If I’m in private practice, do I need a business plan?
Just like any business, it’s important that you create a business plan for private practice before you spend a dime.
Sound daunting? Don’t worry, I’ve started private practice in three different cities and have fine-tuned my process over the years. And I’m going to share it with you!
Why you Need a Business Plan in Private Practice
Is a business plan really necessary? Can’t you just rent an office, stick a couch in it, and be on your way with your counseling practice?
Well, you can try that, but you will likely find yourself sitting in an empty office waiting for clients to show up while your money drains from your bank account.
Think of a business plan as a treatment plan for your business. If your clinical training experience was at all like mine, then treatment planning has been drilled into your head.
Why do we create treatment plans for our clients? They act as a guide to help us serve our clients based on their specific needs. They give us a compass to guide the therapy process, though we can always modify the treatment plan to adapt to a client’s changing needs.
A business plan serves the same purpose. We need to do a bit of an assessment of ourselves and where we are situated to create a set of steps and goals for where we are headed. It sets us up for success as we use our business plan as a guiding compass.
Five Steps to Create a Business Plan
Here are five tools to help you get started in creating a business plan for private practice in psychology.
1. Do Market Research
Before you start anything else in your business plan, it’s important to know what other local therapists are out there in private practice and what they’re up to. Explore the Psychology Today Find a Therapist Directory, do some Google searches, and see who’s around as well as what they specialize in.
Market research helps you know what kind of supply there is for the product you’re selling in your business. This information informs the rest of the steps for creating a business plan.
2. Determine Your Product
You might be thinking: um, Marie, my product is psychotherapy, duh!
It is true that your product is your counseling services, but there is so much nuance to what psychotherapy looks like in practice.
It’s important to look at your market research from step one and see how you fare amongst local therapists. Are you the only therapist in a 10-mile radius? Then maybe your product is more broad.
If you live in an area like me where you’re one of hundreds of therapists just within your zip code, you want to think about what your niche is and maybe even double- or triple- niching so that you are the only therapist delivering this specific product in your area.
Take some time to write down what your product is more specifically. Here are some sample questions to help you get the ball rolling:
- What are examples of success stories you’d like future clients to tell?
- How do you want clients to feel when they sit with you in your office?
- What kind of psychotherapy services will you offer? What’s your area of specialty? What theoretical orientations do you utilize?
- How would you like to be known in your local community? What kind of broader influence do you want to have?
- Who is likely to refer clients to you?
If you’d like to learn more about finding your niche, you might find it helpful to watch my video about Finding Your Niche in Private Practice.
3. Get Advice from Other Therapists in Your Niche
I know this sounds completely counterintuitive. Naturally, we don’t want to go to our “competition” for advice.
Let me get this idea in your head: other therapists in your niche are not your competition, they are your friends, colleagues, consultation resources, and referral sources.
The reality is other therapists in your area of specialty are likely to be one of your primary referral sources!
There are nuanced differences amongst those of us who have similar areas of specialty. Maybe you specialize in GAD in young adults. Then therapists who specialize in GAD in teens and older adults might be indispensable resources to you. You can make referrals to each other when a potential client doesn’t quite fit within your niche, and you can consult with each other when you feel stuck.
These are the people you will be leaning on once you begin private practice, so it’s worth seeking them out before you even start.
How to Find Local Therapists
Some easy ways to find these therapists is through market research from step one, as well as through social media and networking events in your area. Lately tons of therapists have been flocking to Instagram with professional accounts, making it easy to find local therapists in your area. Give it a try! If you need some help, you might like to watch my video about How to Network with People in Private Practice.
Therapists love giving advice and helping people! So when you chat or meet up with colleagues, be sure to ask them for their best tips and advice in private practice. What worked for them? What investments totally flopped? Ask around from a few people because private practice is not a one-size-fits-all endeavor, so you might want to pick and choose what fits best for you.
This is a double-whammy tip because not only does connecting with local therapists help you with future marketing but you also don’t have to reinvent the wheel as you develop your business plan.
4. Determine how much You’re Willing to Give to Private Practice
Time and money are such precious resources, and you need both to get things started with private practice. Ask yourself how much of each of these you’re able and willing to give.
Make a plan together with your loved ones so you have the same expectations for how this will unfold. Ask questions like:
- How much budget are you willing to give to this?
- How much time are you willing to give?
- Are you going to go part-time at your current job to do this or are you going to pick a day on the weekend or evenings to do it?
Determine the answers to these questions in advance and know what you’re willing to expend towards your goal. You may also want to invite trusted friends to share their concerns with you, as our friends have a way of knowing what we need to ask better than we do sometimes!
5: Create an Exit Plan
Before you start it’s important to keep the worst case scenario in mind: what if private practice doesn’t succeed?
Ack! We don’t want to think about that!
I remember when I first decided to go from part-time to full-time private practice, I didn’t have an exit plan. Full-time private practice was THE plan. My husband ended up being the voice of reason. He asked me, “When will you quit if this doesn’t start turning a profit?”
My response? “Uhhhh…I don’t know.”
So we sat down and made a plan for how long I would give this a go before bailing. We created a five month plan, complete with expense spreadsheets so we knew how much money we were willing to sink into private practice if I wasn’t profitable.
It’s not fun to think about failure, but planning for the worst is actually a reassuring measure. You can feel more confident getting started knowing you have a way out if it doesn’t work. Ask yourself questions like:
- How long am I willing to work at private practice before I start turning a profit?
- Is there a certain profit margin I’m expecting to achieve? When do I need to achieve that margin by before bailing?
- Do I have a back-up plan for what I will fall back on if I end the private practice venture?
Think about these things in advance and talk them over with your loved ones. It will save you time and heartache down the road if you need it.
Creating a business plan for private practice can seem overwhelming, but I hope you find these tips make the process a bit smoother for you!
Are you wondering if private practice is right for you? Check out my post: Starting a Private Practice in Counseling: Is it Right for You?
I know the process of starting a private practice can seem daunting and overwhelming, even amidst the excitement that might be there. If that is you, be sure to sign up for the email list to get free information about how to start and grow your private practice. I share tools that I’ve learned the hard way about starting private practice so that hopefully it doesn’t have to be so hard for you.
Until next time, from one therapist to another: I wish you well!