Do you know who makes the most money in your business? What is the ROI on your marketing efforts? When looking at exactly how many hours you work per week, what would that bring your hourly rate to?
In this podcast episode, Joe Sanok speaks about the five numbers you have to know in private practice.
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In This Podcast
In this podcast episode, Joe Sanok speaks about the numbers you need to know in private practice so that you can have accurate information of what is happening in your practice, where you need to cut back and what you need to add.
1. Money per clinician
Who is bringing in the most money? Also, look at what the average is per client and sessions per clinicians.
2. Percentage of time that each office is occupied
How many hours per week are you using your office? Also look at no-shows.
3. Cost per client
What are your operational expenses for an average month, taxes
If you’re putting money into ads or billboards, you need to be able to track the ROI and see how much business it has brought in. Also, look at your costs per intake.
5. How many hours do you work per week?
If you look at your working week, how many actual hours are you putting in? This includes checking emails and texts so that you can determine what your hourly rate is based on that.
BONUS: What keywords are you ranking for?
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Meet Joe Sanok
Joe Sanok helps counselors to create thriving practices that are the envy of other counselors. He has helped counselors to grow their businesses by 50-500% and is proud of all the private practice owners that are growing their income, influence, and impact on the world. Click here to explore consulting with Joe.
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This is The Practice of the Practice podcast with Joe Sanok, session number 389.
I’m Joe Sanok your host and welcome to the Practice of the Practice podcast. I am so glad that you’re here. If you missed it at the beginning, Therapy Notes is our sponsor, use promo code ‘Joe’ to get two months for free. They’re awesome. And we keep hearing from people that are using them just how much they liked them. And if you haven’t signed up now is the final time to sign up for Killin’It Camp. Killin’It Camp is the private practice conference – it’s all-inclusive, and the regular price tickets go up in price after the 19th of August. And so now is the time to get your regular price ticket. It’s 750 bucks, which includes all of your housing, all of your food, the entire conference. We have over 100 people already registered and we know that we’re going to get quite a few more. Our goal is to hit 200 this first year. And you know, with awesome sponsors of the conference, like Therapy Notes, Practikat, and Brighter Vision, we are so excited to bring you an amazing conference, it’s going to be so cool. We have some really, really awesome things planned. It’s going to help you know where to spend your time, how to spend your time on the things that matter and really, really grow at the level you want to grow. For some people that’s ‘I just want to leave my full-time job, if I could leave my full-time job that would be awesome.’ For other people it’s ‘Boy, I really want to scale this year’ and we’re going to help you grow and scale really quickly. And it’s going to be awesome, I can’t wait. I just have all these ideas I want to share with you about the conference and I can’t because you know part of them are going to be a surprise, some of them aren’t. But you just got to sign up over to www.killinitcamp.com.
Today, we’re going to go over the five numbers that you have to know, no matter what phase of private practice you’re in, and I’m actually going to throw in a bonus number, I thought of a sixth one that I just wrote down. And so, these are numbers that to me are so essential to organizing your growth, that if you don’t do them, I just know that you are not going to grow as fast as if you know these numbers. A lot of times people talk about how they have this creative side, but also those numbers side and I want you to develop that number side. Math doesn’t have to be scary; it gives you such good information. And as we look at technology and the numbers, it’s going to allow you to be more creative. So if you are more on that creative side and you say ‘I don’t want to know the numbers’, that kind of ostrich head in the sand approach, you’re just not going to grow as quickly as if you know these numbers and notice a dip mean. You want to know if there’s a dip quickly so that you can adjust and change.
Let’s start with number one. Number one, is the just money per clinician – just straight up who’s bringing in the most money? Is it you, is it one of your 1099’s, is it a W2? Who’s bringing in the most money? And lets on average have an idea of not just how much they’re bringing in per month, but also what’s their average per client. Do they have a sliding fee or if they’re on insurance, does one person mostly attract private pay people, and maybe their number’s $120. Whereas someone else is at $89. What’s the difference there, we can then ask different questions if we notice those things, then if we just didn’t even know who was bringing in money. So, I imagine if I had someone who was attracting a lot more private pay people, in a staff meeting I might want to say ‘Hey, would you present on why do you think that is? Or what are the things that you do?’
You know, I actually just thought of another bonus one, that would be sessions per clinician. So, the average sessions before discharge, so if one person seems to see people twice, and another person sees them 15 times or seems to see them indefinitely, what’s the difference there? That’s another number, we’ll just throw in as a bonus underneath the knowing the numbers of the per clinician.
Second, I want you to look at the percentage of time that each office is occupied. So if you have a single office, and maybe you’ve got a 1099, or W2, and they’re going after hours, on average, if you do the math, there’s about 70 client hours that can happen per week, per office, and that’s doing it on the hour, and giving yourself a little bit of wiggle room throughout a week. If you’re at 35, that means you’re at 50% occupancy. If you are a hotel, that’d be really bad. If you’re a car, cars actually spend way more time just sitting around than actually being used, then it’d be really good. So, we want to know that so that you can say ‘Okay, yeah, I’m spending my money on this full-time office. I use it 20 hours a week. And you know, that’s a pretty low occupancy, maybe I should sell, lease it maybe I should add clinicians, maybe I shouldn’t.’ Being able to look at ‘Well, I always leave on Thursdays at three, so Thursday nights, Friday, Saturday, Sunday and Mondays I’m never in until noon, why am I not optimizing the space for that. That’s another number that I want you to look at, that I want you to really understand and think through.
Next, you want to look at the cost per client. In a sense, you want to be able to look at, if you have a client, and they bring in, say, $100, of that $100, how much goes to expenses. How much goes to your virtual assistant that’s answering the phone, your Therapy Notes, your Practice Solutions for billing, how much goes as a percentage to your accountant? Looking at what are your operating expenses for an average month, between rent and everything. Let me actually get out my calculator and we’ll do some actual numbers here. Let’s say 1500 bucks a month you’re spending on your practice, so 1500 dollars per month. If you see 20 people a week, so around 80. So, we’re going to divide that by 80 sessions. That means you’re spending $18.75 cents on your operating expenses per client. If your client numbers go up, then that number goes down. Maybe your expenses go down, then that number goes down. You want to be able to look at that $100 that comes in and say ‘Yip, $18.75 just goes to the overhead.’ We want to be able to have that percentage; we also want to look at how much is going towards taxes. For every $100 that comes in, you’re able to say ‘Yeah, I know 50% of that is going to operations and taxes.’ Rather than just not having any idea. You also want to do this if you have a 1099’s or W2’s. Say they’re getting 50% of what comes in… If you know these numbers for just the basic operating expenses, if they see an average of 15 clients per week, I know it’s going to be X number of dollars. Then you can look at ‘Wow, okay, I’m only taking 35% here, I’m not sure if I can even make a profit.’ Versus ‘Maybe I need to have some people at 50% that are coming in, based on experience or based on the client load. There are lots of different models that you can use for that. You want to know those numbers that really help you to be able to say ‘Am I making money here? Is this actually working to benefit me or not?’ Alright, so cost per client, thinking of it as a piece of the pie.
Number four, we want to look at the ROI on things – return on investment. You’re probably putting money into Google ads, Facebook ads, maybe in your local newspaper, local magazines or local radio, you might put some money in and test that out. Maybe you get a billboard, any of these things – you want to be able to track the ROI, the return on investment. If you buy a billboard for $5,000 for the month, can you track down more than $5,000 worth of business to justify that spend? Now say that spend, maybe that $5,000 brings in 6000 dollars in business. Well, that’s a 1.2-1 ratio of your return on investment, because you brought in just 20% more. It’s not really a 1-2, you barely broke even. Whereas maybe you spend $75 on a Facebook ad, and you bring in 3 new clients, and you know they’re each at $100, each coming 8 times, that’s a huge return on investment. So, we want to be doing that kind of AB testing, of testing out some different things to see what works and then look at the ROI on it. Is it a 1-5, is it 1-10?
And that leads us into that cost per intake, which is part of that. We want to be able to say for every new intake, we know it cost us this much just to get that person through the door for an intake. So, if we add up all of our marketing budget, we add up all of our website budget, if we look at hiring people to help with SEO… We say okay, this month between all of our marketing, we spent $1000. And how many clients did we get in – so four or maybe 16 for the month. So that $1000, divide that by 16. Our new client cost is $62.50 cents, okay? Well, we know that they’re going to come five or six times on average, we know that they’re going to spend X number of dollars. All these numbers then start to work together to say, well, is this working? Is this going to keep working, is it going to continue to help us. We want to be able to look at our marketing, is it working? And what’s the ROI on that marketing?
Number five, look at how many hours you work in a week… We often talk about this on the podcast, about defining your lifestyle first, and then from there deciding your business. So, keeping track of just how many hours you work… If you’re off on a Monday, are you checking email? Count that! How often are you getting texts after hours from your assistant? How many times are you putting out fires on a Friday or Saturday? When do emergency calls come? If I looked at your week, how many actual hours are you working, because then we can look at your actual hourly. And for a lot of owners, it doesn’t make sense to be an owner, you might as well just do counseling. Because if you’re doing 15 sessions a week, and then you’re on top of that doing 10 hours working on the business. But in those 15 sessions, you’re making $100 an hour, but those 10 hours, you’re only making $30 an hour, well yeah it’s scalable, but at a certain point, you need to say ‘Well, why don’t I do 25 sessions a week, it’s way less risk. Why is this group practice not really working for me?’ And you either need to get some help, some coaching, mastermind groups or say maybe I should just go back to being a solopreneur.
And so, knowing those numbers helps you then make different decisions. I want to give you a bonus one. Also, a number that you should look at is what keywords you’re ranking for? Are you ranking number one, number five, number 10 for specific keywords and use incognito mode so that it’s not pulling from your own personal history. Otherwise, you’ll be number one all the time. I want to know what keywords you’re ranking for. I want to know how you’re doing and what pages you’re on. So, let’s go through these numbers that I think are essential again:
First, the money per clinician.
Second, percentage occupancy and that would include no shows, I don’t think I said that. But you want to include no shows. How many of those actual hours are being filled with counseling sessions versus people just being in their office with an average of 70 sessions per week being available.
Third, your cost per client. If they were a PI figure, what percent is going to expenses, what percent is going to taxes? And what percent is going to profit?
Fourth, we want to look at the ROI. Is it 5-1, 2-1? What’s your cost per intake within that when you look at your marketing budget?
Five, looking at the hours you worked per week. Really just that cut and dry how many hours did you actually work? What would we break down your hourly to be based on that?
And then that bonus, what are keywords you’re ranking for?
I hope you’re enjoying these extra podcasts we’ve been doing, we’ve been doing some quick hit ones, some solo shows, we’re going to be getting back to doing some interviews soon. But I thought it was important to go back to some of these basics because I get these questions. And I don’t always take the time to really dive into them. And I want to make sure that we can go back to the basics of starting, growing and scaling a practice and making sure that you really understand what you need to be doing.
We want to thank Therapy Notes, they have been an amazing sponsor: www.therapynotes.com use promo code ‘Joe’ and you’re going to get two months for free. Also, we have our Killin’It Camp tickets. Those are the tickets for the all-inclusive private practice conference, we’ve sold over 100 tickets already. It’s going to be a dynamic conference where you’re going to walk away with things actually done. We’re coaching the speakers to guide you through a process where it’s experiential, where you get things done, you’re able to really work on stuff while you’re there and get to know some amazing lifelong friends. So if you want to come out to this first Practice of the Practice, really large conference we’ve put on, we’ve done smaller ones, we’ve done retreats, we’ve done things like The Most Awesome conference or we’ve done a Brew Your Practice and Slow Down School…. They were all aimed at those higher-end clients. This is for people starting and growing their practice that are headed towards that scaling. We would love to have you there it’s over at www.killinitcamp.com Thanks so much for letting me into your ears and into your brain. Have an amazing day and we’ll talk to you soon.
This podcast is designed to provide accurate authoritative information in regard to the subject matter covered. It’s given with the understanding that neither the hosts, the publisher or the guests are entering legal, accounting, clinical or other professional information. If you need a professional you should find one. Thanks to the band Silence Is Sexy for your intro music. We love it.