Fun fact: In 2020 during the pandemic, we changed the closing of our email signature from just “Thanks” to “Thanks + be well.” During that time, it became so apparent that wellness was far beyond the physical. We wanted everyone we communicated with to truly be well, especially during a time when we realized that health is truly wealth.
Mental health therapists are so important – when I think of rating the top 10 professions our nation needs, mental health professionals are certainly in that group. If you’ve transitioned into owning and operating a private practice, you should know that running a successful therapy practice requires attention to the financial well-being of your operations in addition to tending to your clients. With the right financial reporting tools and help from a reliable accounting professional, you’ll be equipped to bring ease to your financial management and prepare your practice to scale. Here are five tips we share with potential and current clients to help them grow your therapist business:
1. Track your revenue and expenses: This feels like a nuisance, but it’s your first tax planning tool. If you want to maximize your tax deductions and minimize your tax liability, you have to know how much you earned and how much you spent. Revenue and expenses are captured on your income statement. Software like QuickBooks Online allows you to view this data for any given period (i.e. by day, week, month, or year). With a few clicks, you can produce reports to determine the profitability of your business, and with the help of your accounting professional, determine how to use the current data to scale future profits. Knowing how and when you make and spend money gives you the ability to course-correct to ensure that you’re building a strong and sustainable business. There are also tons of other features that will help to maintain the financial well-being of your business, like budget versus actual reporting, and integrated payroll and contractor payment solutions as you begin to grow.
2. Customize your chart of accounts: This one is simple to integrate, but often overlooked. Customizing your chart of accounts allows you to identify the biggest opportunities for growth or reduction easily. Instead of tracking all money in as income, consider creating subaccounts for revenue line items so that you can see which lines of business are most profitable, which could be new opportunities for growth, and which should be eliminated so that you can better focus your energy and resources.
3. Systemize your business: As your practice grows, you’ll quickly find out how essential it is to systemize your processes and delegate tasks to free up your time and focus on high-impact activities. If your intention is to scale your business, expand your team, and create capacity to work on your business instead of solely working in your business, the secret is systems. If onboarding new clients or team members feels like Groundhog’s Day every time you do it, it’s because you lack systems in these areas of your business. Create standard operating procedures (SOPs) for repetitive tasks, such as client onboarding, scheduling, and invoicing. Utilize project management tools and customer relationship management (CRM) software to streamline your operations.Growing and scaling your business requires that your processes exist outside of your head.It also makes delegation and process optimization so much easier!
4. Create a budget: If you plan to grow, you need a plan. Your budget can act as your roadmap – it tells your money where to go. If you create a living budget (one that you review regularly and update as-needed), you’ll have a baseline to compare actuals to so that you can quickly identify when you’re off-course and why. Intentional growth requires intentional planning and action, and the process of creating and monitoring a budget is a fantastic tool to get you there. Software like QuickBooks Online allows you to create multiple budget scenarios, and run budget versus actual reports with the click of a button.
5. Use your non-financial client data for good: We’re an accounting firm, so we love financial data, but secretly, we love all data. The difference between guessing and making an informed decision is….data! As a mental health therapist, you likely have reports that show you information about your clients – their demographics, the services they receive, and how often they visit your practice. This information is all really helpful in determining trends, which can lead to better defining your ideal clients and opportunities for growth. If you see that many of your ideal clients are coming from a specific geographical area, or have come to you from a specific referral source, that provides solid data to back up the decision to increase marketing efforts in those areas. Do you notice most clients come in every 2-3 weeks? Perhaps a subscription-based model would be more effective.
If your goal is to grow and scale your private practice, getting your financial well-being in order is the key. Staying aligned with an accounting professional who understands your needs and can help you create systems that promote growth, you’ll be on your way to maintaining a successful and sustainable therapy practice.