Cover© Halfway Housing Programs
- The Sanctuary® Halfway Housing Programs.
- Chicago Shelter© Halfway Housing Programs.
- Jeff Johnson© Halfway Housing Programs
Register Your Business
a. What Type of Business Structure is Best for Halfway House?
When starting a halfway house, the best choice for legal structure is to form a nonprofit corporation at the state level and to apply for 501(c)(3) tax exemption at the federal level. Please note that on the state level, you can file a nonprofit LLC.
Technically, you can apply for an exemption with an LLC, but you would need to be an LLC taxed as a corporation; then, you ask the federal government to treat your halfway house for inmates as a nonprofit or tax-exempt organization.
In the United States of America, several states allow a nonprofit LLC, including California, Ohio, Michigan, Minnesota, and Tennessee. In Delaware, the LLC Act permits the organization of an LLC with not-for-profit purposes.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Halfway House?
- General Business License
- Health and Safety Permit
- Zonal Permits (Applicable in some cities)
- Signage Permit
- Operational State Facility Inspections
d. What Type of Certification is Needed to Open a Halfway House?
These are some of the certifications you can work towards achieving if you want to run a Halfway House;
- Community and Social Worker Certifications
- Certified Psychiatric Rehabilitation Practitioner (CPRP)
- Certified Rehabilitation Counselor (CRC)
e. What Documents are Needed to Open a Halfway House?
These are some of the basic legal documents that you are expected to have in place if you want to legally run a Halfway House in the United States of America;
- Business and liability insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval
- Certificate of Incorporation
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering starting a Halfway House, usually you may not have any need to file for intellectual property protection or trademark. This is because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Halfway House?
You would need an estimate of $450,000 to successfully set up a halfway house for ex-offenders in the United States of America. Please note that this amount includes the salaries of all staff for the first three months of operation.
b. What are the Cost Involved in Starting a Halfway House
- The Total Fee for Registering the Business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits – $1,500.
- Promotion expenses – $3,580.
- The cost for hiring a Business consultant (writing of business plan inclusive) – $2,500.
- Insurance coverage at a total premium – $3,400.
- The cost for leasing a secured facility for 3 years – $200,000
- The cost for facility remodeling – $20,000.
- Other start-up expenses include stationery ($500) and phone and utility deposits ($2,500).
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $100,000
- The cost for Start-up inventory (stocking with a wide range of products such as toiletries, foodstuff and drugs et al) – $50,000
- Storage hardware (bins, rack, shelves,) – $3,720
- The cost for the purchase of furniture and gadgets (Beds, Computers, Printers, Telephone, TVs, tables and chairs et al) – $4,000.
- The cost of launching a website – $700
- Miscellaneous – $10,000
c. What Factors Determine the Cost of Opening a Halfway House?
- The size of Halfway House
- The choice of location
- The required licenses and permits
- The type of facility
- The additional services offerings
- The cost of hiring and paying a business consultant and attorney
- The cost for branding, promotion, and marketing of the Halfway House
- The cost for furnishing and equipping the Halfway House facility
- The cost for insurance policy covers
- The cost for registering the business
- Source of your supplies and ongoing expenses
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
You may have to build a facility if you have the resources but it is not compulsory because you have the option of long-leasing a property. On average, it will cost you over two hundred and fifty thousand dollars ($250,000) to construct a halfway house facility.
e. What are the Ongoing Expenses of a Halfway House?
- Cost of toiletries
- Cost of stationery and education supplies
- Cost of food supplies and medications
- Utility bills (internet, phone bills, signage and sewage et al)
f. What is the Average Salary of your Staff?
- Head of Halfway House (President) – $45,000 Per Annum
- House Manager (Administrator) – $36,034 Per Annum
- Nurse’s Aides – $29,660 Per Annum
- Caregivers/Rehab Counselors – $32,878 Per Annum
- Fundraiser – $36,500 Per Annum and based on target
- Account Officer – $35,000 Per Annum
- Cleaners – $18,000 Per Annum
g. How Do You Get Funding to Start a Halfway House?
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Applying for a loan from your bank/banks
- Applying for business grants and seed funding from the government, donor organizations, and angel investors
- Source soft loans from your family members and your friends.
Write a Business Plan
a. Executive Summary
The halfway house for ex-offenders is a facility that will be located in the heart of the city in a neatly renovated and secured housing facility; a facility that is designed and equipped with the needed accommodation facilities and gadgets to give comfort and security to inmates.
b. Our Service
- Provide halfway house facility
- Offer transitional opportunities for individuals who are attempting to return to society as healthy, law-abiding, and productive members.
c. Mission Statement
Our mission is to establish a first-class halfway housing facility that will provide transitional opportunities for individuals (majorly ex-offenders) who are attempting to return to society as law-abiding and productive members. We want to become one of the leaders in the halfway housing industry in the United States of America.
Our vision is to become the number one choice when it comes to halfway houses in the whole of our state and also to be amongst the top 5 halfway house facilities in the United States of America within the next 15 years.
d. Goals and Objectives
The goals and objectives of the Halfway House are to help reformed convicts gain self-sufficiency. Many halfway houses offer drug or alcohol addiction treatment, and it is also common for those who have already received addiction treatment to be accepted into a halfway house.
e. Organizational Structure
- Head of Halfway House (President)
- House Manager (Administrator)
- Nurse’s Aides
- Caregivers/Rehab Counselors
- Account Officer
a. SWOT Analysis
- A well-secured and spacious facility
- Well-experienced and certified caregivers and rehab counselors
- A robust partnership with key stakeholders in our city
- Capacity to attract funding and reliable volunteers.
- Starting as a new business, stakeholders may still be reluctant to donate their monies to us.
- Lack of capacity for now to attract government support and funding
- Lack of budgeting for robust publicity
Enough ex-offenders in the city where we will be opening our halfway house.
- Increased number of law-abiding citizens
- Lack of support from stakeholders and the government
- Unfavorable government policy and legalization.
b. How Do Halfway House for Ex-Offenders Make Money?
Halfway houses make money from;
- Fees paid by inmates
- Contributions for partners and donors
- Grants from government agencies and charity organizations
- Community support.
c. Payment Options
- Payment via bank transfer
- Payment via credit cards
- Payment via online bank transfer
- Payment via check
- Payment via bank draft
d. Sales & Advertising Strategies
- Introduce your halfway house for inmates by sending introductory letters alongside your brochure to prisons (correctional facilities), former prisoners and psychiatric patients, or others unused to non-institutional life in and around your city.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your halfway house to give your halfway house an online presence
- Directly market your halfway house to attract donations
- Join local chambers of commerce and industry to market your halfway house and attract donations
- Advertise the halfway house in community-based newspapers, local TV and radio stations
- Encourage the use of word-of-mouth marketing (referrals)
a. How Much Should You Charge for your Service?
Prices vary for staying in halfway houses, but most of the time it costs about the same as it would cost to live in a modest apartment or home. The rent usually amounts to between $450 and $750 per month, depending on where the facility is located.
But it is important to note that some halfway houses are free especially when they can attract enough grants and funds from donors.
b. How Much Profit Do Halfway House Owners Make a Year?
Operating the halfway house as a non-profit organization requires that no profits be pocketed by the owners or board of directors. Any profits must be re-invested into the facility or programs to benefit residents.
c. What Factors Determine the Amount of Profit Generated?
- The capacity of the Halfway House as it relates to attracting funds
- The location the Halfway House is covering
- The management style of the Halfway House
- The business approach of the Halfway House
- The advertising and marketing strategies adopted by the business
- The number of years the Halfway House is in business
d. What is the Profit Margin of a Halfway House?
Halfway houses are not designed to make profits.
e. What is the Sales Forecast?
Below is the sales forecast for a Halfway House. It is based on the location of the business and other factors as it relates to such startups in the United States;
- First Fiscal Year (FY1): $140,000
- Second Fiscal Year (FY2): $280,000
- Third Fiscal Year (FY3): $320,000
Set Up your Office
a. How Do You Choose a Perfect Location for Halfway House?
- The demography of the location especially as it relates to crimes
- The demand for the services of halfway houses in the location
- The capacity of the residents to donate to the success of a halfway house
- Accessibility of the location
- The number of Halfway House facilities and charity organizations that also offer rehabilitation services to ex-offenders in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What State and City is Best to Open a Halfway House?
- San Francisco, California
- New York City, New York.
- Los Angeles, California
- Chicago, Illinois
- Las Vegas Nevada
- Silicon Valley, California
- Miami, Florida
- Dallas, Texas
- Boston, Massachusetts
c. What Equipment is Needed to Operate a Halfway House for Ex-Offenders?
When starting a halfway house for ex-offenders, you will not need any technical gadgets except office and nursing equipment, teaching aids, first aid kits, smoke detectors, carbon monoxide detectors, fire extinguishers, emergency preparedness kits, and an emergency plan. But in setting up a small office, you will need a computer, printer, software apps, telephones, pager, photocopier, scanner, and fax machine.
When it comes to hiring employees for a standard Halfway House, you should make plans to hire a competent Head of Halfway House (President), House Manager (Administrator), Nurse’s Aides, Caregivers/Rehab Counselors, Fundraiser, Account Officer, and Cleaners.
Launch the Business Proper
You may decide to organize an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can choose to go for a grand opening party. The bottom line is that with the proper launching of the Halfway House, you will be able to officially inform people in your city that your Halfway House is open for business.
a. What Makes a Halfway House Successful?
- Ability to attract grants and funding from the government
- Disciplined and dedicated workforce
- The heart to serve
- Good facility and ambiance
- A good relationship with stakeholders
- Good rehabilitation techniques and programs.
b. What Happens During a Typical Day at a Halfway House?
- The facility is open for the day
- The facility is cleaned and prepared for the day’s activities
- Inmates are welcomed and prepped for the day
- Inmates are provided with educational programs that will prepare them to properly integrate back to society. They also learn new skills and morals.
- The facility is closed for the day and inmates go to their rooms.
c. What Skills and Experience Do You Need to Build a Halfway House?
- Good managerial and human development skills
- Visionary Leadership skills
- Team-building & Interpersonal skills.
- Excellent communication and social skills.
- Organizational skills.
- Good Counseling and problem-solving ability.
- Experience in rehabilitation
- Experience in the halfway housing industry
- Experience in working with ex-offenders and convicts et al.