Evaluating Risk in a Small Business
In my consulting work with psychotherapists, I often find that they are very risk-averse. Yet I have also found that taking small, calculated, high-probability risks is essential for growth and development of a private practice. In this article I'll discuss the three major types of risk that a psychotherapist faces when attempting to grow their practice.
1. Financial: the risk that most psychotherapists focus on (and greatly fear) is that of spending money. I can still remember standing in a huge auditorium in Los Angeles in 1998 at a Jay Abraham small business workshop, with 400 other entrepreneurs - and I was the only mental health professional in the group. People in other businesses talked easily about borrowing money to invest in their businesses. They discussed it like we might discuss buying a few extra boxes of tissues for the office. It was just an accepted part of doing business.
But for psychotherapists, spending any money on an unknown outcome seems to elicit great fear and resistance. What if it doesn't work? What if I waste my money? What if people find out how foolish I was to throw my money away?
The fact is, as the old adage goes, you have to spend money to make money. You must realize that the risk you are taking financially to try something new to grow your business is not a crapshot like you would make at a casino! Rather, the odds are WITH you because you are taking a small calculated risk, with a keen knowledge of your clientele and your services.Read More >>
And to be honest, your results will be all over the place. One of the most successful risks I ever took cost me $18 to promote a new group. The group that started from that $18 has generated over $26,000, obviously a fabulous return on my investment. I have had other risks that cost thousands of dollars and only returned a few hundred at a time. Over the lifetime of my business, though, even those have turned out to be profitable.
Some new things you try work much better than you thought, and others which you think are a sure thing fall flat on their face. You don't have a crystal ball. But if you understand basic business principles and how to slowly and carefully take a risk and track your results carefully, you continue to do the things that work for the long haul and stop the ones that don't have any potential. In this way you are almost certain to come out way ahead, and the actual risk you are taking is quite minimal. Indeed, there is a much greater risk to not expanding than there is of maintaining the status quo.
At the computer company Hewlett Packard they have an annual award for the staff member who comes up with the most failed ideas, the ones that don't go anywhere. They realize that it's essential to reward people for generating ideas, and that one good idea that produces a great service, product or profit will more than make up for all the failures.
2. Time: You can always make up money that you lost, but once your time is gone, it is gone forever. Nonetheless, for most new ventures you will need some combination of time and money. The good thing is that while you are growing your business, time is abundantly available. There are always open spots in your schedule, as well as cancellations. If you learn how to organize and manage your time efficiently, you will find yourself with plenty of time to practice the implementation skills that go along with any new project. And even if a project doesn't succeed as you hoped, you will certainly learn so much through the attempt that your time will have been well spent.
3. Reputation: the third type of risk is our professional reputation. This is the most serious risk of all, because we are promoting ourselves as professionals who are competent, trustworthy and reliable. Any violation of these qualities in the marketplace can truly be damaging, and take a great deal of time and/or money to correct.
It's said that you only have one chance to make a good first impression, and that is never more true than in the psychotherapy field in the 21st century. Any form of promotion that you do must convey your sense of professionalism and integrity, and often in only a few minutes or seconds. Compromising your reputation for the sake of attention is never worth the risk.
My wife and I were invited to be on a nationally syndicated talk show several years ago. We agreed to participate only if the topic was not sensational. We were given copies of all the issues and guests' backgrounds and felt good about what the show was trying to do.
But with just three minutes before we were to go on the air, they completely changed the structure of the show to a hopelessly sensationalistic theme. They came to get us and told us of the 'minor changes'. We told them we were not going on. They looked at us incredulously, as if we were giving up the opportunity of our careers. They tried to guilt us, shame us, intimidate us and bully us, but we never changed our position. We were immediately escorted out of the Green Room onto the street and never regretted the decision for one second.
In sum, when growing your business, it is necessary to take some risks. You must get out of your comfort zone and do things you have never done, if you want to get results you have never gotten. Realize that the risks of your time and/or money are actually quite small, but at all times protect your reputation and integrity. This will build trust among your clientele and among your colleagues, and you will find yourself with a steadily growing practice.