Am I Ready For a Second Location?

We break down how to decide whether a second location will grow your therapy practice or quietly drain the one that already works. We walk through the numbers, the demand signals, the money, and the operational setup you need so expansion stays profitable and doesn’t burn you out.

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*Intro/outro song credit:
King Around Here by Alex Grohl

Transcript

When A Second Location Makes Sense

SPEAKER_00 0:00

So you've built a practice, you have a team, and it seems like that you're at a place now where capacity is hit and they can't take on any more patients or clients. So the next logical step is opening another location, right? Well, not always, and sometimes we need to stop and look at are we ready to open another location? Today I'm going to walk through some key things to look at to decide is this the right time to open up a new place. My name is Craig, and I'm the owner of DAC Financial Coaching. Our team is on a mission to make your therapy practice permanently profitable. If you own a solo or group practice, we're here to help you build a business that creates more time, makes more money, and serves more people. This is the Therapy Business Podcast. So often when we meet with practice owners, we find that either they are coming to us because they have a second location that is just bleeding money, pulling funds from the main location, or maybe they are considering opening a location. And as we dig into the weeds, there really isn't a ton of thought behind it, other than we're full over here, and you know, I want to take on more business, which means we need more space, which means we probably need another spot. Now, I think this is a great model. I think you know, as you reach capacity, you have the option of moving to a bigger location. So just foregoing yours and maybe moving down the road or uh renting out a space next to you so that way you can expand beyond what you have. But the other next logical step is what if we open a second location, whether it's close by on the other side of town, whatever that might be. Well, I want to walk you through some really important things to consider. So if you are at this phase right now, this is going to be super valuable. If you've already made the plunge, then these are things to maybe start thinking about now because you might find that there's certain areas where you're struggling in. This might either offer insights into was the second location a good idea, or how can we overcome some of the challenges we're facing. And then lastly, if you're at a place where this is far down the road, I still recommend listening because the things we're going to talk about are how you can set up your practice now so that when the time is right, if it ever happens, you're there. The practice is in a place where it can afford to open another location and keep you in a financially profitable, healthy place. All

Proving Real Capacity With Data

SPEAKER_00 2:28

right. The first thing we need to look at is the current numbers. And now I'm not just speaking finances, I'm talking about the clients you're seeing, the patients you're seeing. What are your visits or sessions looking like on a weekly or monthly basis? Your team are all your clinicians or PTs or therapists full? Are they at their capacity? Do they have more space? Now, typically, it doesn't mean you have to be busting at the seams before you're ready to open another location, but I would say getting to that point where you're 90% full is probably a good idea. If you have a waiting list or you're losing patients or clients because the time they can get in to see somebody is so long that they're going to somebody else, that's a sure sign. So looking at your current numbers, it's not a matter of, you know, we're wanting to get ahead of it. We're not full yet. We still have one office here that's open or we still have some capacity, but I want to go ahead and an opportunity popped up, so I'm going to go do this. No, it's we're going to go at it from a place of do we need the extra space? Are we going to be able to utilize that right away? Or are we still struggling to get people in the door? Are you getting consistent leads? Are leads flowing in regularly? So that's something to be looking at too. It's not we're at capacity now, but six months ago we were stressing out because you know, sessions or visits were down. So it's are we consistent? Look, go back the next past 12 months, 18 months, and see have we been consistently full over that time? That's

Lead Flow And Conversion Reality Check

SPEAKER_00 4:01

going to be a good tell. How many leads are we getting in? And again, and how many of those are converting? And then we want to stop and say, is there a sales problem? Are we, do we have a scheduling problem? Maybe you're feeling like you're at capacity, but in reality, it's just a matter of we could probably make a few tweaks. Uh, we have uh, you know, Friday afternoons, no one's in in the office, so maybe we could open that up. Uh, maybe if you're if you're in mental health, you open up virtual visits if you haven't done that yet. So there are opportunities that don't mean jump right into that second location yet. Again, I'm a big fan of expanding, but making sure that we have looked at all these pieces. Is there a breakdown maybe in our process of again scheduling that? Oh, in reality, we're 70% full, but truthfully, we're just not utilizing or maximizing on our space or our time or our my therapists and their availability. So there's a lot of things to to look into. So looking at are we actually at a place of reaching capacity? Now, next, I want you to look at this new location. So if you have one in mind, let's be strategic about it. And so, and if you don't have one in mind, here's some things to think about. But a lot of times what I find is these things tend to fall in our lap almost. And what I mean by that is somebody, something just an opportunity pops up. Whether you find out about a new building uh down the street or around the corner on the other side of town, it seems like a really good deal and a really good opportunity, and the rent is gonna be really affordable. And so you're like, hey, you know, this seems like it could be a good time to make that jump. That is reacting to something that we haven't had a chance to say, is this a good investment? And a lot of times this is what happens is an opportunity pops up that maybe the timing wasn't right for us yet, but because it's here and it's such a good deal, we don't want to miss out on it that we don't stop and say, was this the right move? So seeking out these things. Now, if you're at a place where you have done the things we're going to talk about today and you're ready to expand and you're just kind of waiting for that right opportunity, then of course, if one falls in your lap and if all the boxes are checked, then take advantage. But I never want you to expand because you feel the pressure or the fear of missing out to do so. So if an opportunity comes up and it's just not the right time, then the best financial thing you can do. I don't care if the rent is cheaper, if you're gonna pay more on rent down the road, the best thing you can do is wait for that time to be right. Because by jumping in too soon, that's gonna have a ripple effect on your finances, way more than a higher rent might have on a different location down the road. And who knows, you might find something just as good or better down the road too. So that pressure to jump in, it's

Picking A Location Without FOMO

SPEAKER_00 6:40

it's kind of like when you're buying that home and you're looking at houses and you just kind of feel like, ah, this there's nothing we've really liked, so we got to jump on this one. Being more patient and saying, you know what, the right thing will come along. And it may not happen right away, but it's gonna happen when it's when it's time and when we're in a better place to do so. So why this location? Is it strategic or did you fall did it just fall in your lap? What's the demand over there? This is where if you've been tracking your leads, and if you're not already, track your leads, have them enter maybe a zip code, uh, or when you're doing onboarding, you're taking people in, find out zip codes or some kind of information to say where are they located in your area? And then your office space, if you're seeing a high demand in a certain zip code, then that tells you that that's probably a good spot to move to for office space. I encourage you not to necessarily, it's okay to look and say, is there a lot of therapists over here or not? Uh, is this an underserved area? But I don't want that to be our only metric. And that's because sometimes it can be deceiving. If you're looking in an area and you're saying there's no therapy practice over there, or there's no PT offices over there, so you know, we would have no competition. Let's jump in there. Maybe there's a reason that there's not any. Maybe there's been some that haven't worked out or that have failed, or maybe there's not a demand over there. And so by tracking the zip code piece, tracking where leads are coming from, tracking your current clients and saying, Do we have a lot of our clients or patients who are located in this area? Looking at your referral partners. So if you have doctors who refer uh PT client patients to you, or if you have other professionals as a therapist who refer clients to you, where are they located? Would having an office, your top referral partner, would have an office near them be valuable or beneficial? So there's a lot of these key pieces that come into play that we want to be strategic about. Why this location and really being decisive about where do we think the next best place would be? If you're busting at the seams in your current zip code, then it's not always a bad idea to just open another location in the same zip code because you're you're clearly doing something right in that area. But looking at that, and then I always say, look at your current percentage, like I said, of clients now. Where are they? So if there's an a location that you're considering right now, is there a portion of your clients who might switch over to that one? So mental health professionals specifically, because your clients stay with you for a long time for the most part. Would some of your clinicians, your therapists, be able to move to this location? Do they have a lot of their client base that would say, Oh, that's much more convenient over here? So they would move there to kind of help establish that spot. Not only is it going to show that you have a lot of demand over there, but also you can move some people over there. We've already said that you have are making sure you have a good lead flow at your current location. So moving people over there creates space at your current spot so that you can start taking on more clients there. And then the other spot is now seated with some clients already and some clinicians or therapists over there as well. So, all things to consider looking at these numbers, demand is so, so important. It's really easy to get caught up in, oh, this place is so nice, or it's on such a nice street, or it's in uh such a good deal. But we got to make sure that we're gonna be able to fill the fill the doors. Uh, we do not want to open a location and then have it just drain money from the one that's currently working, which moves us on to the third thing, which is the finances.

Profit Runway And Break Even Math

SPEAKER_00 10:10

As you know, I'm gonna be talking a lot about the money piece. So is your practice currently profitable? How profitable is it? Do you have a money system in place? Are you making sure that you have cash reserves or retained earnings to help fund this transition? You need to have a profitable practice. If your practice right now is not profitable, if you are not paying yourself from it, if you do not have uh money that is being set aside specifically for profit, for cash reserves to save, for growth, all of that balance, then you're not ready for another location. A second location is if you have problems in your current one, they're gonna be there in the second one. It's not gonna be a magic fix. We don't want to open a second one trying to solve the problems here in the first one. And that's a big tell. If you're opening another location because you're thinking, well, we're not profitable yet, but if we can just get more revenue in, and the way to do that is to open more locations, you're just gonna snowball and compound the problem. So we have to get your current location locked in and repeatable. It needs to be something that you can replicate. I've done something, it works here. I'm gonna go do it again over here. That's the idea. So making sure you are profitable, making sure you have some cash runway because there's gonna be initial cost, you're gonna have to get furniture things uh done at the other place. Maybe you have to renovate, add walls, or tear down walls. So there's gonna be some probably things to do to get this new location up and off the ground. Of course, you're gonna have the ongoing costs of the rent and utilities. And really the key here is what I like to call runway cost, which is from the time when you sign the lease on the new place to the time it becomes you get your return on investment or the time it becomes break-even, what does that look like? And how much is that going to cost you? So if it takes six months with this new added expense before you finally reach a point where it's at least break-even, do you have money to fund that? Do you have cash reserves set aside? And that's why I say if something fell in your lap and you're not ready, it's not a good time. By being strategic, you're saying, hey, I think in the next six months to a year, we probably should look at a second location. So that means starting now, I'm gonna start saving money to cover that initial startup cost of getting furniture and equipment and all those pieces. And I'm gonna have money set aside to help offset any, you know, operating in the red for the first however many months until we get it up and going. So those are all key. And then you have to know what's your break-even point financially. How many sessions, how many visits per week do you need to be doing in order to break even at this new location? So calculate that. If the added cost is X per month, how many sessions or visits per week does it take in order to reach that? So that you can at least say, okay, now it's break-even, and then we're gonna start compounding on top of that.

Staffing Leaders Admin Billing Support

SPEAKER_00 13:06

The next piece to consider is staffing. Uh, you know, we already kind of alluded to if you have therapists, PTs who work for you and they could go over there, maybe it's more convenient for them where they live, maybe they have a caseload uh that they could take with them over there that's more convenient for their clients or patients, great. But we're gonna need a clinical director or somebody to run that practice. Uh, we need you can't be in two places at one time, right? So having some kind of leadership role where they are overseeing things in that new place is gonna be really, really important. You need someone who can step up and do that. And typically it's gonna be uh internal, but you might have to hire an outside source who can step in and who knows the business operational side of running a practice. Admin team, you know, your your front desk person, your admin, all of those things. We're gonna need more of those. So it's not just the therapists, it's all these other components that are gonna be coming into the equation. What added billing costs might there be? So there's a lot of different things to consider depending on how you handle things, how much you outsource, how much you're gonna you're doing internally, that's gonna come into play. And then really, really important is does your current location run without you? If it doesn't, if you can't step away for a week without having to put out fires, if you can't step away from your practice and know that everything is under control and is being handled, then you're not ready for another location. And that's really tough, I know, but it's one of them is gonna be running without you at least part-time. And so if your current one can't, you are gonna be stressed, overwhelmed, burnt out before you know it. Having double the workload, if if all goes well, having double what you have now, but it can't function without you. That's just twice as much on your own plate. So creating a practice that can run without

SOPs That Make Expansion Repeatable

SPEAKER_00 15:03

you. And what you need to do that is this last piece that you need to consider is systems and processes, uh, what we would call SOPs, which is standard operating procedures for everything. That is, here's how we run billing, here's how we do scheduling with our patients or clients, here is um how we maintain the office space, here is our process for anything and everything, how we handle leads when they come in, how we handle follow-ups, how we handle uh all of the above. All needs to be documented so that one, your clinical director knows what to do, so that your therapists over there know what to do, so that your admin knows what to do, and it's something that they can refer to. It's not just a what do we do here? Let's ask the business owner, and you know, you go put out that fire, and then they don't know what to do. It should be very clear cut. And that's always if you don't have that, that is one of the best places to start. Outside of setting yourself up to be profitable, I would say do that very first today if you're not already. Then I would start documenting. And I always say the easiest way to do it is as you're doing things, or as your admin is doing things, have them screen record. So if it's a matter of uh submitting billing, or if it's a matter of uh whatever it is, have them do a screen recording now. Unless there is uh, you know, we want to stay compliant, so you don't want them recording sensitive information. So obviously we might need to go a different route of that. But the the point is documenting the process and storing it somewhere and then creating those procedures so that when somebody needs to refer to how do I schedule a new patient, there's a document somewhere, and it might even have a walkthrough video of how to do that, or it might have a step one, step two, step three, here's how to do this. So all of those are really important. We have these in our in my business, and I'm still continuing to add to it because truthfully, there's probably things that don't have operating procedures. And what I try and filter through, especially when I was building them for the first time, is when I would sit down and do a task, or uh when my virtual assistant would do it, um, I'd ask, do they know? Do we have this documented? Could somebody else pick this up and do it? Now, luckily, I created a lot of it for my virtual assistant. So when they started working for me, I did a lot of this for them. So it was documented. But even now, as I sign up for new softwares, we move over to a new CRM. Do I have an operating procedure set so that somebody knows how to do X, Y, and Z inside of the CRM? These are all really important. And again, that's the can we duplicate what we're doing over there? If we have no procedures here, we're not gonna have any over there, and it's gonna create a mess. I'm don't mean to be the rain on the parade of opening another location. So if you're listening to this and you're like, wow, Craig, thanks a lot for uh just poo-pooing on my idea of opening another spot. I really think this is important to think about. And you might be a lot closer than you actually think, but go through these these steps, think through it, be proactive about it. If you are at a point where you're facing a new opportunity location popped up and you're just really wanting to do it, but a lot of what we just highlighted didn't get checked off. I encourage you to just be patient. Either that spot will be available and ready when when you are, or an even better opportunity will be. But we have to know your current numbers. Is this new location viable? Can you afford it? Do you have the team to put in place? And do you have the procedures to duplicate over there so that it runs efficiently and client and patient experience is not sacrificed?

Final Checklist And How We Help

SPEAKER_00 18:42

All right. This is stuff we do. So it's not only just the finances, our team of coaches are all about helping you figuring out your staffing, your numbers, your sales processes, your your standard operating procedures, uh, deciding can you afford to make this move and how to do it the right way. If you are considering this or you want to set your practice up in a way that it can scale in a financially healthy way, we would love to work with you. So in the description, always is a link to schedule a free call with one of our coaches. We would love to get to know you, share how we can help, and just help make this practice something that scales and is profitable, pays you what you deserve, and doesn't weigh on you heavily so that you can step away, go on a vacation, and know that things are gonna run smoothly without you. All right, good luck on scaling. If you're looking at another location, I hope it goes well. Get these numbers together and you're gonna be in great shape. Thanks for joining us on the Therapy Business Podcast. Be sure to subscribe, leave a review, and share it with a practice owner that you may know. If your practice needs help getting organized with finances or just growing your practice, head to therapybusinesspod.com to learn how we can help you.