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Have you been considering starting your private practice? Do you know which type of lifestyle you want to create for yourself and your family? What type of private practice do you want?
In this podcast episode, Joe Sanok answers the question; should I start a private practice?
Podcast Sponsor: Heard
As a therapist, you’re probably too preoccupied with your caseload to want to think about bookkeeping or tax filing. Heard can help you out with that. Heard is a bookkeeping and tax platform built specifically for therapists in private practice that helps you track and improve your practice’s financial health. Regardless of whether you’re a seasoned clinician or are in the first year of your practice, Heard will help you to identify areas for growth and streamline best financial practices for your business.
When you sign up with Heard, you’ll work directly with financial specialists to track your income and expenses, file taxes online, and grow your business. You’ll also receive financial insights such as profit and loss statements and personalized monthly reports. You can say goodbye to poring over spreadsheets and guessing your tax deductions or quarterly payments; focus on your clients, and Heard will take care of the rest.
Plans begin at $149 per month and can easily be tailored to fit your business’ financial needs. Sign up now at joinheard.com/partners/joe.
In This Podcast
- What type of private practice do you want?
- What is the lifestyle that you want to live?
- Do you want to take insurance, cash, or be mixed?
- Open your doors!
What type of private practice do you want?
[Define] your lifestyle and your goals right at the beginning. There are lots of ways to make money, but if [you] start with what you are actually trying to do through this business, for yourself [and] for your family, to me that’s more important because it helps you define the value of your practice. (Joe Sanok)
By defining your “why” for starting your business, you can then build your practice upon a foundation made of value. That is an important key to launching a successful practice.
Once you have defined your “why”, then you can get into the type of practice that you want:
1 – A part-time side gig practice alongside your full-time job. You can charge cash or insurance.
One of the advantages of starting a practice when you have a full-time job is that you can take huge risks because your basic living expenses are already covered. (Joe Sanok)
2 – A part-time practice that you want to grow into a full-time job.
3 – Launching a full-time practice from the start.
What is the lifestyle that you want to live?
What are your goals here? Do you want to:
- Bring home a certain amount of money
- Be able to take a three-day weekend
- Pay off student debt
- Take time off to have vacations with your family
Figure out the kind of lifestyle that you want to live, and then structure your practice to live this routine.
There are going to be different things that you set up from an infrastructure standpoint at the beginning when you start a practice. [For example], if you know that you one day … [want] a group practice, you will want to have infrastructure that will scale. (Joe Sanok)
Once you have an idea of the kind of lifestyle you want your practice to help you create, consider practice location. Would working in an office or working online help you achieve your goals?
Do you want to take insurance, cash, or be mixed?
If you want to be mixed and take both insurance and cash, then consider working with only a handful of insurance companies to keep the admin to a minimum. Take insurance from the companies that most people in your area have.
If you want to take private cash pay, then most of your time will go into building a strong brand, finding your niche, and networking.
If you want to solely take insurance, then your focus will be placed on building a strong infrastructure. For example, have a biller right from the beginning that takes a percentage of collected money.
Open your doors!
Now that you have the basics in place, you can open the doors! You do not have to have everything perfect before you start.
Getting going sooner rather than later can help you build your practice quicker, helping you to scale, settle into your niche, and create a network.
Useful Links mentioned in this episode:
- When you sign up with Heard, you’ll work directly with financial specialists to track your income and expenses, file taxes online, and grow your business. Sign up now at joinheard.com/partners/joe.
- Connect here with one of Practice of the Practice’s consultants
- Visit therapynotes.com and use promo code JOE to receive benefits
Check out these additional resources:
- Wade Lightheart on the intersection of gut health and mental health | PoP 707
- Apply to work together
- Sign up for Next Level Practice — Cohort Open!
- Events – click on the event’s dropdown
- Sign up to join the free webinars and events here
- Podcast Launch School
- Practice of the Practice Podcast Network
- Free resources to help you start, grow, and scale
- 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.
Thanks For Listening!
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This is the Practice of the Practice podcast with Joe Sanok, session number 708.
I’m Joe Sanok, your host, and welcome to the Practice of the Practice podcast. If you are brand new to private practice, you are in the right spot. If you have been growing a private practice for a while, you’re in the right spot. We have so many resources, tools and things to help you out. If you haven’t checked out over at pillarsofpractice.com, we have two totally free e-courses with videos, checklists, downloads. You’re going to want to grab those to help you out, whatever phase of practice you’re in. It’s just going to help you get things done so much faster.
Well, for the next five Ask Joe’s, I’m digging into some of the essentials of private practice, those things that right, when you’re starting up, you want to think through. And some of you maybe you’ve been around for a while, and it’s good to just go back to these essentials, these foundational things specifically to think about. These are questions I get all the time. So instead of saying, this is the one person that asked this question the next five Ask Joe’s are just going to be around starting a practice and they’re questions I get literally every single week. So I could list the 52 people that ask in the last year, or I can just say, a lot of people are asking these questions.
The first question I’m going to dive into in this Ask Joe, and I’ll actually share with you what all five of them are going to be, the first one this week is, should I start a private practice? Then the next one I’m going to cover is how do I start a website? Then the next Wednesday is going to be, how do I network for referrals? Then we’re going to be talking about how do I make a marketing plan and last, what should I have set up, that big picture umbrella thing.
We’re going to dive into, should I start a private practice before I do that though? Wanted to let you know that Fridays in May of 2022 if you’re listening in the future, LaToya Smith, one of our consultants is going to be doing a podcast takeover. I’m trying to have this podcast, especially because we have four episodes a week, represent our team, bring in more voices, bring in more perspectives. I literally just gave the microphone to LaToya and said, whatever you think people need to hear, you can hear. So I’m really excited to see what LaToya comes up with.
LaToya’s an amazing consultant. She has her own group of practice. She is great at storytelling and at helping you find your voice. So if she’s someone that maybe you want to work with, you can head on over to practiceofthepractice.com/apply. That’s where you can apply to have a conversation with any of the consultants to figure out if it might be a good fit for your time and your money to fast forward your progress. Again, that’s practiceofthepractice.com/apply. LaToya specifically works with people that already have a solo practice or want to make it just a little bit better but it’s an established practice or people that are in the early stages of launching and growing a group of practice, so sort of those smaller group practices under 10 people so. Head on over to practiceofthepractice.com/apply to chat with LaToya a little bit.
So should you start a private practice? I mean, I remember thinking through this when I was a 1099 contractor and I had officially filed my LLC, so I was my own business, but I didn’t have my own private practice. I was working at child and family psychological services in Kalamazoo, Michigan with Dr. Larry Beer. Larry’s been on the show a number of times. He’s a mega group practice owner. Now he’s sold that. I ran into him at Costco when I was in Kalamazoo for a minute and it was awesome. Caught up for a couple minutes when we were in Costco of what’s going on. He told me he had sold the practice. I told him I had uncoupled. So it was a lot of big things in our life that were going on.
So Larry really for me set the stage of what could be, and I modeled a lot of my early practice off of what he did in regards to 1099 contractors, in regards to splits, in regards to contracts and even some the paperwork to just be able to say, should I even do this? When I started my practice, it really was a side gig thing. I had moved back to Traverse City, Traverse City, Michigan, Northern Michigan. I had a full-time job as a foster care supervisor and eventually worked at the community college and I just wanted to pay off student loan debt.
At the time all of the insurance panels were closed. So I started a practice that was private pay purely out of need. Now I think there’s a lot of different ways to think through this. We’re going to talk through the different elements when you’re thinking about starting a practice, but first is what type of private practice do you want? So really like defining your lifestyle, defining your goals, should be right at the beginning? There’s lots of ways to make money but if we start with, what are you actually trying to do through this business for yourself, for your family? To me that’s more important and helps you then define what you value within your practice.
So let’s talk about the types of practices and then how you can figure out which lifestyle and goals you would want to align with those types. The first type would be a part-time side gig practice when you have a full-time job. So you have a full-time job or maybe a three quarters time job and you want to put in five, maybe 10 hours a week into the side gig practice. Now that may be what you want to do forever. It may just be all right, we’re going to just give this a world forever or it may be eventually I might like to lead that full-time job. I want to open opportunities here. I want to think through if that’s something that I might want to do, but I’m not ready to commit to it yet.
So one of the advantages of starting a practice when you have a full-time job is that you can take huge risks because your basic living expenses are already covered. So for me, by having a full-time job, I could be private pay. I could also raise my rates at a rate that a lot of people weren’t charging. I remember hearing that there were some Ph.D. psychologists that were bashing me saying, “Who does Joe Sanok think he is charging $200 an hour? He doesn’t even have a Ph.D.” I didn’t care. I mean, sure, it’s weird to have people talking about behind your back about stuff. That’s probably more of a reflection of where they were at than anything I was doing, but I could raise my rates and say, “I only want a handful of clients. These are the exact types of clients I want. I’m going to specialize in that area.”
Then also I took foster kids in my counseling practice all the way through. The state would only pay $53 per session. To me it was important to serve the community, especially these kids who had got shortchanged. I didn’t want them to just have therapists that could really just needed $52 a session I wanted to be able to give back in that way. Also there was a single moms group that I offered parenting and free talks through. So when you’re making this extra money, you can then choose to donate your time or take reduced costs in other areas. It doesn’t mean that you’re just eliminating all these people from having access to you. So that first type is just a side gig part-time practice.
Second type is a part-time practice that you want to grow full-time. So you’re starting from scratch. Maybe you don’t have a full-time job or you have other contractual things and I just want to start a practice, I’m going to start really like small and grow that into a part-time practice to supplement my income then we’ll see. The other type is you want a full-time practice. You want to make this jump, you want to grow as fast as possible. Maybe you do have a full-time job right now, or maybe you’ve lost your job, or maybe you just quit your job, or you may have a partner that can cash flow your time so you can take bigger risks. So we have two types of part-time and then one full-time.
Next you want to look at what is that lifestyle that you want to live? So what are the goals here is, is the goal to bring home a certain amount of money? Is it to pay down student loan debt? Is it to just make money for vacations for your family? That’s going to define things much differently. If you’re starting a practice to just pay off student loan debt where you’re saying if I make a couple thousand dollars every few months, that’s great. That’s going to be one direction you’re going to go compared to, if I need to create a full-time job for myself and working full-time hours, making money, scaling potentially into a group practice. There’s going to be different things that you set up from an infrastructure standpoint at the beginning when you start a practice.
So if you know, for example, that you eventually want to at least have the door, say open to a group practice you’ll want to have infrastructure that can really scale so that you’re not starting something and only a year later undoing it and then redoing everything again. You want something that can scale with you. So with your electronic health records, you want to make sure that that can scale and you can add clinicians to it. With your website you might want to right from the beginning, start saying ‘us” instead of “me” or at least have that focus of let’s brand this as a practice.
If you want a group practice eventually, you may not want to name the practice after your name. You may want to have a more generic name that is scalable to other people. So starting to think about these things at the very beginning can be really important. Also from a time standpoint, how many hours a week do you want to put into this? So maybe you drop your kids off at school at 9:00 AM and they’re done with school around four. That’s my kid’s schedule. So I know that I want to work 9.30 to 3.30 on the days that I work. I want to walk my kids to school. I want to walk down and pick them up. I want to talk with my neighbors. I want to be able to not be rushed.
To me, those are very important values for how I run my business and run my life. I don’t want to be a single dad that is hurrying to pick up my kids to hurry to get them somewhere else, to hurry to get them somewhere else. To me, that’s a lifestyle thing for myself, but it’s also, what do I want for my children? Do I want them to feel rushed through their whole childhood and stressed and anxious, or do I want them to be able to come home and color for a while and play outside with sticks and have a past out life? To me, that’s my value set. So I’m making sure that my business reflects that. If I were starting a private practice right now, I wouldn’t see evening clients. I don’t want my kids to not have their dad around, or if I did see evening clients, they would be three to four times as much per hour than my during the day clients. So there would be an incentive to not do that, and then hardly anyone would do it, but hey, if they’re going to pay $700 a session that might be something that I choose to do.
As a therapist, you’re probably too preoccupied with your caseload to want to think about bookkeeping or tax filing. Heard can help you out with that. Heard is a bookkeeping and tax platform built specifically for therapists in private practice that helps you track and improve your practice’s financial health. Regardless of whether you’re a seasoned clinician or in the first year of your practice, Heard will help you to identify areas for growth and streamline best financial practices for your business.
When you sign up with Heard, you’ll work directly with financial specialists to track your income and expenses, file taxes online and grow your business. You’ll also receive financial insights, such as profit and loss statements and personalized monthly reports. You can say goodbye to pouring over spreadsheets and guessing your tax deductions or quarterly payments, focus on your clients Heard will take care of the rest. Plans begin at $149 per month and can easily be tailored to fit your business’ financial needs. Sign up now www.joinheard.com. Again, that’s joinheard.com.
Now also with our lifestyle goals, we’re going to want to look at things like what are the expenses? So if you’re going to have an office, if you’re going to have higher speed internet, if you’re going to have electronic health records like Therapy Notes, we want to know what’s your basic fixed operating costs to just keep the doors open or the virtual doors open? Then what are ones that fluctuate. So it may be that as you have more clients, there’s certain things like a virtual assistant that it may go up as you have more client calls. So having some idea of a little bit of the numbers when you’re starting out, thinking through that before you start a practice.
Then a couple other things to think through is, do you want to be a cash pay practice, an insurance pay practice, or a mixed model? If you’re going to do a mixed model, I would say you want to just pick a couple insurances to be on, probably the ones that have the most people in your area. You can just do a basic like Facebook survey to people in your area. “Hey, those of you that live in Traverse City, thinking about starting a counseling practice, wondering which of these insurances you have for your health insurance,” or which one seems most common amongst your friends. So being able to understand that and then figuring out which ones pay the best.
If you’re going to go on the cash pay side, most of your time is going to go into the image building, the niche marketing, finding people that are already cash pay. It’s going to be a little bit more on the networking side, which we’re going to talk about how to network in a couple weeks. Then if you’re on the insurance side, you’re going to want to have a lot more of your infrastructure built out, so having a biller right from the beginning that’s taking 6% or 7% of collected money. You always want to have a biller that is paying on collected. If it’s just per bill or gross amount there’s no incentive for them to actually make sure that it’s collected. So you may want to have that infrastructure built right from the beginning. Having a good electronic health records like Therapy. Notes, having other things that are built in there that are automated that can help save you a lot of time.
Then once you do that, you’re going to open your doors. You want to open your doors? We’ll talk about starting a website in the next Ask Joe, and then we’ll talk about networking and marketing and all of that over the coming weeks. But it’s a big decision. It feels like at times to start a practice, but also it’s not just opening your doors, setting up the basic, HIPAA compliant video, getting a website up there. Takes a little bit of time, but you really can test this out to see if you like it with very little startup costs and quite a bit again. I mean the average cash pay person that we have in Next Level Practice in our membership community is usually starting at about $125 per session.
I would say the average probably is going to be $150 to $175. A lot of insurances actually are raising their rates to compete with some of those cash pay rates. We’re seeing more and more that $125 to $150 session with insurance companies is more and more common which is really exciting to see that insurance companies are paying for mental health services at a rate that seems fair for mental health clinicians.
So it’s a great opportunity. We also have support through Next Level Practice. Next Level Practice is our membership community that helps folks that are wanting to start and grow their solo practice. You can read more of that over at practiceofthepractice.com/invite. Right now we’re on a wait list till our next cohort opens up. So you want to join that wait list, hang out there and then when the cohort opens pounce on that. Cohorts are so awesome and you get put in small groups, get accountability partners, work with me in a small group setting to help you start and grow that solo practice.
We also could not do this show without some of our sponsors and our sponsor today is Heard. Heard is this amazing service that really helps you with understanding your finances. They’ll look at your profit and loss statements and help you set up personalized monthly reports. You can say goodbye to pouring over spreadsheets and guessing your tax deductions or quarterly payments. You can just focus on your clients and let Heard take care of the rest plans. Start at $149 per month can easily be tailored to fit your business’s financial needs. You can sign up now over at www.joinheard.com. Again, that’s www.joinheard.com.
Thank you so much for letting me into your ears and into your brain. Have an amazing day. I’ll talk to you soon,
Special thanks to the band Silence is Sexy for your intro music. And this podcast is designed to provide accurate and authoritative information in regard to the subject matter covered. This is given with the understanding that neither the host, the producers, the publisher, or the guests are rendering legal, accounting, clinical, or other professional information. If you want a professional, you should find one.