Running start… to a great career: Surviving financial instability
By Rebecca A. Clay
In Alaska, summer days are so long and beautiful that many residents head outside to soak up the sun before winter sets in again, says Michelle Yep Martin, PsyD, a private practitioner in Anchorage. “People aren’t thinking about therapy,” she says. That could mean a dip in Martin’s income — if she hadn’t prepared for it.
Of course, seasonal variations aren’t the only source of financial instability. When early-career psychologists launch practices, says Martin, there may be a long lag time before they even start to break even. And unexpected things can happen, whether it’s a major referral source closing its doors or a medical problem that forces you to temporarily close yours.
Use these tips to prepare for financial fluctuations:
Invest in an accountant. “The biggest thing I wish people had told me when I first started my practice is to find a good accountant,” says Martin. Her accountant now helps her set aside a certain percentage of her income for quarterly estimated tax payments, another percentage for savings and so on. “Pay yourself first, so you’re ready when things get slow or something comes up,” says Martin, who recommends an emergency fund representing three to six months of income.
Find ways to save. Take office space. Instead of opening offices of their own, practitioners could rent office space with others. They could also rent another practitioner’s office on weekends or other days it’s not in use as they build their practice, says Martin, who rents out her own office one day a week.
Develop multiple income streams. Don’t rely solely on traditional fee-for-service office visits, urges Gerald Nissley, Jr., PsyD, a private practitioner in Marshall, Texas. “It’s important to diversify and increase your predictable income,” he says. In his case, that means being an adjunct professor and teaching at summer programs — work that provides a reliable biweekly paycheck. He also offers self-care, diversity and other types of training to local businesses, which also promotes his practice. “Before I even get back to my office, there’ll be three or four requests for appointments,” he says. He even writes for magazines devoted to his twin passions of fishing and kayaking.
Sell yourself. “Look at where your referrals come from and where you’d like them to come from,” says Martin. “And connect with people who have any reason to run into the population you work with.” That could mean setting up lunch with someone to talk about what you both do or shooting out an email saying you appreciate someone’s work and adding a line about what you do, she says.
Analyze your practice. Nissley uses his electronic health record to track which referral sources are most productive, identify needs going unmet and analyze other data that influence his marketing plan. When those data revealed that he was getting tons of referrals for evaluations from foster parents, he realized there was a need that others weren’t meeting and reached out to the state agency. “Now I’m over-run with adoption and foster care referrals,” he says.
This column is geared toward early career psychologists working in practice settings. "Running start ... to a great career" features topics typically not covered in graduate school and includes tips and advice from psychologists.