Therapists I have something important to tell you. You have limits. You only have so much time, energy, and money. Even more alarming? That time, energy, and money not only has to run a successful business- it also has to fund a happy life! There are VERY few great therapists who lead miserable, burned out lives!
Return on Investment for Therapists
Today we are going to talk about return on investment. I want to teach you how this silly "business-ey" term could change your life. And no, not just make you more money- but change your life.
Joseph Sanok created a fun return on investment calculator for therapists here. However, it really is focused on whether something is worth investing in based on how many new clients you will get. It does it really well- and it is RAD!
But, what if you don't have time for new clients? What if you are running a group practice? What if you are looking to transition away from insurance to private pay? Or, you want to write a book... calculating your return on investment can get REALLY tricky, REALLY fast! And what if something provides a great return on investment but it completely saps you mentally and emotionally?
Calculating Return on Investment
So, today I am going to teach you about calculating a return on investment, as well as looking at the big picture. It will help you identify the numbers you need to be pulling together, and the aspects to consider when determining whether something is worth the investment.
1. What is your big idea or vision that you want to make a reality?
Is it honing in on your niche, getting confident in your value, and becoming known locally and internationally like Dr. Agnes Weisman? Or, do you want to launch a training and workbook series to help your fellow professionals like Nicole Stolar? Or, do you want to get clear on your value and finally start charging your true worth and setting your clients up for success like Diann Wingert? (We seriously love bragging on our Most Awesome Conference Alumni!) Write it out in as much detail as you possibly can.
2. What would it really take to make this a reality?
How many hours a week would it take during the planning stages to create what you want to create? How many hours a week would you need to share it with the world (market it)? Do you need to reduce your clinical hours to create room? Or streamline your practice so it runs more smoothly and makes more profit? Don't just think cute kitties and roses- be honest with yourself about the energy it takes to create something from nothing or expand from where you are now. Would you need to hire someone to help? Do you need to buy software or equipment?
3. If this was a reality, how would it impact your life and your bottom line?
Get SUPER clear. How would this impact your weekly schedule? How would this impact you financially? How would this impact your personally, spiritually, clinically? And, of course, how would this impact your financial picture. Unless you are someone with tens of hours of down time during your workday- odds are every time you say "YES!" to one thing you are saying "no" to something else. Or, if you aren't- you are probably setting yourself up for burnout! Be clear on what you have to let go of.
4. Now, calculating your return on investment (ROI)
There are many ways to get a return on investment (ROI). Let's start with the easiest to calculate. Let yourself dream and really dig into the vision of your practice working this new way, finally launching that book, or creating a community where you get to transform people? How would it feel to live your life and run your practice in this new way? Write it down. How would it impact your relationships at work AND at home? How would it impact the way you take care of your body?
We believe in happy lives here. If your big vision creates more stress, less joy, and more overwhelm- we think something is out of balance. Be sure the vision really takes into account the energy and time you need to put this into practice (and time to rest and recharge!)
Only if the opportunity to expand, attend that training, go to the conference, hire that person, etc creates more quality of life, do you move on to seeing if the NUMBERS (money) make sense!
Do the Numbers Make Sense?
Ok- now let's talk money! Money, you remember, is simply a resource. It is neither good nor bad- it just is! In fact, while money can impact your happiness- they find after about 60k a year you don't get any more happy! Happiness is actually spending time with the people you like!
Calculating ROI If You Need More Clients
If have room for more clients for you to see than you can use this simple return on investment calculator by the fabulous Joe Sanok of Practice of the Practice.
Calculating ROI If Your Fee is Changing
Here is the formula if you are transitioning from insurance to private pay OR raising your fees with new and established clients.
First, calculate your average hourly fee and average weekly income. Weekly income will simple be all the fees you would collect each week (if everyone paid you directly on time. Average hourly fee is that weekly income divided by the amount of clients you see each week.
If you see on average 20 clients a week, and you take off about 2 weeks per year (for easy math) every $10 you raise your average fee translates to $10,000 in gross income!
Or, if you don't see 20 clients a week 50 weeks a year, here is the formula:
Average clients per week x Weeks worked per year x Amount You Raise Your Average Hourly = Impact on Annual Gross Income
Calculating ROI When Writing a Book
If you simply run the financial numbers when publishing your first book- things are NOT going to add up! Whether you self-publish or go the traditional publishing route, there is a ton of time and energy that go into writing a book.
However, there are several bigger picture returns to consider when determining if the ROI is worth it for you. Would you like to be paid as a speaker? Publishing a book can open up additional speaking opportunities and speaking fees. Publishing a book can lead to more referrals, requests for consultation, and more confidence for you personally. Some therapists will write a book over time and "use" the book as part of their clinical practice giving an immediate return on investment in the clinical impact. However, if your book topic doesn't relate to your ideal clients, or a topic you are passionate about- that will obviously give you less return!
Financially you might be looking at your return being calculated based on being asked to speak twice a year, or having the confidence to charge an appropriate fee as a consultant. So 100 hours of work at $150 an hour = $15,000 "sweat equity." If you are able to secure 2 speaking engagements at $2k each, and 8 6-week consulting clients at $250 an hour= $16,000. And, of course if publishing a book gave you the confidence to increase your fee to $165 an hour, that could mean another $15k per year.
5. No Amount of Money is Worth Your Quality of Life
It may be tempting when you are running numbers and trying to build your business to overlook your energy levels, overlook your limits. If you do that, it will catch up with you. Your body will tell you. Sit down and talk to 20 overworked therapists and see how many of them have auto-immune disorders... it is pretty alarming.
No amount of money is ever worth your health, your happiness, your family, your friendship. And guess what, to be a great therapist you need to be well balanced. Burnt out therapists make choices that don't reflect themselves.
6. Trust Yourself
Remember- ultimately you know what you need. This is your business. Everyone learns differently, grows differently, expands differently. What provides amazing ROI for you, might be different than what your trusted colleague needs. Calculating ROI is a very personal decision, and ultimately after you've run the numbers you need to trust that you've made the right decision for you- even if your friend, spouse, colleague thinks you could "save money" by <Insert what they said here>.
Do you feel inspired to start calculating your return on investment when you make business decisions about attending conferences, taking trainings, hiring a coach, etc? Yay! I hope so!
Share your questions about calculating a return on investment as a therapist in private practice in the comments section!