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You’re not quite there yet!
Expansion is in your future, but it’s not time yet—hold off or you might put your practice at risk. The truth is, growing an unprofitable practice won’t magically make the money start rolling in. Although a large practice can bring in higher revenue, that isn’t guaranteed to generate more profit for you, the owner.
Business owners are optimists at heart, so they tend to think, If I can just hire one more person, or get one more referral partner, or make things more efficient, I will finally make a profit. Growing an unprofitable practice will only amplify your money problems, not fix them. Your business must become profitable before you can successfully scale a practice.
Here are some tips you can implement right now, to set your business up for successful future growth:
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Start (or continue) tracking the financial metrics of your practice (revenue, revenue per clinician, number sessions, number of intakes, number of inquiries)
Make a plan for increasing profitability. That might mean raising your rate (if you have a private pay practice), dropping low-paying insurance panels, changing your compensation structure, or keeping your team accountable for the number of sessions you expect of them.
Make a budget, so you can be certain you have enough funds for upcoming business expenses, and your tax liability.
Take a look at your current expenses to evaluate what can be cut. Pull out your bank and credit card statements and go line by line. Can you get a better deal on your phone plan? Are there software subscriptions that you no longer use but still pay for? Cut them.
Consider starting Profit First (order the book here!) In addition to the Profit First foundational accounts, open a bank account earmarked for expansion. Each time you transfer funds, you’ll allocate an amount to expansion. When you’re able to save up some money in the account, you’ll know you are ready to expand.
There are three major phases to expansion. Based on your answers to the quiz, you’ll need to spend a little more time in the Planning Phase. You’ll be happy you did!
Phase 1
Planning
During this phase, you save for the expansion, consider options, interview potential employees, or even visit new office space.
This phase can last for a few weeks to a few years.
Phase 2
Action
This is the exhausting, expensive three- to twelve-month period of action and hard work, the growth spurt during which profit tends to be leaner.
You might be tempted to second-guess your decision to scale during this action-packed phase.
Phase 3
The New Normal
During this phase, your financials start to stabilize and you find your footing as the owner of a larger business. You might still be hiring, advertising, and adjusting, but you’ve implemented processes and are measuring what matters. Your profit (finally) catches up. It can take up to one year after expansion for that to happen, so enjoy the fruits of your labor.
In my book Profit First for Therapists I go into much more detail about each phase. I also discuss the various costs you can expect when planning to add a location, clinical staff, admin or leadership staff, or benefits for your team.
Keep your focus on stabilizing the business finances until you are able to cover the practice's monthly expenses with ease and have at least some funds saved for expansion.
Many therapists have misconceptions about "profit" being a dirty word, and we completely understand why.
As a therapist, you work hard to help others, and it may seem counterintuitive to prioritize profit. However, Profit First for Therapists takes a different approach. Instead of putting profit first at the expense of your clients, Profit First helps you prioritize your own financial well-being while still serving your clients to the best of your ability.
The truth is, your clients need you to have a profitable practice. If your practice isn’t thriving, you aren’t thriving–which can negatively impact your mindset and client interactions. By implementing the Profit First system, you can gain financial stability and freedom, ultimately benefiting you and your clients.
The system involves transferring percentages of your income into various bank accounts to cover profit, taxes, operating expenses, payroll, and owner's compensation. This simple yet powerful system can help you stop worrying about money and focus on growing your practice and helping your clients.
Whether you've read the book Profit First by Mike Michalowicz or not, the principles outlined in Profit First for Therapists can help you.
Here are just a few of the things you’ll be walked through to set your practice up for success:
Step-by-step instructions to implement Profit First in your therapy practice
Ready to build a thriving therapy practice?
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Strategies for managing clinician compensation, your group practice's largest expense
Tips for avoiding the most common mistakes practice owners make when implementing Profit First
Recommendations for successfully scaling your practice
Tools to reverse-engineer your practice to meet your personal lifestyle needs
Financial systems to keep your practice profitable
Best practices to implement Profit First with multiple businesses