In this episode, Gordon talks about using your time and money resources and when to “bootstrap” vs.outsource in private practice. There is a relationship between our time and money assets. The biggest commodity as counselors and therapists have is our time. We trade our time for money. Gordon talks about getting the best ROI for your money by developing a mindset and understanding of your time and its value. Knowing where to focus your efforts depends on which phase of private practice you are in.
Time and Money
Most all of us like to save money… And it would be fair to say that most of us also like to save time…
Time and money… we seem to lump those two things together. And everyone seems to never have enough of either…
I remember going to a workshop several years ago that had something to do with financial planning or money management. The presenter asked, “If you had all the money you wanted PLUS all the time in the world, what would you do with it?”
I also remember the comedian Stephen Wright saying, “You can’t have everything. Where would you put it?!” But I digress…
The Time/Money Dilemma in Private Practice
In the counseling and therapy professions, our livelihood depends on trading our time and expertise for money. It’s fairly simple economics in that people pay us a fee for spending time in conversation with them and offering some sort of expertise and direction.
So when you think about it, your time is very much a commodity. Your time is what you have that is of great value. Your time is what brings you your income.
How you spend your time is important…
Being in sessions with clients is, of course, at the core of what we think of when it comes to being in the counseling/therapy business. There is also the clinical work that is done outside of sessions. For example, writing session and progress notes and writing treatment plans.
Then there are all the other ancillary things we have to do like billing and dealing with third-party payers (insurance). Not to mention networking, marketing and all the other business things that need to be done.
Not all of these activities will bring you any money for the time spent on them. Many of them are necessary, but not things that will increase your income.
Depending on what phase of private practice you might be in, has a lot to do with how you spend your time. In the beginning stages of starting a private practice, you are going to be spending your time building a client base and referral sources. It is a great use of your time. It is time spent that can be seen as an investment in your practice. It is also a phase of practice where “bootstrapping” is needed and sometimes necessary.
The term “bootstrapping” is a business term that describes stretching your resources and finances as far as you can. It loosely comes from the idea of “being on a shoestring budget”. It is a way of keeping costs down.
In private practice, we tend to think of bootstrapping as the therapist or counselor doing all of the administrative functions of their practice; doing intakes, returning phone calls, marketing, bookkeeping, filing taxes – all the things necessary to keep the practice running smooth
So in the beginning stages of private practice, that is until you have the cash flow and income needed to outsource, it is a good idea and probably a best practice to bootstrap. But how do you know when it is time to switch to outsourcing?
Knowing the value of your time
First of all, you really need to understand the value of your time. Think about it in terms of what you get paid for a session. So for example, if you charge $100 per session, simply put, 45-50 minutes of your time is worth $100.
Assume you work a 40 hour week charging $100 per session:
10 clients = $25 per hour
15 clients = $37.5 per hour
20 clients = $50 per hour
It’s pretty simple math but the more time you spend during a 40 hour week seeing clients the more money you will make, right? But what about those hours you spend marketing, doing administrative things or client documentation. What is that time worth?
The Value of Clients
Most clients we will see them more than once. So if you see a client for 8 sessions, at $100 per session, they are going to bring in $800. If you have 10 clients, their total value is $8000.
So when you think about it this way, your efforts in bringing in clients makes your time spent on those things worth something. If you invest 1 hour of time to get you one client, essentially, that one hour of time is worth $800.
ROI- Making a Mindset Shift
When you think about the value of a client, it just makes sense that the majority of your time should be spent in sessions AND in doing things that will bring you more clients. So the big question becomes, how are you spending your time now?
One mindset shift that I had to make, was to stop thinking of what I was spending on my practice as an expense. Some of the things I spend money on our investments. For example, my Psychology Today profile. It costs about $30 a month. But that is an expense that absolutely gives me an ROI (return on my investment). Using our previous figures, would give someone $30 in order to get $800 in return? Absolutely!
Also think about the ROI of your time investment in things. And depending on what phase of private practice you are in, will determine how you invest your time and money.
When to stop “bootstrapping” and switch to outsourcing
When it comes down to it, one rule of thumb to go by is to “invest” in “bootstrapping” when your client load is smaller. Invest in outsourcing when your client load is higher. And however you invest, do so with ROI in mind. In other words, will put your time and money into something give you a return on that investment.
Have A Way To Measure Your ROI
Another rule of thumb to keep in mind is if you do not have a way to measure your ROI, it is probably not a good investment of your time or money. For example, I decided not to put an ad on some pharmacy bags even though it was a good deal. I didn’t have a way to know if I would get a return on that investment; no way to know if it would actually bring me, clients.
In conclusion, know for yourself where you are going to get the “biggest bang for your buck” both in terms of time spent and money invested. Bootstrapping and outsourcing are both ways to optimize your use of time and money. But they both need to be done correctly in order to reap the benefit.
Meet Gordon Brewer, MEd, LMFT
Gordon is the person behind The Practice of Therapy Podcast & Blog.He is also President and Founder of Kingsport Counseling Associates, PLLC. He is a therapist, consultant, business mentor, trainer and writer. PLEASE Subscribe to The Practice of Therapy Podcast on iTunes, Stitcher and Google Play. Follow us on Twitter @therapistlearn and Pinterest “Like” us on Facebook.