How To Launch Your Private Practice: 2021 Comprehensive Guide
This is the ultimate guide to starting and growing a counseling private practice in 2021.
So if you want to build a profitable and sustainable private practice, you’ll enjoy the actionable tips (and things to avoid!) in this new guide.
Let’s dive right in!
Table Of Content
1. Start with “Why”
The most important question business owners should ask themselves is, “Why should I start a private practice?” This is important because it’s your motivation to do something heroic and courageous.
So, why do you want to start your private practice?
- Is it to increase your impact on your community?
- Is it to make more money?
(In my experience of helping therapists launch a private practice it’s typically both. And that’s okay! That’s why many people go into business.)
Starting a private practice is like having a baby. In the beginning your baby needs a lot of nourishment, time, & support from YOU.
Starting a private practice will demand your time, your emotions… all of you.
So, your “why” needs to be strong and true.
If you need clarity on your “why” then I recommend “Mission Statement Made Simple” course by Donald Miller.
I’ve helped dozens of clients create a mission statement that serves as their “why.”
But, in the meantime, here’s a back-of-the-napkin formula. Write your why statement like this:
“The reason why I want to start a counseling private practice is so I can:
1. (Define A Future Benefit For Myself)
2. (Define a Future Benefit For My Family)
3. (Define a Future Benefit For My Community)
Example: “The reason I want to start a private practice is so…
I can pay off my student loans more quickly, (personal benefit)
have the flexibility to spend more time with my family, (family benefit)
and have a greater impact on the marriages in my community.” (community benefit)
Your “why” doesn’t have to be perfect, but you need something to support you over the next 12 months.
Okay, on to drafting a business plan!
2. Sketch Out A Business Plan
A business plan will give your counseling practice clarity and solid boundaries to make important decisions.
Here’s what you can include in your business plan.
First. Answer: Who is your ideal client and what problem are you trying to solve for them? Get as detailed as you can on this. If you need extra support, just watch my free marketing series.
Second. Determine your private pay rate, and if you’re going to panel with insurance companies. (more on that in the next chapter).
Third. Find your office location. If you’re going to be seeing in-person appointments, then location is important. The good news is, most counseling practices don’t need a lot of space or furniture to get started (unless your a play therapist or dance therapist).
Here things to keep in mind when choosing a location:
- Is there ample parking for clients?
- Is it easy to get in and out of the parking lot?
- Is it easy to get to for your ideal client?
Fourth: Create an estimated expense list. Here’s an expenses template I use with clients to get you started.
Fifth: Create a personal budget. Determine how much you need to make per month to survive. Write down, “I need to take home, after taxes, $________ to cover my personal expenses, school loans etc.”
Then take that list, combined with the business expense list, then start to add up how many clients you need to see a week to cover business expenses AND your personal expenses.
Sixth: Consult with another private practice owner and ask what mistakes to avoid when starting a private practice.
Now, we need to talk a little more about money.
3. Private Pay, Insurance, or Both?
As you begin to launch your counseling practice, you’ll want to think carefully about private pay vs insurance, or will you have a hybrid approach. In my experience, the more your niche down, the more you can command private pay prices.
The broader a counseling practice you have, the chances are you’ll want to have a hybrid approach.
Kid Matters Counseling in Chicagoload is 100% private pay (they even publish their prices). But they have niched down to just working with kids ages 2-12. (Plus there was a philosophical decision behind it too).
Cedar Tree Counseling sees all types of clientele so their approach is a hybrid one: private pay and paneled with one insurance company.
Another practice has chosen to panel with several insurance companies (scroll to the bottom).
If you want the most flexibility try to go 100% private pay. (More on this below).
How To Choose Which Insurance Company To Panel With
When it comes to choosing an insurance company, I recommend choosing one (maybe two) insurance providers that have the highest reimbursement rate (United Healthcare & BlueCross BlueShield come to mind, but it depends on your state).
The more insurance panels you are on, the more insurance billing headaches. That’s been my clients’ experience.
In my experience, it’s easier to start with private pay and gradually add insurance.
Here’s the deal. When you’re growing a counseling business, well, any business, you typically have two “levers” you can pull to generate more revenue.
1. See more clients
2. Raise your rates
When your primary revenue model is insurance reimbursements, the only lever you can pull to grow revenue is “see more clients.”
While paneling with insurance companies may help grow your caseload, your earning potential, however, is capped because you have a limited amount of time to see clients.
If you plan for your counseling practice to be 90% insurance-based, then the only way to scale your business is to hire more clinicians to see more clients.
But, if you’re private pay, you’ll have the ability to raise and lower your fees at will. No one is determining how much your services are worth. This will allow you to be more in control of your business.
Imagine the ability to see fewer clients per week, but still make the same amount of income? That’s the potential of private pay.
Here’s your homework: make an initial decision on how you’ll structure your counseling practice.
Will it be 100% private pay? A hybrid? Or 100% insurance?
But, don’t fret about it too much. You can always change it later.
4. Find the Perfect Office Space
When it comes to leasing an office space it all comes down to: location, location, location.
(Unless you’re going to be 100% Telehealth. Then you’ll need support found in this telehealth roundup post.)
Here are my top 3 tips for finding the perfect location for your private practice:
Location Tip #1: Make Sure There Is Plenty Of Parking
You don’t want parking to be an issue for your clients. When Kid Matters Counseling first started we had to make images of how to do tandem parking. It was terrible.
Location Tip #2: Make Sure You Have Room To Expand
It’s been my experience that those who have a solid marketing and growth plan, will grow quickly. So you want to make sure you have square footage to expand with more rooms to accommodate more therapists.
Location Tip #3: Make Sure There’s A Waiting Space For Clients
What I don’t like about waiting rooms is that it takes up square footage for other potential offices. But, you do need some sort of space for patients to wait.
I’ve also seen counseling practices that shared or common waiting room with other businesses. You usually find these in larger office condos. That’s a great option because you’re not paying for square footage that can’t be monetized.
So, make sure you have a waiting room that compliments the size of your practice and you’re good to go!
5. Four Essential Tips to Naming Your Private Practice
In a digital first age how you name your private practice is crucial. But here are 4 tips to name your private practice that plays nice with Google and will set you up for success for years to come.
TIP No. 1 – Choose A Name That’s Built To Sell
There may be a time where you have the option to sell your private practice. So put yourself in the buyer’s shoes. Would you rather buy a business with the brand name “Karen’s Couples Clinic” or would you rather buy a counseling practice with a name like “Thrive Couples Counseling”?
So, choose a name that doesn’t have YOUR name in it. Unless you plan to NOT have a group practice, or wouldn’t want to sell your practice down the road.
TIP No. 2 – Choose Your Name With Keywords That Will Improve Your Google Search Rankings
The primary way Google ranks a webpage is through crawling your website and “reading” the words on a webpage. The same is with your URL domain.
Words matter to Google and the more you use words that tell Google what your business is about, the better.
So, when you’re choosing a name for your counseling practice, have the words “therapists, therapy, counseling, counselors” in your name.
Having one of these words is also important because of how people search for counseling practice, “counselors near me,” “Therapists near me.” “Marriage therapist near me.”
If you have a business name (and URL) that matches the search intent of the individual, Google may rank your website higher in organic search.
Disclaimer: SEO (search engine optimization) is a MASSIVE topic and there are many ways to rank your website other than having a domain name with the right keywords. Having the right keywords is just one piece of the SEO puzzl
TIP No. 3 – Make sure the name is available to incorporate
You might find the perfect name only to find it’s already incorporated in your state (or the domain URL is already taken!).
So here’s how you check it:
1. Do a google search for: “(Your state) business name lookup”
2. Start typing in your name
3. See if it’s taken
If the name is already incorporated in your state you may be able to add some modifiers
Here’s what I’ve found for “Thrives Counseling” in the state of California.
But, what’s even more important is having the right domain name which both reflects your business name AND can help with Google Search.
TIP No. 4 – Make sure the domain is available to purchase
This is important for a few reasons:
1. This is “digital real estate” that authenticates your business. This is your brand’s home.
2. This will also be your branded email address. [email protected]
3. It will also be the hub of your social media accounts.
If the .com of your URL is available, buy it ASAP. You don’t need to buy all the variants (.org, .net, etc. unless you plan to be an nationwide chain or franchise).
If the .com is not available, buy the .net address.
If your business name is not available as a .com use Hover to come up with some creative solutions.
Hover offers some helpful domain ULR alternatives.
Your domain URL will be the hub of your brand. All roads should lead to your website. So spend some time getting your domain name as close to your business name as possible.
6. Incorporate Your Private Practice
If you want to start a business, you need to incorporate it. It will provide protection for you and has built in tax advantages.
If you’re looking to start a private practice with a partner, then my advice is to consult with a lawyer to draw up the paperwork.
If you’re looking to have 100% ownership, incorporating is easy.
Here are a few ways you can incorporate your counseling practice:
1. Hire a lawyer. Many lawyers can help you do this (and so can a lot of accounting firms). You’ll probably pay anywhere from $500-$1500. (HINT: some accounting firms will do this for you for free if you already have them do your taxes).
I’ve used Swyftfilings.com to incorporate a few of my businesses and for some counseling practices.
Here’s a Swyftfilings walkthrough video of setting one up using Swyftfilings.com
NOTE: Each state has its own laws on how a licensed profession (like a counselor) can incorporate so please do some research there (or ask your tax accountant).
In Illinois, a counselor has to register as a P.C. (Professional Corporation). It’s basically an S-Corp with a designation of a P.C. (Professional Corporation).
7. Four Essential EHR Features Your Private Practice Needs
Choosing the RIGHT Electronic Health Records software (EHR) for your counseling practice is crucial to your success. It will help you:
- Schedule clients
- Communicate with clients
- Organize client paperwork
- Charge clients and
- Submit insurance claims
Your EHR will become the essential communication, scheduling, and financial hub of your practice. So you want to try to get it right the first time.
If you want to know which mistakes to AVOID when choosing your EHR take time to watch my conversation with Hillary.
So, here are 4 essential EHR features your private practice needs.
First, your EHR should be able to collect payments from credit cards (which includes debit and HSA debit cards) and submit claims to insurance companies.
For private pay, they should integrate with Stripe or PayPal to make charging clients seamless.
For insurance claims, they should have a simple and seamless way to submit insurance claims and get reimbursed.
Oh, and this will also keep your papercosts down. A good EHR will keep your practice 80% paperless. +1 for the environment.
Here’s a little taste on Hillary’s first mistake: Being overly trusting of the sales associate!
Second, your EHR software needs to be well funded. The WORST thing about any software company is for you to sign up, integrate into your business, but then the software company runs out of money and goes out of business.
Here is a quick, non-scientific way to check to see if an EHR is well funded (even though you cannot look into their bank account):
1. Are they hiring new staff? (Look for their careers page)
2. Do they have a product roadmap? (This is a list of features they are current developing)
3. Do they have a nice website? (This is a vanity metric, but if they have a beautiful and information website, that means they invested in their marketing)
4. Do they have a blog with amazing content? (If a software company is investing in video and written content, then, in my opinion, have some funds in the bank).
Third, the EHR should be HIPAA compliant. This is a no-brainer. You need to be protected and so should your clients’ health records.
Fourth, your EHR should have a seamless scheduling experience. Scheduling is one of the biggest time wasters for a private practice owner so make sure this is a simple process. Some clinicians like to have online scheduling available.
To have a seamless scheduling experience make sure your intake coordinator can have access to the scheduling calendar as well.
If you want to discover which mistakes to avoid when choosing an EHR, listen to Hillary’s experience and learn from her mistakes.
8. Essential Client Paperwork and Forms
You can’t have a counseling practice without paperwork clients will need to fill out. Here are the top 6 essential client paperwork your counseling practice needs:
1. Informed Consent
This paperwork outlines the privacy practices and policies for treatment.
This document can include:
- Session duration
- Statements on touch
- Statements on fees
- Cancelation policies
2. Recorded Retention
This paperwork outlines how long you keep medical records; how you dispose of them; and any recorded communications.
3. Mandatory Disclosure
This paperwork discloses policies on video recording, mandated reporting, and how clients can file a grievance if the client and counselor cannot come to an agreement.
4. Developmental Questionnaire
This paperwork provides basic information about the client’s background that could be helpful in getting a general view of their life story and can help a clinician create a treatment plan.
5. Release of Information
This document allows a client or client’s guardian to give the clinician permission to coordinate care with other providers while following HIPPA compliance.
6. Payment Form
This document allows someone to pay for services if they are not the one directly receiving services.
Now that you have your paperwork in place, it’s time to visualize your intake process so nothing gets dropped in the process of someone becoming your client.
Step 1: Potential Client Requests For Help
What’s the first step a potential client need to make? Do they fill out an intake form online, or call to schedule an appointment? Make this as clear as possible.
Step 2: Recording Client Information
You’ll need at least a name, address, and phone number. Will you write it down in a notepad? Record it in a Google Doc? Or record it in an EHR?
Step 3: Scheduling The Appointment
Who’s going to schedule the appointment? Will you have an intake coordinator? Or, if you’re doing it yourself? Will you record it directly into your EHR, a paper calendar, or a Google calendar?
Step 4: Client Paperwork
If you want clients to fill it out before the first appointment, who will send it and how will you send it? Will you email it to the client? Will your EHR send an email and they fill it out online?
Will you also collect a credit card in case of no-shows or late cancellation? Will you take a “deposit” to secure their time slot? Some things to think about.
Step 5: Appointment Reminder
To help eliminate confusion it’s important to send an appointment reminder.
So, who’s going to send the reminder?
Will you give them a phone call reminder? Will you send them an email or text message reminder from your phone or from your EHR? Is this a manual or automated task?
These 5 steps are the most important steps your private practice to ensure your client has a good first experience.
If you can solidify your intake process, then you can easily handle the influx of new clients coming to your counseling practice!
10. Budget Common Private Practice Expenses
When starting out, it’s important to write down your the most common business expenses. This is part of your business development plan.
Common private practice expenses are as follows:
1. Utilities: Depending on your lease you may only pay for internet, or you’ll have to pay for gas, electricity, and more. Expect internet to be at least $75/mo and electricity anywhere between $30-50 depending on the size of your space.
2. Software: This includes your email (Gmail) and probably your EHR. This could also include Quickbooks accounting software.
3. Website Hosting: This all depends on your hosting and website development plans.
4. Phone System: I highly recommend Grasshopper for your voicemail system. Easy to use. Great app (that will mask your personal phone number) and easy to scale with your growing business.
5. Rent: Try to keep it as low as possible. Use my guidelines on how to choose the perfect location.
6. Yearly / One-time Costs: includes furniture (use Wayfair getting started or Goodwill, or Facebook Marketplace); copier for the office.
7. Google Ads: You don’t need to run ads, but it’s important to budget some money for marketing.
We’ve created a Google Doc preloaded with the most common expenses for a private practice. Open it up and make a copy for yourself!
DOWNLOAD THIS BUDGET SHEET!
11. Three Marketing Mistakes to Avoid When Starting A Private Practice
If you’re starting a private practice, you need to keep it growing with a marketing plan.
So here are the top 3 marketing mistakes you need to avoid.
Mistake To Avoid: Not Having a Sales Funnel
A sales funnel is a way to guide a potential client from curiosity to commitment. That is, from finding about your services to becoming a client.
Here’s what I recommend your sales funnel should be:
1. Create your brand message
Your brand message is like a hollywood script. It’s the words you’ll use to create a blockbuster marketing campaign. Your brand message should tell a clear and compelling story so potential clients will do want business with you and not your competition. The brand message is the foundation of your sales funnel.
2. Fix Your Website
Most people create a website but don’t have the right words in the right places to convert clicks into clients. Your brand narrative will help you create a website that’s a 24/7 sales machine.
3. Create a Lead Generating PDF
Not everyone is ready to schedule an appointment so create a high-quality lead magnet that potential clients can download in exchange for an email.
4. Start an email Nurture Campaign
Now that you have the potential client’s email, you’ll create a series of 4-5 emails providing valuable information, position you as a guide to help them, and then call them to schedule an appointment.
If you’d like to take advantage of an excellent e-course on sales funnels. I highly recommend Marketing Made Simple online course.
Or you could buy the book!
Mistake to Avoid: Not Reaching Out to Referral Sources
Referral sources are the cheapest advertising you can have. So, identify 5-10 referral sources and begin a letter writing campaign.
Here’s a simple writing campaign you can use:
The First Letter: This should be a “I’m new” or “I just opened!” introductory letter. Look at their website portfolio, or LinkedIn, or Psychology Today profile and look for some common ground to make a connection.
This could be a similar demographic, credentialing, training, graduate school
The Second Letter: This could be a “thank you for your work in the community.” This is purely an encouragement letter.
TIP: You should send some flowers along with that letter.
The Third Letter: This should be a “this is how I work with referrals sources.”
- I always send a “thank you” letter letting you know I’ve received your referral.
- I’m always open to collaborative care.
- Invite them to a Zoom call or coffee to connect.
People do business with other people. It’s about human connection.
This approach will build trust with referral sources and you’ll soon begin to experience growth!
Don’t assume growth will happen overnight. Have the long-game in mind.
Mistake to Avoid: Perfectionism
Look, at the end of the day, marketing is about relationships, not about getting the tactics perfect.
Seth Godin wrote, “The imperfect is an opportunity for better.” Dead on.
Follow the steps in this guide, then launch your counseling practice.
It will be imperfect, but you’ll have time to make it better.
REMEMBER: Your potential clients don’t care if your website is perfect, or if your business cards are amazing.
They want to know if you can help them.
Your marketing doesn’t have to be perfect. It just needs to be clear.
Be known for solving a problem your clients desperately need help solving, and your counseling practice will be full.
BOUNS: The Most Important Thing About Starting Your Private Practice
Be the best therapist you can be.
You need to be a good therapist. Invest in trainings and certifications that will enhance the client therapeutic experience.
Word travels quickly when you can provide the best mental health care for clients.