Business Basics: Stages of a Private Practice

In business, this is called the five stages of a business life cycle.

1. Stage 1: Startup/Launch

   • Risky at this stage because you’re learning how to run a business and if your services are needed

     • But of course, mental health services are needed in this moment in time in 2022

     • The risk is really the therapist figuring out the basics of running a business (having a business mindset)

   • Common worries

     • Can I make enough money to break even?

     • Will I be able to pay my bills?

     • What if I fail?

   • Marketing strategy plan and action

     • Finding out what works for you, your business, and your personality

   • Revenue is low starting out because no one knows about you (yet)

   • Usually just one person business 

   • Goal is to survive 

2. Stage 2: Growth

   • Practice is successful

   • Generating enough money for a profit beyond breaking even

   • You can pay your rent, bills, health insurance, and fund retirement fund

   • Marketing is paying off; more clients know who you are because more of your colleagues know who you are

3. Stage 3: Maturity

   • Profit peaks and stalls 

   • You have a full caseload

   • Marketing is working

     • More website traffic

     • More colleague referrals

     • More client referrals

     • People know who you are

4. Stage 4: Transition

   • Considering expanding beyond one-on-one therapy or scaling to a group practice 

   • Considering other business ventures outside of therapy (e.g. writing a book, teaching, supervising)

5. Stage 5: Succession/Decline 

   • You don’t want to own a practice anymore for a variety of reasons

     • Segueing into another field/career

     • You miss working in standard 9-5 job (the stability, benefits, community)

     • Your life changes (e.g. pregnancy, marriage, divorce, separation, death, illness)

   • You want to sell your group practice

   • You want to retire