Are you ready to navigate the thrilling yet daunting journey of expanding your group therapy practice?
In this episode, I open up about the real pressures and considerations that come with team expansion. We're not just talking about adding new faces; we're tackling how to maintain financial stability and ensure the quality of service doesn't dip as you grow.
Learn about avoiding the pitfalls of quick hires and creating a compensation structure that works for everyone involved. It's all about crafting a practice that provides both you and your clients with the freedom to thrive.
I'll walk you through understanding the anomalies in your business performance, why you should never ignore seasonal fluctuations, and how to craft a proactive plan for financial health.
We'll also discuss why starting the hiring process early is a game-changer and the significance of having a growth fund at the ready. Unexpected staff changes? We've got strategies for that too.
Are you ready to navigate the thrilling yet daunting journey of expanding your group therapy practice?
In this episode, I open up about the real pressures and considerations that come with team expansion. We're not just talking about adding new faces; we're tackling how to maintain financial stability and ensure the quality of service doesn't dip as you grow.
Learn about avoiding the pitfalls of quick hires and creating a compensation structure that works for everyone involved. It's all about crafting a practice that provides both you and your clients with the freedom to thrive.
I'll walk you through understanding the anomalies in your business performance, why you should never ignore seasonal fluctuations, and how to craft a proactive plan for financial health.
We'll also discuss why starting the hiring process early is a game-changer and the significance of having a growth fund at the ready. Unexpected staff changes? We've got strategies for that too.
Hiring clinicians is probably the most difficult and complicated thing about growing a group practice Knowing when is it appropriate to do so. Can I really afford it? And really going into it with full confidence that this is the right move for your practice? Today I'm going to give you three things that you should consider before you even start hiring. My name is Craig and I'm the CEO of Desi Financial Coaching. Our goal is simple to help you run a therapy practice that is permanently profitable. If you own a solo or group practice, we're here to help you build a business that creates more time, makes more money and serves more people.
Speaker 1:This is the Therapy Business Podcast. So, for those of you that already own a group practice, you know how challenging it can be when it comes to trying to hire new clinicians. And if you're a solo practice owner, it's just you. Maybe you're considering soon hiring that first employee, or you just know that down the road at some point that's in your future and you feel some anxiousness about it. And those of you who have gone through, like I said, you already know that feeling of anxiousness when bringing somebody in. There's a multitude of reasons. You're trusting someone with your brand to provide quality care. You're entrusting all those things. And then you're also thinking about money. You're going okay, can I really afford this person? It's no longer this thing where it's just you.
Speaker 1:I remember when I started hiring my team, I used to be by myself for a long time. When I started my business, I thought it would literally just be me. I was just thrilled to even have my own job versus working for someone else. And then I started approaching this point where I'm going okay, I need to start hiring some coaches under me to coach more people. Our demand is growing. Truthfully, I was stretched thin. I needed to be able to focus on growing the business, but my calendar was so full that I couldn't do that. But then, all of a sudden, this new stress came in and it was this idea that, okay, if this business fails, if revenue drops, if I do something wrong right now, it's just me that takes the hit. Right, I'm a solopreneur. Nothing happens. But when I hire that team, suddenly I'm responsible for their paycheck. I'm responsible for them, and if something happens financially and I can't pay their paycheck, I'm not the only one impacted. Do you remember that feeling? I remember it so well and, honestly, it kept me from hiring longer than it probably should have because I was so afraid.
Speaker 1:But here's the thing we get into business for two main things freedom of time and freedom of income. And when you're in an industry like therapy practices, where you are primarily one-to-one, you can be limited. Whenever it's just you or it's just you and your team, you're going to hit that ceiling of what you can make. Now, if you're private pay, you can continue to raise your rates and try and increase what you make per session, but for those of you who are accepting insurance, you know that that's not an option for a lot of your clients. So you really are tied to how many patients can we see in a given week, how many patients can each clinician see? And then you're going to hit that ceiling. So hiring is the natural first step that most practices take. Now, of course, you can offer different offerings, like intensives or programs, online programs, group programs, all those things which we'll dig more into in future podcasts, but today I really want to focus on that key element of hiring either your first clinician or hiring that next one. So there's a problem. Is that most therapists go through? Is they just rush into it and maybe it's not even rushing into it, it's just going into it without really thinking through the entire process and what can happen is it can just tie your hands.
Speaker 1:I worked with a client once who they went into it without thinking. They just kind of got to a point going oh, our leads are growing, we have more people coming in than what we can take on or what I can take on, so it's time for me to hire somebody. And so they did. And they hired someone and they went on a percentage split and they didn't know what was a fair compensation. So they were like well, we want to hire somebody. Good, so I'm going to hire this person at 70%. I'll give them 70% of whatever they make, which, as we know, is pretty high. And if you're out there and you're paying your clinicians 70%, you know very well that it's pretty high and it can be tightening on your cash flow. If you're not paying your clinicians 70%, that's a good thing, as much as I want your clinicians to be compensated.
Speaker 1:Well, that doesn't leave a lot of room for margin, which we discovered with this business. As they were looking at it, they started to grow, they're paying them 70% and they need to hire somebody else, somebody else, and suddenly they had this team of clinicians under them being paid 70%, but on top of that they were W2. So there was payroll taxes. They were paying them, they provided a healthcare stipend to those employees, they were reimbursing them for trainings and certifications. They're contributing to their retirement, and all those things add up.
Speaker 1:And the problem with it was there was just no game plan. They hired this person and these people, they wanted to pay them well, which I get and then they wanted to keep them and so they wanted to be competitive with all the other group therapy practices out there. So they're going well, we'll also give you this, we'll also do this, this, this. And suddenly that margin squished and what happens is the practice owner has this team under them, yet they're still stuck seeing clients, a full caseload of clients, because hiring is not really generating that much income.
Speaker 1:Let's say you make $200 per session and you're paying them 70%. That's $140 of that session is going to your clinician. So you're thinking, okay, I'll make 60, right? Well, when we take into consideration those other things, the payroll taxes is going to eat into that Any overhead costs that you have related to your clinician. So it's a simple practice subscription anything like that is going to eat into all of that, and suddenly you're just left with not much that you have related to your clinician. So it's a simple practice subscription Anything like that is going to eat into all of that, and suddenly you're just left with not much, and that's why it can feel frustrating spinning your wheels trying to figure this out. And 70% is an extreme example. This same problem can happen at 60% or 50%, whatever your percentage split is, or if you're doing a percentage split, or if you're paying hourly maybe you're paying too much hourly or if you're paying a flat fee based on how many. They see.
Speaker 1:We just want to go into it with eyes wide open. Now we'll talk more about pay structures and again in a future episode we're going to break down different pay structures, how to do it well, how to do it wisely and go into it with purpose. But today I just want to give you three things to consider before you hire a clinician, three ways that you can look at the numbers and decide am I ready? And go into it with eyes open. Now the first thing we want to do is just look at your cash flow. What does it look like the past three to six months. And when I say your cash flow, it's how much money have you been making in the past three to six months? What? How much money have you been making in the past three to six months? What have your expenses looked like in the past three to six months? Has it been growing steadily? Has it been up and down? Has it been you had an amazing month and then you had a terrible month, then you had a great month? Or has it been pretty consistent? Either you've been staying at the same revenue level or maybe it's been climbing steadily up and up and up.
Speaker 1:We want to look back at that. Did we add any new revenue? If you're sustaining a revenue number, is that just because you were keeping your clients and not adding new clients in? Is it because you were somewhere leaving, but you're also consistently bringing in new clients? We want to look at those lead sources. Are the lead sources consistent? Are we bringing in people consistently? And then, looking at specifically individual lead sources, where are they coming from? Is it coming from psychology today? Is it coming from wherever? Has that individual lead source been consistent? Did you just happen to have a month where it just blew up for some reason and then we can always look into that. Or has it been consistently feeding you new clients? Yeah, if money hasn't been consistent, if it's been kind of up and down, how long would it take you if you were to hire someone tomorrow? How long would it take you to fill up their caseload or to get them to a point where they're generating an ROI for you? We want to consider that.
Speaker 1:Employees, no matter what, are an investment, which means it's going to cost you something before you get a return. That's any investment. You're going to pay something before you get a return. That's any investment. You're going to pay money to later get a return on that investment. Employees are no different. There's always that growing time where, from the time you hire them to the time that they start making you money, there's a break there, whether it's training them, getting them up to speed, building their client base. We want to look at that and consider how many clients would they need in order for me to make my money back, for them to suddenly be profitable?
Speaker 1:If it's a percentage split, some of you are already thinking well, if I'm just giving them a percentage of every client they see, then they should, from day one, be making me money. If they meet with one client, I'm paying them X percent and I'm going to make some money off the top of that. But there's a few things that can come into play. Are they taking clients off of your plate, meaning so that you can give them clients? Are you going to stop taking on new clients? And the reason this is important is because when you see a client, 100% of that income is in the business, right, whereas if you have one of them see a client, 100% of that income is in the business, right, whereas if you have one of them see a client, only a part of that money comes to you in the business because you're paying them a part of that. I hope that makes sense, that it's you. So if you're charging $200, $200 comes to the business. You don't have to pay anybody for that session, other than what maybe you'll pay yourself, but you're going to want to pay yourself off of your clinician's income too, so it's not a one for one. If you lose a client, your clinicians are going to probably have to have two to three clients to replace that one income wise. So just thinking through all of those things, how long would that take? If you're at a place where you have other clinicians and maybe it's just they're going to be taking some and this other clinician won't be getting more for a while, that's okay. Maybe that's apples to apples and that's fine too. So, just thinking through these things, what will numbers look like? How long do I think it will take?
Speaker 1:Another thing we want to be careful of is this best month mentality, and what I mean by that is maybe you just had an amazing, amazing month in your practice. You hit a revenue target that was higher than you've ever hit before. Your clinicians were all just maxed out and suddenly you're having to put people maybe on a waiting list to start the following month and you're thinking, oh my gosh, we need to go higher fast. We need to go higher right now. We want to be careful of that best month mentality. We don't want to look at that and say, okay, I made this much money last month, that's now how much my business makes. No, it's not. It just means you had a great month and hopefully it'll continue. Maybe that's the new precedent, but we need at least three to six months to know.
Speaker 1:Is this the new norm or was that just an amazing month, which leads us into the second thing we want to think about, which is are there any anomalies that may exist in those growth numbers? So was there something that maybe contributed to that big month? A great example of this is let's just say, you were selling newspapers on the corner and you went out and you had to buy a crate of newspapers and you go, stand in the corner and you sell them and one day you're doing that and within an hour you sell all the papers out of that crate. So you're thinking, wow, one hour I had a crate to last me all day. I sold it all in one hour. What's our natural tendency as business owners? Well, we're thinking I need more papers for tomorrow, right, so tomorrow you go out and you buy five crates of newspapers and then you go out into the corner and you sell those. Now, logically, that seems to make sense.
Speaker 1:But there's a couple of things we want to be careful of. What anomalies could have existed? Maybe there was something in the headlines that day that would cause more people to buy newspapers that maybe they wouldn't tomorrow. Was there something going on? There's a lot of different things that could affect those numbers, good or bad. So in your practice, was there something going on that maybe could have contributed to that number? Was there a promotion that you were running? Were you a guest speaker somewhere? Were you a guest on a podcast or somewhere doing something like that?
Speaker 1:Look at your lead sources again. Was there a spike in something? Maybe it could even be as simple as a referral partner. Suddenly you look down and you're going yeah, they sent us a lot of people last week. Maybe they were running ads last month and that spiked their lead intake and they were able to start sending you some people. So there's a lot of anomalies that could take place and that's why we don't want to trust just that one good month.
Speaker 1:So we want to look back and we want to look at those anomalies in our business. What could contribute? And the same thing can be for a down month. So we don't want to panic because we had a down month, because again there could be some anomalies. Maybe you had some clinicians who were out sick or on vacation and that can affect your overall top line revenue. So look at those things. What could be causing those anomalies? And thinking back to that newspaper example, what could cause it? Was there something in the headlines? Was there something in the city that brought more people to that corner? And so you just happen to be selling something, selling more papers? Anomalies can absolutely affect your growth numbers and we want to be careful and mindful of those.
Speaker 1:And then, third, when hiring, before you hire, what hidden dangers lie ahead? Not being dramatic here, not trying to scare you out of hiring somebody, but we want to think through, because we a lot of times go into this with those rose-tinted glasses of we're going to hire, we're going to fill their caseload, we're going to make some money, then we'll be ready to hire again and we're going to need a bigger office. So it's just, this is the plan, plan, and it doesn't always work out that way. So what hidden dangers lie ahead and how will you fund them? Is there a seasonal rise and fall and I know that that's the case for 95% of practices out there. It's a made up statistic, but most practices out there deal with seasonalities Summertime. If you're working with a lot of teens and kids, you know that their schedules are chaos and that the number of sessions is probably cancellations or reschedules are gonna be high and so your session completion rate is gonna be low.
Speaker 1:All industries January, february, sicknesses we see this across the board with all of our clients. Usually in January and February their revenue takes a hit because they're getting a lot of people canceling due to illnesses. That's just flu season. People are sick. So, looking through those times, you know them, hopefully know them well. And if you don't look back, what does August typically look like for you? What does July usually look like? Looking at each month, what does summer look like? What does fall look like typically? Is there a spike, is there a drop, or does it usually stay on par over the past few years?
Speaker 1:Thinking through that, and then you can use that information to look ahead and say, okay, yeah, we're busy in the spring, but we know summer's a hit. So maybe hiring, based on our spring numbers, you might go hire that clinician and then they're going to join you in June and all of a sudden your lead intake just plummets. And now you have this clinician who's they're frustrated because they're not making any money. You're frustrated because you hired them and maybe you're spending extra money on them and you can't quite get their case load up. So we want to be careful of those seasonalities. We want to look ahead and see maybe one of our other clinicians leaves. What are we going to do in that case? They decide to leave and they take a lot of their clients with them. What's the game plan for that Is that obviously we want to be proactive with that, but sometimes it comes out of nowhere.
Speaker 1:Hopefully you have a good pulse on your clinicians and you kind of can tell and have a good vibe and you have that open communication going. But sometimes we can feel that in our gut. Obviously we're blindsided once in a while, but usually we can kind of feel it in our gut if maybe an employee is starting to pull away a little bit. So how will we fund them? What are those hidden dangers that might lie ahead? What I recommend with this is saving some money in advance.
Speaker 1:So as you're planning, we always say hire slow, hire before you're ready, and what I mean by that is that sounds like I'm contradicting what I said at the beginning. But start hiring before you're ready. Meaning start the process Doesn't mean you have to bring somebody on. You want to wait until you're ready to bring them on, but start the process before you're ready, and we can do that a number of ways so we can be setting aside some money. If you know that we teach if you've listened to our past episodes, and episode two I'll link in the show notes talks about the money system that we teach our clinicians, our therapy owners, which is to use multiple bank accounts, and so when you make money in the business, you're putting a certain percentage of it into these different accounts, and so you could always open an account that is employee or growth account or whatever you want to call it, and we're going to just set a small percentage aside into that account to build up some money. What this does is twofold. Maybe it's helping you practice paying this person before they ever come in, but mostly it's building this nest egg of cash that you can tap into during that period of time, from investment in the employee to return on investment so that you can confidently go into it and you give yourself some runway of okay, maybe they're not taking on clients as quickly as I would like them to. I have a little bit of extra safety net cash here to get me through that time.
Speaker 1:Another benefit of starting the hiring process early is start interviewing, start looking before you're desperate. Two things happen there. It's either a you wait until you absolutely need someone and you're desperate and you might make a bad hire or two. Usually when you need somebody the most is when you have the least amount of time to be interviewing and looking for employees. So, starting as, just a few months ahead of time, thinking okay, I'm thinking as of this recording, it's May 3rd that I'm recording this. So if you're thinking I might need to hire someone in the fall and you know, I have a couple of clients who are already starting that process they know they're not going to be ready to hire until maybe September, october, but they're starting the process of hiring. They're financially preparing, they're putting their postings out there. They might even start interviewing people over the summer just to get their feelers out there.
Speaker 1:You can interview somebody without being ready to hire them. That is totally okay. Just because you're interviewing doesn't mean you have to hire someone right away. You can find some people you like. Yes, you run the risk that maybe they find employment elsewhere, but you'll find a few people that you like and then, when you are ready, you can reach out and extend that offer to bring them onto your team. And then, of course, if things speed up and you're ready sooner than you thought you would be. You have them in the wake, right there to reach out and try and bring them on a little bit sooner. So prepping in advance is key when going through this process. So those are the three things I want you to think of financially before you start hiring.
Speaker 1:We want to look back so always looking back. What has money looked like over the past three to six months? Even looking back into that seasonality over the years, what happens during each time of the year? We want to look for anomalies. What may be affecting numbers? What may be affecting this emotional response to want to hire Not that that's a bad thing, but am I reacting emotionally or am I reacting because the business really needs it? And then what hidden dangers lie ahead? Think through those things before you make that hire and I promise you you're going to go in and it's going to be a much better experience. You'll sleep better at night, knowing that you can actually afford this employee and it's really contributing to the growth of your business. Thanks for joining us on the Therapy Business Podcast. Be sure to subscribe, leave a review and share it with a practice owner that you may know If your practice needs help getting organized with its finances or just growing your practice. Head to therapybusinesspodcom to learn how we can help.