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Creating a Business Plan For Your Psychology Private Practice

private practice psychology business plan

You’ve probably been searching for the perfect private practice psychology business plan template to help you translate your vision for your practice into actionable steps that will help you achieve your goals. Unfortunately, most business plans are focused on helping you start a practice or document your practice in such a way as to appeal to investors. Both certainly have their uses, but they’re not going to help you grow your practice, and they’re definitely not going to act as a blueprint for your practice’s success. More than 34% of psychologists are self-employed , making an action-focused business plan an essential component of a growth-focused, profitable practice.

Having worked with hundreds of psychology practice owners, some solo practitioners, others running multi-location practices, we’ve narrowed down the essentials of a practical business plan template. Divided into five different sections, this template is going to help keep your practice on track and motivate you to succeed. It’s also going to help you make decisions, and, most importantly, it’s extremely actionable.

Not sure if you need a business plan? Well, you wouldn’t build your house without detailed plans and a strong foundation, so why would you approach your practice any differently? Whether you want to grow your existing psychology practice or are just starting out, you need a laser-focused action plan.

Create an Actionable One-Page Private Practice Psychology Business Plan

Think of your business plan like you would a treatment plan. It’s just a roadmap that is going to help get you from where you are now to where you want to be. So, where do you start? With your vision…

Section 1 – Vision

Before you work out what you need to do, you need to know what you’re working towards. Your vision statement should constantly remind you why you went into private practice in the first place. Owning a psychology private practice isn’t a walk in the park, and there are definitely going to be challenges along the way. A clear, concise vision can help keep you focused on your purpose. The key here is to make sure your vision inspires you and should define what you offer and to who you offer it. Here are some ideas on how to personalize your vision statement.

A practical example for your psychology private practice:

“[ YourPracticeName ] provides [ description of your products, services, or benefits ] for [ clearly describe your target market ].”

Section 2 – One Year Goals

In this section of your private practice psychology business plan, we’re looking for SMART goals, goals that are specific, measurable, attainable, relevant, and time-based. These goals should stretch you while still remaining achievable . In most cases, you should make these profit- or revenue-based goals as it’s healthy finances that will ensure that you stay in business in the long-run.

Practical examples for a psychology private practice:

If you have one overarching goal and wish to grow multiple revenue streams, your one-year goal might look like this: “In one year’s time we will increase total turnover by 25%, and at least 50% of that growth will be from Telehealth appointments .”

If you have two goals, such as growing your client base and increasing your annual turnover, your goal would be, “In one year’s time we will have grown our active client base by 20%, and our annual turnover by 25%.

Section 3 – Monthly Targets

Once you have your annual goals nailed down, you need to work backward to get a monthly breakdown of your targets that you need to meet in order to meet your one-year goal. There are a couple of factors to keep in mind, such as seasonal variations, historical trends (based on previous years), and any holiday plans that you (or your staff) have booked. You also need to be realistic and work towards reasonable growth rates.

If you currently have 200 active clients, it’s realistic to want to add 20% by the end of the year. That’s 3 to 4 new clients a month, not accounting for the natural attrition rate of your existing customer base. If you have a client turnover of around 20%, you’ll need to attract 7 or 8 new clients a month, or two a week. That’s still very doable. But, if you want to grow by 50% in a year, the numbers suddenly become a lot more daunting, and you’re going to have to put a lot more effort into your marketing strategies to try and meet your targets.

Section 4 – Tactical Strategies

This is the part of the private practice psychology business plan where we get practical. You need to list out the strategies that you want to implement that are going to help you achieve your monthly targets. A good way to approach this challenge is to think of it as an opportunity to make more people aware of your services. And it always helps to have fresh ideas and input, so get your team in on the session.

Start by brainstorming all the different strategies you can think of (and let everyone know that there are no stupid ideas, the more creative, the better!) In general, your growth strategies are going to be focused on marketing and sales, your products and service offering or organisational changes.

Here are some ideas that you can use to kickstart your session:

  • Google ads;
  • Facebook ads;
  • Regular blog articles;
  • Weekly newsletter;
  • Flyer drop in your target area;
  • Client referral program;
  • Website SEO;
  • Branding refresh (signage, uniforms, website, and stationery);
  • Run a regular networking event;
  • Offer telehealth services;
  • Ask clients for referrals;
  • Get in a specialist consultant for a fresh perspective;
  • Create a marketing-focused role for the practice;
  • Invest in practice management software to automate booking reminders and better communicate with clients;
  • Offer an online chat for the website to improve conversions;
  • Investigate online client referrals;
  • Build relationships with local businesses;
  • Accept invitations to speak at local events;
  • Add new products or services such as an eBook.

Need more ideas? Have a look at our comprehensive healthcare marketing guide . There are probably a few ideas that jump out at you, but maybe many that you think you should be doing. Our advice here is to take it slow. The temptation can be to try and do everything at once, but the problem is that you’ll end up biting off more than you can chew and when that happens, nothing gets done properly. If you can’t take a strategy and see it through to completion, you’re not going to get the results you’re looking for. Most businesses, private practices included, can only handle one new strategy per quarter. That makes sense; as the practice owner, you’re normally stretched in a hundred different directions, you can probably handle adding one more thing to your plate, but not much more.

The key is to prioritise which tactics you want to work on and choose one or two to implement per quarter.

Section 5 – Action Items

Once you’ve narrowed down your list of tactical strategies, you need to break them down into action items (an actual to-do list), so that you can get on with the business of making your goals a reality. You’ll need to consider the timing, what needs to be done when, and in what order. Try to be quite detailed in your approach and break things down so that no action item is too big. It should be something that can be ticked off relatively quickly to keep your momentum going. The list also needs to be reasonably comprehensive so that, once all the action items have been ticked off, you’d be fairly certain that the tactical strategy has been completed successfully.

For example, if one of your tactical strategies is to “Post Regular Blog Articles”, your action items could be:

  • Set up a blog on the website (call your website developer);
  • Detail the workflow from article creation to posting ;
  • Create a content calendar for 3 months;
  • Assign employees to topics (or block out regular time in your own calendar);
  • Email employees their topics and due dates;
  • Create the first draft of your first article;
  • Find appropriate images;
  • Review and edit your first article;
  • Post your first article online;
  • Post your blog post on social media;
  • Set reminders in your calendar to follow up next articles;
  • Check your web statistics periodically for visitor traffic and conversions.

Right, that’s it, one page, and it’s got everything you need to keep you focused on building your practice, complete with growth strategies and the means to implement them. And, best of all, you can start using it today. The first time around, it might be a bit daunting, especially if you’ve never taken a hard look at your revenue figures or clearly defined your vision. But, once you’ve made a start, you’ll be able to refer back, and you’ll be amazed at the progress you can make in just a few short months.

Keep in mind that as a practice owner, you’re really a small business owner, which means you need to stay flexible. Certain details in your private practice psychology business plan may change as you grow, discover new needs, or respond to a changing economic landscape. You might add new staff, develop additional therapy approaches, or offer new products or services. It’s a good idea to regularly revisit your business plan (at least twice a year) to update any information or change strategies that haven’t given the results you need.

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Developing A Business Plan for Your Mental Health Private Practice

Developing A Business Plan for Your Mental Health Private Practice

Business plans act as the foundation for any type of business and are important for setting benchmarks to measure success. But how do you write a business plan for a mental health private practice? Valant takes a look at the components of a business plan and translates it into an easy-to-use framework for both mental health professionals looking to start their own private practice and those looking to expand their current practice. Check out our guide to creating an effective private mental health practice business plan below.

Mission Statement / Vision Statement:

As behavioral health providers, you all are in the business of saving lives. But what makes your services unique? What value are you bringing? Make sure when you are drafting your mission statement you answer these four questions:

  • What does my practice do?
  • How do we do it?
  • Whom do we do it for?
  • What value does your practice bring?

Description of your Practice and Service:

What is your service delivery model? What kinds of patients do you want to see, including age range and presenting problems? How many hours per week do you wish to work and on what days? What types of services will you provide (e.g. therapy versus medication management)?

Legal Framework:

The three basic choices for your psychiatric business entity are: sole proprietorship, LLC, and S corporation . The choice is based mainly on relative costs, tax implications, and general business liability (rather than professional liability). If you do plan to expand to a group practice, you should probably consider an LLC or S corporation so you have the option of continuing under the same tax ID number, but we recommend consulting with a local accountant and lawyer with experience working for other health care providers before deciding.

Mental Health Practice – Operations Model:

Operating processes can be broken up into four categories: facilities, front office, back office, and insurance.

Facilities refers to your plan for location, furniture, phone, internet, hardware, and any other tangible item or service that enables you to provide your clinical services.

Front-office refers to your plan for handling non-clinical patient facing interactions such as your intake process, administrative phone calls, reception and scheduling, eligibility and verification checking, handling of patient payments, no show and cancellation policies, and prescription management policies and procedures.

Back-office functions are dominated by medical billing but could also include transcription services and handling of documents.

Insurance refers to the package of insurance that you’ll need, including general liability, professional liability, or any other insurance you might want for you or your staff (medical, dental, and long and short term disability).

An electronic health record has the potential to influence and streamline all operation models, so it is important to have the right EHR in place.

Watch our product videos to see how Valant’s EHR and practice management system streamlines operations for mental health private practice

Team refers to internal staff and outside consultants such as a lawyer, accountant, bookkeeper and medical biller. We recommend developing a strategic employee incentive system that addresses benefits, compensation, appreciation, and recognition. One of the most costly expenses your practice can endure is staff turnover. Want to learn more including recruiting tips? Watch our webinar “How to Recruit and Retain Top Talent in your Mental Healthcare Practice”

Get a Personalized Live Demo

We would love to show you how Valant can help your practice.

Starting Your New Practice

Chart a Path to Start a Successful Practice

Developing A Business Plan for Your Mental Health Private Practice continued…

Marketing Strategy / Generating Patient Flow:

Developing A Business Plan for Your Mental Health Private Practice

Especially for new practices, it’s important to dedicate a certain number of hours each week to marketing your private practice , generating patient flow, and supporting your practice’s capacity goals. Many practitioners find that word-of-mouth marketing and/or referrals are their most effective sources of new patients; in today’s saturated therapeutic market, however, establishing a digital presence may also be necessary.

Building A Website

With that in mind, building a website (or hiring a professional to build one for you) is the natural first step in promoting your practice online. Your website will act as the home base for all of your digital marketing efforts — meaning, every other digital marketing initiative you try should direct traffic back to your website. As the foundational piece of your marketing strategy, your website should be intuitive, attractive, and optimized for search engine visibility.

It will also be important to support your website with new, high-quality content once it is built out and launched. Starting an informative, active blog can be a fantastic way to highlight your expertise, reach engaged audiences, and support your positioning in search engine results.

Referrals & Directories

In most cases, the two most common means for finding new patients are to 1) utilize and nurture a referral network and 2) be on insurance contracts. This makes sense in practice; people trust other people to give honest referrals of a practitioner and their practice. They also want to ensure the provider is on their insurance network before moving forward.

With that in mind, you will need to develop referral sources to generate patient flow and to build the kind of practice that you want. Your referral sources will know your strengths and weaknesses and will refer accordingly.

In the online space, users often look to directories, insurance networks, and review sites to determine whether a provider is a right fit for them. Having active, complete profiles or listings on as many directories as applicable ensures you’re considered in the most relevant patient-provider searches possible. Additionally, directories and review sites act as an opportunity for current patients to leave reviews, providing invaluable feedback to support your practice’s long-term success.

A few examples of relevant, high-traffic directories you could sign up for include Google My Business , Psychology Today , GoodTherapy , or most social media platforms. Depending on the supply and demand characteristics in your area, however, being on insurance contracts and having profiles on insurance networks is sometimes all that is needed. 

Generating Patient Flow:

The two most common means for finding new patients are to utilize and nurture a referral network and to be on insurance contracts. Depending on the supply and demand characteristics in your area, being on insurance contracts is sometimes all that is needed. But, in most cases, you will need to develop referral sources to generate patient flow and to build the kind of practice that you want. Your referral sources will know your strengths and weaknesses and will refer accordingly.

Financial Model:

It is not necessary to have fancy financial projections to start and successfully operate a small psychiatric private practice, but it’s important to have an idea of what your net income will be and to understand the variables. Let’s break down the equation: net income = revenue – expenses.

Revenue Revenue = Average fee per face to face hour x hours worked It’s easy to overestimate this number by overestimating collections rates, fees paid by insurance for a unit of service, show rate, and patient flow. We recommend budgeting for 20% less than whatever you come up with in your plan, at least until you get validation from real revenue.

Expenses Expenses = Facilities + Front Office + Back Office + Insurance

A basic rule of thumb for expenses is that they represent anywhere from 15-30% of total revenue for a solo practice. If you employ staff or outside services for front office and back-office work, they tend to be divided pretty equally between the three. If you do not employ staff, then these expenses are more heavily loaded on facilities. Make no mistake, you are paying for those front office and back-office functions with your time. This is where the concept of opportunity cost applies. The cost of your time is dependent upon either the value you place on your time or the revenue you could generate by seeing patients during that time. However, opportunity cost does not explicitly appear in your financial statements.

If you would like to learn more about these financial metrics, we recommend reading our blog Financial Metrics 101

Behavioral Health Performance Indicators

20 Important KPIs for Private Practices

Private Practice Business Plan Template

Private therapy practice tips:.

  • Don’t sweat excessively about location. You will probably move within 2 years. At that point, you’ll better understand your needs. You’ll also better understand the nature of your local market and the level of competitor saturation ; especially in areas where therapy is popular, it’s important to identify your niche and find an area where you can assert yourself as the local expert, rather than offer the same expertise as competitors in your neighborhood. Modern telehealth technology also makes the location of your practice less important. By offering virtual sessions in addition to in-person visits, you can reach a larger network of patients, regardless of their proximity to your practice. Learn more about Valant’s telehealth software .
  • Networking always pays off in terms of building the type of practice you want. Start early since that is when you will have the most time.
  • Most small business owners overestimate revenue, especially during transitions. Make sure that you have other sources of cash during your ramp up including other part-time work, savings, or a line of credit.
  • Understand the opportunity cost. There are many things in life that you love and do well. If you don’t love medical billing, don’t do it. That time could be better spent elsewhere.
  • Start with a behavioral health care focused Electronic Health Record. By using an EHR focused on your specialty, you’re eliminating spend on features and functionality that is not going to be pertinent to your practice, plus gaining efficiencies in having technology workflows that are intuitive for your discipline. It’s easier to build it into the fabric of your practice from the beginning rather than switching later.

At Valant, we’re focused on providing great technology — as well as the business knowledge you need — to help your practice run smoothly and profitably. Want to learn more about Valant’s EHR and practice management suite for behavioral health?

Visit us on Facebook , Twitter , LinkedIn

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Could your patient care process be simpler A look at Valant’s EHR workflow for the busy clinician

If I’m in private practice, do I need a business plan?

…YES!

Just like any business, it’s important that you create a business plan for private practice  before you spend a dime .

Sound daunting? Don’t worry, I’ve started private practice in three different cities and have fine-tuned my process over the years. And I’m going to share it with you!

Private Practice Business Plan PDF

Why you Need a Business Plan in Private Practice

Is a business plan really necessary? Can’t you just rent an office, stick a couch in it, and be on your way with your counseling practice?

Well, you can try that, but you will likely find yourself sitting in an empty office waiting for clients to show up while your money drains from your bank account.

Think of a business plan as a treatment plan for your business. If your clinical training experience was at all like mine, then treatment planning has been drilled into your head.

Why do we create treatment plans for our clients? They act as a guide to help us serve our clients based on their specific needs. They give us a compass to guide the therapy process, though we can always modify the treatment plan to adapt to a client’s changing needs.

A business plan serves the same purpose. We need to do a bit of an assessment of ourselves and where we are situated to create a set of steps and goals for where we are headed. It sets us up for success as we use our business plan as a guiding compass.

Five Steps to Create a Business Plan

Here are five tools to help you get started in creating a business plan for private practice in psychology.

1. Do Market Research

Before you start anything else in your business plan, it’s important to know what other local therapists are out there in private practice and what they’re up to. Explore the Psychology Today Find a Therapist Directory , do some Google searches, and see who’s around as well as what they specialize in.

Market research helps you know what kind of supply there is for the product you’re selling in your business. This information informs the rest of the steps for creating a business plan.

2. Determine Your Product

You might be thinking:  um, Marie, my product is psychotherapy, duh!

It is true that your product is your counseling services, but there is so much nuance to what psychotherapy looks like in practice.

It’s important to look at your market research from step one and see how you fare amongst local therapists. Are you the only therapist in a 10-mile radius? Then maybe your product is more broad.

If you live in an area like me where you’re one of hundreds of therapists just within your zip code, you want to think about what your niche is and maybe even double- or triple- niching so that you are the only therapist delivering this specific product in your area.

Take some time to write down what your product is more specifically. Here are some sample questions to help you get the ball rolling:

  • What are examples of success stories you’d like future clients to tell?
  • How do you want clients to feel when they sit with you in your office?
  • What kind of psychotherapy services will you offer? What’s your area of specialty? What theoretical orientations do you utilize?
  • How would you like to be known in your local community? What kind of broader influence do you want to have?
  • Who is likely to refer clients to you?

If you’d like to learn more about finding your niche, you might find it helpful to watch my video about Finding Your Niche in Private Practice .

3. Get Advice from Other Therapists in Your Niche

I know this sounds completely counterintuitive. Naturally, we don’t want to go to our “competition” for advice.

Let me get this idea in your head: other therapists in your niche are not your competition, they are your friends, colleagues, consultation resources, and referral sources.

The reality is other therapists in your area of specialty are likely to be one of your primary referral sources!

There are nuanced differences amongst those of us who have similar areas of specialty. Maybe you specialize in GAD in young adults. Then therapists who specialize in GAD in teens and older adults might be indispensable resources to you. You can make referrals to each other when a potential client doesn’t quite fit within your niche, and you can consult with each other when you feel stuck.

These are the people you will be leaning on once you begin private practice, so it’s worth seeking them out before you even start.

How to Find Local Therapists

Some easy ways to find these therapists is through market research from step one, as well as through social media and networking events in your area. Lately tons of therapists have been flocking to Instagram with professional accounts, making it easy to find local therapists in your area. Give it a try! If you need some help, you might like to watch my video about How to Network with People in Private Practice .

Therapists love giving advice and helping people! So when you chat or meet up with colleagues, be sure to ask them for their best tips and advice in private practice. What worked for them? What investments totally flopped? Ask around from a few people because private practice is not a one-size-fits-all endeavor, so you might want to pick and choose what fits best for you.

This is a double-whammy tip because not only does connecting with local therapists help you with future marketing but you also don’t have to reinvent the wheel as you develop your business plan.

4. Determine how much You’re Willing to Give to Private Practice

Time and money are such precious resources, and you need both to get things started with private practice. Ask yourself how much of each of these you’re able and willing to give.

Make a plan together with your loved ones so you have the same expectations for how this will unfold. Ask questions like:

  • How much budget are you willing to give to this?
  • How much time are you willing to give?
  • Are you going to go part-time at your current job to do this or are you going to pick a day on the weekend or evenings to do it?

Determine the answers to these questions in advance and know what you’re willing to expend towards your goal. You may also want to invite trusted friends to share their concerns with you, as our friends have a way of knowing what we need to ask better than we do sometimes!

5: Create an Exit Plan

Before you start it’s important to keep the worst case scenario in mind: what if private practice doesn’t succeed?

Ack! We don’t want to think about that!

I remember when I first decided to go from part-time to full-time private practice, I didn’t have an exit plan. Full-time private practice was THE plan. My husband ended up being the voice of reason. He asked me, “When will you quit if this doesn’t start turning a profit?”

My response? “Uhhhh…I don’t know.”

So we sat down and made a plan for how long I would give this a go before bailing. We created a five month plan, complete with expense spreadsheets so we knew how much money we were willing to sink into private practice if I wasn’t profitable.

It’s not fun to think about failure, but planning for the worst is actually a reassuring measure. You can feel more confident getting started knowing you have a way out if it doesn’t work. Ask yourself questions like:

  • How long am I willing to work at private practice before I start turning a profit?
  • Is there a certain profit margin I’m expecting to achieve? When do I need to achieve that margin by before bailing?
  • Do I have a back-up plan for what I will fall back on if I end the private practice venture?

Think about these things in advance and talk them over with your loved ones. It will save you time and heartache down the road if you need it.

Creating a business plan for private practice can seem overwhelming, but I hope you find these tips make the process a bit smoother for you!

Further Resources

Are you wondering if private practice is right for you? Check out my post: Starting a Private Practice in Counseling: Is it Right for You?

I know the process of starting a private practice can seem daunting and overwhelming, even amidst the excitement that might be there. If that is you, be sure to sign up for the email list to get free information about how to start and grow your private practice. I share tools that I’ve learned the hard way about starting private practice so that hopefully it doesn’t have to be so hard for you.

Until next time, from one therapist to another: I wish you well!

Next Step: What’s the Best Website Builder for Therapists? 

Photo by  Lonely Planet  on  Unsplash

Reader Interactions

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February 26, 2022 at 2:39 pm

I resonate with the point regarding exit plan or “what to do if this endeavour isn’t turning out as expected.” I am currently working full time at an agency, and have just recently decided to start my private practise on the side, though low key, I also want my time and effort to bear some fruit. This article is a great reminder of my motive and what I need to keep in mind.

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Counseling Private Practice Business Plan Template

Written by Dave Lavinsky

counseling private practice business plan template

Counseling Practice Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their counseling private practices. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a counseling private practice business plan template step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What Is a Business Plan?

A business plan provides a snapshot of your counseling private practice as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan

If you’re looking to start a counseling private practice, or grow your existing counseling private practice, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your counseling private practice in order to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Counseling Private Practices

With regards to funding, the main sources of funding for a counseling private practice are personal savings, credit cards, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for counseling private practices.

Finish Your Business Plan Today!

How to write a business plan for a counseling private practice.

If you want to start a counseling private practice or expand your current one, you need a business plan. Below are links to each section of your counseling private practice business plan template:

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of counseling private practice you are operating and the status. For example, are you a startup, do you have a counseling private practice that you would like to grow, or are you operating a chain of counseling private practices?

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the counseling private practice industry. Discuss the type of counseling private practice you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.  

Company Analysis

In your company analysis, you will detail the type of counseling private practice you are operating.

For example, your counseling private practice might specialize in one of the following divisions:

  • Clinical psychology : this type of counseling private practice assesses, diagnoses, treats, and prevents mental disorders. Specialization within clinical psychology may focus on areas such as neuropsychology, geropsychology, child psychology, etc.
  • Industrial-organizational psychology: this type of counseling private practice specializes in applying the principles of psychology to the workplace, to assist with a range of HR issues such as employee retention or productivity.
  • Marriage and family therapy: this type of counseling private practice is licensed to diagnose and treat mental and emotional disorders within the context of marriage, couples, and family systems.
  • Social work: this type of counseling private practice includes services such as individual and group therapy, crisis intervention, and child and family counseling.

In addition to explaining the type of private practice you will operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

  • When and why did you start the business?
  • What milestones have you achieved to date? Milestones could include the number of patients served, number of cases with positive outcomes, reaching X number of clients served, etc.
  • Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the counseling private practice industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the counseling private practice industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy, particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your private practice business plan:

  • How big is the counseling private practice industry (in dollars)?
  • Is the market declining or increasing?
  • Who are the key competitors in the market?
  • Who are the key suppliers in the market?
  • What trends are affecting the industry?
  • What is the industry’s growth forecast over the next 5 – 10 years?
  • What is the relevant market size? That is, how big is the potential market for your counseling private practice ? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your counseling practice business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, schools, families, and corporations.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of private practice you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other counseling private practices.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes psychiatrists, other healthcare providers, or members of the clergy. You need to mention such competition as well.

With regards to direct competition, you want to describe the other counseling private practices with which you compete. Most likely, your direct competitors will be counseling private practices located very close to your location.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

  • What types of customers do they serve?
  • What type of counseling private practice are they?
  • What is their pricing (premium, low, etc.)?
  • What are they good at?
  • What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

  • Will you provide options for the uninsured?
  • Will you provide services that your competitors don’t offer?
  • Will you provide better customer service?
  • Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a private practice, your marketing plan should include the following:

Product : In the product section, you should reiterate the type of counseling private practice company that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, will you provide psychodynamic therapy, behavior therapy, cognitive therapy, or integrative therapy?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the services you offer and their prices.

Place : Place refers to the location of your counseling private practice company. Document your location and mention how the location will impact your success. For example, is your counseling private practice located in a busy retail district, a business district, a standalone office, etc.  Discuss how your location might be the ideal location for your customers.

Promotions : The final part of your counseling private practice marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

  • Advertising in local papers and magazines
  • Reaching out to websites
  • Social media marketing
  • Local radio advertising

Operations Plan

While the earlier sections of your therapy business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your counseling private practice, including answering calls, planning and providing therapy sessions, billing insurance and/or patients, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to book your Xth session, or when you hope to reach $X in revenue. It could also be when you expect to expand your counseling private practice to a new city.  

Management Team

To demonstrate your private practice’s ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in managing counseling private practices. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a counseling private practice or successfully running a small medical practice.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you see 5 patients per day, and/or offer group therapy sessions? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets : Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your counseling private practice, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a private practice:

  • Cost of computer software.
  • Cost of furniture and supplies
  • Payroll or salaries paid to staff
  • Business insurance
  • Taxes and permits
  • Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or a list of insurance plans you accept.  

Putting together a business plan for your therapy private practice is a worthwhile endeavor. If you follow the template above, by the time you are done, you will have an expert counseling private practice business plan; download it to PDF to show banks and investors. You will really understand the counseling private practice industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful private practice .  

Counseling Private Practice Business Plan FAQs

What is the easiest way to complete my counseling private practice business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your business plan.

What is the Goal of a Business Plan's Executive Summary?

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of private practice you are operating and the status; for example, are you a startup, do you have a private practice that you would like to grow, or are you operating a chain of private practices?

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How to Start Your Own Private Practice in Counseling & Psychology

How to start your own private practice in counseling & psychology.

Opening up your own private counseling practice is a great step to take in any mental health professional’s career. Though the steps involved may be intimidating, it gives one a great opportunity to operate on your own terms. It is your personal preference on how you go about helping people and which therapeutic techniques you choose to leverage. It’s also your own business to run as you see fit, meaning flexibility in structure and schedule.

However, though you may have a solid idea of what kind of therapeutic practice you want to open, you may have some questions on how to run a business.

How to Start Your Own Private Practice in Counseling & Psychology

1. CONSIDER WHAT IT TAKES TO RUN YOUR OWN PRACTICE

2. create a business plan, 3. establish where you will practice, 4. consider legal requirements.

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Opening a practice requires business acumen and adds a laundry list of new responsibilities related to your career and life. You must be aware of the challenges, and create a game plan for how to work through opening your practice. 

Speaking with those that have opened their own practices is a great way to get an understanding of the pros and cons. Examining the pros and cons will help you determine if it’s the correct next step in your career.  Take some time to think through your own extensive list of pros and cons.  Examining them will help you determine if it’s the correct next step in your career.

A few pros include:

  • Flexible schedule
  • Choice of clients
  • Complete autonomy – you get to run your business, your way!

A few cons Include:

  • Marketing and business acumen required; may require additional training
  • Start-up costs  (including real estate fees, additional staffing, insurance and taxes)
  • Less security 

Dr. Yotam Heineberg, Psy.D .  and clinical faculty member at Palo Alto University’s Gronowski Center, had to consider these pros and cons when he started his own private practice. Given that he launched his practice with a strong network, 6 years after earning his license, he was “surprised the first few months were not full with clients.”  

In fact, “it took a little while to fill up…I now know that part of filling up a private practice has to do with investing in online marketing. But the biggest pro is touching people’s hearts, helping as a life mission, and growing while helping others grow.”

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Just like any other business, a private practice requires a solid business plan for success. A well-thought-out business plan will serve as a guide during the creation and expansion of your practice, and help you make critical decisions in line with business goals.

  • Write a mission statement that describes your reasons for running a practice, how you plan to help clients, and who you hope to serve.
  • Make sure to include any values that are fundamental to your mission.
  • Keep the mission statement brief and easily digestible.

When it comes to financing your business, there are many aspects to consider as you craft your business plan.  Below are a few questions to ask yourself:

  • Will you fund out of pocket or seek a loan to start your business?
  • How much money do you need to make each year to keep the business going?
  • How much money do you need to expand the business?  Consider marketing costs required to expand awareness.
  • Do you have a financial buffer?
  • What are your financial goals for the first month, first year, and first 5 years?
  • Will you need to hire someone to manage your finances?
  • How much money do you need to make in order to pay off the loan in the established timeframe?

It’s helpful to enlist the help of a professional when considering financial aspects, as this is a vital part of your business plan to thoroughly think through.

Marketing Strategy

  • Think about what kind of client base you hope to serve, and how you can connect to referral sources. What are the qualities about your practice that stand out that you can leverage in a digital setting? How much money and time are you willing to invest in a digital presence?
  • Once you have an idea of who your client base is, where your key differentiators exist, and how you hope to leverage your digital presence.
  • Create a website, a  Psychology Today  profile, and social media presence to help drive traffic and raise awareness of your private counseling practice.  
  • Make your practice purpose clear, ensure resources and info about the practice are easy to find and create a clear path for clients to engage with you via readily available contact information.
  • Once you have an idea of who your client base is, know where your key differentiators exist, and how you hope to leverage your digital presence. Create a website and social media presence to drive traffic and raise awareness about your private counseling practice.
  • Referrals: Clients will come and go, so it’s important to have a strategy to continuously fill up empty appointment slots. Ensure you have a strong referral pipeline to tap into when a client moves on. Make sure you don’t take the eye off the ball when y our practice is full, as that can easily change at any time.
  • Website: Your website should be intuitively designed to reflect the digital presence of your practice. Investing effort and time to get a well-functioning and nicely designed website will pay off for years, attracting new clients and partners alike. There are many things to consider when creating a website, so it’s best to consult more information on how to create a  website before driving in.  Consider using a tool like   WordPress ,  Squarespace , or  Wix  to   build your site.
  • Psychology Today Profile :  Potential clients will use this site to search for therapists, so it is a great way to let people know about your practice. With this in mind, be sure to craft your profile for a particular type of client, describing how you can help them. Remember to demonstrate understanding, relatability, and be sure to avoid including a laundry list of qualifications or using too much jargon. Lastly, include a call to action that lets them know what to do next–should they call you? Email you? Be specific.
  • Social Media Presence: Social media should meet your customer where they are. Consider the tone you will display on Instagram, Facebook, and other popular platforms. Update often, and provide helpful information that you believe relevant to your client base. And just like your website, it’s best to do some research into a successful social media strategy before diving in.

Business Goals

  • Create a list of goals for 6 months, 1 year, and 5 years out that you can revisit and use as a reference guide for growing and maintaining your practice.
  • Make sure those goals are specific and attainable.
  • Include a mixture of short-term and long-term goals that align with where you want the business to grow.  
  • Once you’ve created a business plan, make sure you consider a way to track and monitor your finances and goals against the plan to ensure healthy business movement.

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In today’s continually changing world, you have a wide array of options when it comes to where to practice. For Dr. Yotam Heineberg, virtual therapy offers a lot of valuable flexibility, but “the magic of in-person presence cannot be matched.”

When deciding between a  physical location and a remote option, consider the following:

  • Where is it easiest to meet your client base?
  • Are there specific needs of your client base that require a physical location vs. an online option?
  • Do you plan on offering a hybrid office setting, both online and in a physical location?

If you choose to go with a physical location, the environment is everything. Creating a safe and comfortable environment is vital, but there’s no need to overspend in this area. A home office can work just as well as a nice rented space in an office building, as long as the space provides a calming environment for clients. Calming elements include:

  • A secure, confidential space
  • Cozy and inviting furniture
  • Calming colors
  • Elements of nature (plants, images of nature, etc.)
  • No loud noises or phones
  • Ease of parking might also be a factor to consider, if in a larger city setting

If considering online options, there are many online portals that can be leveraged by physicians. Healthline provides a great roundup of   online psychiatry services   for reference. There are also courses available to help prepare you for a virtual environment, including:

  • Foundations in Digital Therapy
  • Technology and Mental Health for Children & Adolescents
  • Evidence-based Internet Interventions to Reduce Health Disparities

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A private practice is a business and is therefore regulated by local and state laws. It is vital to ensure the practice is compliant with regulations, so it’s a worthwhile idea to enlist the help of both an attorney and an accountant. They can walk through requirements, and help you decide what type of business structure fits your business needs, and provides the correct type of liability protection.

Below we outline the most common business structures for private practice:

  • Limited Liability Corporation (LLC):   An LLC is the most popular business structure for a private practice in counseling. LLC’s do not require business owners to pay corporate taxes and provides reduced liability risk compared to other business structures. In an LLC, the assets and liabilities are considered separate from the practitioner.
  • S Corp:   An S corp is an elected tax status, rather than a business entity. It operates as an LLC in that the liability risks remain separate from the practitioner. However, an S-corp is less structurally flexible than an LLC.

There are many different types of insurance policies from which a private practitioner can choose. The right type of insurance coverage depends on each individual business, as insurance needs vary. However, basic insurance should cover the practice, business, and the practicing therapists.

Popular types of coverage include:

  • Personal Income Protection:  Protects from unforeseen circumstances like an injury or illness that prevents business operations.
  • Business Protection:  Protects the business owner from accidents on property and issues involving the business property.
  • Professional Protection:  Protects the practice from malpractice suits, etc.

The complexity of a small business and tax considerations often warrants the consultation of an accountant. However, the basics of what a business owner should take into consideration from a tax perspective include:

  • Separation of personal assets from business assets
  • Having a proper accounting software program (like  QuickBooks ) to keep track of assets and liabilities
  • Organized method for keeping receipts and other financial paperwork
  • Quarterly self-employment taxes

As you walk through the setup and considerations listed above, it will become clear if starting a private practice is the correct next step in your career. This list is not exhaustive but can help to paint a picture of practicality. 

Jasmine Monfared

Jasmine Monfared

Jasmine Monfared holds a post-bacc certificate in Counseling and Psychology professions from UC Berkeley Extension. She volunteers as a crisis counselor on a local hotline that serves 15+ counties in Northern California. Jasmine graduated from UC Berkeley with a sociology major and a minor in journalism. As an undergraduate, she implemented mental health curriculum in a faculty-sponsored sociology course with an emphasis on accessibility and diversity.

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The Practice of Therapy

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business models for private practice

In private practice you have to wear a “business hat”…

When starting or building a counseling private practice you not only have to wear a “therapist hat” but also have to wear a “business hat”. Because in reality, a private therapy practice is a business! Even if it is a non-profit organization, you have to know something about business models and have some basic business knowledge to make it successful.

In this article, I want to outline some basic “business models” for running a private therapy practice (not business plans; I hope to cover that later). First of all, what is a business model and how does it differ from a business plan? One definition of a business model is simply the design or plan for making money. It is how you identify where the money comes from and how it flows in the private practice. It also defines who runs the business and provides the services. A business plan differs in that it is more specific. It lays out specific financial goals and how you will reach them.

To put all this in counseling or therapy jargon:

Business model = treatment approach/model, business plan = treatment plan.

Let’s look at some examples business models for private practice as a therapist. What I will focus on is how the money “flows” or comes from in these examples which ultimately determines your salary as therapist.

Business Models

(download your free copy of this infographic), sole proprietor model.

This is essentially the simplest model and what most people tend to think of when they go into private practice as a counselor. In this model you are responsible for generating your own referrals, record keeping and paying yourself from your own business account. Clients contact you and simply pay you directly for your time. You are also responsible for paying your overhead or the cost of doing business (rent, electric, phone, advertising, and other office expenses, etc.). Your net profit (take home pay) is the money you have left after paying the bills. As mentioned already, it is the simplest way to do business.

Another, sub-category of this model would be if you decided to take third-party or insurance payments. This adds another layer of overhead in that you would have to make insurance claims or hire someone to do this for you. There are several pros and cons of accepting third-party payments. Pros would be that it does tend to increase the number of referrals you get. It also can be more convenient for clients who want to use their health insurance benefits. The cons are that you will have to settle for what the insurance companies say they will pay you (lower rates) and that extra layer of overhead I mentioned.

Co-op or Shared Practice Model

In this business model you essentially operate as a sole proprietor but with the benefit of sharing overhead costs with a partner or other therapist. Each person involved in the private practice operates independently. You would still be responsible for generating your own referrals, record keeping and paying yourself. The difference though is being able to split or share the cost of running an office with someone else that is a therapist.

Many times people that partner like this will also take the step of forming an LLC or other legal partnership, like a corporation, to protect themselves legally and have a way to handle the accounting and tax implications. It does require that you form a legal entity which can be done easily with a service like  Swyft Filings * or other attorney services. Also check with an accountant about possible tax implications in forming an LLC or other business entity. It is an extra step and expense. But do seek the advice of a professionals on this (attorney, CPA, etc.).

*In the spirit of full disclosure, this is an affiliate link which simply means we receive a commission at no extra cost to you if you use this link to purchase. Thanks in advance for using the link!

Contract Counseling Models

With this type of business model there are two sides of the equation to consider. One side of this would be the private practice owner that is “hiring” a contract counselor to provide therapy services for the practice. The other side of this would be from the perspective of the therapist that was being contracted. Usually with this model the fee contract counselor receives is either on a per case flat rate or as a “split fee”. With a “split fee” the private practice owner would give the contract counselor a percentage of the total fee collected for the practice. Typical fee splits are 60/40 or 70/30. For example, with a 60/40 split, the therapist that provides the session keeps 60% of the total fee collected and the practice keeps 40%. A flat rate is just a set per session fee the practice would pay the therapist for seeing that client at their practice regardless of what is collected from the client.

Contract Counseling “PRN” Practice Model

In this business model, the private practice is still operating as a sole proprietor or business entity, but is essentially “free lancing” or offering to provide their services as a therapist to other established practices. It may or may not be a group practice. This is often referred to as “PRN” or “as needed” work or. It might be that an established practice has a waiting list and they need to get clients in to see a counselor before the clients decide to go somewhere else. The practice would contract with a therapist to see those clients for set fee or split fee. Another example would be if a private practice therapist were to go on vacation and needed another therapist to be on-call or see clients for them while they were gone.

With the contract counseling models of private practice, the therapists you have “hired” are not employees and they will need to bill you for their services to keep the IRS happy. At the end of the year you will need to complete a 1099 form with the IRS showing what you paid them during the year. If a person is working as contract therapist, they are responsible for paying their own withholding and income taxes. If you are working as contract therapist it might be to your advantage to pay quarterly, prepaid taxes. Again, consult professionals on this!

Group Practice Models

Group practice business models can vary quite a bit. Typically, they use one of the previous mentioned shared practice or contract counseling models or a combination of them with the counselors working within the group.

Independent Group Member Model

In this sub-model of group practice, each person that is part of the group is considered in private practice on their own, but are simply using the “brand” of the group to promote their own individual practice. It might be that the group practice does all of the advertising and referral generation as part of what they provide in return for the fee split. Any number of fee arrangements could be made as part of this type of business arrangement. Usually with a group practice like this, there is one or two “owners’ of the practice and it is usually set up as a legal entity. Essentially, all of the members of the group are contracted by the practice to provide services. Some or all of the group members might own a part of the practice.

Employer Group Model

The other thing a group practice might do is simply employ therapists for a set salary or hourly rate. Unless it is a large practice, hiring therapists as employees has some disadvantages. Number one is that, as an employer, you have to provide benefits such as disability insurance and health care for those people employed by the practice. All of this adds to the overhead expense and somewhat to your liability. You also have to abide by the employment laws of your state and pay for workman’s compensation insurance. You have to track and pay withholding taxes for employees. Needless to say, as the owner of this type of private practice you will be managing employees and be responsible for much more paperwork. This, of course, affects your bottom line. Of course for therapists working for a private practice that has employed them you are technically not in their own private practice. They are an employee of that private practice.

There is not one counseling private practice business model that is necessarily better than another. It all depends on your individual needs and financial goals. For most therapists in private practice, they start as a sole proprietor and build from there. And there are some that simply start as a contract counselor for an already established practice. Regardless of how you start or grow your private practice as a counselor, educate yourself and just do it!

Meet Gordon Brewer, MEd, LMFT

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Psychology Business School

How to write a business plan for a psychology private practice: reduce overwhelm with a plan that works for you..

Do you ever feel like you want to work more “on” rather than “in” your psychology practice but you don’t know what that actually looks like? It can seem totally overwhelming when we enter the world of business because there are lots of moving parts to keep on top of alongside your clinical work and creative projects. A good business plan can act as your guiding light and help you cut through the overwhelm.

Today I am going to share the key points you need to know to create a business plan that works for you and reduces your overwhelm rather than adding to it. First we will look at the key elements of a rock solid plan. Then we will consider how you can use your plan to effectively prioritise.

The key elements of a good psychology/therapy practice business plan.

Here I am going to give you a checklist of the key elements you need to include. We already have episodes of the Business of Psychology Podcast that go deeper on each topic so I will link to those in the show notes.

Vision. Values. Mission. Why does this business exist? What do you want from it?

The legal stuff. Are you properly protected? Do you know your GDPR, insurance and professional obligations? Have you registered with HMRC? What is the legal structure that best suits your vision? If you aren’t sure we have a class dedicated to this in Psychology Business School where you can ask a specialist lawyer. You may also find our client confidence checklist a useful place to start.

Your ideal client. Who are they? What do they want and need from you? Where are there gaps in current services that you could fill? We have an episode on defining and getting to know your ideal clients here .

Your services. What do you intend to offer and when? It is a good idea to work on one “project” at a time. Once that is profitable you can add another service or product into the business. Your plan is a great place to plan out when you intend to wane on certain projects so you aren’t tempted to try and do them all at once.

Your expected costs. This can be hard when you are starting out so if you don’t know your costs yet then check out this episode/ blog post where I give a rough guide.

Your minimum fee for each service. Work this out using the formula from the pricing queen, Sally Farrant. See the blog or podcast with Sally here .

Your goals. What would success look like in 3 months, 6 months, 1 year + S years?

Your marketing plan. Your strategy will depend entirely on all of the previous sections. Here you detail which activities are going to move you towards your specific goals. In psychology business school we teach you how to use “high touch marketing/relationship building”, authority building as well as content marketing as these will help you achieve different goals in your business and are suitable for different projects. You can find episodes on high touch marketing/networking and content marketing (eg. blogs and social media) in the podcast library.

Using your business plan to reduce overwhelm in your psychology/therapy practice

Once you have your plan in place your challenge is to stick to it! You can use it to decide which opportunities to say no to and which to grab with both hands. You can use it to decide which activities are worth your time right now and which can wait until next quarter or next year.

Want more support?

If you want to go deeper and work through your business plan with me then join me for our free training. In August and September we are running free workshops to help you create a business plan that allows you to thrive and develop the fulfilling practice you deserve. Choose your date and book your space on the free training now.  

Ready to build a thriving and fulfilling practice?

Are you stuck in private practice paralysis? Beat the overwhelm, imposter syndrome and insecurity by creating a business plan that gives you confidence. This summer I’m excited to bring you our free 50-minute training so you can take your first step to a fulfilling, financially rewarding and enjoyable practice.

Whether you are looking to start your independent practice in September or you have decided it is time for a major overhaul in the way you run your existing practice. Choose your date and book your space on the free training at  psychologybusinessschool.com/webinar

Thank you for listening to this week’s episode of the Business of Psychology podcast. If you share my passion for doing more than therapy, then make sure you come over and join my free Do More Than Therapy Facebook community where you can work on getting your big ideas off the ground with like minded psychologists and therapists. I’d also love it if you could leave the show a five star review wherever you listen to your podcasts. It will help more of the people who need it to find it. See you next week for more tips and inspirational stories to help you do more than therapy.

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How to Start a Private Practice in Psychology

Last Updated: May 23, 2021 Approved

This article was co-authored by Chloe Carmichael, PhD . Chloe Carmichael, PhD is a Licensed Clinical Psychologist who runs a private practice in New York City. With over a decade of psychological consulting experience, Dr. Chloe specializes in relationship issues, stress management, self esteem, and career coaching. She has also instructed undergraduate courses at Long Island University and has served as adjunct faculty at the City University of New York. Dr. Chloe completed her PhD in Clinical Psychology at Long Island University in Brooklyn, New York and her clinical training at Lenox Hill Hospital and Kings County Hospital. She is accredited by the American Psychological Association and is the author of “Nervous Energy: Harness the Power of Your Anxiety” and “Dr. Chloe's 10 Commandments of Dating.” wikiHow marks an article as reader-approved once it receives enough positive feedback. This article received 12 testimonials and 88% of readers who voted found it helpful, earning it our reader-approved status. This article has been viewed 165,257 times.

Many clinicians are attracted to the idea of starting their own private psychology practice, but are daunted by the steps needed to build a business. This can be especially the case for those without training in business or marketing. But, with some hard work and dedication, you can succeed in starting a practice of your own.

Earning Your Credentials

Step 1 Decide which kind of psychology degree you’d like to earn.

  • If you’re interested in being a social worker or counselor, then you’ll need to get your master’s degree in one of these fields.
  • If you’re interested in being a psychologist and practicing psychotherapy or other modalities, you’ll need a Ph.D. degree (Doctor of Philosophy) or a doctor in Psy.D. (Doctor of Psychology Degree). The Psy.D.is similar to the Ph.D. except that it is tailored more towards training psychologists to be clinicians in a wide range of clinical settings rather than focusing on research.
  • If you’re most interested in being a psychiatrist and writing prescriptions for psychotropic drug therapies, then you’ll need a medical (M.D.) degree and complete a three or more year residency training program.

Step 2 Think about adding some business courses.

  • Check your local state regulations to see what kind of license you need for your type of practice.
  • Typically, social workers need two years of supervised clinical experience before they can apply for a license or enter private practice.
  • Psychologists usually need to complete an internship and have a couple of years of work experience before they can be licensed for private practice.
  • Psychiatrists typically have to graduate from an accredited medical school, complete a residency, and then pass a licensing exam before they can begin their own private practice.

Step 5 Apply for a business license.

  • There will be specific procedures for registering your business depending on where you live and what your local ordinances are. Check with your local town/city clerk’s office or your municipal zoning board for more specific information.
  • In addition to following your local procedures, you can also consider registering your business as a LLC (Limited Liability Company) or a PLLC (Professional Limited Liability Company). While individual states have different laws regarding these types of companies, registering your new practice as a LLC or a PLLC can help protect yourself and your personal assets from liability and lawsuits leveled against your professional practice. [2] X Research source This does not take the place of other types of insurance, though, and will not completely protect you from potential patient lawsuits.

Step 6 Get insurance.

Planning and Preparing

Step 1 Decide on your practice's specialty.

  • Narrow down what kind of patients you’d like to see and what kinds of conditions you would like to treat based on your field of speciality, degree type, and/or certification. This will also help you narrow down things like location and office features: if you’re planning on treating children, for example, you’ll be making different office décor choices!
  • See what other psychologists in your area offer, and find an area to focus on that does not have much competition. This can help you carve out your own, unique niche within the market. [4] X Trustworthy Source American Psychological Association Leading scientific and professional organization of licensed psychologists Go to source

Chloe Carmichael, PhD

Chloe Carmichael, PhD

Starting your own practice can give you independence and flexibility. Licensed clinical psychologist Dr. Chloe Carmichael says: "Having your own practice means you get to choose the types of clients that you want to work with, as well as the most effective way to work with those clients. You also have a lot more latitude in your own life, so you can take off when you need to, or you can limit your client list so you don't get burnt out. Having the freedom to practice more self-care in your own life can help you be a better therapist. "

Step 2 Decide on your location and building type.

  • Ideally, your office will be located near a major freeway or bus routes and be easily accessible.
  • If you’re thinking about a family practice or working with children, you might want to focus on suburban rather than inner-city locations.
  • Look for an office space that has a reception area, a good sized treatment room, and a smaller room for your office.
  • If you’re planning on seeing families, be sure to look for an office space that has meeting rooms large enough to accommodate several people at once.
  • Consider sharing space with other professionals in a business suite, or sub-leasing space from another professional. This is a great option for keeping down other overhead expenses (like utilities, office equipment, or furniture).
  • If you live in a large home that has a separate entrance you can always consider converting a room into a treatment space.

Step 3 Find a mentor.

Growing Your Business

Step 1 Create a professional looking website.

  • Your website should include a mission statement and a detailed description of your specialties.
  • Include some information about yourself and your background, too, so that clients can get to know you and see if you would be a good fit for them.
  • You should also included some details about what a typical therapy session with you looks like, what insurances you cover, and what are your typical session rates. Don’t be shy about listing your rates, and remember that your hourly rate should also include business costs and overhead.

Try to make it as easy as possible for your clients to find you and book your services. Licensed clinical psychologist Dr. Chloe Carmichael says: "When I was starting my practice, I polished my LinkedIn page, wrote 3 or 4 blogs for my website that I thought my potential clients would be looking for, and published a professional photograph of myself. I also made an easy online booking system, a really good FAQ page, and I had a professional biller from the start. I tried to put myself in the shoes of someone who might not know anything about therapy, and to think about the obstacles they might face."

Step 2 Advertise.

  • If you are a member of a professional association, such as the American Association for Marriage and Family Therapy, you can list your practice in their online directory.
  • You can also take out ads in your local Yellow Pages or newspaper.

Step 3 Build your client base.

  • Give free talks in venues such as schools or community centers; introduce yourself and your practice to those who might benefit from your specialized services.
  • Introduce yourself to other companies or professionals, such as physicians, educators, or religious leaders, who can refer clients to you. Ask them if you can leave some business cards for them to pass along to interested people.
  • Network with fellow psychologists who run successful practices but are in a different field of speciality than your own. Forge a relationship with them and ask if they would refer clients to your practice for specialized treatment.

Step 4 Continue training and developing new skills.

  • Look for advanced programs that offer specialty certifications in areas. Not only will this help you to continue to acquire new skills, but you'll also be able to network.

  • Keep an eye on professional trends. Be aware of how the profession is changing as well as public opinion and needs. If, for example, one type of therapy seems to be falling out of favor, consider shifting your practice away from this and towards what seems to be the new, in-demand and sought after type of treatment. [6] X Trustworthy Source American Psychological Association Leading scientific and professional organization of licensed psychologists Go to source
  • Diversify your practice by adding new specialists and joining forces with another psychological practitioner, or by branching out into other types of services like running workshops for companies or by serving as their consultant. [7] X Trustworthy Source American Psychological Association Leading scientific and professional organization of licensed psychologists Go to source

Step 5 Polish your professional image.

  • Put some thought into your practice's logo; ideally, it will be visually appealing, say something about you and your services, and be easy to remember.
  • Get opinions from friends and professional contacts about your print materials (business cards and letterhead) and website. You want to be sure that you’re business materials are making a good impression and showing your success.
  • Spend some time refining your office décor. Your office should feel comfortable and reflect some of your personal style. Consider making small updates every couple of years to stay fresh and current.
  • Keep your website up to date, and consider including recent patient testimonies (with their identities concealed, of course).
  • Consider increasing your web-presence and youthful, "hip" appearance by incorporating elements of social media. Tread carefully though, you don't want to look too youthful and non-professional by "tweeting" all the time.

Expert Q&A

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  • ↑ http://www.apa.org/gradpsych/2011/11/private-practice.aspx
  • ↑ http://www.realpsychpractice.com/category/starting-psychotherapy-private-practice/
  • ↑ http://www.apa.org/gradpsych/2012/11/you.aspx

About This Article

Chloe Carmichael, PhD

If you want to start your own private psychology practice, you’ll need a Ph.D. or doctor of psychology degree. Get some experience working for another practice if you haven’t already, which will help you network with patients and learn the back-end of the business. You should also consider taking a business course to help you handle your practice’s finances. Requirements vary from state to state, but you’ll generally need a vocational license, a business license, and insurance to open your practice. Unless you have a dedicated space in your home for your practice, you’ll need to find an office space that’s easily accessible for your patients. For more tips from our Psychology co-author, including how to attract clients to your new private practice, read on! Did this summary help you? Yes No

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How To Develop A Private Practice Business Plan

  • May 30, 2022
  • Becky DeGrossa

Last week, Howard Baumgarten of Smart Practice Central joined me to share his expertise with the CounselingWise community. In the webinar, he talked about the importance of having a private practice business plan for counseling, as well as what goes into creating one.

One of the things I took away from his presentation was to be successful, you need to be prepared, and you need to have a plan.

As the owner of a small business myself, I know that having a solid plan in place has been a vital aspect of CounselingWise’s growth and success. I’ve found that having a plan is what drives a business forward to achieve its goals . Without a plan, as Howard mentions, you are less successful.

During the webinar, Howard talked about the 11 different parts (or “modules”) of a business plan . Each part is equally important and pieces together an organized view of any business. Today, I am going to highlight five parts of Howard’s business plan. To learn about the other six (equally as important) parts, be sure to check out the webinar replay here .

Before we dive into the different parts of a successful business plan, I want to lead you with something to think about. During the webinar, Howard advised, “ Think about your business plan as a matter of survival in your professional life . It’s an opportunity for you to really organize yourself and appraise what is going on in your business.”

Business plan layout next to laptop.

5 Key Parts of a Successful Business Plan

1. the four c’s of your vision.

If you are familiar with the SWOT technique (a planning method use to evaluate your strengths, weaknesses, opportunities, and threats), then the 4 C’s will be something you relate to . 

Because he didn’t want to focus on a person’s weaknesses or threats, Howard viewed this planning method through a different colored lens.

The 4 C’s stand for:

  • What Are Your Capabilities? (your strengths)
  • What Are Your Challenges? (your weaknesses)
  • What Are Your Chances? (opportunities)
  • What Are Your Concerns? (threats)

This piece of the counseling business plan is key to evaluating your practice from a personal and professional level. 

Take out a pen and paper and jot down all of the above as they apply to you.  Get a piece of paper and breaking it into four columns. In each column, write down your professional and personal capabilities, challenges, chances and concerns. One thing to keep in mind—it’s okay to have the same thing in multiple categories.

By having your capabilities, challenges, chances, and concerns outlined on paper, you can better plan for the future of your practice and your personal life .

It forces you to take what’s kind of hazy and abstract in your head and makes it a tangible reality. That way then you know where you stand and how to move forward with your vision for your practice. 

2. Your Mission Statement

The next part of the private practice counseling business plan I want to highlight is your mission statement. In Howard’s presentation, he said to ask yourself… 

“What is my purpose? What was I born to do? What do I really want to do? How do I want to affect the populations I am working with? What am I empowered to do?”

By answering the above questions, and really digging down into the meat of the reason you get up every morning , you will develop a wholehearted mission statement for your practice.

But what does developing a mission statement look like in practice? 

For his therapy practice, Howard’s mission statement is, “ Build something new in order to change something old in order to grow .”

One thing to keep in mind when writing your own mission statement… 

Make sure you are writing the statement in lay terms , and not professional/clinical terms. Try to stay away from words like “depression,” “anxiety,” etc. You are writing this not only for yourself, but also for your clients.

3. Your Services

This is the who , what , when , where and why of your services as a private practitioner. 

This part of the private practice business plan is key to giving you the clarity you need in terms of the services you provide , and the services you may want to offer in the future.

  • Who? Who are you working with? Who are the populations you treat? Do you work with couples, adults, children (what age children?), teens? What kind of couples do you work with? For example: high conflict, couples about to get married, etc. Really dig deep into the “who” of your services to determine what clients you have and what clients you want.
  • What? What are the issues you want to focus on? If the “who” is couples, what type of couples issues do you want to work with? Howard’s example was that he likes to work with couples that have a high degree of conflict and are tired of fighting with each other.
  • When? When are you providing your services? When you are first starting out, as Howard mentioned, it could be Fridays and Saturday mornings. When you build your practice more, you can shift your hours more and more. Determine when you want to practice and include it in your plan.
  • Where? Where do you want to practice? Maybe you want to do a day in a doctor’s office. Maybe you want to offer therapy out in the community, or in the wilderness. Think creatively about where you want to practice. It will maximize the benefits of your services.
  • Why? For the why, you will want to see your mission statement. The why is all about your passion and purpose.
  • How? How do you treat your patients? This is all about your treatment intervention style (EFT, mind-body-connection, EMDR, etc). What are your technique leanings?

This part of the plan is powerful. It helps move you in terms of defining yourself and who you are. You will also draw from this part as your quick “this is what I do.”

As you are completing this part of your business plan, keep in mind that you will probably have three or four different sub-sections under each of these .

Answer each question for each service you offer or want to offer. Eventually, this will all be useful information that you’ll want to include on your website. 

If you’re thinking ahead and want to use this exercise to generate content for your website, check out how to write informative specialty pages .

private practice psychology business plan

4. Personal Growth

To grow professionally, it’s important to take care of yourself so you can grow personally. 

In order to have a healthy work-life balance, you will want to focus on 4 main areas :

  • Nutrition: Are you eating a healthy, well-balanced diet?
  • Sleep: Are you getting enough sleep?
  • Exercise: Are you moving your body?
  • Spirituality: Are you expressing yourself spiritually? This could look like anything, such as a religious practices, time in nature, yoga , etc.

Think of things that are important to you on a personal level and write them down. Personal growth is a key piece of your business plan.

Because if you don’t grow yourself, how can you expect to grow your private practice? It all works in concert, together. 

5. Administration

The Administration part of the private practice business plan can be hard, especially if you are used to being a one-person show. 

And  if you think you can run the show without any professional support throughout your entire career, you will be spread very thin .

As part of your counseling business plan, you need to create an administration plan to ensure you have the support you need to build a successful practice—and keep your sanity. 

Think about the people who you currently have supporting your practice professionally. Then think about the people you may want to include in your group of practice professional support.

Naturally, some people may not be ready for this, so think about this part of your private practice counseling business plan when you are ready. 

You know you’re ready when you say to yourself, “I am getting really sick and tired of doing this admin task, and I am now in a place where I can afford to hire someone to do it for me.”

By getting support, you free up emotional space so you can pursue things that drive your interests and passions . This is a vital piece to your professional growth.

Administrative support includes but is not limited to… 

  • a medical biller (if you accept insurance),
  • a bookkeeper,
  • an accountant for tax purposes,
  • a financial manager/adviser,
  • an investment banker,
  • a corporate attorney,
  • an insurance agent,
  • a commercial real estate broker (rent or buy)
  • and a virtual/actual assistant.

Each part of the counseling business plan that I discussed today is vital to a successful practice. Your business plan, however, really isn’t complete without the remaining six. To learn about all 11 parts, and to learn more from Howard about a successful business plan, watch the webinar replay here .

You can also download the Business Plan Template here .

One last tip : Don’t just write your plan and forget about it. Howard recommends going back every six or so months to revisit the plan and stick to your goals.

You can also watch my interview with Howard Baumgarten, founder of Smart Practice Central, below. 

Enjoy the replay!

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What needs to be in a psychology private practice business plan? Everything you need to think about when setting up a psychology private practice. Part One

Do more than therapy in your psychology private practice.

  If you are setting up a psychology private practice you need a business plan. And it needs to have more than therapy in it… Many of us stumble into private practice as an add on to an already busy NHS (or other public health) role. It is too easy for us to just assume that all we do is rent a room and use our existing skills. Many talented clinical psychologists, therapists and counsellors are shocked to discover that they don’t make much money from their private practice.

I was in that position a year ago. I had gone full time in my practice and was busy with clients. But I wasn’t making much money, didn’t have the flexibility I needed to fit around solo parenting my two children and most annoyingly I found myself with NO time to do the community psychology interventions I was passionate about.

I noticed I was heading for financial, creative and emotional burnout and invested in business coaching to figure out how on earth to make it right. It was the best decision I ever made and I have put the key learning points into this blog and the psychology private practice business plan template to help make sure you don’t make the same mistakes as me. If you are just starting out you might find yourself feeling resistant or “a bit icky” about some of this stuff. Don’t worry that is part of the journey. You will feel better when you are up, running and helping lots of people.

The Foundation of a Psychology Business Plan

Over the next few weeks I am going to break down what exactly needs to be in a psychology private practice business plan. This week we are laying the strong foundation you need to build a sustainable business by looking at your mission, your mindset and the structure of your business.

Mission: What do you want from your private psychology practice or project?

All too often we set off into a venture without being intentional about what we are trying to create. However you run your practice, whether full time or part time I guarantee it is going to have you working more hours than you ever did in the NHS. The good news is many of those hours won’t feel like “work” at all if you are passionate about the purpose of your practice. So don’t skip this bit if you want to feel fulfilled rather than drained by your work!

The following questions should help you figure out your personal and professional mission:

What is the change you want to create in the world?

What is the change you want to make in your life?

Write out one or two clear mission statements that sum up the impact you want to have for other people. Then write one that puts into words what your work needs to provide for you and your family.

I want to help X (insert group of people you want to help) to do X. I will use my X skills to do this.

I want to create a life that allows me to live my values. The things I value most in life are x, y and z. My business will help me to have more of these in my life by x, y , z.

My examples:

I want to help solo parents to parent confidently through hard times in life. I will use my therapy and writing skills to do this.

I want to help psychologists and therapists who want to have big impact but feel stuck and don’t know how get their projects off the ground. I will use my writing, marketing and coaching skills to do this.

I want to create a life that allows me to live my values. The things I value most in life are health, being present with my family and creating social change. My business will help me to have more of these in my life by giving me financial freedom, flexibility in my hours and the ability to reach people who find it hard to access NHS services.

Structure of the Business: Should my psychology practice or project be a Ltd company, social enterprise or sole trader?

Don’t get hung up on this! This question is mostly about what is going to happen to your “profit”.

I am not an expert in company formation (by a long way) but my research for my own business has given me a basic understanding. It seems to me that if you are a sole trader all your money (less your personal tax allowance) is taxed through self assessment so all you need is a separate bank account and rock solid records of everything you spend and receive.

In a social enterprise you pay yourself and others on the team a salary and then the profit gets reinvested into your business or other projects that align with the social change you told the government you want to make. There are a few different ways of setting these up that dictate how much freedom you have. A Ltd company usually involves paying yourself a salary and then taking a dividend if you make extra “profit” on top of that basic salary. It can be tax economical if you are making good money and most SEs and all Ltd companies have the benefit of limiting your liability so your own assets are protected if the company goes bankrupt and can’t pay its debts.

If you are setting up something big involving other people it is best to consult a lawyer to get some advice to make sure things are set up well from the beginning. In my opinion, if you are doing it on your own it is usually best to get started as a sole trader and then look at becoming a social enterprise or limited company once there is money coming in with which to pay an accountant. This will be an upcoming topic on the podcast and I will get some proper expert advice for you. For now just don’t let this stuff stop you. So long as you have the right professional indemnity insurance my advice would be to get started and figure it out later…

  Mindset: Allow yourself to be successful in your private practice

Don’t skip this! I used to think mindset work was a bit woo… It often is… But it is also completely essential. For now just be mindful and notice what comes up for you when I start asking you to think about how your business will make money and how much money you need to make. There will be ickyness and I use a lot of the tools of Acceptance and Commitment Therapy (ACT) to help me deal with it so I can keep working towards my mission. It isn’t easy and there are plenty of times I would far rather hide than show up online a put myself out there. Keep your mission at the front and centre of your mind and commit to dealing with some painful feelings in order to make it happen.

If you are new to ACT or don’t use it much in your work the key principle that is useful here is that when we are doing something that pushes us outside our comfort zone it is normal and inevitable that we will feel anxiety, stress and other unpleasant emotions. That is our mind’s way of trying to keep us safe. If however we know that we need to do this scary thing in order to live the life we want to live, including serving others in the way we want to, then we need to allow these feelings and do what matters to us anyway. There are loads of tools in ACT that can help us to do this and if you are interested in learning those DM me and I will happily send some resources your way. For now my favourite is one from Russ Hariss’ ACT Made Simple. Russ asks you to imagine the icky feeling as an object in your body, locate where it lives within your body, what shape it has, texture, temperature, whether it is moving or still. Spend some time really getting to know the object, examining its colour, weight and density. Once you have done that then try sending some soothing breaths into and around the object, imagining your body softening around it and making room for it. I find this technique very helpful when I am doing something scary, like recording a podcast for the first time.

Next week we will be drilling in to the numbers you need to understand when planning your business, starting with what you are likely to spend. These will also be topics on upcoming podcast episodes so watch this space and put a post in the “ Do More Than Therapy” Facebook Community if there is anything specific you want help with.

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    Just like any other business, a private practice requires a solid business plan for success. A well-thought-out business plan will serve as a guide during the creation and expansion of your practice, and help you make critical decisions in line with business goals. Write a mission statement that describes your reasons for running a practice ...

  14. Business Models for Counseling and Therapy Private Practices

    Contract Counseling "PRN" Practice Model. In this business model, the private practice is still operating as a sole proprietor or business entity, but is essentially "free lancing" or offering to provide their services as a therapist to other established practices. It may or may not be a group practice.

  15. Starting A Private Practice

    Starting A Private Practice Jessica Bullock, MA, LPC, LCADC, CCS CEO/ FOUNDER LIFE OPTIONS COUNSELING SERVICES LLC. ... Business Plan Your Business Plan is a live document that will continue to evolve as you and your ... Relationships Psychology Today Community Organizations Networking Events - Literature / Instagram/

  16. How to write a business plan for a psychology private practice: Reduce

    How to write a business plan for a psychology private practice: Reduce overwhelm with a plan that works for you. Do you ever feel like you want to work more "on" rather than "in" your psychology practice but you don't know what that actually looks like?

  17. What to Include in a Private Practice Business Plan

    Takeaway: In private practice, you're more than a therapist-you're also a business owner. Whether you're just starting your private practice or want to revamp it, having a solid business plan can help. In this post, we'll answer all your questions about creating a private practice business plan: what it looks like, why you should have one, and what to include.

  18. How to Start a Private Practice in Psychology (with Pictures)

    1 Decide which kind of psychology degree you'd like to earn. Depending on which kind of psychology you'd like to practice, you'll need to obtain the required schooling, degrees, and certification. If you're interested in being a social worker or counselor, then you'll need to get your master's degree in one of these fields.

  19. How To Develop A Private Practice Business Plan

    Try to stay away from words like "depression," "anxiety," etc. You are writing this not only for yourself, but also for your clients. 3. Your Services. This is the who, what, when, where and why of your services as a private practitioner. This part of the private practice business plan is key to giving you the clarity you need in terms ...

  20. Business plan for private practices

    Business plan for private practices Our therapy business plan template: Directs the action and progress through the various stages of your business Serves as a guide, accountability partner and checklist for developing, launching and running your practice

  21. What needs to be in a psychology private practice business plan

    The Foundation of a Psychology Business Plan. Over the next few weeks I am going to break down what exactly needs to be in a psychology private practice business plan. This week we are laying the strong foundation you need to build a sustainable business by looking at your mission, your mindset and the structure of your business.

  22. Are you really ready for private practice?

    Walfish and colleagues Pauline Wallin, PhD, and Lauren Dehrman, PhD, are using their consulting skills to develop an online business called The Practice Institute, which will help psychologists gain the tools to build successful private practices. Others author self-help books, create educational CDs and DVDs, conduct forensic evaluations and ...

  23. Counseling Private Practice Business Plan

    The third part of your plan is our new Starting a Private Practice SWOT Analysis. This worksheet helps you consider the Strengths, Weaknesses, Opportunities, and Threats (SWOT) that exist in your practice. We walk you through each question and will email you a PDF with your complete SWOT analysis. The fourth part of your plan is the Marketing ...