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Too many therapy practices are bootstrapping and don’t even know it.
Bootstrapping is when a business needs more resources than it has, and the circumstances can be very risky and unstable.
Bootstrapping is inherently risky. The business is too small to sustain without huge amounts of ongoing effort.
But not big enough for things to run smoothly when we do something drastic like, say, take a much-needed vacation.Â
A therapy practice will only be sustainable if leaving the bootstrapping phase. This blog helps you stop bootstrapping, reduce business risk, and start thriving in your practice.
This is a guest blog by James Childress, an accountant for therapists. James’ company CAC Advisors helps practices get their finances in order so they can hire, grow, and make a huge impact.
The biggest trouble I see with practices in the bootstrapping phase is they don't even realize that's what they're doing. They have huge risk and don’t realize it.
Every practice has risk, and growth always involves adding risk. So how do we grow while not letting our risk get out of hand?
The systematic elimination of risk is what we call “intentional growth,” which is the opposite of what some would call “organic” growth.
This elimination of risk is accomplished by bolstering the areas of the business where risk exists.
These are areas where the owner likely doesn’t have an appropriate skill set. In the business world at large, these are addressed by critical roles often called the C-Suite.
These roles are important because they reflect intrinsically significant skill sets:
C-suite roles are not just for the big corporate folks.
Each role reflects something that happens in ALL businesses and, yes, in all practices. Your practice needs these roles filled to grow.
And here’s the kicker: when a practice is small we have all of these roles on one desk. The owner’s desk, in most cases.
In larger companies, each business function is handled by teams of hundreds or even thousands of people all dedicated to one particular aspect of the enterprise.
And if they’re doing it, it’s probably for great reason.
We wouldn’t want a marketing person doing human resources or a financial officer protecting us from cyber threats or HIPAA noncompliance.
Every role has a unique function and is done best by certain people with specific training.
So, who we hire for each position matters, as well as when we hire them. In doing this, we reduce risk to our practice significantly and build sustainability.
Here are some insights about each role/function and how they help you run and grow a great therapy practice.
The Chief Executive Officer (CEO) role seems a bit misunderstood but it is where the whole thing kicks off.
This is often the founder at the beginning. In essence, the CEO is the person who takes ultimate responsibility for the practice’s vision.
When I say the vision, I generally mean the most basic version of how services are provided.
The patient gets served, and the practice is better for it. Many specifics and permutations exist but that is the basic form. The risk that the CEO has is all-encompassing.
Elon Musk describes this best when he says “If you’re the CEO of the company, you have a distillation of all the worst problems in the company.”
Love him or hate him, on that point, he is absolutely correct.
We have all had an experience where we ask someone in a business a question that is just a bit outside of their scope of reference, and they say “Let me check.”
Then they go talk to someone else with a bigger scope of reference. That is just how organizations work.
So, what this means as growth takes place is that this “problem funnel” starts to look more like a problem jet engine.
Once problems show up, more problems show up. Then they start to stack up and everything else starts to flow increasingly quickly up to “the boss.”
Whoever that is now has to to fumble to solve things no one else around them can solve due to timing, resources, authority, skillsets, money, or whatever else may be short.Â
People sometimes chuckle about how the owner is the bottleneck. But the real truth is these are a sign of a business that is bootstrapping and potentially with a future in doubt.
It shouldn’t be this hard. And it gets easier as the CEO gets help from other C-suite members.
The problems that end up on the CEO’s plate are always the most risky.
One example is a client of mine who ended up in a $500k lawsuit because a verbal agreement wasn’t written. These folks actually agreed on a policy but did not formalize it.
Then, when the partner left, they realized some money could be theirs and sued. And why was this? They were all “too busy.” Why is that?
Because there was too much on their plate, and hidden in that massive overloaded plate were serious risks to their business.
So, a bottleneck is not just things getting slowed down, it is often about risks piling on top of other risks.
To succeed, your practice CEO will need some support.
Thus, we get to the next and most critical role that starts to provide bandwidth to the entrepreneurial practice owner and CEO – the CFO.
The Chief Financial Officer (CFO) must be next to ensure success. This is because every other role and resource fulfillment hinges on some financial investment.
It’s essential to note that as a practice grows it must make a sure step every time. That way, retracting is avoided.
You must invest in new hires, systems, team members, buildings and leases, C-suite roles, EHR’s and everything in between and beyond. But they all have a price tag.
In a sales conversation, the prospect cites their challenge, the vendor cites their solution, and then they discuss cost.
That’s usually when the brakes get pumped.Â
A prospect may say they don’t have the money. More often, they don’t KNOW whether they have the money.
And they lack clarity on whether having/buying the thing would create a return on investment.
So, the cycle SHOULD look like this.Â
 Let’s make this real for private practice with an example:
Every practice has some idea about what they need to succeed.
But we can’t buy everything we want willy-nilly. We must be strategic.
Most often, the practice owner doesn’t have a financial strategy. So they don’t know what they can invest in and when.
After a while of inefficient/nonexistent financial strategy, a growing business becomes a slowly growing business.
Or worse – it turns into no business at all by falling apart.
The CFO manages this risk of cash planning as well as a long list of finance and accounting things.
But their most important role is to ensure the smooth onboarding of resources. How? By creating a financial path to bring them on.
If a practice is wondering whether it has money for something it needs, that practice has a CFO problem. They should know with certainty if and when they can afford the next resource.
Every purchase should flow through the CFO.
The risk of defaulting to the brake pedal can be the greatest barrier to growth, followed closely by stepping on the gas and leaving it there.
Hiring a CFO (even a part-time one) can help you grow your practice thoughtfully and sustainably.
The Chief Marketing Officer (CMO) is the next most critical role for therapy practices.
The CMO brings in a surplus of leads, meaning caseloads stay full and revenue is earned. This helps grow the practice further.
This role is often misunderstood as being an ad person, SEO consultant, or other type of marketer. The truth is the CMO is the person who ensures all of those things go well. They’re a lot more strategic than “work for hire.”
For example, it’s better to spend the funds on a person who can help you know what inexpensive things you can do to market effectively than to simply spend capital with a vendor who sounds good.
Strategy is important in marketing because we need to know what comes first.
We can get out over our skis with an investment in ads (for example) when we have no concept of our brand, our ideal client, or all of the other marketing basics.
The best marketing investment is a marketing strategy, above all else. That is the role of the CMO.
The job that the CMO takes on is getting good-fit clients to reach out to the practice, so the practice stays in business.
The risk they take on is the endurance of the practice. If too few inquiries come in, or too many inquiries from ill-fitting clients, the practice becomes unstable.
As such, marketing is critically important. But only a good CMO can provide the right overarching strategy.
To recap, we have:
What next? Well, we’ll now need more and more providers to meet the inquiries, and with that comes a surge in our risks related to Human Resources.
The Chief Human Resources Officer (CHRO) is a role that covers a lot of risks in the organization.
I’ve seen so many instances through my career where the wrong hire/fire done the wrong way busted a company.
Naval Ravikant likes to describe how most people will remark "It’s the people that make the company.” But then these same people skip over that and get back to thinking it’s some other type of magic. It’s not!
If people are the magic behind a successful practice, it helps to have an HR expert in your C-suite.
HR folks are an interesting crowd, working in the space between:
In short, when you bring on an HR person to help make some of these challenging decisions, you’ll sleep much easier.
It feels good knowing the risks of losing good team members or being sued by bad ones are strongly mitigated.
And now that we have a path to reliably and securely build our headcount, the number of people in the mix starts to increase our risk of exposure to data breaches. And the overall price tag on noncompliance issues goes through the roof.
So we need a CTO.
A Chief Technology Officer (CTO) ensures compliance with our data.
They protect it from getting into the wrong hands.
And they ensure we stay up to date and avoid “tech debt.”
Tech debt is when we get behind on upgrades and improvements. If it goes on long enough, we’ll need to spend a hefty sum to finally get back up to date.
Team members want to be on a winning team, and that usually means that we keep up or ahead of the times.
The primary risks prevented by having a CTO are:
Importantly, patient privacy is paramount in the mental health space. Our practices must protect patient information completely.
Having a tech wizard on staff can make a world of difference in our practices.
Let’s look at a real-word example. Imagine your admin team is still handling intake with paper.
Having a person around who can help you institute a secure online form for intake documentation can reduce errors and expedite this part of the process.
If you asked your admin team to come up with something like that you might have a lot of concerns about it being secure or the overall design being insufficient.
Experts are expensive for a reason, and their judicial application is highly recommended. It can really help you avoid fines that would otherwise bust your business.
In short, when you have a CTO on board you’ll sleep a whole lot easier knowing you have someone you can get ideas from, and who is ensuring security and compliance ride alongside efficiency.
Now, you might be asking where is the Chief Operating Officer?
I agree with Dan Martell that most people look to this role way too early and need to “buy back their time” first.
I also know that most practices are run by clinicians and operations is the hardest area for them to let go.
It’s also the area they are the best at and have the most influence in.
The roles of the CEO and COO are very much linked.
The COO enacts the CEO's vision through systems. They work together to refine the process, and for the CEO, that vision. Both roles keep each other accountable here.
So, when it comes to the COO and practice operations, the key things we want to happen are:
But the point here is that until there is a layer of supervision in the practice (that is not the owner), these things will likely be the focus of the owner. And for good reason.
They make or break a practice.
If you’re the owner or director of a small practice, realize that you operate as COO too. And once you have the other C-Suites filled with great hires, do the same for your COO role.
Hire someone who’s great with systems, data, feedback loops, and more to make your practice a well-oiled machine. They’ll reduce your risk and improve your client outcomes.
You might be asking how all of this actually works. Isn’t this a lot of money to be paying all of these people?
Remember, these are roles and not actual individuals. Keep in mind with these roles is they don’t have to be full-time positions.
Likely, for many small to medium practices, these are part-time (perhaps VERY part-time) positions. And they can be outsourced to external vendors.
They may also end up on one person's plate. First the owner, then a clinical director, etc. If money is tight, they may need to DIY with support from YouTube videos or books.Â
The golden nugget of this whole thing is simply to realize that you have to find some way, regardless of your size or budget to level up these areas.
Otherwise, you’re allowing risks to your practice to run rampant throughout. Risks that grow faster than your practice will!
Where should you start? With a Chief Financial Officer, even if they only work a few hours per month for you. They’ll help with financial planning for your practice and creating a budget to keep things on track.
For practice owners and directors who want to grow past the bootstrapping, unstable phase of their business, these are the best places to start.
And if you require financial help, reach out to my team at CAC Advisors and we’ll get your finances looking excellent, so you can grow beyond your wildest imagination.
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This blog post is provided for informational purposes only and is not intended as legal, business, medical, or insurance advice. Laws relating to health insurance and coverage are complex, and their application can vary widely depending on individual circumstances and state laws. Similarly, decisions regarding mental health care should be made with the guidance of qualified health care providers. We strongly recommend consulting with a qualified attorney or legal advisor, insurance representative, and/or medical professional to discuss your specific situation and how the laws apply to you or your situation.
