The Private Practice Success Podcast

10: 7 Pitfalls of Growing to Fast

• Gerda Muller • Episode 10

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Is your private practice experiencing rapid growth? While expansion can be exhilarating, it comes with its own set of challenges. In this episode, Gerda Muller explores the seven pitfalls of growing too fast and shares her personal experiences to help you navigate these challenges effectively.

In this Episode, you'll learn (amongst others):

  • The 7 common pitfalls that accompany rapid business growth in private practice.
  • How leadership and team exhaustion can impact your practice.
  • The importance of maintaining strong hiring practices and cash flow management.
  • Strategies to avoid over-capitalization and missed opportunities.
  • The critical role of robust systems and processes in sustaining growth.

Who This Episode Is For:

  • Private practice owners experiencing or anticipating rapid growth.
  • Allied health professionals looking to expand their practices sustainably.
  • Business owners seeking to build a resilient and profitable practice.

Join Gerda as she shares insights and strategies to help you grow your practice without falling into common traps. Whether you're just starting out or managing a growing team, this episode provides valuable guidance to ensure your practice thrives in the long run.

Connect with Private Practice Success & Gerda here:

Well, hello there, spectacular private practice owner. My name is Gerda Muller, and you are listening to the private practice success podcast. And this is episode number 10. 

Today, I'm going to take you through the Seven Pitfalls of Growing Too Fast. Yes, there is such a thing as growing too fast. But let's start at the beginning.

Starting a Private Practice

I have said this before and I will say it again - that starting a private practice is actually a really easy thing to do. Easy when we compare it to the ease of getting started in other industries. If you compare, for example, starting a private practice - which generally you do as a solo practitioner versus, for example, opening up a McDonald's - the paperwork you need to go through It's like a thousand times more. The cost is probably like 10, 000 times more.

In our industry, we are really fortunate in that the barriers to entry into starting an allied health private practice business, is very low. And you can actually start your private practice on a shoestring budget. Or you might decide to start off with a four-room practice, which is going to be more expensive, and there's going to be more upfront capital that you're going to need in order to do that. But, that's just one way of doing it. Compared to most other industries, we can actually get into the business of private practice really easily.

You need a place to see people from, and these days you can do that from your home office, if you're going to be a telehealth provider. And you need clients. So, if you've got an understanding of the marketing that you need to do, you just start doing that, two to three months from your first date of opening - because it takes time for your marketing to start paying off, unless you're going to put a lot of money behind it. So, remember I said this is when we do it on a shoestring budget. You start spreading the marketing word two to three months out and you will have clients on day one of opening your doors. I can guarantee you that. 

However, what is harder, is stepping up from that solo provider space into becoming a group private practice, where you now need to recruit and retain a group of clinicians, we need to manage multiple administrative team members and where you need to fill the books of a group of clinicians.  And doing that sustainably over the long run in a profitable manner, well, that is not that easy to do. 

Now, that being said. I have found that when there is a lot of demand in the marketplace from a client perspective, it is actually pretty easy to grow into a group practice, but to a certain level. And over the years, I have found and I've experienced this myself, that there comes a time, where if you've not worked sufficiently on the fundamental frameworks to support your business, that that your growth will come back to bite you in the you know what. It's happened to me. So I'm going to warn you. 

And I don't think I've shared this before on the podcast. Not that I can remember off the top of my head, but that is actually the reason why I started Private Practice Success Australia. So, the short vision is that I built my practices up to a place where they, you know, were running very smoothly, things were going really well. 

And then I thought, Oh, what am I going to do with myself? I'm a bit bored. So I did what any you know, good psychologist will do. And I decided to do a PHD. So I decided to enrol, but I knew that in order for me to stay motivated, I would need to have something that I'm really passionate about.

Psychologists As Business Owners

So the topic I landed on for my PHD was psychologists as business owners, looking at their current coping challenges and success predictors. So I wanted to see how are they going as business owners, how are they coping with those challenges? Because between me and you, I knew how hard it was to be a psychologist turned business owner.

I also wanted to know what is the challenges unique to our businesses as psychologists? And then what is those factors that predicts success when you are a psychologist turned business owner? Long story short, of course I had to do a lot of research as part of the literature review process, and it just became so apparent that there was a huge gap in the knowledge base for us. And a huge lack of support specifically for psychologists, and then also more broadly - because first I looked for psychologists, and then I started going into allied health, and then I even started looking into, you know, veterinary space, looking at dentists, seeing what's happening there.

And just the lack of business support for allied health professionals was really eye opening. It's like, okay, this now makes sense to me. My years of struggle - now makes sense to me. You know, you get trained for six years to become a psychologist. You leave your master's degree thinking you know everything, and then you start your first job and you realise, you know nothing as a psychologist, it is like, Oh my goodness. Now I'm starting again at the bottom and I need to learn all these things. 

And then you decide one day to start a business and you rely on your research skills that you learned as a clinician to research things that you think you need to do. But the problem is - you don't know what you don't know. So you can't research things when you don't know that you need to research it. So yes, you do your absolute best to try and get that business skills. But if you don't know, you don't know. So I just went, okay, I need to do something about this. So what did I do?

I thought, no, I'm not going to wait three to six years to finish this PHD because that is just too long. Every day that passes, there is a practice owner who was struggling like I was struggling, before I knew what I was doing. That is feeling overwhelmed. That is pulling their hair out because they don't know what else to do. That is juggling all these balls and feeling every day like they are a failure. So I'm just going to do something about it. And that is, I'm going to start telling people what I learned. So I sat my ass down, and I started writing out what is the stuff if I had to look back on my process or my journey, my learnings. What did I do? What did I learn? 

And it took me quite some time, multiple weeks, really long days because I was really determined to get it done. I would actually stay at the practice until 10 o'clock at night in the final weeks and just going - I need to get this onto paper. And that was me unpacking what today is my intellectual property, and what today is the Private Practice Success Model of how do you do this thing called private practice business.

And I started running workshops and of course the rest is history. That is how my business that is today, Private Practice Success Australia started. So it all started with lifting the lid. It started by going, “You know what? I've made all these mistakes. Every mistake in the book, and I want to make sure that other people don't make those.”

So today I'm going to share with you the seven pitfalls of growing too fast. Because it's so easy for this to happen, and I'm putting my hand up here, and that it happened to me.

The Seven Pitfalls of Growing Too Fast

When you grow too fast, the consequences can be devastating, unfortunately. The great thing about growing too fast is that it is a very exhilarating process.

You feel so good when your business is growing fast, when the clients are coming through the doors, when the phone doesn't stop ringing. When the faxes, the amount of fax referrals we got in those days when faxes was still a big thing, it was amazing. I would never get to the fax machine and not have at least three to four referrals that has popped out of the fax machine ready and waiting.

We had so many clients coming in. We had a long wait list. We were spoiled for choice when it came to clinicians and getting people on board. So my practice grew incredibly fast right. So when I started my Solo practice, I started in like February, I think 2007. And by the end of that year, I was fully booked. I took two team members on board immediately, went from one room to a three room practice. And soon after that did four rooms, and then started another practice all in the space of four years. So, in the space of four years, we went from one room solo provider, to two locations, and a really big team and lots of clients coming through the doors.

And you might think that, you know, if I've had three to four really great years, I've got this covered, right? Nope, that is just an illusion. Until the first crisis - like real crisis happens, you won't know that you're not ready. And the crisis for us was the global financial crisis, which yes happened in 2008, but the consequences and the fallout of that only manifested in the grassroots of community and small business in 2010.

And I soon realised that there was things that I didn't know I needed in place. Although I had all these things happening,  I thought I had systems - but it wasn't up to par. It wasn't how it was meant to be. So hence this episode, because I don't want that for you. If I can get you to not experience these pitfalls, your growth will be even faster and it will be more sustainable.

So let's have a look at these.

Pitfall #1: Leadership Exhaustion

The first pitfall is what I refer to as leadership exhaustion. Sound familiar? Probably. The thing is, the more leadership is contained to only one, or a few people in your team, the more those people will be sucked into the day-to-day management of your practice. And I think we both know that that's probably happened to you. Whether that's happening right now, or maybe it's happened in the past.

So generally, if you're the business owner in our industry, you're probably the principal clinician. You are probably the main leader, main manager at the practice, you are probably wearing a lot of different hats. Many of whom are leadership hats that you are dealing with. And I am pretty confident that you have experienced being sucked into the day-to-day operations.

For example - and I did this many years ago when I was in this situation. When reception was off sick and we had clinicians and clients coming through the doors, who do you think went and sat at the front desk? It was me. So I would on that day, man the front desk. I would still need to see my own clients. I would be returning all the phone calls. So I would be clinician, seeing my own clients, I would still be supporting my clinical team. Catching up with them between sessions, making sure they're all good. They've got everything they need, doing a quick debrief with somebody if they've had a difficult session.

And I would still take everybody's payment. You know, in that time we still had the Eftpos machines and stuff, which took a lot of time because you still had to process the Medicare cards for the rebates. It like took forever. Had to pre book appointments for people and had to, at the end of the day, stay back to follow up on the voicemails - all of the things. That is an example of being sucked into the operations. And you know, reception is allowed to be off sick. Everybody gets sick. But as the leader, I was the one that would step in and do all of that stuff. 

Tell me, has that happened to you? Is maybe that's still happening to you today? The thing is, when this happens, you as the leader, are spending more and more hours working in the business instead of on the business.

And that, when it happens over and over again, causes leadership exhaustion. So ask yourself, is that happening for me personally? And also ask yourself if you've got a principal clinician or a practice manager, is that happening for them? And where are they at? What are, what is their levels of exhaustion right now?

Pitfall #2: Troop Exhaustion

The second pitfall is troop exhaustion. So who's the troops? That's your team, alright. And this often happens when the business grows really quickly - with it, the workload grows really quickly. And sometimes you just don't have the time, because you're behind the eight ball because you've been sucked into the day-to-day operations and you didn't see that this was coming, because you never had time to work on the business, and therefore you did not have the foresight, and therefore you did not make the time to add more qualified staff to do the work. And now what has happened is that workload has been piled onto your existing team members. 

Now this can happen within your admin team, and this can happen in your clinician team. Now, I've had the unfortunate privilege of speaking to a lot of clinicians - so yes, I speak to a lot of practice owners, but I also speak to a lot of clinicians that don't own practices - and one of their biggest complaints from places that they've worked before is that, you know, they come on board, they think they're going to see X amount of clients a day. They come out of their third or fourth session for the day. And they see three more clients have been added to the tail end of the day. And it's like, how? That is because somebody who's running that business, really want to help these people, these clients, they, you know, urgently want to be seen. So I'm going to just add them to this person's diary at the end of the day, because they want to help people.

But what happens then? The poor clinician is the one at risk of burnout. That clinician then has to pick up those pieces of looking after those clients. And when people have to do that day in, day out, week in, week out - that's going to lead to their exhaustion and ultimately burnout, and you don't want that to happen. Now, I will be the first to say that that does not happen at the practice owners that I work with. Never has, never will. And those are stories that I have heard. And very often it's not private practice businesses. Actually, it's in other similar types of businesses without calling them out, but it happens out there way more than you think.

And I'm probably preaching to the converted with this specific example, because I'm sure you're sitting there and going - I will never do that. But there are people that do that. And those are the businesses that gives a lot of private practice a bad name, because what do people do, they start to generalise. It just has to happen in one or two practices. Somebody says it in a Facebook group and then it's generalised towards all of private practice. And I can categorically say that the businesses I work with will never do that. 

However, this does happen at times on the admin side. And very often people come to me with questions like, “How many admin should I have, when I've got four rooms or when I have eight full time equivalent clinicians”, and those type of questions - which is great questions to ask. And that also tells me that these are the people that are mindful of troop exhaustion. 

So very importantly, I want you to reflect on this and ask yourself - Is troop exhaustion an issue in my practice right now? 

I also want to add that troop exhaustion can be as a result of actually a variety of things. It can be because you didn't hire early enough. However, it can also be that your system is not where it should be because if the systems isn't optimised, if the systems isn't effective, you might need five people to do a job that really should be able to be done by one person. And it's because the systems and the processes aren’t in place.

Pitfall #3: Sloppy Hiring Practices

Alright, number three, still saying within the HR area. So number one pitfall was leadership exhaustion. Pitfall two was troop exhaustion. So number three is sloppy hiring practices. So we've just spoken about troop exhaustion and often as a result of that, what then happens when the penny drops and the business owner goes, “Oh my goodness, I should have hired like a month ago already.”

Then they scramble. They scramble to cover the workload, which then leads to them making sloppy hiring choices. So they go, “Oh, this person will do. This person's good enough. Let's just get them in. They might not be the ideal person, but I need somebody right now.” Big mistake, absolutely big mistake. You would have heard me say that you should never hire when you are desperate.

These days, of course, I don't do the hiring anymore at my group private practice. My principal psychologist does the hiring. And every now and then she would, you know, give me a bit of an update to say, “Hey, I've interviewed these people. What do you think?” And I ask her one question and one question only to give her an answer.

And that question is the following: I say, “Did this person wow you?” And if there's any hesitation between the question, and an answer that is anything but, “Hell Yes”.  I say no. I give my people a lot of rope. They can still hire them if they want to, but they might come back and say, “Gerda, you were right.” But that is the most important thing.

That is how I know that my practice isn't hiring because we're desperate. We asked the question - Did they wow us in the interview, and the way they communicated with us in what they shared with us. In their interactions with our front desk? How did they treat the front desk, for example, where they came in for the interview? How were they on the phone? All the boxes that need to be ticked. They need to wow us in all aspects. And of course, they need to be an amazing values alignment. That's the people that we will hire. Because one of the biggest pitfalls of growing too fast, which is growing in general, is sloppy hiring practices.

Pitfall #4: Cash-Flow Difficulties

Pitfall number four of growing too fast is cashflow difficulties.

I've seen this so many times. That a well-funded starter practice, become an unfunded practice, thanks to initial success. So they grow so fast that they start, for example -  taking on too many third party referrals. And what happens, that impacts their cash flow. And they've also taken on a lot of team members, but now they might need to wait two weeks, four weeks, eight weeks. There are some people, and I'm not going to say what type of referral this is, in Victoria, that are waiting freaking months for certain payments to come through from third party payers. It is absolutely ridiculous - and which is probably a different topic - but it leads to cashflow difficulties.

So you can't just go, yes, yes, yes. I want to take all these referrals. And I, for one, let me be 100 percent certain - you most certainly don't want all your referral eggs in one basket, okay. I think we are seeing this right now with all the changes in the NDIS for NDIS registered providers. You do not want to be at the beck and call of one specific referral type.

You most certainly need different types of referrals. But you need to be mindful of the impact, you need to know what the payment terms, conditions, and arrangements are, because that's going to have an impact on your cash flow. Because when you couple that with all the extra expenses due to expanding - because when you're growing, you are expanding - that will equate to significant cashflow difficulties. And take it from me, there is nothing that keeps you awake more at night than worrying about money. 

And I do not want you to worry about money. Worrying about whether you're going to have enough money to pay your brilliant admin team and your awesome clinicians, and still pay all the other bills? Recipe for disaster. So you need to look out for that pitfall.

Pitfall #5: Out-Building your Business

Linked to that is pitfall number five, which is outbuilding your business. I'm sure you've heard more in your personal life. You know, when you go to barbecues, you speak to people, you speak to the neighbours and the one neighbour says, “Ooh, that other neighbour, they've just added another shed and a garage and a swimming pool. They've overcapitalized, and they've overcapitalized especially for the suburb.”

Now, the same thing can happen with your business. You can actually overcapitalize your business. I mean, you can do it, but you need to know the consequences of doing so. And this is, you know, when you are planning for rapid growth by buying, or renting, for example, more office space than you need, sometimes hiring more people than you need. Building in too many hierarchies in your organizational structure, which means higher salaries and wages for certain team members. 

All of this can become a burden on you if your growth is more modest than anticipated. And a lot of times people anticipate significant growth. And they very often overestimate the growth that they're going to have in a short amount of time from a revenue, and more particularly a profit perspective. And it's so, so easy for people to grow a practice to seven figures and beyond and be making a loss, not even talking about minimal profit. 

The amount of practice owners I've spoken to, that has reached out to me for help and support - and I thank them for it, that's the right thing to do. And I feel extremely blessed to be in a position to help people turn those type of businesses around. But it's crazy for me that that that can even happen. And I know it does because I see it like at least once a week. I'm speaking to somebody in exactly that situation, and it's so hard for them as a business owner, because when people look at their business from the outside - like if I were to ask their team of admin and clinicians, they would probably think the business is doing amazingly. They would probably think that this practice owner must be rolling in it. They must be so lucky and happy they’re so successful. 

But meantime, back at the ranch, this practice owner is like not sleeping at night. They are consistently worried. They have aged 10 years in the last 12 months because of the worries. Because the bigger the business, the bigger the revenue, the bigger the worries when there is financial worries, and that can happen so easily when you grow too fast. And particularly when you are outbuilding your business, because outbuilding your business generally adds a lot of additional fixed costs to your expense sheet on your profit and loss, and it's really hard to get out of that once you're in it. Not impossible, but it makes it harder. So you most certainly want to be mindful of this one.

Pitfall #6: Losing Opportunity

Pitfall number six is losing opportunity. So when you're growing so fast that you can't seem to find the time to take a meeting, or attend a conference, or networking event. You are in danger of missing out on what could be really amazing opportunities to make your practice even better.

And that again often happens because you get sucked into the day-to-day operations where you go – “I can't deal with that. Oh, I don't have time for this networking event.” But that's the stuff we use the business owner need to be at. You know, a lot of business gets done in the networking. It's relationship building. And if you don't make yourself available for those things, that stuff ain't going to happen and you're going to miss out on opportunities. So it's important. 

It's your job as the business owner to keep up with industry trends. To keep up with what other people are doing in the local area. To keep up with new technological advances and how you can use that to innovate in your practice. To keep up with the latest best practice, not in terms of clinical, but that's also pretty important, but also from a business perspective. What is best practice? Let's say when it comes to how we bill our client. Is it still to ask for payment straight into the bank account? Is it still just payment on the day? Or is it pre billing clients? You know, what is best practice right now and why? And do I want to update what I'm doing, to get up to standard? Such important things that you need to focus on. And these things are essential for the survival of your business and for the success of your business. That's the stuff that will see your business be sustainable in the long term.

And we know that everyone wants to grow their business at a quick pace. But there's no use doing it quickly or fast for that matter, if it's not sustainable - it has to be sustainable. And I really want to encourage you to ask yourself, am I being patient enough? This just made me think of somebody that reached out to me, it was more than 12 months ago, but I clearly remember it.  This was an email that I received from a business owner that had a relatively small team of clinicians, with really a big vision for what they wanted to achieve. And the question to me in the email was, “So this is where we're. This is where I want to get to. Can you help me get there in 12 months? And can you guarantee that that is where we'll end up?” I'm just thinking to myself - Hell no. I'm not guaranteeing anything. Unless I'm the one at the practice implementing these things. I can't guarantee your results. 

Just like when we're working with clinical clients, you know, I know that what therapy we do -  that the therapy works, because its evidence based. But I also know that it only works at the pace that the client is willing to do the work that the client is willing to implement. And that pace is also impacted by that client's personal situation, their personal constraints, their personal resources, and the same holds true for business.

But I was really struck by the sense of urgency that this person wanted the business to grow at. Now I'm not saying they couldn't do it. I just aren't in the business of adding that level of pressure to my own life, or to the life of a practice owner that I might work with. I always want to play the long game. Yes, I'm all for getting there as soon as possible. But as a female business owner that has family responsibilities, I also know that I'm not going to set myself up for failure, and an interesting fact is that this was a male business owner. You know, whether that means something or not, I don't know, but that's just the fact of the matter. But I know that family responsibility is really important, and I'm not going to set myself up for failure. And I will never set my practice owners that I work with up for failure. 

And I'm a very ambitious person I would say. I like to achieve. I'm a high achiever. I'm a high performer, and I tend to work with high achievers and high performers. So, when somebody tells me when they come into my Academy or Founders Club, for example, I asked them, what is your 12 month goals, right? And I always support them in setting very realistic goals, but stretch goals. And I would often need to help them think bigger. I would often need to help them become more quantitative in the results that they want. And again, you'll often hear me referring to what I do in business to similarities in therapy.

And the first thing I think of here is, you know when a client comes in for session number one, as a psychologist, and you ask them, what is their goals for therapy? And what did they tell you? Nine out of 10 times, they say, “I just want to be happy.” Okay, and then you need to ask questions around what does happy look like? How would you know when you get there, right? And it's the same with business owners, a lot of times people come in and go, “I just want to feel more organised Gerda. I just want to have less overwhelm”. And there's a lot of times to coping, and feeling as that person running the business. Which tells me that my PHD topic, when I said, I want to look at current coping and challenges was spot on. It is so, so needed. And very often I need to help people go, yes, this is the qualitative goals, but what is the quantitative goals? And always want to make sure that people set realistic goals, but also stretch goals, right? 

So I'm not saying you can't be ambitious. That's not what I'm saying. But I am saying is we want to put the joy in our business. My little tagline is that: I help you build a practice you can't stop smiling about, because that is what I want for us. You know I've been in business now since 2007, and there was a lot of years where I didn't feel like I had a business to smile about. And when I got that, and how that felt, and what that did for me and my family and my team and my clients - I want to give that to every practice owner that I work with and that I get to touch - even if I never get to work with you. And even if it is just from you listening to this podcast, if I can help you put one thing in place that can help you smile, when you think about your business, then I'm doing my job. 

Alright, so that was pitfall number six.

Pitfall #7: Systems Fall Down

Last but not least is pitfall number seven. And this is when your systems and your processes fall down, as a result of your business growing too fast. So what happens when growing too fast, we get so busy, often with seeing clients or looking after the clinicians and supporting them with supervision and debriefs, and all of those things that we forget to adjust our systems and our processes accordingly.

And very often what happens is that because those systems and processes and policies were originally designed to cope with a business of a certain size. And now that business has doubled in size, it just can't keep up. It just falls apart. And I can tell you one thing when your systems, policies, and processes, which is the scaffolding of your business falls apart, what do you think happens?

I want you to imagine scaffolding falling apart. What happens? It's not pretty. It's not good. So you must consistently be looking at and reviewing your systems and your processes, and amending them accordingly. And the one thing that I have realised now, knowing the type of person that I am, that doesn't matter what business I have, that it's always going to be growing because that's just who I am. And this is all about, you know, knowing thyself. Is when I'm now looking and reviewing a policy, whether that is part of The Psych Professionals, which is my group practice, and even this business of Private Practice Success Australia, if I'm reviewing a policy or system or procedure, I'm asking myself - what does this need to look like in six months’ time? Or what does this need to look like to support the growth that I anticipate in the next 6 to 12 months. 

Because if I write it for what I need right now, it's going to be outdated in the next three to four months. Just because that's the nature of things. So you always want to be future focused, so that you don't have to redo it every six months. Ideally, you want to do it every 12 months, want to just have a review and go what policies, systems, processes, needs adjusting. What has changed in the marketplace, what is trends that's changing. Or maybe what have we not reviewed when we looked at the last time that we just kept it as is that probably needs reviewing right now. That needs to be part of what I like to refer to as The Rhythm of Business.  So, within your rhythm of business, you need to have a time to look at these things.

Conclusion

And that, my friends, was the pitfalls of growing your private practice business too fast. Now I want to encourage you to really start recognizing, reflecting, and then planning for these pitfalls ahead of time. Because if you can see these things coming, that will allow you to ensure that that line on the little graph of your business growth, is always climbing. 

Might not climb as quick as you want it, but it's climbing. It's moving in the right direction. And not only is revenue climbing, but profit is climbing. People impacted and lives changed is climbing. And that includes - impacting and changing the lives not only of our clinical clients, but also of your admin team, of your clinician team, but also yours and your family. So that everybody in that world of your business can smile about what it is that they do at work, at the practice, and are all getting that benefit.

Thank you so much for tuning in. If you enjoyed this episode, please take a moment to subscribe and leave a review for us. This really helps other practice owners also find the podcast and get to benefit from these insights that I'm sharing with you today. 

Thank you so much, and as always, remember that I'm here to help you build a practice you can't stop smiling about. 😊

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Gerda Muller

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