Do You Have a Hobby or a Small Business?

by Joe Bavonese, Ph.D., Uncommon Practices

When I first started my private practice part-time in 1992, I was excited when I got my first few clients and saw the potential for doing my clinical work in a more authentic way than I could at the clinic I was working at. I also saw the potential for making some decent money (though at that time, before I studied business and marketing concepts, I had no idea just how much I could make). I started with three clients, a shared office and some really cheap furniture.

And I continued that way for a while, picking up clients here and there from people I knew. It was easy and fun, and since it was part-time, I really didn't worry about how well it was working. A year later, though, I decided to take the plunge and go full-time into private practice now. Freeing up extra time in my schedule helped me increase my caseload, and within six months I had a few weeks where I saw over 20 clients in a week. And then I'd have five cancellations and my client count would be closer to 10. When things went well and the money and referrals flowed, I was ecstatic. On those weeks, I was also more likely to get complacent and just assume things would continue this way. A colleague and I even joked that on weeks when we had more clients, we were "good therapists" that week, even though we knew that the sheer number of sessions in a week actually had little to do with our clinical skill.

As I look back now, those days were like a roller coaster. It would go up and down, feast or famine, and I couldn't seem to get any steady consistency to it. I recalled what my friends who were in practice told me: this is just the way it was: you'd have good days, good weeks, good months, and even good quarters, but you'd also have bad ones. You had to roll with the punches, get used to varying cash flow, save up when the going was good for those inevitable slow times.

Well in retrospect, I was dead wrong. What I now can see clearly is that the reason I was on a roller coaster was that I was treating my private practice like a fun, lucrative hobby. Now I treat my practice like a small business, and that has made all the difference in growing my practice from a small, up-and-down one person operation to a steady group practice with ten therapists. But it was only after I studied business principles that I realized the difference. Let's look at the difference in these two mindsets.

A Lucrative Hobby

A lucrative hobby is characterized by these qualities:

  • you begin doing it because it's relatively fun, easy, fulfilling (and possibly profitable)

  • you attribute much of your success to internal factors, such as your excellent skills; or you engage in fantasy or magical thinking when things are going well (e.g. I have good karma; I'm a good person; I do affirmations; people know how good I am)

  • you attribute your lack of success to external factors outside of your control (managed care, the economy, changing philosophies of treatment, etc.)

  • you don't really have a specific plan for where you want your hobby to go to; you're content to just take it as it comes. Of course you hope it continues to grow, but beyond a certain point you're not sure how to increase the likelihood of that happening so you take a passive approach and hope for the best

  • though you have a general sense of times when things seem to go well or not, you don't systematically keep track of how you're doing in your hobby (e.g. you don't know exactly how many clients you see in a month or a year; you don't exactly know where they come from; and don't know how much you spend in running the practice)

  • you tend to think about short-term results when you think about making some changes in what you do (e.g. I think I'll do that lecture I was asked to do and see if anyone from that becomes a client)

  • any further training you undertake is primarily for the purpose of learning how to perform your hobby better (e.g. more training in a clinical area)

A Small Business

A small business is characterized by these qualities:

  • you begin doing it because you have a clear vision of what your service is; what benefits it can provide for people; and what personal lifestyle concerns of yours it has the potential to address.
     

  • you attribute your success or failure to a combination of your skill in providing your service as well as your skill as a business professional. You take responsibility for whatever happens, regardless of external factors.
     

  • you engage in regular, systematic business planning in every phase of your business: you chart a path of future growth based on a realistic appraisal of your business potentials. You realize that he who fails to plan, plans to fail.
     

  • you systematically track your results with a number of measures of how your business is doing; what the Return on Investment is for each service you provide; where each referral comes from, etc. All of this helps you to predict with great accuracy and consistency how your business will perform in the future, and alerts you quickly when something is breaking down in your referral stream.
     

  • you tend to think about long-term results and consequences when you think about the future of your business. You realize that you need to understand longer-term trends that will affect your business, for better or worse, for years to come.
     

  • by realizing the enormous upside potential of optimizing your business, you continually take business and marketing trainings to increase your knowledge of business practices. You also stay up to date in the latest trends in technology to make running your business as efficient as possible.

Which Do You Have?

 

By looking at the above comparisons, you can begin to think about whether you have been viewing your practice more as a hobby or a small business. If you do have a hobby, I would encourage you to start to develop a small business mindset. If you already have a small business mindset, I would encourage you to further deepen and refine it. Your future income and survival as a private practitioner depends on this.


The benefit of a mature small business mindset is that you gain a tremendous amount of predictability and control of your practice. Instead of wishing or hoping, or being pleasantly surprised or sadly disappointed, you have a much greater sense of control of your hours, your income and your clientele. By virtue of your business knowledge and application of sound business principles, you are much better prepared to withstand any unusual circumstances in the marketplace or in the world. My practice was successful before the Internet was a common part of life, and now that the Internet has become so ubiquitous, I've been able to apply my business knowledge - as well as studying Internet marketing to add to that knowledge - to take full advantage of the opportunities it presents. We never stop learning how to be better clinicians; we should also never stop learning how to be better businesspeople.
 

 

ABOUT AUTHOR: Joe is a Licensed Psychologist and Co-Founder and Co-Director of the Relationship Institute of Royal Oak, Michigan. Joe has a Ph.D. in Clinical Psychology from the California Institute of Integral Studies. He has worked as a Research Psychologist and Consultant for General Motors and was the Clinical Director of Outpatient Mental Health and Substance Abuse Services for Medical Center Psychiatric Associates in Warren, Michigan. He has worked as an Adjunct Professor for the Graduate College of the Union Institute, a Field Faculty Advisor for the Graduate Program at Norwich University and is a member of the American Psychological Association. read more...