Setting Up and Running a Therapy Business: Frequently Asked Questions

By: James Rye
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This book answers the questions that therapists frequently ask about setting up and running a business. It allows readers to successfully make the journey from being trained in how to conduct professional therapy sessions to running a growing private practice. The material covers a range of issues including: registration with HMRC, money issues, marketing, insurance, and whether to work from home or other premises. The book addresses a number of practical questions, such as: Do I have to register with the information commission? What can I count as legitimate business expenses? What mistakes should I avoid when marketing my practice? How can I easily and cheaply accept card payments from my clients? What help can I get to manage my phone calls? How can I get a website? and, What can I do to increase my personal safety?As counselling in the twenty-first century changes, an increasing number of therapists are using technology to write and store notes, and to communicate with clients - either to arrange appointments, or to conduct them. The author acknowledges this trend, and while not being unaware of potential problems, he addresses practical issues around the use of technology and mentions several services, websites, and apps that he has found helpful in his business.The demand for counselling to help people deal with their life issues has never been greater, and seems to be increasing as public stigmas surrounding it are slowly evaporating. This book offers detailed, practical advice on how to start and run a successful business in that marketplace.

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1 Why Should I Consider Private Practice?

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Let's be honest, a lot of therapists end up in private practice almost by default rather than by enthusiastic choice. Many enter years of training with a genuine but vague notion of “wanting to help people”. And then, years later, they realise that there are very few paid counselling jobs available, and at this point, a significant number of trained counsellors effectively “disappear” and never directly use their expensively acquired skills as a means of generating income.

For those who are determined to try to earn money from their training, they now face what is for many the unwanted task of setting up and running a business. Although there are those who, right from the beginning, relish the prospect of working for themselves, I strongly suspect that they are in the minority. For most of us in private practice, the genuine relishing comes after experience and growth in confidence. However, regardless of whether we are initially reluctant or very willing business owners, there are a number of compelling reasons for considering starting a private practice.

 

2 What Qualifications, Experience, and Qualities do I Need to Start a Private Practice?

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Professional qualifications and experience

As most of you will be aware, at the time of writing “counselling” and “psychotherapy” are not yet protected titles, and anyone can claim to be a counsellor or psychotherapist (and sadly, some very unqualified people do). Similarly, there are no “rules” governing who can and who can't set up in private practice.

However, having said that, there are two things that potential practitioners would do well to consider when trying to reach a decision on the matter.

The first is the ethical code of their professional body. Whichever professional association you belong to, it will almost certainly contain a requirement that therapists work in the best interests of the client. The question for would-be private practitioners is: “Do I feel reasonably confident that my level of training and experience is sufficient for me to genuinely work in the best interests of the client?”

Many counsellors starting out may not be able to give a simple, clear answer to that question. A lot would depend on the type and number of clients they saw. Perhaps they would feel that they could do a good job if they saw a few, relatively “uncomplicated” clients (whatever that means) each week, but they would acknowledge that if they started to see a large number of clients with very “complex” needs, they would struggle to feel that they were the right people to work with them.

 

3 What Things Must I do if I Go Self-Employed?

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Register with HMRC

Within three months of starting trading, you must register with HMRC. You will be responsible for paying any tax liabilities and you will be liable for National Insurance contributions (Class 2 and Class 4). You are advised to seek professional advice from an accountant who can take note of your particular liabilities that are likely to be affected by other factors (for example, work history, business structure, turnover, other income).

Upon registration, you'll need to provide the following information:

address

National Insurance number

date of birth

telephone number

email address

the nature of your business

start date of self-employment

business address

business telephone number

your Unique Tax Reference (UTR)—only if you were within self-assessment previously

the business's UTR—if you're joining an existing partnership

if relevant, the full name and date of birth of any business partners.

 

4 What Should I Consider if Planning to Work from Home?

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For some counsellors, working from home is the last thing they would want to do. The idea of clients knowing where they live seems repugnant, unprofessional, and possibly even threatening. However, for others, it may initially seem an attractive, “easy” option. It may seem to require less effort (you don't have to go in search of suitable premises), and it may also seem less risky financially (you don't have to agree to any rental contract for a minimum period). In some ways, it is more convenient: there is no travelling involved, and if a client fails to turn up (which can happen a significant number of times), you can simply carry on with your normal daily life.

Despite any initial attractions that working from home may have, there are several important things to consider before making that choice.

Interruptions

How would you prevent (or aim to prevent) the normal interruptions to domestic life that take place in a home from disturbing your therapy sessions? What about:

 

5 What Should I Consider if Planning to Hire a Room?

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There are advantages and disadvantages to hiring a room to use to conduct your business. The advantages might include a clear separation between work and private life (including family members and the likelihood of domestic interruptions), the ability to have a room furnished for and used only for therapy, and perhaps informal support from other therapists who may use the same building. The disadvantages might include greater costs, and being tied to a long-term tenancy agreement.

I have listed below some questions that you might find it useful to find answers to if you are considering renting a room to use for therapy.

Costs?

Your room cost might be charged in a variety of ways. You might be asked to pay so much per hour of actual use. Obviously such an arrangement is likely to be to your advantage, especially when starting up. However, such an arrangement is rare. If you are fortunate enough to find such an agreement, find out whether or not you have to pay for the use of the room if your client fails to arrive. You would normally be expected to do so.

 

6 What Insurance do I Need as a Private Practitioner?

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There are several risks involved in running a private practice. What if your client feels seriously aggrieved with the therapy you have provided and decides to sue you? What if your client accidentally knocks your computer off the desk? What if you have a road accident while driving to your supervisor? Fortunately, there are insurance policies available to protect you from excessive financial risk.

Professional liability insurance

Although there is no legal requirement for you to have professional liability insurance (also known as “professional indemnity insurance”, or PI), there are two compelling reasons for taking out such a policy.

First, most professional counselling organisations require you to demonstrate that you have such insurance if you are to become one of their members. Most creditable supervisors would require you to have such insurance before agreeing to supervise your work. Most EAPs and agencies would require you to demonstrate that you have such insurance before offering you work as one of their affiliates.

 

7 How Much Should I Charge?

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The issue of how much to charge is a tricky one. There are at least six factors that are relevant to the decision-making process.

First, you need to consider what your service is worth. Think about what you are offering people. Increasingly, you are likely to have graduate and even post-graduate qualifications. You are offering people a safe place for their emotions and deepest secrets. In the longer term, you are hoping to help them bring significant changes in their lives—for example, greater acceptance of self and others, better relationships, less anxiety, more freedom from dysfunctional patterns, improved functioning at home and at work. All these changes are likely to have a life-long impact. Most people would be prepared to pay several hundreds, if not thousands, of pounds in total for such a service.

Once you have an idea of the total, the difficulty is in getting a sense of how many sessions it takes to get there, and what you might ideally charge for each session. It might be easier to think about what you think you would be worth for a day's work, and then use that to get a starting point for an hourly rate. But you shouldn't be embarrassed about putting a significant price on the skill you offer. If your work helps one man refrain from committing suicide and leaving a young family, or helps one woman stop abusing alcohol and keeps her with her partner and children, think of the financial and emotional cost that you have helped others avoid. In an ideal world, what would it be ethically reasonable for you to charge for your skill?

 

8 How Much can I Expect to Earn?

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I once knew a lady who ran an informal ironing service. Friends would drop off items of clothing to her at the start of the day and she would return them, ironed, to their homes, at the end of the afternoon. At the time, she was charging £0.35 per garment, and she felt she was earning a little “pin money”. When she had more time on her hands, she wanted to turn the service into a more formal business. We had sat down and calculated her legitimate business expenses (for example, insurance, electricity, equipment, telephone, transport, national insurance) and looked at the number of garments she could realistically expect to iron in a year. It soon became apparent that if you divided her total running costs by the number of garments she would expect to iron, she needed to charge at least £1 if she stood any chance of beginning to make a profit. She decided she could never charge £1, continued to charge £0.35, continued to pay her business running costs, and told herself that she was making a little money, even though in reality she was losing a lot. Income does not equal profit.

 

9 How can I Accept Payment?

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In one sense, the answer to this question is very obvious. Most therapists accept cash or cheques. However, cash and cheques are “old technology” and are sometimes the least convenient for clients. Businesses looking to the future, and looking to make payment as easy as possible for people, will want to seriously consider other options.

Cash

Cash payments can be immediate. However, if you charge something like £35 or £48 per session, make sure that you have a supply of change available as clients will inevitably give you four or five £10 notes.

Because, in the eyes of some, cash payments can have an air of “he or she is trying to avoid paying tax and this cash income will not be declared on tax returns”, make sure that you receipt the cash payments and record them in your accounts.

Cheque

Although I accept payment by cheque, I inwardly groan every time that I do. This is because:

 

• Cheques are expensive. I have to pay business bank charges for their deposit.

 

10 Should I Give the First Session for Free?

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Reasons for doing so

Some therapists offer clients a free first session. There are at least two possible reasons why they might do this.

First, for some, it might be done as a matter of principle. Some counsellors feel that assessment is a vital part of any therapeutic relationship and they want to spend time doing an assessment thoroughly. They feel that at this stage there has been no commitment on either side for the two parties to work together and therefore it would be wrong to take money for that.

Second, some might do it as a marketing ploy. Given that, broadly speaking, there are too many counsellors “chasing” too few clients, anything that gives a counsellor a distinctive edge is attractive. Also, because counselling isn't usually cheap, anything that reduces the overall cost of therapy is likely to appeal to some clients. Most counsellors know that clients often experience considerable stress around attending the first session. A free first session might help motivate the clients to come. Once clients have overcome the hurdle of the first session, they are likely to continue to come, and from a business perspective, that is where counsellors will get their income. For some, it is worth losing the first session fee in order to gain income from the many other sessions attended.

 

11 Should I Charge for Sessions when a Client Doesn't Turn up or Cancels with Short Notice?

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I'm afraid that the experience of many private practitioners is that clients sometimes don't turn up or don't give 24 hours’ notice of any cancellation. A rough guesstimate from looking back over my diary and from talking informally to private practitioner friends would suggest that this happens between ten and twenty per cent of the time. If you have a twenty-session week booked, you could expect at least four of those appointments not to happen.

If just one client a week fails to arrive, and if you receive no money for that slot, that represents an annual income loss of £1,920 (based on £40 session fee and a forty-eight-week working year). Regardless of the loss of profit in your pocket, if that money were to be invested in your business, it could have more than paid for your accountant, or easily enabled you to upgrade your computer system, and still left you with spare cash.

And of course, it isn't that simple. For private practitioners who work outside of their homes and hire premises, there are outgoings that have to be paid for. If the client doesn't arrive, or if the client doesn't cancel in sufficient time to enable you to fill the relevant diary slot, you will have incurred travel and possibly parking costs, as well as charges for the use of the room. You will have spent out for that hour and received no income to cover it.

 

12 What are Business Expenses, and why do I Need to Bother about them?

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Although some of the counsellors I meet when running training days on setting up in business are reluctant to face these things, it is very important both to acknowledge that running a business involves expenditure, and to know how much that expenditure is. Running a business costs money, and if you don't know how much it costs, you can never know if you are making a profit or a loss. Income does not equal profit. If your business costs more to run than you are taking in income, you are running your business at a loss. And while it may be acceptable to make a loss for a year or two in the hope of eventually making a profit, it doesn't make any sense to go on losing money in the long term.

Some counsellors are deceived into thinking that they are making a profit by the fact that they regularly collect money from clients. If you take approximately £400 a month in counselling fees, you might be tempted to think that you are making £4,800 a year profit. But if your business expenses are £420 a month (not an unreasonable amount), you are actually making an annual loss of £240.

 

13 What are your Tips for Marketing my Business? (1)

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In order to answer this question, there are, perhaps, three other questions to ask. Why? What? Where?

Why?

If you want to catch a fish, you have to go fishing.

The need to advertise may seem obvious to some, but sadly, it isn't obvious to all. I can think of many counsellors who have started up in business who are reluctant to market themselves and who never seem to get round to it with any commitment. They then wonder why they have so few clients. Once you have an established business and a good reputation, you may be able to cut back on the advertising, but when starting out it is essential that you tell others about yourself.

Perhaps some reluctance may be caused by a natural reticence about self-promotion. It may be caused by a naïve belief that people will somehow, mysteriously suddenly start coming to you. It may be down to not knowing how to start. I suspect that a big reason is a failure on the part of therapists to fully accept that they are changing gear and running a business rather than just doing therapy (“Surely all I have to worry about is being a good counsellor? I don't really have to do this commercial stuff, do I?”).

 

14 What are your Tips for Marketing my Business? (2)

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Where?

Whenever I talk about marketing with groups of counsellors, I ask them to imagine that they have recently inherited £200 from a deceased relative, and to decide how to use this money to advertise their business. I then put them into small groups and ask them how they would spend their money. In the plenary feedback, we list multiple ways of spending the inheritance. After a while, I stop them and ask this question: “If you were a potential client and were looking for a therapist, where is the first place you would look for information?” The answer they give is always unanimous and crystal clear: “The internet!” Despite the clarity of the answer, few, if any of them, ever suggest using the money to get a website. I would argue that the best place to put your marketing material is on a suitable website. (See “How can I get a website?”.)

Over the years, I have found one of the best ways of making a decision about whether or not to spend money on advertising in a particular place is to ask myself a question similar to the one above: “If I wanted a counsellor, would I look in this particular place to find out details of one?” If the answer is “No”, I know that spending money for that particular advertising space is probably going to be a waste.

 

15 What Else can I do to Help my Business Grow?

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If you consistently provide a quality, professional service, your positive reputation will spread, and your business will grow. You will start to get clients who have been recommended by former clients. And former clients themselves will possibly return with new issues.

And if you have a strong web presence, people will easily find you. EAPS, rehabilitation agencies, and local companies will recruit you as an affiliate and start to regularly send you referrals. Your turnover will steadily start to increase.

For some counsellors, especially those who have a second income, or those who are not depending on their business for their livelihoods, such slow growth may be enough. They may have moved from getting two clients a week to routinely getting six, and feel content. However, the reality for others is that they need a bigger income, and need to regularly achieve the equivalent of between fifteen and twenty-five (see “How much can I expect to earn?”).

The problem is that there are likely to be several other counsellors in your area all competing for the same clients. So, how could you offer something different to increase the likelihood of getting a bigger proportion of those clients? And how else could your business earn money? Any answer to these questions will probably involve a medium-term plan and possibly some financial investment. When thinking about your professional development needs, think of which skills you might need that could increase your income as well as what you need immediately to improve your work with clients. For example, researching and committing to undertake, at some stage, a two-year, part-time course on clinical supervision is likely to secure more income for your business as well as develop your personal skills.

 

16 What can I do to Increase my Personal Safety when Working Alone?

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A male counsellor had a first session with a new female client. He was alone and working from home in the evening. He went to the front door to greet her and guided her through the hallway to the counselling room. Before sitting down, she held out her hand to him and offered him something. He was surprised, but assumed she was keen to pay and was offering the session fee they had agreed over the telephone. In fact, what she was handing the man was his house keys which she had picked up on the way through the hallway. She looked at him rather sternly and said: “If you are going to invite strangers into your house, don't leave any keys on the sideboard by the front door!” He discovered during that session that she worked as a professional escort and had a lot of knowledge about, and experience of, how to keep safe when working with strangers at home.

It may be helpful to think of personal safety under three broad headings: initial screening, avoiding misunderstanding, and further practical steps to enhance safety.

 

17 Do I need to Give Clients a Written Contract?

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You may not feel the need to give clients a written contract. However, there are compelling reasons for doing so.

Private practitioners are isolated

Although upheld complaints against counsellors are comparatively few, private practitioners risk generating a disproportionate number of those complaints for at least three reasons.

First, because they work alone, they do not experience team support. Counsellors working as part of a team have chance to discuss decisions and benefit from the checks and balances that other professional colleagues can provide. They may take decisions to supervision, but there is no compulsion to do so, and anyway, by that time, it may be too late.

Second, counsellors who work as part of an organisation usually benefit from that organisation having tight procedures in place, especially a complaints procedure, and this can help defuse a situation and prevent something escalating into an official complaint to a professional counselling body. It helps the complaint to be considered and rectified (if necessary) at a local level.

 

18 If I Issue a Written Contract, what Might it Include?

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In broad terms, an agreement might contain information about:

 

• What counselling with you is likely to be like; what a client could expect.

• The appointments: How long do they last? What happens in them? How much do they cost? What happens if they are missed? How can they be paid for?

• Confidentiality; what it does and doesn't cover.

• Record-keeping and storage.

• The duration of the agreement.

 

I have included a full sample contract below, with my commentary. You will need to amend it according to your own preferences, needs, and understanding about what a written contract should or shouldn't contain. It is not offered as a definitive document but as a work in progress. Many counsellors will see it as far too formal and would want to modify it considerably in order to make it something they would be comfortable with. For example, you might want to shorten it and give it out to each client as a single sheet of information to discuss with them. Please see “Introducing a contract” for a discussion about raising the formal issues of the contract in the therapeutic setting.

 

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