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Are your profit margins small? Have you been struggling to build momentum in your income? What does financial security mean for you?
In this podcast episode, Joe Sanok answers the question about how to grow a practice when you have financial constraints.
Podcast Sponsor: The Receptionist
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Start a 14-day free trial of The Receptionist for iPad by going to the receptionist.com/practice, and when you do, you’ll also get your first month free when you sign up.
In This Podcast
- Define your constraints
- Set out your priorities
- Are your clients short or long-term?
- Is outsourcing necessary?
- What does financial security mean for you?
Define your constraints
It is okay and workable to have only a little money, but you need to get clear on the numbers to define exactly how much you have to get a sense of where you are at, and what is possible.
Look at your fixed costs per month and then your variable costs.
We want to be able to say, on average, [that] my cost of doing business is X number of dollars per client I see. So, if on average I see 10 clients, that means that maybe $35 per session is going towards rent in all those costs. [But] it should not be razor thin.
Joe Sanok
You should aim for your costs not to be over 50% of what you are bringing in as income. If your profits are razor thin, then look at your fixed costs and see what you can change.
Set out your priorities
Your priority is to get full with clients.
Once you have hired another person, build up their caseload as fast as possible so that they’re full of clients too because this is the income that your business runs on.
Therefore, think about what drives client growth. This could be:
- Marketing
- SEO
- Writing blog posts
- Networking with people in your community
Most people, when they’re not full … will work 10 or 12 hours and then do laundry … if you want to work 20 sessions a week, it’s going to be at least five hours of paperwork or marketing outside of those 20, so that’s 25 hours a week. You would be working 25 hours a week, every week, until you are at your goal.
Joe Sanok
Are your clients short or long-term?
If your turnover is quick, you will be expending a lot of energy trying to maintain a constant stream of new clients as the previous groups exit. This means that your cost of marketing and converting new clients will be high.
If they’re longer-term, and you know the average person comes for 10 or 20 sessions, you know that you can put a little bit more money into advertising or things like that because that long-term growth is going to be a lot easier.
Joe Sanok
Is outsourcing necessary?
If your profit margins are currently very small, is outsourcing worth it? At least for the time being.
Although, if you are doing your best work, and you can see another client within the hour or two that you would have spent answering the phone or replying to emails, then consider it.
If you know that you can make that time count, then outsource the small job to someone else.
What does financial security mean for you?
Define what your financial security looks like.
Put numbers on paper and consider what you would need to have saved up for 6 months to be secure if you were to get stuck between a rock and a hard place.
Often, when you scrutinize your numbers, you may realize that you weren’t as bad off as you thought – especially when you handle the finances well.
Useful Links mentioned in this episode:
- Start a 14-day free trial of The Receptionist for iPad by going to the receptionist.com/practice, and when you do, you’ll also get your first month free when you sign up.
- Ask Joe A Question!
Check out these additional resources:
- Mental Health Ecosystems in Psychiatry with Dr. Brian Dixon | POP 807
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- Practice of the Practice Podcast Network
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- Apply to work with us — a decision-making matrix for your next steps
Meet Joe Sanok
Joe Sanok helps counselors to create thriving practices that are the envy of other counselors. He has helped counselors to grow their businesses by 50-500% and is proud of all the private practice owners that are growing their income, influence, and impact on the world. Click here to explore consulting with Joe.
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