Investing for Success in Your Therapy Business
By Joe Bavonese
I’m sitting in a large, noisy conference room with 425 people at a hotel near LAX. It’s May 1996. I’m at a seminar led by a man named Jay Abraham, who’s touted as the world’s most brilliant—and expensive—small-business marketing guru. I’ve paid $3,500 to attend a three-day seminar called the Ultimate Live Marketing Laboratory, and I’m too embarrassed to tell anyone I’ve spent this much on it. I’m told Jay charges $5,000 an hour for private consultations, so this is supposed to be a bargain. But for someone who’s used to weekend seminars costing one-tenth that amount, I feel like a sucker before the seminar even starts. I get up and walk around the room, scanning the fancy nametags we all got at the door, and to my horror, I quickly discover I may be the only mental health professional in the room. I see accountants, dentists, cell phone salesmen, weight loss clinic owners, a professional clown, a man who sells 200 varieties of fortune cookies, and a few vitamin-marketing hopefuls. I feel incredibly alone, as I look around at all the smug, smiling, yapping faces. They all look so . . . confident and smartly dressed in their upscale casual attire. It’s all so L.A.—no neckties, but plenty of expensive sportcoats and chic hairstyles. In a flash, my worst stereotypes of businesspeople come to mind.
I remind myself that we therapists are the good people of the world, providing help and service to those in need. But these attendees? I’m fairly certain they’re selfish, greedy, and manipulative—not working selflessly for humanity, as I am, but simply to out make the Big Bucks. Slightly ashamed of my prejudice, I flip into conscious self-talk: be open; don’t be so judgmental. But when no one talks to me, my negative assumptions are confirmed. Yup, they don’t care about anyone but themselves. They don’t care about helping people as we do. All they think about is profit, and ripping people off.
What am I doing here? I want to run out of the room. Then I remember: what I’m doing here is trying to save my career as a private practitioner. After leaving a job as clinical director of an outpatient mental health and substance abuse clinic run by a megalomaniac psychiatrist, I’ve gone into private practice. I’m 42 years old, I’ve been on my own for two years, and it’s going okay, but not great: feast or famine, 27 sessions one week, 16 the next. I made $57,000 last year. My immediate goal is to learn how to grow my practice so I can average a steady 35 clients a week, every week. But the real kicker is that two months ago I found out that my family of three is suddenly zooming to five: my wife and I are having twins in eight months. How can I support five people on a roller-coaster caseload? I try to tell everyone I’m excited about the twins, but the honest truth is that I’m far more scared than excited. I lie awake at night worrying about money.
I’ve read that you have to spend money to make money, but, like most therapists, I just don’t believe it. Anyway, I’m not Donald Trump: I’m just a good clinician. Why isn’t that enough? Why do I have to spend more money? Didn’t I spend enough in graduate school? It seems crazy to have gone through all those years of training only to end up here: scared, risk averse, confused, and unsure what to do next to grow my practice to the point that I can provide my family with even a middle-class existence. Retirement, college education, health care costs—my head is swimming with fear and doubt. Above all, I’m deathly afraid of making a financial mistake that I’ll regret, of feeling foolish, inadequate, and unsuccessful. So while I hoped to get some good marketing tips at this seminar, I didn’t expect to come face-to-face with deep-down, primordial fears about spending money.
Meanwhile, the room is buzzing with anticipation. Snapping out of my fearful reverie, I hear the Village People’s “YMCA” blaring through the sound system. People are clapping and standing, and a short, thin, bearded man dressed in black bounds to the microphone to loud applause. He starts off saying, “Hello my name is Jay, and I’m the head of Overachiever’s Anonymous!” The crowd roars and we are off and running.
This guy evokes hope and admiration. Two people rush to the stage to give him personalized, expensive gifts in thanks for how much he’s helped them. I quickly get it: Jay Abraham is the Babe Ruth of small-business marketing, famous for making millionaires out of many small-business owners. He has a fascinating background: in his twenties, with no formal training in marketing or business, he discovered an uncanny ability to think out of the box, and began consulting with small businesses. His unorthodox methods often led to massive improvements in people’s businesses, and his fame quickly spread. During the past 25 years, he’s worked with more than 10,000 clients in 400 industries worldwide, from one-person enterprises all the way up to huge companies, like Federal Express, CIGNA, General Electric, IBM, Merrill Lynch, and Microsoft. He’s written only one book, and a small one at that, Getting Everything You Can out of All You’ve Got, produced almost as an afterthought to his seminar and consulting work.
He’s the consummate workshop leader: charismatic, charming, witty, brilliant. Unfortunately, he could also be the head of Attention Deficits Anonymous, as his out-of-the-box mind jumps from one tangent to another, frequently abandoning his original point—this isn’t the kind of organized, point-by-point workshop presentation I’m used to. Dipping and swooping through his material, he covers only about two-thirds of his printed agenda, and much like a Robin Williams stand-up routine, allows plenty of room for improvisation.
Some of it works and some of doesn’t, but overall, the seminar is remarkably helpful. Despite Jay’s disorganization, I begin to be aware of a coherent core of ideas filtering through the noise. Even better, once we break down into small groups to discuss application of these ideas, I’m delighted to discover that many of the businesspeople I meet are kind and unselfish. I talk to the man who makes his living as a clown, the guy who sells fortune cookies, and the accountant. At first I feel cheated because these people couldn’t possibly have anything useful to tell me, but then I realize that none of them wears the blinders that all therapists unconsciously wear—for example, assuming our clinical skill is all we need to succeed—and they can offer feedback I’d never hear from another therapist.
Furthermore, I learn, there are common business principles that apply to all of us who run our own shops. These include the Three Ways to Grow a Business, the Lifetime Value of a Referral, and the importance of Business Planning and carefully tracking results. As Jay reminds us, no matter what we do, we’re all selling something. I cringe inwardly at this thought before reluctantly admitting to myself that he might be right.
I spend a lot of time during breaks informally talking with a funny, balding, fiftyish man named George, a high school dropout who’s a chimney sweep in Washington, D.C. Sheepishly, I admit to him that my only association to chimney sweeps is Mary Poppins. But when he tells me he has six centers and an annual income of $2 million, I drop my prejudice against blue collar work and suddenly develop enormous respect for chimney sweeps. George asks me how I’m funding my practice and I tell him it’s been profitable from day one, and that’s how I’ve managed growth. He looks at me incredulously. “What? You can’t possibly get where you say you want to go without funding!” I think of where I want to go—middle-class security for my family of five—and feel a lot less smug. It becomes obvious that in comparison to most small-business owners, we therapists are incredibly risk averse and well, cheap.
George urges me to get a “small” $100,000 business loan to fund a major expansion of my marketing efforts and hire additional staff. The thought of huge loan payments every month fills me with dread, and, seeing my expression, he laughs out loud, yelling above the din, “Hey Doc! Who’s the psycho, you or me?”
A woman named Linda, a radiant massage therapist from Seattle, pulls me aside and tells me everything she knows about press releases. She tells me that they got her numerous appearances on TV and radio, and that the free publicity allowed her to double her income. Next I talk with a tall, handsome, tan dentist named Larry, from Boca Raton, who talks to me about active referral systems. While most therapists rely on client referrals, we typically do it passively, feeling uncomfortable about letting clients know that we’re open to more referrals. Active referral systems are direct ways of asking clients for referrals. He says most service professionals receive referrals passively, but with an active system, you can easily triple your client referrals. Larry gives everyone who refers a new patient a lottery ticket. I’m not comfortable with that, but he does get me to reflect on systematic ways of letting clients know I’m open to referrals, such as putting referral cards in my office and waiting room, or mentioning that I’m expanding my practice in any written contact with clients or other professionals.
In addition to his ADD, Jay seems manic. Every day we work nonstop from 8 a.m. to 11 p.m., and after three days of this, my head is bursting with new ideas. I’m particularly struck by the concept of calculating the Lifetime Value of a Referral, which is that you multiply your average fee by your average length of treatment. So if your fee is $100 and your average length of treatment is just 10 sessions, your Lifetime Value of a Referral is $1,000. This, says Jay, is what you should be willing to spend to get one new referral, although you rarely will need to spend that much for each referral. If you do, you’ll still make money from two sources: additional “back-end” services, such as lectures and workshops, in which the client can participate later and which cost you nothing to promote, and other referrals that this client will generate. It’s a benchmark for your marketing efforts—and it’s a much larger number than I’d ever have been comfortable with.
I’m fascinated by Jay’s idea that it’s less expensive and less time consuming to promote your services to an existing client than to get a new one. On the red-eye home, I can’t sleep because my mind is racing with the realization that I’m a small-business owner, not just a psychologist. I have to work on my business, not just in it. I can be a victim and blame my low caseload on managed care, the economy, etc., or I can take responsibility for learning how to create more of what I want. I may have a Ph.D. in clinical psychology, but I’m clearly in the kindergarten phase of my business education. This is at once a sobering realization and a powerful call to action.
If You Spend It, It Will Come
Less than two years after my epiphany in Los Angeles, my practice was full, even though my office is in a therapist-saturated suburb of economically depressed metropolitan Detroit. Now, more than a decade later, I get so many referrals that I can’t handle them all—and with one consultant’s help, I’ve expanded to a group practice focused on relationship issues. The practice now has 12 therapists and consistently gets more than 60 referrals a month. My annual practice income has increased every single year since 1996, growing tenfold since then.
Two wonderful benefits have accrued from this growth. First, I’ve rediscovered the joy of doing therapy, now that I no longer have any concerns about where my clients will come from. I’m free to practice more creatively. I vary the length of my sessions to accommodate my clients’ needs. Some clients request 90- or 120-minute sessions, and I can be flexible with my time because I know I can fill up every session I want. I’ve gotten off of all but one managed-care panel. I have fun doing things I’ve always wanted to do with my clients—more Gestalt therapy, teaching mindfulness meditation, and rapid symptom relief methods, such as the Emotional Freedom Technique (EFT). I love going to work every day. Second, I can spend more time at home. The added income has allowed me to set up a solid retirement account and college funds for all three kids, buy a vacation house, and take the family on four vacations a year.
I had to work through a lot of resistance and worry about spending money to get to this point. When I got home from my seminar with Jay Abraham, I was filled with exciting ideas about how to increase my practice, but I was terrified about implementing them. They all required spending money, but with the twins’ birth looming and my wife’s income sure to go down, I was loath to spend a penny. The more I thought about it, the more I realized that my life and my practice were stuck, and that to deny that fact was to rob my family of the future we all deserved. I needed to take a leap of faith, but my feet were stuck firmly to the ground. I reentered therapy. I meditated every day. The turning point, though, was a casual glance at the famous Anais Nin quote: “And the day came when the risk to remain tight in a bud was more painful than the risk it took to blossom.” That hit me between the eyes, and I got moving the next day.
I began by designing display ads for use in local papers, using the advertising principles I’d learned from Jay Abraham. I cringed when I wrote the checks (the ads costs between $300 and $500 per month), but when my practice increased 30 percent in four months, I was hooked. It was working! I realized that the only security in this field comes from diversifying referral sources and service offerings—to insure that you have a steady flow of clients, that they have many entry points to your services, and that they have a range of service possibilities to choose from. For instance, they may become individual therapy clients, then take a workshop, then attend a group, and then buy a book or DVD of one of your lectures. They may have testing first and then therapy, or therapy first and then testing. So I plowed forward, one step at a time, trying out many new things, discarding the failures, and expanding upon the successes. When the fear became too great, I’d meditate and consciously connect with the aliveness that was present beneath the fear. I used my cognitive therapy training to separate my rational and ever-present irrational thoughts.
I started a print newsletter. I accepted numerous speaking engagements, and, following another Abraham principle, focused more on collecting names and addresses than on what I was being paid. I hired a publicist for a PR campaign, which resulted in six TV appearances, three radio interviews, and four newspaper articles. Then I started two new groups, one of which failed miserably. The other group was a $5 drop-in support group for singles (several colleagues found it highly amusing that someone with a Ph.D. would work for $5), which started slowly but grew quickly, becoming the catalyst for numerous word-of-mouth referrals. It ultimately led to the formation of a closed weekly therapy group and a new workshop that’s generated more than $80,000 to date.
I created a primitive website on my own, for free, but then realized that if I was serious about the Internet, I needed a more professional look. So I hired a web design firm (www.relationship-institute.com) to build a website for $4,000. I paid for all of this from my expanded caseload. Every two years, I’ve paid for more business training, including a yearlong personal mentoring program with Abraham in 2001. While I never did take the chimney sweep’s advice and get a $100,000 business loan, I did get a $25,000 small-business line of credit, which I’ve used to fund some of my business training.
I took the huge—and difficult—step of hiring an office manager. Letting go of control and spending even more money was a double whammy. But with the time I saved, I could devote more attention to marketing the practice and expanding the website. Interestingly, I found support and inspiration from reading business books. I learned that almost every successful business person has suffered a massive failure or two—a concept that served me very well when I lost $10,000 in one day because I’d scheduled a huge event for September 11, 2001.
As my group practice income increased, I had an inspiration: if I got even one great idea from a business-training session, it would almost always result in an annual increase in income of 10 percent or more, which would be worth tens of thousands of dollars to me over the course of my career. As a result of this insight, by 2002, spending money on my practice had finally become a low-stress no-brainer for me. In 2003, I began to study Internet marketing extensively, and found it to be a highly targeted, efficient way to attract new clients, and much more cost effective than many other forms of marketing.
After my practice was full and stable, I began sharing some of my business and marketing ideas with my colleagues. Most of them weren’t interested in what I was doing (one colleague who sees 12 people a week in his practice laughed at me and said “marketing is just a waste of time”), but my former clinical supervisor from my postdoctoral internship, Mel Restum, who runs a child and family practice specializing in the assessment and treatment of attention deficit disorders, was quite interested. He began applying the same business principles I’d learned, such as the Lifetime Value of a Referral, Diversification of Services, and Systematic Client Follow-Up, and experienced rapid growth in his practice. He and I talked about business, marketing, and clinical practices constantly, and one day in July 2004, after a long, spirited discussion at a local Starbucks, we decided to start a new company to teach therapists the business skills we’d learned.
We began by running a series of focus groups with therapists in our area to find out what they were struggling with as they attempted to grow their practices. We then expanded this process and began performing free monthly telephone conference calls with hundreds of therapists all over North America. On these calls, we reviewed the six commonest mistakes that we saw private practitioners make, led an experiential exercise on creating one’s ideal practice, and asked the participants to describe their greatest challenges in private practice. We heard tales of fear, despair, and confusion. Many told us that managed care had destroyed their practices and incomes. Others complained that the Internet, Dr. Phil, and Pilates were stealing their clients. Still others felt they were getting passed over in favor of Lexapro and Xanax. A few sounded hopeless, not knowing what to do to increase their practices. Some said they knew what to do, but hadn’t taken action because they’d felt so uncomfortable (or as one woman put it, “slimy”) doing marketing. Others said they had great ideas for promoting their practices, but never seemed to get around to implementing them.
It became clear to us that many of these therapists experienced a huge conflict between service and self-promotion. They wanted to make more money, but seemed to engage in magical thinking about the process: they wanted it to happen with little investment of time or money, or they wanted that one big tip that would push them over the top. In addition, they were tight with their money when it came to investing in their practices, just as I’d been.
We asked how much money they’d be willing to spend to get one new referral a month. We were, of course, thinking about Abraham’s Lifetime Value of a Referral concept, according to which one new referral a month would be worth about $12,000 in additional income every year for them. Yet a poll of 70 therapists showed that the average amount of money they were willing to spend to generate those 12 extra referrals was just $83! It wasn’t just that they were cheap: many of these people told us they spent thousands of dollars a year going to clinical trainings. It was more a lack of understanding of basic business principles, principles that none of us learn in our graduate training.
So we followed up on the phone and asked: why would you spend so little to learn how to get what you say you want? We heard a variety of reasons: they didn’t have confidence that what they learned would work for them, they didn’t think business principles were relevant to the way they practiced (because their profession was unique), they thought what they’d be taught was too “left-brain,” too linear, too vague or expensive. Another group said they were afraid of getting ripped off, and they didn’t trust the motives of business trainers, who, they supposed, were out to make money at any cost. Others confided to us privately that they felt they were smart enough to figure it out on their own.
The pain expressed by these therapists was palpable and disturbing. How could so many dedicated, talented people, highly skilled at helping others deal with the most challenging aspects of human existence, get so stuck? And how could our graduate training—so rich with fascinating theories and transformative practices—leave us utterly unprepared to deal with the dog-eat-dog world of small business, in which, according to a 2004 study in Inc. magazine, 90 percent of the players are gone within five years?
Learning to Fish for Referrals on the Internet
Following these calls, Mel and I started working with the therapists who seemed motivated to grow their practices. We e-mailed them articles about practice building, following up with phone consultations and group conference calls. They, in turn, referred therapists to us who were having business troubles. In July 2005, I got an e-mail from Sam, who sounded worried. He and his wife, Sue, lived in Kansas City and had made a decision to move back home to Columbus, Ohio, despite the depressed economy in that area. They’d just had their first child and wanted to be near their families. Sam gave up his benefit-laden $59,000-a-year salaried hospital job, doing assessments, training, and therapy in a Kansas City Inpatient Psychiatric unit, to start a private practice in Columbus. I told him he might want to try a more gradual approach—take a part-time job and then build up the practice. But he was determined to go full-time into private practice, working with children and families, starting with few professional contacts, no referral sources, and no clients. Yikes!
Sam started off by networking with lots of enthusiasm. He showed his face everywhere. He joined the Chamber of Commerce. He attended every school function he could. He met with pediatricians. He gave free seminars to the staff of private schools. But the referrals were slow in coming. I told him he needed a website, but he wasn’t interested because he thought no “good clients” would look for a therapist online. I showed him research indicating that 70 percent of people now search for professional services online first, and told him that I’m getting 30 referrals a month from my website, and he suddenly got interested. Because he was fairly computer savvy, he decided to create his own website, finding an inexpensive web-based service called Site Build It (http://buildit.site sell.com). He built the entire site in six weeks and learned the basics of search-engine optimization to help potential clients find him more consistently. Despite this, his site initially showed up on page 16 of Google search results and wasn’t generating referrals. Impatient and frustrated, he asked me, “Why did I waste all that time creating a website, just to have it sit there?” Meanwhile, the bills at home were piling up and his savings were dwindling.
So we discussed pay-per-click advertising with Google AdWords. Pay-per-click ads are the small, three- or four-line text ads that usually show up on the right column of Google search results. It is the most highly targeted form of marketing available today, because instead of trying to find clients through advertising in the traditional way, potential clients find you—by searching for keywords that relate to your service. Potential clients typically search for keywords that include clinical issues and their location, such as “depression Chicago” or “eating disorders New York.” Even better, unlike much more expensive advertising formats like display ads that you pay for, regardless of whether they generate any calls, with this type of advertising, you pay only when someone clicks on your ad. Their click takes them to a specific page on your website.
Sam seemed interested, but when I told him it costs money for every click, his interest dwindled. I persisted, telling him that he, as the advertiser, would decide how much he was willing to pay for each keyword click, so he could start low and test it out. (Google sets a minimum bid for each keyword.) He still wasn’t sure, and asked if I was getting a commission from Google. At this I laughed out loud—if only I were!—and he realized the absurdity of his question. Sam created an ad and because there was no
competition among psychologists in Columbus, he immediately showed up at the top of page 1 of Google search results on the far right column of the page under what are called Sponsored Links. Again though, his initial results, in terms of actual referrals, were disappointing.
I’ve learned not to give up so easily when trying a new marketing idea, however. So we dug deeper. We researched keyword-ranking data to find out the best keywords for his specialty. We learned, for example, that the keyword phrase “adolescent counseling” is searched about 475 times a month in the United States, but the phrase “adolescent depression” gets searched almost 1,200 times a month—more than twice as often. Yet the average keyword price on “adolescent depression,” to get to the top of the search results page, is just $0.90 a click, whereas “adolescent counseling is $1.30 a click! At 44 percent of the cost, Sam could get more than twice as many clicks.
After two months of applying this type of analysis, Sam’s website and pay-per-click ads started generating steady referrals. To date, his return on investment with Google AdWords has been a remarkable 734 percent. This, combined with his ongoing networking to schools and pediatricians, proved to be the perfect formula for his practice to take off. Just eight months into his practice, Sam is now averaging 30 patients a week, his website is generating 40 percent of his referrals, and he’s gotten several free TV interviews from Internet searches. Sam is a quiet, introverted man, but he called me up in January 2007, bursting with excitement and said, “I just have to tell you: I’m having more fun and making more money than I’ve ever made in my career, and my wife and I are talking about a second child. Thanks for everything!”
Being Too Risk Averse
Not everyone is ready to apply business concepts to their practices. Karen had had a part-time practice in Atlanta for five years and was ready to go full-time. But she didn’t know what to do to generate more referrals and, like many risk-averse therapists, she was afraid to spend money on things that might not work. I offered her a free phone consultation. Because she was so fearful of making a mistake and spending money foolishly, I wanted her to understand the Jay Abraham concept of the Lifetime Value of a Referral. Karen protested with a common fear. “But with my luck, all the clients I get will be the ones who come one time!” I told her to try to think long term, because over time, each referral will generate an average of $1,000 of income. She then mentioned a business coach in Atlanta who wanted to charge her $200 for a one-hour consultation, saying she thought he might help her, but also felt he was too expensive. Compared to what, I asked? Now that she understood the value of every new referral, she had a useful metric to use to evaluate his offer.
“Do you think that coach could help you get at least one more referral this year than you would get on your own?” “Yes!” she said emphatically, “probably much more than that.” I said, “Okay, then it’s a no-brainer! If the he can get you just one extra referral this year, which should be the worst-case scenario, and you meet with the coach twice, you’ll still make a $600 profit on your $400 investment, right?” There was silence on the phone. Finally, she said the question confused her. Before I had a chance to explain further, she got defensive. “You’re trying to trick me, right? You’re trying to sell me something, aren’t you? You guys are all the same. You guys don’t really want to help. Thanks for nothing.” She abruptly hung up.
I felt empty and taken advantage of. I’d given her a free consultation, tried to help her see the benefit of paying someone else, and gotten this treatment! But I fully understood how difficult it could be to contemplate spending money on this type of help. I agonized for weeks about spending money to grow my practice in 1996, even after being exposed to some proven ideas. Our orientation as helpful service providers gets in the way: despite our skills at integrating disparate parts of the psyche, for many therapists, the integration of service and self-promotion is just too great a stretch. “Promoting myself? Why, it’s just . . . so icky!” a woman named Joan told me during a consultation. She couldn’t even bring herself to put her name on a handout at a lecture she gave. “Never in a million years did I think I’d have to prostitute myself like this.”
The Growing Pains of a Group Practice
While most of the therapists we talked to would be thrilled with a full practice, others with full practices for some time found themselves frustrated with the lack of upside potential—they were working full-time but not making enough money—and wanted to expand into something bigger. Barbara, a 45-year-old psychologist, had had a full caseload in her Phoenix office for four of the nine years she’d been practice, but wanted to make more money so she could save more for retirement and her children’s education. Her husband had recently been in a serious car accident and was currently on disability from his engineering job. She felt stuck, because there were no hours left in the week to see more clients. “I’m spent. I feel like a high-paid line worker who can’t work anymore overtime,” she told me, sobbing, after just five minutes on the phone.
I explained to Barbara that the model of one unit of time for one unit of money is an old labor model, and that it’s possible to leverage your time so you receive multiple units of income for one unit of time. She was intrigued yet puzzled, responding, “I think I have a sense of what you’re saying, but I really don’t see how it’s possible in my situation and at my age.” After I threw around some options, she decided to expand to a group practice, because she felt it offered her the greatest potential for significant passive income. We went over all the fundamentals of how to start a group practice, but she resisted when I told her she should hire an office assistant. “What, and spend more money?” she asked incredulously. I discovered she was tight with her money. She told me she’d had her business cards printed at Office Depot because they are $8.99 for 500, and refused to have stationery or envelopes printed with her name on them, because of the cost. We tracked her activities and found that she was spending about eight hours a week on clerical tasks. “Did you get a master’s degree to file charts and write down voice-mail messages?” I asked her facetiously. She, like many therapists, had a hard time letting go of control and delegating tasks. The best I could get her to do was hire a college student as an intern to work in her office for no pay.
Then I asked her to give me a report showing the number of referrals she’d gotten in the past six months, from every referral source she has. She was silent, embarrassed. She didn’t have those data, nor anything even remotely close to it. “Well, I pretty much know where they come from,” she offered quietly. I know from my own experience that most of what we think we know about our practices turns out to be inaccurate. I explained to Barbara that without these objective data, it would be impossible to make informed decisions about where best to allocate her marketing resources.
She started collecting the data. Every month thereafter, she had two detailed reports to show me. We went over the data and decided there were enough referrals to hire two therapists to work part-time for her—which would be the first time in her career that she could leverage her time to receive passive income. We then created a detailed business plan, which laid out everything she had to do to set up her group practice: what had to happen when, how much each step would cost, and what the projected income would be when the plan was implemented. Her first goal was simply to hire the two part-time therapists.
She was scared, but excited. Then we ran into a snag when she realized what her up-front costs would be. She called me, obviously upset, speaking very rapidly, “I have to spend $879 for extra furniture, $17 for more business cards, and $125 to pay my web designer to create four new pages on my website. I’m sorry but it’s just not worth it!” I calmed her down, reminding her of the original reason she contacted me. In fact, new referrals did come in, and for the first time in her career, she gave them to someone else. But she had a terrible sinking feeling doing this. “My fee is $125, and I’ll only make $40 a session when my associate sees them,” she protested. At this point, all Barbara could focus on was the money she’d just spent—and the money she’d lose under the new arrangement.
By the third month, she’d made only an additional $375 from her two associates’ sessions. She was impatient and wanted to stop the experiment immediately. I kept her focused on the longer-term goal she’d set, which was to add two therapists every three months to her group practice. But then, unexpectedly, one of her new therapists quit and took four clients with her. Barbara was crushed and totally convinced this group practice idea is crazy. “I could still be seeing those four people!” she wailed to me. “I’m losing thousands of dollars.”
I reminded her that one unit of income for one unit of time was clearly not working, and that her group practice wouldn’t get built up in a month or two. I told her that this wasn’t a linear process: you have to look at the longer trends, such as 3, 6 or 12 months down the road. There are, of course, many factors involved in successfully growing a practice, but at her rate of referrals, she should have expected to bring in up to 10 new clients a week within three or four months. I reminded her of the metaphor of the transition of going from crawling to walking, when crawling is still a more efficient form of locomotion. “That’s all well and good, but the way things are going, I’ll never get to walking, and running is just a fantasy,” she e-mailed me. Slowly her practice grew. After seven more months, Barbara had three therapists generating $3,750 a month for her. She’d passed the goals set by the original business plan, and we expanded the plan for the next six months.
Soon after this, she realized the potential of what she’d created. “That’s 7 hours of my life I’ve regained every week,” she said with glee, “in addition to the 10 hours of clerical work I’ve let go of.” She made plans to hire two more therapists. Barbara now knew there were no guarantees, but she’d finally transcended her line-worker mentality.
So maybe the sky isn’t falling after all. Private practice is alive and well—but only if you realize that excellent clinical skills are a necessary, though not sufficient, condition for success. To have a successful practice and serve more people, you have to learn how to run a small business, tolerate risk, and be comfortable spending money. Much like our clinical training, building a small business is a complex, ever-changing discipline that takes a commitment of money, time, and feedback from successful mentors to fully master. But if you’re serious about being successful in your private practice and helping more people, investing money and time will reward you handsomely for the rest of your career. You just have to remember always that your work is your business, your business is your work, and you are as much businessperson as therapist. These days, to be successful at one, you have to be successful at the other.
Joe Bavonese, Ph.D., is the codirector of the Relationship Institute, an outpatient psycho-educational organization in Royal Oak, Michigan. He’s the cofounder and codirector of Uncommon Practices, a training organization that helps psychotherapists create their ideal practice through the study and implementation of business and marketing principles. The group offers consultations and workshops, and develops websites for private practitioners. Contact: email@example.com. Letters to the Editor about this article may be e-mailed to firstname.lastname@example.org.