I was savoring the last bite of my raspberry cheesecake as the lunchtime speaker began. Twenty-five of us from all walks of entrepreneurship were at our local chapter meeting of Women’s Referral Service. We had networked, finished our chicken taco salad and now it was time for the speaker.
Today’s speaker was a financial planner. She was a lovely, soft-spoken, intelligent woman who discussed SEP-IRAs, trusts, annuities and other types of investing. She reminded us how much money we would need in order to retire (“the number.”) She spoke in very simple terms and I learned a lot that day about tracking my income, expenses and investments.
As she ended her talk, she paused dramatically and made eye contact with many of us in the room.
“I know there are a lot of solo-preneurs here – people who have a sole proprietorship company. It can be wonderful and lonely to work by yourself. It is easy to forget that you must work on your business and not just in your business. So make sure you market your business and track your money. Make a profit. Because if you don’t make a profit, then you have a hobby – not a business.”
You could have heard a pin drop. Every single one of us was staring at her and I think some of us had stopped breathing. My business life started to flash before my eyes. My goals were simple: 1) help people 2) pay my bills. That was it. If I did that, I was happy.
You see, having a business was something that I wanted to avoid. I had done the corporate and management thing. I was tired of skirted suits and high heels. I knew I just wanted to have people sit on my couch for 45 minutes while I provided brilliant therapeutic interventions and then they would leave. I did not want the stress and headaches of managing office personnel or other corporate responsibilities.
Then I had another thought. I had no money saved for retirement. I had not taken an actual vacation in six years. When my car needed major repairs, I had to charge them, as I didn’t have any emergency funds. My clothes often came from discount places – and truth be told – sometimes from second-hand shops. I was terrified my computer would have a hard drive crash because – although I had been meaning to – I had not saved a cent for the new one I knew I’d need soon. Somehow I was always surprised when my annual car insurance bill showed up.
Serendipitously, my dad came to visit that weekend. He is a great support of my business venture. He asked, “So, you making any money at this therapist business?”
Good heavens! I had no idea how to answer that question. I had gone over my figures after listening to the financial planner earlier that week and realized I was breaking even – as long as you didn’t count emergency charges on my credit card, no savings, and dining on 99 cent green burritos at the local taco place most nights.
It was time to make a change. The first thing I did was look at my aversion to actually having a business. I was comparing my tiny therapy practice to a billion dollar corporation. It seemed there had been only two options in my mind – breaking even vs. managing a huge corporation with the associate worries about buildings, equipment, customers, suppliers and employees. To think those were the only two options open to a business owner was ridiculous.
I began to design a financial plan for the practice I wanted. Instead of ignoring the fact that I hadn’t taken a vacation, I put the money for one into the budget. I created an “emergency fund” for unexpected expenses such as broken water heaters. An “irregular expense account” was created to save (in advance) for expenses that came throughout the year – for example, malpractice insurance and continuing education classes.
As you can imagine, I needed to bring in more money that I had been earning. Some changes needed to be made in the way I ran my practice in order to have the additional money. In the next two chapters we will talk about how to calculate how much money you need. I call this “The Revenue Assignment.” Then, in future chapters, we will discuss ways that you can bring in that additional money.
In all honesty, it took a couple of years to really get the hang of being on top of my money. I remember one October I made more money than I had made in the prior two months. It was very exciting. I made a huge contribution to my SEP-IRA. I bought a gorgeous designer purse. I all but stopped my marketing efforts as I basked in all that money. November came and went. Then December hit. It seemed every client I had decided to “take a break” during the month of December. I had no money saved for the seasonal lulls in my practice. That became a new category in my financial plan and the next year, I took off three weeks in December. The “December money” was in the bank and I enjoyed my vacation.
But little by little, my income increased and my retirement account grew. Going out for a nice lunch with a girlfriend was a treat – rather than a worry. For the first time in my private practice career, I started to relax. I had a business with a well-planned safety net.
Some of my therapist clients readily admit that they want to do therapy as a hobby. They would like their practice income to compensate them for their practice expenses but these practitioners have no need for their private practice income to pay for any personal or household expenses. Usually these are clinicians who already have a lot of money or they have a family member who is supporting their household expenses. And in the words of Jerry Seinfeld, “Not that there is anything wrong with that.” We all have hobbies and if providing therapy is yours, more power to you! My concern is with the thousands of clinicians who have not felt it was okay to make a profit – the ones who haven’t looked at their numbers out of fear or ignorance and are worrying about the rent payment at the end of every month. It doesn’t have to be that way. You can learn a few new skills or implement some you already know and start enjoying a lifestyle with less worry and more fun and freedom.
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Business Coach Casey Truffo is a Marriage and Family Therapist in southern California. She identified 8 key strategies that helped her business flourish, and began to help other therapists build their practices. Now she devotes her professional life to helping great clinicians learn what they didn’t learn in graduate school about how to have a fun, fulfilling and profitable private practice. BeAWealthyTherapist.com
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