Private Practice Success Newsletter

September 2006, by Lynn Grodzki, LCSW, MCC (Master Certified Coach)
www.privatepracticesuccess.com

Economies of Scale for the Small Business Owner

During the past several months in this newsletter, I have been alerting you to a worrisome economic trend for therapists in private practice—the signs of a tighter market. At the same time, I have offered you strategies for staying profitable and viable.

If you are a therapist, healer, or coach in private practice, I want you to have a tool kit full of ideas and solutions for any current or future business challenge you might face. As you consider each solution, adapt it so that it will best fit your specific needs and situation.

This month, I introduce you to yet another business concept that can help you to stay profitable by lowering your business expenses. The concept is “economies of scale” — a way that a business can reduce its costs by spreading them out over increased production.

Here is an example: Imagine you love to bake cookies, but your recipe takes a lot of time and some expense to create. In fact, the last time you baked a dozen cookies it cost $25 for ingredients and took 3 hours of preparation and baking time.

Now imagine that you expand production, to make a lot more cookies, and find that for only $25 more, you make a hundred cookies in the same 3 hrs. How? Well, you buy flour and chocolate in bulk, you repeat the same recipe ten times and develop expertise, and you organize your cooking area so that you can be more productive. You have just achieved “economies of scale.”

But how can this concept of increased productivity and lowered expenses apply to a small service-oriented business? Let me offer you some quick coaching, so you can leverage your operating expenses and increase your output. Here are 3 ways to scale your practice:

"The value of an idea lies in the using of it." – Thomas A. Edison

1) Lower input costs: If you are baking cookies, your input costs are your ingredients. By using volume as leverage, you buy in bulk to reduce costs.

Your therapy, coaching, or consulting practice can shift this strategy a bit, and by affiliating or combining your input costs with others, you can aproximate volume and reduce expenses.

Here is what I mean: Common big-ticket expenses for a private practice include: office rent, advertising, supervision or mentoring, printing, mailing, website hosting, office equipment, phone lines, and outsourcing billing.

To leverage volume, one group of therapists decided to form an association without walls. They have separate practices in separate offices, but find that they can join together to share some of these expenses: they join together when advertising and marketing, to list all their offices under one name, and divvy up the cost of running ads in a local new-age magazine each month. They all wanted some supervision with a senior therapist to improve their skills, and buy 2 hours a month of her time, and share that expense. They coordinate their direct mail efforts so that they can use bulk mailing rates.

A psychologist contacted 4 colleagues who all needed part-time help with billing. Together, they negotiated a discounted full-time rate with a bookkeeper. She goes office to office each week, spending one day with each practice.

An acupuncturist doesn’t use her office and equipment on weekends or mornings; she sublets her space during those times, and charges an extra fee for use of her administrative equipment: computer, copier, and fax machine (which her sub-leaser is happy to pay.)

If you think cooperatively, you can find creative ways to share expenses.

"Nobody talks of entrepreneurship as survival, but that's exactly what it is and what nurtures creative thinking." - Anita Roddick

2) Increase productivity: A management consultant I coached complained of his long office hours, but when he analyzed his time carefully, he saw that he spent hours each day on the phone and at his computer, doing unbilled research for his clients. I asked him to either find a way to bill for that time, or eliminate it.

He decided to bill for it, but was worried that his clients would balk at extra charges. Together, we developed an updated explanation of his services, and research topped the list. His clients had no idea of the work and benefit that the research yielded, and with the information he provided, most were eager to have him include this new service, for the added price. He increased his profitability by 18% over the course of a year.

What do you do for clients that is not billed? How can you set boundaries on your time and activity to increase productivity? What will you say or explain to clients about the additional services you can provide, and the benefits?

"Your best teacher is your last mistake." - Ralph Nader

3) Systemize: Organization is the key to economies of scale. You need to match your business efforts to your business needs.

If you are baking hundreds cookies, you need to organize your kitchen so that it becomes a production line. If you are a therapist, coach, or consultant, your tasks need to be systemized in a similar way. Look at your office. Does it lend itself to productivity? If not, organize your space. Set up your desk so that you can do one thing at a time, and so that task naturally leads to the next, and the next.

I was bothered by the big pile of paperwork on my desk that never gets filed. I called a colleague to ask how she approached filing. Her method was simple, but smart. She kept her "to be filed" papers in a plastic box, right above the filing cabinet. One task led to the next.

Ask for help. Learn from others. Look for the easiest way possible to achieve your business goals. Find colleagues with whom you can share information, technology, support, and expertise.

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Upcoming Teleclasses

Come and continue the converstaion. Be Part of Our New Teleclasses Starting this Fall!!
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"Strong Start" for Therapists and Other Healing Professionals
Tuesdays, Sept 12 at 2:00 PM EST or
Thursday Sept 14 at 5:30 PM EST

Starting a private practice or renovating a stalled one can be daunting. It helps to have the right kind of support when you are building your practice. The right kind of support is a professional group of your peers who will celebrate with you when you succeed, commiserate (but not indulge you) when you have a tough time, help you stay consistently motivated, encourage you, and hold you accountable for your goals.

The Strong Start Teleclass Program is a twelve-hour, four-month-long progressive practice-building program that follows the first several months outlined in Lynn's best-selling workbook text: "12 Months to Your Ideal Private Practice: A Workbook", to help therapists and healing professionals take the right steps to build their ideal private practices. We meet by "bridgeline" — an easy to access conference line, that you dial just like a long-distance phone number at the given time, to be connected to everyone on the call.

For logistics, fee, and registration information go to:
www.privatepracticesuccess.com
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"The Coach as Entrepreneur" for Personal and Professional Coaches

Starts October 2006

Building a thriving coaching business is a challenge. With an estimated number of 40,000 coaches worldwide, and with the majority hanging out their coaching shingles during just the last five years, the coaching market is definitely growing. But data shows that these same coaches are finding that despite their best efforts, the business side of coaching is not as financially viable as they had initially hoped.

Whether you are a veteran coach or new to the coaching profession—this Teleclass can help promote your business success. If you have questions about what it takes to start or expand your ongoing coaching business, we will talk together to provide answers that have been tested in the marketplace. If you are at a loss as to how to attract clients, retain clients, or earn what you need, we can share strategies that will shorten your learning curve. If you love being a coach but don't yet love being in business and feel stuck or burnt-out, we can help you find an easier way to thrive in this challenging business.

This Teleclass, based on the book, "The Business and Practice of Coaching", will help you take steps in the right direction. We meet by "bridgeline" — an easy to access conference line, that you dial just like a long-distance phone number at the given time, to be connected to everyone on the call.

For logistics, fee, and registration information go to: www.privatepracticesuccess.com

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Books by Lynn Grodzki, published by WW Norton. To order, click on each book.

	The Business and Practice of Coaching By Lynn Grodzki and Wendy Allen (2005) An estimated 30,000 coaches have entered the coaching profession in the past five years, but unfortunately, the majority report they are unable to earn a living wage from their coaching services. This book shows you how, using a coaching approach to the business of coaching.
	Building Your Ideal Private Practice By Lynn Grodzki (2000) The best-selling guide to what you need to do and who you need to be in order to have a highly profitable, personally satisfying private practice. Often called the "private practice bible" this book has become a resource for tens of thousands of your colleagues.
	The New Private Practice:Therapist-Coaches Share Stories, Strategies and Advice Edited by Lynn Grodzki (2002) A groundbreaking look at the profession of coaching through the eyes of 16 successful therapist-coaches who tell you how to become a coach, what to charge, and show you how they coach their clients.
	12 Months to Your Ideal Private Practice: A Workbook By Lynn Grodzki (2003) This planned, motivational workbook will help you build the practice you desire. The workbook incorporates fresh ideas, new exercises, further skill sets and much more to give you a direct experience of being carefully coached by Lynn, month-by-month, for a full year.

More next time,

lynn@privatepracticesuccess.com
See the website for additional articles, information about individual coaching, and upcoming classes.