4 Mistakes I Made When Starting My Private Practice

By Alison Pidgeon on October 17, 2018
4 Mistakes I Made When Starting My Private Practice - TherapyNotes

As a business consultant, I often share what others should do in their private practice. But it’s also important to share what NOT to do, since we’ve all made mistakes in our private practice journey. Here are the four mistakes I made in my first year that you should avoid.


1. Not fully leveraging technology

In the name of saving money, I started out keeping paper charts for my practice. What I didn’t realize is that this strategy came at the expense of my time (think making copies, handwriting notes, etc.). I piecemealed several different systems that didn’t work well together to do all the things I needed (for example, scheduling was one system, billing was another, and so forth). I wish I would have started out using an electronic health record (EHR). It saves a ton of time, it makes my practice efficient, and I don’t have to figure out how to store paper charts.

Another area where therapists don’t always leverage technology is email. In my work, therapists often tell me they’re afraid to use email in their practice because of concerns with HIPAA and confidentiality. Their solution is to not use email at all. By doing this, they’re putting themselves at a disadvantage, since it’s convenient for clients to set up an initial appointment or reschedule an appointment via email or a contact form on the website. Sometimes, clients simply aren't available to make appointments by phone, and not providing another scheduling method may deter those clients from scheduling at all. Plus, there are several HIPAA-compliant email solutions available at a low monthly cost.


2. Not taking advantage of targeted marketing

I tried a lot of different marketing strategies in the beginning. It felt kind of like “throwing spaghetti at the wall and seeing what sticks.” I didn’t totally understand the concept of homing in on my ideal client and figuring out a way to market more directly to them. Because of this, I made mistakes.

For example, I once bought really expensive radio ads on a local station in an effort to reach a wide range of people. However, because the audience was so broad, I only gained four or five new clients as a result. Considering how much I paid for the ads, it certainly wasn't worth it. Lesson learned.

I made another classic mistake when I first opened the doors of my private practice. I put up a website and a Psychology Today profile and assumed the phone would start ringing. This was a good start, but to really ensure a steady flow of client calls, I needed to do a lot more than that. Eventually I figured out I needed to have at least six or more different targeted marketing strategies to help my practice take off, including referrals from doctors, referrals from other therapists, and good search engine optimization (SEO).


3. Not understanding basic accounting

I get it: We didn’t go to school to be accountants. So, of course you should hire an accountant to help you in your business. Have them set up a system for you, like QuickBooks, so you can easily account for all your bank transactions and run reports. But don’t do what I did: I manually entered transactions into a spreadsheet. This is not efficient, and you can’t generate basic reports like a profit and loss statement.

Even though you may dislike numbers and want your accountant to handle all of it, you still need to understand the basics of accounting. The numbers tell a story and can help you make decisions. Don’t stick your head in the sand when it comes to understanding basic accounting because you will get yourself into financial trouble.

Similarly, business structure is crucial. Most therapists don't realize that once they scale their business, it usually makes sense to form an S-Corporation. Therapists typically incorporate their business as an LLC or PLLC (depending on your state), but at some point your business starts to generate enough income that it makes sense to switch to being taxed as an S-Corp while still being an LLC or PLLC. There are significant tax savings, so be sure to ask your CPA at what income threshold you should make the switch.

In year two of my business, I quadrupled my gross income but didn’t realize it until it was too late in the year to switch to an S-Corp. This resulted in paying a lot more in taxes than I could have.


4. Not having a long-term vision

Now in year four of my group private practice, I have a clear vision of what I want my business to look like: 12 providers in six offices. That number feels manageable to me and is large enough (meaning it generates enough income) that I can delegate much of the responsibilities to my staff and remove myself as much as possible from the day-to-day details. But when I started my group practice, I didn’t think about the long-term vision at all. I just thought, “Let’s hire someone and see how it goes.”

If I had that long-term goal, I would have made some very different decisions along the way. For example, I would have looked for an office where we could have grown into that size. Instead, by the time I figured that out, we had outgrown our space and had nowhere to go in our building because it was full.

I don’t mean to say that you must have it all figured out at the start or that you can’t change your vision as time goes on and circumstances change. But, here are some important questions to ask yourself:

  • What do I want my practice to look like five years from now?
  • How many hours do I want to work per week?
  • How many clients do I want to see?
  • How do I want my practice to be known in the community?
  • What size do I see my practice being?
  • Are there lifestyle goals I need to consider as I am starting my practice?

Learn from these four mistakes that I made and think carefully about how to set up your practice in an efficient way. Doing so could benefit you greatly as your practice grows.

 I would love to hear your feedback! What mistakes have you made that would help someone else avoid the same error? Comment below!

* The content of this post is intended to serve as general advice and information. It is not to be taken as legal advice and may not account for all rules and regulations in every jurisdiction. For legal advice, please contact an attorney.


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