Hooked on Profits
After FSB's intervention, an addiction-treatment firm shows 50% sales growth.
(FORTUNE Small Business) – ONE YEAR AFTER ITS MAKEOVER, Addiction Intervention Resources (AIR) is going strong. The St. Paul-based company, which used to specialize in interventions designed to persuade addicts to enter treatment, has refined its business model. Revenues are up 50% so far this year, to about $1.5 million.
"The consultants came in and looked at all the nooks and crannies," says founding partner Andrew Wainwright. One advisor told Wainwright and co-founder Bob Poznanovich that AIR was really in the "continuing care for addicts business" and that interventions were just one of their products, not the whole company. So now, instead of simply persuading addicts to enter treatment, the company devotes most of its energy to helping addicts stay clean and sober after they leave. AIR's counselors stay in touch with recovering addicts when they return home, making sure they attend counseling sessions and avoid companions and locations that could tempt them to start using again.
Instead of relying on referrals, AIR salesmen travel the country flogging their products to unions, trade associations, and employee-assistance programs. AIR also revamped its website (addictionintervention.com), making it easier for visitors to learn about the company. About 60% of AIR's business now comes from its marketing (vs. referrals), up nicely from 40% last year.
Some Makeover advice has been harder to implement. One consultant shrieked when he heard AIR was giving a whopping 25% to 40% of intervention revenues to its freelance intervention specialists. Better to incentivize key associates by granting them equity in the company. That proved difficult to pull off, Wainwright says, mainly because there's lots of competition for skilled intervention personnel. The consultants also suggested that AIR borrow money to make acquisitions. "At the time, we were very proud that we had no debt," says Wainwright. "But in the last year we've been approached by several employee-assistance programs and some small treatment centers that asked us if we wanted to acquire them. We haven't done it yet. But we've thought about it and concluded it's a prudent way to grow."
Poznanovich and Wainwright also followed an FSB marketing consultant's advice and cobbled together a book with the help of a ghost writer. The volume has a long but arresting title: It's Not Okay to Be a Cannibal: How to Keep Addiction From Eating Your Family Alive. Hazelden, the Minneapolis addiction-treatment center, plans to publish it next year.
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