Perhaps you are fresh out of graduate school and have had a taste of agency life during field experiences or internships. Or maybe youve been working in an agency or a hospital for a while now. Private practice beckons. No staff meetings, less paperwork, more money, and the freedom to work with clients you choose to see. Your thoughts regularly give way to fantasies of the ideal practice.

Or maybe you are already in private practice and the dream isnt living up to the reality. You dont have enough clients. Your schedule is out of control. Managing insurance forms (or paying someone else to manage them) is a continual challenge. Many of your clients owe you money, and you feel awkward about collecting. Managed care companies are calling, requesting a site visit. This isnt at all what you thought you were getting into when you opened your office.

Or maybe you already have a private practice that is doing just fine, thank you. So far youve been able to do the work you love with personal integrity and sufficient financial reward. But you are worried about maintaining your success in the face of increasing pressures from multiple sources. You want to be sure that you have the information and support you need to maintain a work life and lifestyle that you relish.

The dream of a successful private practice doesnt have to be only a dream. Many thousands of therapists are seeing many thousands of clients in private practice settings every day. Most are doing so in ways that they personally define as successful. Whats their secret? Most have consciously or intuitively embraced principles that dramatically increase the odds for success.

1. Go into private practice with a clear vision of its challenges as well as its rewards.

Private practice isnt easier than agency work its different. Understanding the differences and making a clear decision that the differences are worth the effort are the hallmarks of a successful private practitioner.

Its a mistake to underestimate the supports that agencies provide as a matter of course. Agencies supply office space, steady referrals, colleagues and supervision, support services for billing, paperwork, and emergencies, and perhaps the support of a union. In return, you have to meet productivity standards, do things according to agency protocols and guidelines, and punch a time clock. In addition, your potential earning power is limited by the agency budget and, when a union is present, union pay scales.

Private practice means finding and keeping up your own office, developing a referral base, creating your own professional supports and supervision, doing all of your own billing, and managing your own paper trail.

Private practice also means the freedom to set your own hours, define the work you want to do, create your own working environment, and choose your clients and modes of intervention. Any money you make will benefit you directly because you are no longer paying for agency overhead or union activity.

Only you can decide if the benefits outweigh the fact that in private practice you will have to assume responsibility for many of the support services that an agency provides. With that increase in responsibility, though, comes an increase in freedom and earning power.

2. Create a specialty for yourself.

Successful practitioners conduct a careful needs assessment of their communities. Although most psychotherapists like to work as generalists seeing people from many walks of life and with many different problems and diagnoses its also important to find something that you can uniquely offer to your referral sources. What makes you different from the other dozen or so private practitioners that people in your area can choose? Identify an area that you genuinely can commit to and get the training you need to be the local expert. Examples might be pain management, sports psychology, dual diagnosis, children who are developmentally delayed, school problems, family businesses, adolescent anxiety and depression, or elder care. Choose something you can get passionate about! This will become a reliable base for your practice.

(Note: Only a few years ago, specializing in trauma work or substance abuse would define a practice niche. These days, nearly everyone in private practice works with those two issues regularly, so they are no longer available as a specialty that will set you apart from others.)

3. Embrace the business end of the business.

Private practice is most definitely a business and as such requires sound business practices. The business of private practice requires that you learn everything from bookkeeping to basic tax law to marketing strategies to good record keeping. If you decide to accept insurance, youll need to deal with different billing procedures for each carrier. Even if you decide not to accept insurance, you will still need to deal with collecting money and managing a cash flow that can be erratic.

The people who do best in private practice are those who are able to embrace the business end of the business as a challenge or even as a game. They find gratification, even fun, in setting business goals and achieving them. They know that a good rule of thumb for the first two or three years is to plan on an hour of business activity for every hour of clinical activity. With that kind of time requirement, it only makes sense to find a way to enjoy doing it.

4. Take the time for some business training.

Very few social work or psychology graduate programs include courses in practice building and management. Despite the fact that a substantial number of their graduates will be in business for themselves for at least some part of their careers, schools focus solely on turning out good clinicians.

But very good therapists are not necessarily equally good business people. Being in business means being at least passably good at being in business. It wont matter a bit, in terms of your personal income, if you are a brilliant theorist and an even more brilliant healer if you cant bring yourself to charge for your services, to keep good records, or to do the necessary bookkeeping in a timely way. Unless you were reared in a family business or went to social work school after a successful business career, you probably need to give yourself the gift of some additional training training specifically in business management.

Successful private practitioners attend business seminars, read up on business practices, join the Chamber of Commerce, and take up whatever help is offered to hone business skills. is another source of practical business help. Well regularly run articles to keep you in touch with industry trends and provide you with up-to-date information on what you need to do to keep the business end of your business on the cutting edge.

5. Deal with your own issues around money.

Unless you are either independently wealthy or living on someone elses income, private practice is indeed about money. You are engaged in an exchange: you provide help and support, and your client gives you money. This may seem obvious but for many therapists, setting a fee and dealing with clients about payment are the most difficult aspects of the work.

Clinicians in most agencies are protected from having to deal with the financial end of things because a front desk and billing department take care of collecting fees. But in private practice, you are the front desk and billing department something that takes some getting used to.

If you cant get comfortable with being firm and clear about charging and collecting for what you do, you may need to do some of your own therapy around these issues.

6. Invest in yourself with both money and time.

The primary reason a business fails is insufficient capital. Private practice is no different. Many people make the mistake of opening a practice and throwing whatever money comes in at bills, hoping for the best. Successful practitioners take the time to build a budget, save for start-ups costs, and save or take a loan so that they wont be panicked if the first year doesnt bring in the revenue theyd anticipated. You wont be able to draw a reliable salary for at least six months. Factor that into your planning.

The second most common cause for failure is an unrealistic idea about how much time building a practice can take. Generally, it takes three to five years for any business to stabilize. You will see intermediate steps toward your goals, of course, but successful practitioners have a long-term view of where they are going and a realistic idea about how long it will probably take to get there.

7. Remember: Location, Location, Location.

Perhaps part of your private practice dream is to work out of a home office or at least close to home. However, home may not be the best choice for your initial location. Its important to evaluate your competition and to choose a location where you are likely to get referrals.

One very successful practitioner I know works in a community 25 minutes from her home. Why? Because when she looked at the Yellow Pages in her local phone directory, she found that her town already had no less than 42 private practices to serve a community of 20,000 people. Meanwhile, in a small city of 50,000 only 25 minutes away, she found only one other therapist listed in the phone book. She therefore set up her office in the other community, contacted the local schools, and had a thriving practice in a matter of months. She says that she regularly watches new practices in her hometown open and close because there are just too many therapists there. Meanwhile, now that she has a referral base, a legion of satisfied clients, and a good cash flow, she has been able to open her home office two days a week. Clients are willing to drive the 25 minutes to see a therapist they know or have heard about through their friends.

8. Accept that your time isnt really your own.

Many people who leave agency life do so because they believe that they will be able to set their own schedules in private practice. This is usually true – eventually. But part of building a private practice is making yourself available when there is client demand. This often means evening and Saturday hours, at least until you have enough private practice alumni to have word-of-mouth referrals coming in reliably. Figure that for the first year or two, you will need to be maximally flexible.

In the initial years of private practice it is far easier to move clients to a different appointment time once in a while to accommodate going to your childs school event or to take a needed break. You can set your own vacations, holidays, and days off without having to factor in agency needs that have nothing to do with you or your clients.

9. Perfect your paperwork.

Some senior clinicians in private practice long for the old days when a few notes scribbled on a yellow pad was all the record keeping a therapist needed. Accept it. Those days are over! Without the protections of a corporation or agency, the best protection an independent practitioner has is her or his own record keeping. In an increasingly litigious society, not keeping good, accurate records can be professional suicide.

As with any business, the business of private practice requires record keeping and storage that is above reproach. Successful practitioners invest in having standardized forms, using them, and putting them in a good locked file cabinet. (Please note: Its essential that you know your states regulations. Many states still require paper records as well as computer records.)

Membership in will help you with this particular aspect of your business immeasurably. The tools of the Virtual Office will guide you through the professional record keeping process.

10. Develop a marketing plan and revisit it every few months.

Wanting to set up a private practice is a goal, not a marketing plan. Marketing means developing and implementing a strategy for making yourself known to referral sources and for building and maintaining relationships with them. In the initial stages of building a private practice, this is the work that will take the majority of time in your workweek. Every hour that isnt spent on seeing clients or doing collateral client work should be put into meeting referral sources, making yourself visible, and positioning yourself in your community. Dont know how? See Principle #3 take time for training. And do take a look at the companion article on marketing.

Its vitally important not to let this effort lapse as time goes on. Every few months, take a few hours to think about what youve been doing, whether it is working, and what you should do next to keep your place in the minds of your referral sources.