Running a solo therapy practice is hard work. Really hard. First, you have to sit in the chair and keep your therapist demeanor firmly in place while people share with you their pain, session after session, day after day, expecting you to make it all better.
Then, as if that’s not more than enough already, you also have to run all aspects of your business. Put on your CEO hat to decide what services to offer, where to open up shop, whether and when to add associates or staff, etc. Hello CFO hat – it’s time to deal with the bank, merchant card servicer, credit card issuer, etc. Oh-oh! The toilet needs to be unclogged, the water container replaced, the A/C fixed – now where did you put that COO hat? And let’s not forget that if you don’t put on your CMO hat, you won’t have clients. You’d almost need to be a hydra to have enough heads for so many hats!
From our experience with setting up and running my wife Risa’s practice, I’m sure you often feel overwhelmed trying to not only make a difference for your clients, but also make your practice as profitable as you can. Below I offer a dozen tips to make more profit by making smart choices about your space, which should improve your bottom line by thousands of dollars a year.
In the simplest terms, the formula for profit is:
Profit = Revenue - Expenses
(and when it comes to your practice, the money you take to support yourself and your family counts as an expense too).
We all try to increase revenue through marketing, but while we hope to influence people’s choices, you really have no control over whether or not they come to your practice (or even go to therapy at all). The part you can control is the other part of the equation, your business expenses. Indeed, cutting expenses is a guaranteed path to improving the profitability of your practice, and here are a dozen specific tips.
Rent is likely one of the biggest items in your business budget, so you want to choose the right space solution. Risa reminds me how when she started out, renting an office for a single day a week petrified her. Of course signing a full-time lease was too scary to consider. We had an emotional conversation about it, and it was only after I pointed out that just one client would more than cover the rent that she felt able to sign the lease. Here are five tips on getting the most efficient space solution for your practice.
1. Rent the right type of space. Risa started renting Class B office space, since that can save 25 to 50% compared to Class A. Once she determined that her ideal client expected something better, we moved to Class A space, actually buying rather than leasing.
2. Rent the right size space. Renting a single office inside someone else’s space is much less expensive than renting a small suite. When Risa started out, she rented space in someone else’s suite, which allowed her free shared use of a waiting area, kitchenette, bathroom, and a conference room when needed. Now that we own our suite, we rent out offices to other sole practitioners who want that same benefit.
3. Expand your reach to a nearby area without any additional rent costs. If you want to serve clients beyond those who find your current space convenient, find a colleague in a nearby town who provides a different kind of therapy and swap one or two days a week so neither one of you pays additional rent. Not only do you not compete (since you offer different services), you can even serve as referral sources for each other.
4. Consider renting a large suite and subleasing space to others. Before we bought our own suite, Risa rented one with five offices, and subleased space to other therapists. Risa’s net rent doing this was much lower than renting an office in someone else’s suite. If you’re willing to take on the responsibilities and headaches of serving as a landlord of sorts, consider renting a suite larger than you need, and getting your landlord’s permission to sublease the extra space to others.
5. Perhaps you don’t need to rent space at all. If you’re just starting out, consider tele-therapy. You’ll avoid paying any business rent, though it will entail some dedicated expenses such as reliable broadband Internet, high-quality camera and microphone, and a video-conferencing service that meets all HIPAA requirements for providing remote therapy. You’ll also need to make sure you have all the required licenses. If you feel comfortable doing so, you could also see clients in person in a dedicated room in your house without paying business rent.
Reducing your electricity usage is not just financially smart, it also helps the environment. Here are three tips to help you do just that.
6. Use a programmable thermostat. This will reduce your energy consumption by only heating and cooling your space during business hours.
7. Turn them off. After hours and even during business hours, you can turn off lights and equipment in offices not currently in use. Put computers, printers, etc. on power strips with on/off switches to minimize the number of switches you need to flip. You can also invest in motion-sensor systems to turn off lighting automatically in unoccupied spaces. That last is what NASA does as part of its effort to save on utilities and reduce its carbon footprint.
8. Lock in low electric rates. Look for an energy co-op to lock in low electric rates for a year or more. For example, I locked in a rate that’s about 20% lower than the standard rate offered by our local utility. I did this by joining a co-op through the local Chamber of Commerce.
Equipment and Furniture
Buying equipment and furniture isn’t a regular expense, but it can be significant, especially when you’re just starting out. That’s why Risa and I always try to be prudent about these.
9. Buy gently used furniture. If you buy new furniture at full cost, it shortly becomes used anyway. Instead of paying full price for new, find gently used furniture at much lower cost. When we furnished Risa’s office, we found some really comfortable chairs and sofas on Craigslist that looked almost new, for less than a third than the cost of similar new items.
10. Take advantage of clearance sales. When we needed to furnish several offices for associates and renters, it would have taken too long to find everything we needed used but in great shape. Instead, we visited several local furniture stores and purchased from their clearance areas. We saved over 50% compared to buying non-clearance items. We were also able to simply back up our SUV and take the furniture that day, instead of waiting weeks for it to be ordered, manufactured, and delivered.
11. Save on tech while buying new. I don’t recommend buying used computers, printers, etc. By the time they’re offered, they’re nearly obsolete – the RAM may be too small for the latest versions of the operating system, browser, and word processors. They’re likely to have slower USB ports, and may even be infected with malware. On the other hand, I never shop for the latest and greatest laptop or printer at Best Buy, as they come at premium prices, and the newest features may still be glitchy. Instead, I shop office supply stores such as Staples and find new items that came on the market a year or two ago. This is how I get a new laptop with all the features I need and want for under $1000, while the latest and greatest go for more than $2000.
12. Drop the landline. Especially if you’re just starting out, consider not installing a landline. Not only will you avoid the installation charges, you also avoid paying monthly bills that don’t drop when client traffic is slow. Instead, consider VOIP services that charge you based on actual calls. Since more calls translate to more revenue, your phone bills will generally only go up when your revenues are higher.
The point of the above tips isn’t that you should become a penny-pincher. The point is to cut where it makes sense so you have more money available to invest in things that bring in more clients and/or make your life simpler and easier. In the next article, we'll explore 11 tips to increase your profit by being smart about business finances.
How have you cut your space-related expenses? Leave a comment below to continue the conversation.