*This blog was last revised on 7/11/19.
Ok... let's start by saying this: Private Practice is not a get rich quick scheme. This article isn't about making 40k in 2 days, or being salesy, sketchy, or unethical in the name of building your private practice.
Some of you are struggling financially. And that struggle is making it difficult or impossible to maintain being in private practice and working with the clients who desperately need you. Or, at the very least... not making a decent income is making you seriously question your life's work, or making you feel burnt out and exhausted and it is sucking the joy out of the work that you love. You might need to make some changes and some decisions to get money flowing in your practice in a more meaningful way. And let's be honest- you might need it to happen relatively quickly.
What is Profit in Private Practice?
Ultimately, as a business owner you have to look at the profit of your business- or the income you make after accounting for expenses (and taxes). We have heard so many practice owners come to us sharing how profitable their practices are when in fact they are only focused on how much money they brought in, what their clients paid them.
But that isn’t true profit.
Your accountant will ask for "profit and loss" statements when they do your taxes. These statements look at the larger financial picture, what you got paid and what expenses you have. When you put those two together, what remains is truly your profit.
Unfortunately, many therapists don't create a business plan, or take into account all the expenses related to being a business owner. So, for many therapists in private practice- their take home income in private practice is unsustainable. In fact, some therapists believe private practice is something that is for people who have a spouse or partner who can be the financial breadwinner. (We don’t believe that, FYI - we both were and continue to be the primary income for our families)
Your budget and the fee you choose are part of your business plan. To be sustainable in private practice you need a business plan ASAP. Why? Because if you bring in tons of clients, but you aren't charging a fee that allows your business to be profitable- you won't be able to sustain this. In fact, growing your private practice when you are undercharging can be MORE difficult and lead to more headaches! (I know you might not believe us- I could give you all the reasons why- but that would be a WHOLE blog in itself!)
Plus, if you are seeing all of those clients, and you show up tired and overwhelmed, it’s not great for clinical outcomes. You want your clinical pace to be one that is good for your clients and for you.
The hourly fee you charge has to take into account business expenses, taxes, no-shows, vacations, holidays, sick time, license renewals, CEUs, trainings, consultation, retirement, time for marketing your business, time for managing your business, and so much more! Your hourly fee in private practice is in NO way related to your old hourly wage at a non-profit! You are a business owner now, and you need to start thinking like one!
One of the biggest mistakes we see therapists make in private practice is not being realistic about the costs of doing business. No matter how careful you are about expenses- if you haven't created a realistic business plan- you are going to be struggling financially.
A Bit of Powerful Math
During our free how to set fees in private practice training for therapists we do a little math that almost always shocks therapists. Did you know that if you see about 20 clients per week, and work 50 weeks a year, that every $10 change in your fee equates to a difference of $10,000 in your annual gross fee?
That means if you slide your cost down an average of $20 per client, you are losing $20,000. And, that raising your fee even $10 can equate to a difference of $10,000 in gross income. Little decisions can add up to big changes in income- for good or for bad.
Step 1: Get Real About Money
The first thing you need to increase your income is to get honest about your financial situation, how much you really need to be charging, and start charging that fee with confidence. Therapists in our Business School Bootcamp for Therapists are constantly surprised that when they take care of their money fears and get confident about their fee (and how they developed it)- money gets easier, and they have more clients who pay their fee.
Get real about what insurance contracts you might need to say goodbye to, and make a plan to increase your fee to something sustainable if you realize your fee isn't allowing you to be happy in private practice.
Before you create another stream of income, before you add another clinician to your practice - be sure you are maximizing the income you have right now. If you don’t do this now, you might replicate the same issues in new streams of income,
Step 2: Know Your Value
Before you go out and market your practice, you want to be able to express how you help. You need to know the transformative value of the services you are offering. This comes from looking at your outcomes in your practice, being clear about your process for working with clients and sitting in confidence with what you offer.
This gets often ignored out of fear of being prideful or because we have been taught through our training that we know so little until we have been doing the work for a long time. Knowing your value does not equate to making false promises, it is clearly being able to speak to the people who need you most and making it clear how you help.
Step 3: Get Real About Marketing
Once you get your business plan aligned, your fee aligned, and your current money situation resolved- NOW you have time to market your private practice and focus on bringing clients in that you can deeply help, and that fits the needs of your business. Many of the therapists we work with tells us that they feel re-inspired to work on their business once they understand the big picture and it feels less overwhelming- they know exactly what needs to happen to have a profitable business.
Remember, your fee needs to allow you TIME to market your private practice. Even if you ultimately wanted to spend 40 hours in the office,- your hourly breakdown might look more like this:
19 client sessions
2 hours of billing
1 hour of bookkeeping
3 hours of phone calls
5 hours of networking (coffees, groups, trainings, etc.)
5 hours of online marketing (websites, social media, etc.)
3 hours of creative time, self-care
2 hours of progress notes, treatment planning, or consultation
Have you done a breakdown of the tasks that are required to have your practice running smoothly? It may seem like the last thing you need to do to get your income flowing. I get it. It doesn't seem like the best use of time. But you might be surprised at how not being real about your time and your schedule might be getting in the way of you having time or energy to market.
What Really Works in Marketing?
It is important for you to know that creating the most effective marketing that is going to bring clients to you and build a profitable private practice is a very individualized experience. A lot of therapists are spending 20 hours a week on Facebook groups reading about what everyone else is doing- and then getting overwhelmed and exhausted trying to implement everything. Building a profitable private practice that is going to make you happy and have a significant impact in your community takes focused, impactful effort. You can not do everything. Or, even if you can do "all the things" you can't do them all well!
Therapists implement so many marketing strategies to connect with clients and bring in income. However, most therapists aren't sure how to determine what is working and what isn't. So they can end up stopping marketing activities that are bringing them referrals, and spending time on things that aren't a good fit for their practice. During bootcamp, when we show therapists to track what is working, what isn't, and how to determine the return on investment not just from paid advertising but for their time- it is a game changer! They finally realize what they can let go of and what they can put more energy into so they can spend LESS time marketing, and have more income coming in!
So to recap:
Put the transformative value you that you established in Step 2 into your messaging - on your website, your social media profiles and in your networking
Simplify but diversify. Instead of doing all the things, pick a few key marketing strategies for both online and offline (relationship networking). In bootcamp we provide a template for each area of marketing and options for strategies so you can customize a plan for you.
Track your marketing. Look at your efforts and measure the outcomes so you know what marketing to continue and what to pivot. It takes time and testing to find the right marketing plan for you. That can look like tracking your referrals or looking at your analytics.
So How Do You Increase Income Stat In Your Private Practice?
So let's do a quick recap on what needs to happen to get income flowing in your private practice.
Develop a business plan
Calculate a fair fee that allows your business to be profitable
Charge that fee to new and existing clients
Be clear about your transformative value
Implement marketing that works for YOU and YOUR clients, including online and offline stategies
Track, Assess, and Streamline Your Marketing
Intention and consistency are key to increasing your income. Be thoughtful about all the components of your business plan and consistently show up to put in the work, not in a frantic way, but in a planned and streamlined way and you will start to see the changes happen.