When I first started my private practice as a psychologist part-time in 1992, I was excited when I got my first few clients and saw the potential for doing my clinical work in a more authentic way than I could at a clinic. I also saw the potential for making some decent money (though at that time before I studied business, I had no idea just how much I could make). And I continued that way for a while - I went full time in my practice a year later. When I'd talk to my colleagues, I'd say things like, “Yeah, I had a good week, I saw 22 clients. " Or “Not sure why, but my caseload is down lately. "
When things went well and the money and referrals flowed, I was ecstatic. A colleague and I joked that on weeks when we had more clients, we were “good therapists" that week, even though we knew that the sheer number of sessions in a week actually had little to do with our clinical skill.
As I look back now, those days were like a roller coaster. It would go up and down, feast or famine, and I couldn't seem to get any steady consistency to it. So I just decided that this was the way it was: you'd have good days, good weeks, good months, and even good quarters, but you'd also have bad ones. You had to roll with the punches, get used to varying cash flow, save up when the going was good for those inevitable slow times.
Well in retrospect, I was dead wrong. What I now can see clearly is that I was treating my private practice like a fun, lucrative hobby. Now I treat my practice like a small business, and that has made all the difference. But it was only after I studied business principles that I realized the difference.
A Lucrative Hobby
A lucrative hobby is characterized by these qualities:
A Small Business
A small business is characterized by these qualities:
It's also interesting to realize that most business people consider a ‘small’ business to be one with annual revenues of up to $20 million.
Which Do You Have?
By looking at the above comparisons, you can begin to think about whether you have a lucrative hobby or a small business. If you do have a hobby, I would encourage you to start to develop a small business mindset. If you already have a small business mindset, I would encourage you to further deepen and refine it.
The benefit of a mature small business mindset is that you gain a tremendous amount of predictability and control of your practice. Instead of wishing or hoping, or being pleasantly surprised or sadly disappointed, you have a much greater sense of control of your hours, your income and your clientele. By virtue of your business knowledge and application of sound business principles, you are much better prepared to withstand any unusual circumstances in the marketplace or in the world.
Joe Bavonese, PhD
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