Writing a business plan was the last thing on my mind when I first started my private practice. I soon realised however that a business plan is essential, especially if you need outside funding. I felt out of my depth, not knowing where to start and what to do. I didn’t even know what a business plan was or looked like. Few psychologists get formal training in how to set up or run an independent practice and I was quite comfortable not to think of my practice in hard business terms. I suppose it was partly because I was unfamiliar with business terms and practices. I knew how to be a psychologist and thought this was all I needed to be successful in private practice. The bank asked me for profit-and-loss forecasts, business goals and asked me to highlight any features that would set me apart from rivals. I felt like it was all a guessing game and a waste of time. I came to understand that a business plan is far more than financial projections. It is like a written road map of where the business is going, what it has to do to get there and what it will look like on arrival. Putting together a business plan requires you to think strategically about your business and it also asks of you to do some self-exploration. We are so used to guiding others in analysing their dreams, motives and behaviour but we neglect to do this for ourselves. A business plan forces you to self-reflect. Here are a couple of pointers to keep in mind when working on your business plan:
- Develop a vision
Think about the kind of practice you want. What do you enjoy doing? What are your expectations for private practice? What about your personality may fit or conflict with being an independent practitioner? Getting in touch with what you are naturally good at is important in developing a sustainable practice. What will keep you satisfied over the long term? If you enjoy doing therapy, you will want to develop that service. Or if you are particularly good at Psychometrics and report writing, you can work towards specialising in this field.
- Do market research
It would be impractical to conduct a proper market analysis before you start but you can do informal surveys by talking to colleagues in your area and asking them about trends, needs in the area, who specialises in what, etcetera. You want to identify unfilled market needs and saturated markets. Be careful to start out with a too specialised target market.
- Identify existing practices in the area
In business terms they would call this “analysing the competition” but I prefer not to use the word ‘competition’ as it sounds like a win-lose game which is not necessarily the case. Find out who is practicing in your area, what services they offer, how much they charge, what kind of reputation they have, where they get their referrals from and so on. You want to identify saturated markets and also supportive professionals in the area.
- Set financial goals
This is especially difficult when you are first starting out, with no financial history to guide you. Establish benchmarks for the number of clients, billable hours and income you want. Then divide this by 5 or even by 10 to get a more realistic expectation for the first year or two. This is what financial institutions will do with your projections. Also be realistic about the number of clients you can emotionally bear and remember the significant number of non-billable hours of work we as psychologists have. There is also definite peak and low seasons during the year for which you will have to plan.
- Create a marketing plan
Marketing is another swearword for psychologists but you need a plan for generating referrals. Think in terms of networking opportunities, presentations you can give or attend, colleagues you can approach for overflow from their practices, other practices you can support with your referrals and meeting with people in person regularly. A phone call or letter to introduce yourself to a doctor will not work. You have to brace yourself and go out there. Ask your colleagues who you can meet as not everyone is very approachable and also don’t forget to go and introduce yourself to other psychologists in the area. My experience was that other psychologists were often more approachable, forthcoming, helpful and understanding. Be as specific as possible with your marketing plan: who will you go and see, when you will do it, how often, etcetera. Marketing is an ongoing activity.
- Adapt standard business plan templates for the psychology context
The reality of a psychology practice is that it is a business, but it’s not just any business. Keep the ethical codes that govern our profession in mind and remember the professional guidelines.
- Revise as you go along
The business plan is a living document that should grow along with your business. Regularly revise it and use it as an objective tool for determining whether the business is on track to meet the goals and objections you have set. Business planning is a critical part of independent practice and treating your practice like a business can mean being able to stay in business. Don’t be scared off by the business jargon and concepts. Think about your business plan as a living statement of who you are as a professional, what you offer and how you intend to offer it. It will be time well spent.