Entering the business world, it is sometimes really hard to find a private practice office.
Recently my Traverse City counseling practice outgrew my office and we had to find a new location for the private practice.
I was renting an office, a single office unit. We had four clinicians using the space. We used Google Calendar for scheduling, but we could not see one another’s client’s, just when we were using the space. Here’s how we highly utilized that space in the private practice:
- Monday: Morning Tarah and Trisha could use it. After 4:30 it was mine, unless they asked.
- Tuesday: Morning Tarah and Trisha could use it. After 4:30 it was mine, unless they asked.
- Wednesday: I had it from 12:00-12:45, Tarah had that evening.
- Thursday: I had it from 12:00-12:45, Steve had that evening.
- Friday: free for anyone
- Saturday: free for anyone
Depending on the week, we’d have 30 or so sessions. However, evening sessions were always the most popular. As a result, I looked at how best to grow. Even though we were highly utilizing the space, it was time to find something new.
Determine your ideal rent structure
If you are starting a private practice, the best thing to do to limit your liability is to:
- Rent a space from another private practice on days they don’t use it.
- Rent by the hour: Pay by the hour, for example: $20 per 60 minutes, So if in a month you saw 10 people x $20 = $200 rent
- Rent as a percent: Pay as a percent of what you bring in, for example: 20% of what you gross. If you charge $100 per session, you’d owe $20 per session. So if in a month you saw 10 people x $100 = $1,000 x 20% = $200 rent
- Pay by the day: Rent an office every Saturday morning or Wednesday evening for a specific amount per month. Make sure that the rent is close to 20% of your gross income
Ready to rent your own private practice
At some point, it will make more sense for you to rent your own space for a private practice. Maybe you are adding 1099s to your private practice or you are looking to expand. Before you look for a place, determine some things first:
Private practice square footage
When you determine the square footage, it’s hard to know what to look for. To give you an idea, our office is 1,002 square feet. This is a four office suite with a lobby. Each office is a great size. So, the lobby is a little bigger than other offices, plus there is a hallway. A good rule of thumb is 200 square feet per office and 200 square feet for a lobby. So if you want a 2 office suite, look for 550-650 square feet.
Private Practice Location
A private practice location is one of the biggest determining factors as to how much you can charge over the long term. You don’t need to have a top floor corner office (even though I do) to grow. For years we had an office that was a great first floor office. However, over the long-term, your image will be built on several things. Location is one of them. Imagine if you could have a mechanic that charged the same as another, except that one had a view of the water and gave you free fancy coffee and the other was in a shady part of town. Where would you go?
Private practice cost per square foot
The cost per square foot is really dependent on your town. Also, this can fluctuate based on where the rental is a triple net lease, also known as a NNN lease. This means that on top of your rent you also have to pay: property expenses, insurance, and maintenance.
How to find a private practice location
There are a few ways to find a private practice location.
- Work directly with a realtor
- Work with a few realtors
- Do it on your own
Let’s talk about each of these options:
Having one realtor
In this situation, you have a realtor schedule all of the office locations that meet your specifications. The idea is that you have this person do the leg work for you. In exchange, you exclusively use them. The landlord usually then gives them at least one month of rent as commission. This can save a bunch of time.
Work with a few realtors
In this situation, you call the realtors that are listed on places that you are interested. Drive around in the area you want a private practice office and then call the realtors. This can take more time, but you then only visit places that you know you want to visit. Each realtor might then show you additional property. Just make sure they know that you are not working exclusively with them, so they don’t put in a ton of work.
Don’t work with a realtor
In this situation, you call places that you are interested in to inquire if they have space. This is a highly focused way to look, but can also be frustrating if your dream locations are out of your price range or don’t have openings. Look for buildings you like and call the landlord. Despite working with a few realtors, this was actually how I found my most recent place.
What are the next steps in renting a private practice?
I go in depth about triple net leasing, but as a rule of thumb, I don’t recommend it. Here are some alternatives.
Ask for a triple net limit
Even before you discuss this you have to know what is a triple net lease? Ask for a clear bottom line or upper limit. You may have to pay a little bit more or have a longer lease, but you’ll have a specific money amount locked in. Since prices go up over time, longer leases will actually guarantee that the price does not go up.
Ask to pay a percentage
It is not unreal to ask to pay a percentage of your income. Especially in areas with loads of property, you can negotiate to pay a percent of your income. Often a landlord then wants you to be flexible. If they find a full-paying tenant you may have to move out.
Lease from another counselor
Maybe after all this, the bottom line of having the risk of your own place is too much. Think about it, if a counselor sees 20 clients per week in private practice that leaves a tons of hours left over. Imagine all the private practice session opportunities: Every Monday through Friday from 7:00 am-8:00 pm, that’s 13 hours per day. Broken into 45 minute sessions this is 17 sessions!
Always have an attorney review the lease
My attorney saved me thousands of dollars by helping to negotiate a clear bottom line every month. Also, I have the peace of mind that someone that knows what they are doing is ensuring I’m not getting screwed or sued!
Congrats on this next step, let me know if I can help! Also, if you aren’t sure what phone system or website building software to use, check out this post about Starting a Private Practice.
Joseph R. Sanok, MA, LLP, LPC, NCC
Joe Sanok is a private practice business consultant and counselor that helps small businesses and counselors in private practice to increase revenue and have more fun! He helps owners with website design, vision, growth, and using their time to create income through being a private practice consultant.
Joe was frustrated with his lack of business and marketing skills when he left graduate school. He loved helping people through counseling, but felt that often people couldn’t find him. Over the past few years he has grown his skills, income, and ability to lead others, while still maintaining an active private practice in Traverse City, MI.
Photo by Steve Davidson