Don’t Forget to Pay Yourself and Other Money Planning Strategies: An interview with Carla Titus

Curt and Katie interview Carla Titus, Fractional CFO about what therapists get wrong when budgeting for their private practice. We explore financial strategies to maintain a viable business as well as how you can grow your business responsibly. We talk about making sure to pay yourself first, then set up a rainy-day fund, and follow that with saving additional extra funds for hiring or new services before you scale.    

Transcripts for this episode will be available at mtsgpodcast.com!

In this podcast episode, we explore what therapists need to know about financial planning for their business

Curt and Katie talk with Carla Titus about financially planning for your business. We look at common mistakes as well as how you can grow while still paying yourself.  

 What does financial planning look like for a therapy practice?

·      Managing cash flow

·      Understanding the Return on Investment for new ventures

·      Running the numbers on costs and revenue, the gross margin

·      Calculating the profitability of adding clinicians or trying new programs

·      Working to get a total profit margin of 10-20%

·      Creating a reserve fund and saving profit to reinvest, when needed

Common Mistakes therapists make when financially planning for their practice

·      Not paying attention to their expenses

·      Not tracking cash flow (i.e., not getting billables timely and having expenses that are due before you have the money on hand)

·      Therapists often avoid looking at numbers

·      Scaling before you have another reserve of money to fund it (2-3 payroll runs for a new employee for example)

What should therapists do before hiring a clinician into their private practice?

·      Save money from profit to reinvest into the business

·      Making sure you have your rainy-day fund prior to adding additional funds to float a new person as they get up to speed

·      Make sure you’re able to pay yourself while bringing on the new hire

·      Order of priority: pay yourself, save for a rainy-day, then save for scaling

How can a therapist manage their “money,” even when they are just starting out?

·      If you’re taking out a business loan or grant, have a plan for how you’re going to use that money

·      Focus on revenue generating ideas to be able to get money and/or pay back loans

·      Expenses should also have a high return on investment for the business longevity and the bottom line

·      Try to avoid shiny object syndrome

·      Know the expectation of the outcome for the money you are spending (for example on marketing)

·      Evaluate outcomes and course correct when needed

·      Beware the sunk cost fallacy

Stay in Touch with Curt, Katie, and the whole Therapy Reimagined #TherapyMovement:

Our Linktree: https://linktr.ee/therapyreimagined

Modern Therapist’s Survival Guide Creative Credits:

Voice Over by DW McCann https://www.facebook.com/McCannDW/

Music by Crystal Grooms Mangano https://groomsymusic.com/