How Do I Recession Proof My Private Practice?
There are many things you can do in order to get your private practice ready to survive a recession.
First, what are recessions?
By most definitions, a recession occurs when Gross Domestic Product (GDP) drops for two quarters in a row. So, that’s a minimum of six bad months for the economy. On average, a recession tends to last up to ten months.
Recessions are part of an economy that runs on supply and demand. Broadly speaking, when demand outpaces supply, the economy expands. When supply outpaces demand, it contracts. A recession is the contraction part of the economic cycle.
During a recession, spending decreases overall. Household budgets get tighter. For a therapy practice, that’s likely to mean fewer potential clients decide to start going to therapy. As budgets tighten, people really start to evaluate what they are spending money on, and sometimes services like mental health can be put on the chopping block for the family budget.
What as a private practice owner can I do about it?
Actually, there are quite a few things you can do as a private practice owner in order to prepare for a recession.
First, look at getting your business lean and mean. Go through your numbers and see if there are things that you really don’t need for your business. Many of our businesses have a lot of waste that we can just do away with. Maybe you are paying for some service you rarely use, or have duplication of services.
Second, get rid of any debt that you can for your business. This may or may not be an option for you, but it is worth taking a look at. Can you pay off some of that debt and just get it out of the way? Carrying a lot of debt for your business can reduce your cash flow, and cash flow is important during recessions. Also, having a lot of debt reduces your ability to access more credit just in case you may need it down the road.
Third, think about getting access to more credit. Using your credit cards during a recession to keep your business floating is a bad idea. The interest rate will really hurt the cash flow. Having access to credit can help in case you need it and keep you away from resorting to your credit cards.
Fourth, do what you can to shorten your billing cycle. I know we only have so much control over this one, but if you are one of those people that only run billing once every two weeks or once a month, doing it more often will help with cash flow.
Fith, and here is the golden goose… Diversify your business. What other services or products can you sell to help add to the overall bottom line? Some examples may be:
Online course
Ebooks, self-published or written for a publisher
Start a Group session instead of individual sessions
Workshops for your local community
Sixth, Do some serious marketing! Marketing is very important, it is the only way your ideal clients know you are there. If things are going to get tight you want to broaden your reach. I know this one seems tough because marketing takes time and money, but you really need to develop a marketing plan that is going to engage your audience.
Seventh, Learn the art of the pivot. Pivoting is another very important business owner skill. If something is not working, move on and try something else. Don’t get so stuck on something that is draining your time and money.
Eighth, plug into a community of like minded business owners that can help share ideas and concepts. We have a great community of mental health practice owners and others who serve the community in our Facebook group that can really be a sounding board for you. People will figure out things that are working for them and you will want access to those ideas.
Join our community today https://www.facebook.com/groups/theconnectedprivatepractice
Schedule a consult with us to get your numbers and your marketing on point!