Debbie Devine, LPC, Rockwall, Texas
www.devinerelaxation.com

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After reading an article by one of my favorite authors, Malcolm Gladwell, in last months New Yorker Magazine (1/18/10), I want to examine an important strategy to consider for these uncertain times.

Gladwell’s article is called “The Sure Thing: How Entrepreneurs Really Succeed” and using research and examples of famous entrepreneurs, such as  Ted Turner, he shows that contrary to myth, successful entrepreneurs are not always daring risk-takers.

The most successful business people are actually risk averse; they don’t put their personal or professional assets in harms way to make a profit.

In my new book, Crisis-Proof Your Practice, I wrote about how to evaluate risk in the chapter titled “Protecting Your Practice.”

After reading Gladwell’s article and with the recession still in process in the US and Europe, I want you to consider adopting an essential, risk averse position.  Here’s why:

Don’t Be One of the Practices That Will Fail This Year

Building a small business is hard and risky, even in the best of times.

Small business survival rates consistently suggest that even in a health or educational service business, 50-65% will fail during the first five years.

A large percentage of small businesses fail, and the creation of a business built on “intangibles” – services that are hard for the public to define, explain, or measure – adds to the difficulty.

When the market is tough, it’s essential that you evaluate your level of risk. By risk, I mean both what you do and what you don’t do that can threaten the survival of your private practice.

But risk is a two-edged sword.

You may think that curtailing all investment into your practice right now is the best way to avoid the risk of economic failure. But not investing in your private practice, not giving it enough time, money, energy, opportunities, or brainpower –is a way to threaten its survival.

The Top 6 Steps to Reduce Your Risk

Risk reduction is a term that means evaluating the dangers and then minimizing the severity of the loss or potential loss.

For example, one basic method of risk reduction in your home is smoke detectors that will warn you of a potential fire.

Risk reduction in your business includes these 6 steps:

1) A written business, marketing and financial plan that will help you evaluate and track the state of your practice at any given time.

2) A cash reserve to cushion the operating expenses of your practice. Each practice needs a minimum 6 months cash reserve to help you sail through especially tough months and still pay your basic operating expenses.

3)  Self care for the business owner so that you as the primary service delivery person don’t get sick, exhausted and unable to work, market and fulfill responsibilities to clients.

4)  Complete record keeping by the service professional and written treatment planning. Data counts. Know your limits and strengths with clients. Transfer those who are not a good fit for your strengths.

5) A plan for worst case scenarios. Try to average out losses over time (the bad winter month gets incorporated into the overall profit and loss statement for several months or a full year, to try and amortize the loss.

6) Maintain insurance including malpractice insurance, rental insurance, and life insurance on partners or associates if their income is critical to the operating income of a practice.

The Secrets of Successful Entrepreneurs

Gladwell says that successful entrepreneurs read the market, see the opportunities, take bold action, but don’t take unnecessary risks with their own capital or with their professional positions.

Instead, they pursue the “sure thing.” They look for ways the market is underserved and fill those needs. Writing a business plan is a must, and buying an existing practice may be less risky than starting up a new one.  They do their marketing consistently.  They compete on value, not just price. The list goes on.

The greatest risk, according to Gladwell, one that unsuccessful entrepreneurs forget, is to prepare adequately or think ahead.  Some risks are unavoidable but many can be anticipated and resolved.

{previously published in the Private Practice Success Newsletter, Dec 2009}

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Billy Joel wrote a song called “New York State of Mind,” an ode to returning to the East Coast after many years in LA.  Many of us in small business are in a “Referral State of Mind,” missing the frequency and reliability of referrals past.  Read on to see how you can increase referrals with grace, during this season of giving.

Who doesn’t love a referral? A client referral from a colleague or professional contact is always prized. Referrals infer trust and goodwill. With a referral, building the initial client connection is easier; the work of therapy, consulting, or coaching can begin right away.

But many of those in private practice have noticed a drop in referrals during the past year, as the recession takes its toll on our businesses. Even in a difficult economy, there is more that you can do to elicit referrals. Here is one strategy to incorporate into your practice-building efforts now that fits into the season of Thanksgiving.

Marketer Bill Cates says that building a business based on referrals is a mind-set. You must become an expert at not just getting referrals but also giving referrals.

Karmic Marketing

Karmic marketing means: What goes around, comes around. In my newest book I call this a “Give to Get” strategy of networking. When business is slow, think:  Who can I connect with and what do I have to give?

Over time, giving to others in your network leads to opportunities and referrals. At the very least you will generate good will, an important cornerstone of a viable business. Read on to see how this works.

My friend Cathy Lange, a leadership and executive coach, has developed the “Give to Get” strategy into a way of life. Cathy seeds many of her professional relationships with the idea of giving. “When I meet someone, I think about how I can be of help, long before I ask for anything,” she explains.

What does Cathy have to give? “Well, I love to take people out for lunch. I offer resources, referrals, open my rolodex. I can spend time, give free advice sometimes have some expertise that makes a difference. I might send an article, invite someone to a networking event, connect them to other resources, make introductions.”

The Give to Get strategy does not mean that you “give away the store.” But you can gift others with a “taste’ of your services as a way of reaching out.

During Thanksgiving week, one massage therapist I know gives free 15-minute massages to those in his business network. “Everyone is so stressed. I just want to help out those I can. I put out the welcome mat on the Friday after Thanksgiving. My colleagues can stop by, chat, and get a mini-back massage. Its fun for me and as they get to know and trust my services, they send me referrals. I don’t offer the mini-massage for that reason, but I welcome the result.”

Giving to Get

One veteran social worker gives back to her local community as a parent. Since she has children at home, she volunteers time at their schools and at the neighborhood soccer team. She gets known through these channels and develops relationships with other parents and teachers. These parents and teachers are her friends, not potential clients. But they need services and she finds herself making a dozen referrals each year to other therapists and health professionals.

Then those professionals reciprocate in kind, because she knows how to ask for referrals back, to keep her business network reciprocal and mutual.

Try this:

1) Create a diagram of concentric circles and place your practice at the center.

2) Name each circle to reflect the links to existing communities that surround your practice now. One may be your geographic community (neighborhood), another may be your professional community (clinical societies, business associations), others may be related to shared interests (sports, arts, volunteer, religious, social).

These do not need to be communities that you currently take part in, only communities that exist. Add as many circles as you need to represent the position of your practice.

3) Pick one circle. Think how to add value to that circle. Don’t contribute money–get personally involved and give something of yourself to this community for the purpose of improving your world. Feeding the circle will enrich your immediate environment, one form of reciprocation.

4) What gifts do you have to give? To get referrals, give referrals.

When referring to other professionals, make sure you establish a reciprocal relationship by explicitly asking that the favor be returned.

5) Other gifts to give? Time, energy, attention, a listening ear, asking good questions, a warm presence, business ideas, humor and lightness, and brainstorming.

{previously published in the Private Practice Success Newsletter, Feb 2010}

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No business is an island.

Sometimes, a private practice can become too private: we need connection to survive and thrive.

The strongest position for a practice is what I would call healthy dependency. Healthy dependency means that your business, no matter the size, relies on the 3 A’s: Affiliation, association, and alliance. When you apply these, your practice soon generates one more A: Abundance. With healthy dependency, your practice has a better chance to be and stay successful, no matter how difficult the economy.

In the book titled Healthy Dependency (Bornstein and Laguirand, 2003) the authors suggest that the path to success begins with knowing how to:

• Lean on others without losing yourself
• Depend without becoming overly dependent
• Move beyond old stereotypes to continually learn and grow

Who’s got your back? If you are worried about a business problem, who can you call for advice, support, suggestions, and brainstorming?

If your answer is “no one” – your goal for 2010 is to develop more business connections. When facing a serious downturn in your practice, having solid professional support can be the difference between resilience or collapse. Here is a short example from my Workbook about the difference connection makes:

Anne, a social worker, has been in solo practice for years. In four months, Anne’s practice took an unexpected drop from 23 clients a week down to 12.

Anne was frightened; a loss of 50% of one’s income and workload is hard to handle. She did what was natural for her: she retreated inside herself, tried to think through what was wrong and tried to calm down. She is quiet, reserved and works in relative isolation from her peers and her community. But after six months, with no change in client count and with a growing credit card debt, she found herself doing something she hadn’t done for 20 years: she looked through the want-ads for an agency job.

Contrast Anne’s story to that of Jill, also a social worker, whose practice also took a sharp drop. Jill belongs to four professional support groups. When Jill’s practice fell off, she talked about her concerns in all of her support groups.

“Right away I got professional support,” she says. “My therapist colleagues assured me that they had gone through this from time to time, so I didn’t feel like a pariah. They offered some good ideas, and they wanted to know each week how I was doing. The business groups took it as a personal mission to keep me motivated. No one could fix the situation—that was up to me to do. But I found the support invaluable to help me stay upbeat. The women’s business group even turned out to be a source of some referrals, once I let them in on my situation.”

Jill’s practice bounced back quickly, because she had so much energy to put towards her practice and she did not suffer any loss of self-esteem or financial crisis. The support acted like fuel and kept her business engine running. Being a small business owner means that you carry the emotional weight of your practice on your shoulders. Having support makes the burden lighter.

Want to take the next step?  Find ways to link, affiliate, collaborate, partner, share, network, or merge with like-minded colleagues.

Debbie Devine, LPC
www.devinerelaxation.com
Rockwall, Texas

Peter Hannah, Seattle Washington, Yourgoogleguy.com

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