Your client practice is a business and it CAN support you!
I’ve had a private practice since 1992 — 32 years! I’ve evolved my practice 7 or 8 times, to strategically match my needs and interests. I’ve always viewed my practice as a business that should support me and my needs. Once I left corporate America, my practice was never a hobby, a service that I offered for free, or a gig. It was and is my profession.
I spend a lot of time with practitioners, and too few of them think about the business side of their work. And it shows. Where? In their ability to support themselves! In their ability to thrive! My practice would not have survived had I not made an investment in it as a professional business, or if I brought a poverty mentality to my work.
Let’s do a little exercise to ground you in thinking about your practice as a business. You game? Let’s play!
What have you invested?
How many modalities have you studied? Write them all down.
- What have you paid for each modality? Include the cost of training, any materials or equipment you had to purchase, any travel expense to attend the training, including airfare, rental car, mileage, tolls, gas, meals, lodging, public transportation.
- What are you investing on an ongoing, monthly, quarterly or annual basis to deepen your learning? Coaching, supervision, CEUs, additional modalities, business classes, online trainings. Add the costs to your list.
What’s the total amount of money you’ve invested in your modalities? Whatever you’ve spent, divide it by 36 to track your Return on Investment (ROI) through client income over the next three years. For example: if you’ve invested $21,000 in training, with fully loaded costs (travel, equipment, etc.), you want to make $7,000/year ($585/month) in income to pay back that investment.
That’s not a lot of money to make in a year, in fact, if it’s all you make, you’re never going to quit your day job! But what I want you to understand is that it takes time to achieve an ROI on your investment. It doesn’t often happen in the first or second, sometimes even your third year because you’re building a practice and continuing to plow money back into your business.
What does your client practice cost to operate?
- What do you spend every month to run your client practice? Include: rent for your treatment space, your laptop or tablet, any other supporting technology, your treatment equipment, office & waiting room furniture, rugs, lighting, internet, electricity, cell phone, artwork. Note: If you bought new furniture, artwork, rugs, you’ll amortize the cost over a few years. Divide the cost of the new furniture by 36 (months), and apply one third of it to your current operating costs. We also won’t get into technology depreciation here, it’s an accounting practice, but not totally relevant to this exercise. Take the cost of any technology acquired and apply the same 36 month approach. If you bought a MacBook Air and a printer and spent $1800, divide that over 36 months. [Lastly, if you’re using a room in your home, do the exercise anyway. What did you spend on furniture? Allocate a portion of electricity, internet expense, your cell phone to your practice environment.] Capiche?
- What does it cost to administer your business? Any software you use to track income and expenses, or manage client bookings, or track client cases, your business license, insurance expenses, dues or association fees, your annual web hosting expense.
- What have you spent on business development and marketing to grow your client practice? Include the cost of your website, your social media, advertising, and promotion costs.
- What service providers do you pay to support your client practice? Website developer, bookkeeper, accountant, virtual assistant, cleaning personnel, graphic designer, social media manager.
All of these expenses are part of the cost of doing business (CODB). Take your total expenses for the year, and divide it by 12 to come up with a monthly expense for running your client practice. Even if there’s a little funny money in there, like the allocated expense for a practice space in your house, there are real-time expenses that need to be met, week after week, month after month. It helps to know what they are!
What’s your monthly nut?
Now, add your monthly expenses and your monthly ROI together. If you spend $3000/month on your operating expenses, and $585 is your monthly ROI number, you start generating personal income once you’ve delivered $3600 worth of client activity.
What’s your monthly income?
This number is driven by your client session fees, and how many clients you see on average each month. Your practice fees are derived in part from what your market will bear. A rural community with a low socio-economic level is not going to be paying top dollar for your services. A major metropolitan area or a wealthy suburb will yield higher session rates. To a certain extent your monthly expenses will be commensurate to your fees. In other words, you’ll have higher expenses in a more affluent community.
How many sessions do you need to run each month to meet your expenses? Remember, a full-time practice is about 20 clients/week. If you have to run 35 sessions a week to make your practice expenses, you need to make some adjustments to how you run your business!
Take a hard look at your numbers
Do your expenses exceed your income? If yes, don’t panic.
Answer a few questions:
- Am I spending beyond my means in my practice? How can you reduce costs?
- Is my hourly rate in alignment with similar practices in my community? Can I strategically increase my rates in the coming months?
- Am I new to the business, to the market, to my practice? If yes, outflows exceeding inflows is a normal experience – your practice takes time to build and grow. There may be some things you need to do to increase your presence in the community and generate interest in your work. And you may run at a loss for some period of time. It’s great for tax purposes, even if it is a little bit nerve-wracking!
What are you NOT doing to grow your client practice?
Make a list of the things that you are not currently doing to support your practice.
For example, is your website your only marketing vehicle? Then list that you are not doing any social media posting, writing blogs or video content, working on list building activities, marketing outreach, or advertising/promotions.
If you are bootstrapping every aspect of your practice, and have no one supporting task execution, such as bookkeeping, or using a web developer, social media manager, or accountant, add these to your list.
If you have not purchased insurance or registered your business with your state, that’s a major problem, and it should not be on this list, it should be on your TO DO IMMEDIATELY list. These are inexpensive items if you join a professional association for insurance. Business licenses are rarely more than a couple of hundred dollars a year. Both are essential.
Let me clue you in on a little something here. If you’re NOT doing one of these things to support your practice, it’s probably going to be tough to begin doing ANY of these things.
Marketing builds your client practice
The number one, most important thing you can do to grow your practice is marketing. You don’t have to spend a fortune on marketing…though you definitely can do so if you’re not careful.
But you have to market to build a business that supports you.
EHI is launching an annual directory listing for its practitioners to market their practice to EHI site visitors. Does your modalities have a directory? The ROI for the practitioner can be achieved in 1 or 2 client sessions, depending on their hourly fees. That’s extremely low cost advertising that promotes a client practice 24 hours a day, 365 days a year, uses SEO (search engine optimization) that’s well established and successfully implemented. The directory is an example of passive marketing. It’s not the only thing a practitioner can and should do, but it’s a low-cost strategy that can pay off nicely over time.
Community connection & word-of-mouth grow your client practice
Attending networking events, meeting practitioners who offer diverging services, offering free or low-cost workshops, online presentations support practice growth and evolution. Consider value-added offers to clients who refer people to your practice. Don’t pay for referrals, don’t discount your services. Offer expanded time or value-added services that increase your clients appreciate of your work.
EHI & Jill Leigh offer 1:1 consulting services and soon, workshops to practitioners wanting to grow and expand their outreach and client practice. These services require an investment of time, money and energy. If you’re new to your client practice and have no resources to invest in consulting, look for online classes that are free or low cost to learn fundamental tasks on how to build a practice from the ground up.