The unexpected costs of running a private practice

The Business of Psychology

The unexpected costs of running a private practice

I know nobody likes talking about money. I don't like talking about money. But I am motivated to make an episode about money today, because I see so many people being completely blindsided by the costs of running a private practice, and setting their fees badly at the beginning of their private work, because they just don't anticipate some of the stuff that they're going to end up spending money on. This is a mistake that I made, and it's only from learning the very hard way, by not making enough money in my practice to even pay for my childcare, that I came to this realisation, and I don't want anybody else getting started in private practice now to be going through that. So I thought I would run through some of the unexpected costs of running a private practice, so that you can make an empowered pricing decision from the beginning.

Supervision

The first unexpected cost is supervision. Now, you probably know that you need supervision, and you probably have already factored that into your equation, but what you might not realise is that you might need a lot more than you think you do when you're starting out in private practice, because you might feel a little bit less confident than you do when you're surrounded by a team in an NHS setting. You also might find that you want specialist supervision on particular topics. I often talk in private practice about how beneficial it can be to have more than one supervisor. For a long time I had a supervisor who is a specialist in trauma, because I was doing a lot of trauma therapy, and I also had a supervisor who is a specialist in online therapy, because online therapy was quite a new thing for me, but also a new thing in general when I started it, and I felt like I needed somebody who had expertise in dealing with risk issues in particular, in the online context. So I actually ended up paying for two lots of supervision every month, though when I started out in practice I thought if I look at the hours I'm doing versus what I was doing in the NHS, probably once a month is enough. Well, it wasn't, so my supervision hours were always double what I had initially thought they were going to be.

CPD

The other thing that I hadn't really considered when I set out in private practice was how much I would want to spend on CPD. Again, you might have already thought about this, maybe wanting to engage more in continuing professional development is a reason that you left the NHS or a reason that you're deciding to strike out in private practice. So it may be that this has been at the top of your mind, but for me, I hadn't really considered how much CPD I would want to do in order to feel like I was serving my clients to the best of my ability. We don't actually tend to do that much of it in the NHS, or I didn't; there wasn't as much opportunity for it. But when I got out into the private space, I became aware of all of these amazing courses that I could do, and while I would say that you need to watch your imposter syndrome sometimes, it may be that your imposter syndrome is telling you you need to do course after course after course, when in reality you'd be fine just reading a book and using your existing knowledge and supervision, there actually are times when it's really beneficial to your private practice to get an extra accreditation under your belt, or to spend a bit of time on some additional workshops that are going to give you that confidence that you need to push forward with your marketing. So making sure that you've got a healthy budget in your mind for CPD is really important from the beginning, in my opinion.

Insurance

Obviously insurance costs money, and you need to think from the beginning about what that premium is likely to be for you, make some calls and get a realistic quote. In my experience it's been going up year on year, and also because we're working in different ways, we might need to get more extensive insurance than we did in the past. So have a listen to my episode with Catherine France about the different kinds of insurance you might need, because some of those you might find surprising. For example, I hadn't really considered when I set up my practice that I might need cyber insurance, but I now think that is pretty important for most of us. So have a listen to that episode and make sure that you've got a realistic idea about what insurance is going to cost you.

Premises & Related Costs

It's likely that if you're setting up in private practice, you have considered that rent, for example, is likely to cost you money, or premises of some sort. However, you might not have considered all of the different costs that are associated with providing sessions to people, whether those are online or one-on-one. Under that premises category, if you're seeing people in person, you need to be aware of whether your premises might incur business rates, council tax, whether you will need to be paying for the energy bills and the costs of WiFi in those premises. In my experience if you're not paying those, then they'll be rolled into a more expensive rent either by the hour or monthly rent if you've got exclusive use of a premises. So wherever you are, you need to consider those things, because if you're working from home, you are going to have increased energy bills, which is very relevant at the moment as we're seeing those absolutely soaring, and you will most likely want to pay for the most expensive, premium WiFi service you can get to your house, because if you're seeing people online there is really nothing worse than a dodgy connection. So you need to consider all of these things. Also whether you might need to adapt your house in some way, if you're seeing people from home, in order to make your client work feasible, whether that is a bit of soundproofing if you're offering online sessions, whether it's moving where your WiFi router is so that you can plug into it, there are all kinds of things that you might want to consider if you're working from home that you might not have realised are going to cost you money. So do have a think about that. Even if it's ‘oh, I need a new desk’ that all costs money, and it needs to be factored in from the beginning of your private practice.

Business Skills

Another thing you might not have considered at the outset is that you will need to regularly invest money in courses, online courses, or coaching in business skills. To run a successful business, you need to continuously be learning and investing in business skills, whether that is marketing, whether that is the bare bones of running a successful business, financial management, or whether it is in coaching, having somebody hold your hand and help you take your business to the next level. You will always need to be investing in something in your business; it's the reality of it, if you want to be successful, you have to keep learning. That's because the world of business and the world of marketing change continuously, so it is not the case that you can do one course and then you're set for the next five years. I would say your business always needs to be growing or it will be declining, and therefore you always need to be learning new ways of making your business more effective, more efficient, and getting it in front of more people. So I don't think since I started my business, there has even been one month where I haven't been paying for some kind of business development, education, or coaching. I wish that I'd known that at the beginning so I could have factored that into my expected running costs.

Computer Hardware

Another thing that hopefully you have thought of but you might not have, is that you will need the best computer that you can get. Even if you're not working online, you're doing most of your work face to face, you need to be working with good technology, because most of our marketing these days requires a good online presence. I've talked about that a lot on this podcast. Everything you do in your practice is just going to take you too long if you're working with rubbish machinery, so don't put up with that, it's a false economy, you need to get yourself a decent computer. You can either buy one upfront if you've got capital, or if you don't, you can actually lease them for a fairly good deal. A company that I've used in the past is called HardSoft, but there's a few out there where you can lease the latest technology for a monthly fee rather than paying for it upfront. So that is worth considering.

Software

Also, you need to make sure that you've got the software in place that's going to make your life easier and make sure that your practice is compliant with GDPR. I go into all of that in our episode on the tools that you need to run your private practice. So go back and listen to that one. I won't run through them all now, but they all cost money and it is worth factoring that in from the beginning as well.

Admin & Marketing Support

I also really wish that I had at the beginning of my private practice journey, set aside a budget for admin and marketing support. By that I mean outsourcing the admin to a VA, and outsourcing some of my marketing, the stuff that I'm not so good at like creating graphics, to somebody who is good at it from the very beginning. So if you are on the cusp of making that decision, or if you're concerned about outsourcing and worried that you can't afford it, I really urge you to listen to my episode with the Psych VA, Anna, my lovely VA, because in that she talks about how you can make sure that you get a return on investment very quickly. I also think though, that you need to set your fees with it already factored in, that you will be getting support with these things, because it can really hold you back in your practice. I almost think we need to have the attitude that it's unacceptable not to have admin support, which I know often we feel like in the NHS, we don't have very much admin support and so we think we can manage without it. Well, okay, maybe you can while you've got a handful of clients, but are you giving those clients the best service possible if you're spending all of your time uploading notes, dealing with scheduling issues, doing your own invoicing? I would argue not. I would argue that in that time you could be doing CPD, you could be thinking about your clients, formulating, doing a lot of stuff that's going to bring a lot more value to them than you sitting there doing your own admin. So I would urge you to get admin support from the beginning, and that will mean that you need to charge higher fees, but it will also mean that your work with those people is more effective, and I very much come down on that being the better way round to do things. So admin and marketing support; I wish I'd factored that in from the beginning and I think that you really should.

Time Off & Pension

Two things which Sally Farrant, our pricing queen who helps us figure out our pricing strategy in Psychology Business School, told me that I should be factoring into my fees, and it honestly never occurred to me, were things like time off and pension contributions. You will not be able to work every day of the year, you are going to need to take a holiday, you're going to need to take sick days, and actually factoring those in from the beginning when you're working out your fees is really important. Also, you need to be paying into a pension, and I'm saying this as a total hypocrite, because I don't even yet have my pension sorted. But I know this is really, really important, and we should be factoring it into our fees from the beginning because you deserve to have a good pension. Our lives could look pretty grim if we get to retirement age and we don't have a decent pension in place. It's one of the things which we tend to fail to consider when we're setting our fees, so please, please have a think about that and factor that into your finances from the beginning of your practice.

If you need more support with setting your fees, then please listen to our episode with Sally Farrant, thep pricing queen. She's an accountant who has a very straightforward process to help us figure out what we need to charge that takes into consideration all of these things, and helps you come up with a minimum fee that you should never work for less than. It's really, really helpful, it's completely transformed my practice, so I very thoroughly recommend that you do listen to that episode.

I'd also encourage you if you're setting up now in private practice, to come over to psychologybusinessschool.com and have a look at our resources and our foundation course Psychology Business School, where we really walk you through all of this and we help you to figure out your pricing strategy from the beginning, as well as getting all of your other foundations in place for your private practice, and setting up your marketing machine and all of everything that you need to know to get set up properly in private practice, because honestly, I feel like if you get this right from the beginning, you're going to avoid a lot of the pain that I've been through and that I've seen other people go through in private practice. It is well worth investing your time and a bit of money at the beginning to get this right.

I hope that has inspired you to have a look at your financial projections and to make sure that your pricing strategy takes into account all of these unexpected costs. Please do let me know what you think; I'm on Instagram @rosiegilderthorp and as ever, I'd love to hear from you.

Links

Episode 81: Insurance for psychologists and therapists who do more than just therapy with Catherine France

Episode 92: What tools do I need to run my practice?

Episode 96: How to set up your practice for success with Anna Bunch aka the Psych VA

Episode 41: How to set your fees in your psychology private practice with “pricing queen” Sally Farrant

Client Checklist

Mentioned in this episode:

Free Client Checklist

Do you sometimes wake up at 2 am worried that you’ve made a terrible error that will bring professional ruin upon you and disgrace your family? I’m laughing now but when I first set up in private practice I was completely terrified that I had “missed” something big when setting up insurance or data protection. Even now, three years in, I sometimes catch myself wondering if I have really covered all the bases. It is hard, no impossible, to think creatively and have the impact you should be having in your practice if you aren’t confident that you have a secure business. BUT it can be overwhelming to figure out exactly what you need to prioritise before those clients start coming in. I’ve created a free checklist (plus resources list) to take the thinking out of it. Tick off every box and you can see your clients confident in the knowledge that you have everything in place for your security and theirs. Download it now - the link is in the show notes.

Client Checklist 2021