Setting Income Goals - Billable vs. Non-Billable Hours

Hey there! A few weeks ago, I posted about setting fees in your private practice. As a follow-up to that, I wanted to break down how I determined my monthly and yearly income/expense benchmarks. This is just my way of setting income goals and it is by no means perfect. I am not an accountant or even have a business background, just a dietitian running a private practice and learning things as I go! You don't necessarily need to do every step listed in every order, again, I am just posting this as a guide for my fellow private practice RDs and RDs-to-be.

Step 1a: Figure Out Your Personal Expenses
I separated my expenses into business and personal, but since I am self-employed, both get factored in to my equation. I found it easiest to figure out what my expenses were per month and then times that by 12 to get the yearly expenses. Any expense that was paid yearly (car insurance, etc), I divided out to see what a monthly average cost would be. My estimated monthly personal expenses ended up totaling $1470, which brought my yearly personal expense total to $17,640.

Examples of personal expenses: food, living (rent, utilities), medical (bills and medications), car-related (gas, inspection, etc), gym membership, phone bill, etc. I also added in here an extra $100 for miscellaneous expenses (i.e. gifts, clothes, etc).

Step 1b: Figure Out Your Business Expenses

Many of you who have been following me the last year or so may know that I do primarily in-home counseling and some work-site counseling. I don't have any overhead for office space rentals, etc. I just wanted to throw that out there since my monthly business expenses may seem a bit low. My estimated monthly business expenses ended up totaling $400 initially; however, I did have to add in health care costs since I pay for my own insurance now. That brought me up to about $700/month for business expenses. 

Examples of business expenses: office supplies (ink, paper, etc), travel/parking for classes/counseling, cooking class materials, referral fees, memberships, business banking fees, health care, liability insurance, faxing services/machine, etc.

Step 2: Figure Out Yearly Income 
Right off the bat, I know that I need to make at least $26,040 to cover my personal and business expenses (monthly expenses x 12). I also wanted to be able to save some of my income and not just live paycheck to paycheck. When I first figured out my desired income, I settled on $40,000 for the year. This level of income would cover my expenses + estimated taxes. For estimated taxes, I averaged about 15.3% being paid towards federal (SS + Medicare) and about 4% for PA tax. I rounded this up to about 25% just to cover myself. With taking out about $10,000/year for taxes and $26,040 for expenses, that left me with about $3,960. This number could vary in real life since I overestimated for expenses and taxes. Also, when doing taxes for the year (or quarterly), you do get some tax breaks for being a business owner and a lot of my expenses were write-offs. Regardless, I still wanted to have a rough estimate to figure out my income goals. If you wanted to have $40,000 be what you would see after taxes, just do the following -> ($40,000 x 25%) + $40,000 = $50,000. You could also think to yourself that you just want to make ends meet. In that case, you could do the following -> (Yearly expenses x 25%) + Yearly expenses = Desired yearly income.

Step 3: Figure Out Monthly Income Goals
One easy way to figure out monthly income goals would be just to divide out your desired yearly income by 12. Still using the $40,000, that would be $3,333/month. With $50,000/year that would be about $4,167/month. From this point, there are a lot of ways you can figure out client goals; however, below I list just two of them. Before I get into that, I just want to point out that you will need to think about what is considered billable versus non-billable hours. You may work a 40-hour week and end up only being able to bill for 20 hours of that. Billable time is what you are getting paid for (i.e. counseling appointment time, class time, etc). Any office work, emails sent, time prepping for an appointment, etc may not be time that you can necessarily bill for. So, when thinking about client goals just know that this is the billable time or amount of time in which you receive payment for services.

Step 4: Figure Out Client Goals (Option 1)
Let's say you have an income goal of $3,333 per month, this breaks down into a weekly goal of about $833. If you only have 8 hours available for billable hours (i.e. 8 hours to see clients) then this means you will need to charge at least $104 per client and see at least 8/week ($32/month) to be able to reach your desired income goal. If you don't take insurance and you already know that you charge $120/hour, this cuts the number of clients you see per month to 28 versus 32. You can think about what your time is worth and determine a rate for counseling or general services that is even higher and ends up cutting down on how many hours you need to spend doing things that count as "billable." If you accept insurance, you are bound to the fee schedule that they set for you. So, if you get reimbursed $120/hour for initial appointments and $108 for follow-up appointments, you may need 10 initials and 20 follow-ups to hit your monthly goal.

Step 5: Figure Out Client Goals (Option 2)
If you do more than just provide counseling services, you can use this option to determine client goals. Working with the $3,333 as a monthly income goal, let's say you run cooking classes or a nutrition class every month. Let's say you make $800 per month to run this class 3 times. This leaves you with $2,533 ($3,333 - $800 class) to still make for the month. This could mean about 24 follow-up appointments at an average of $108/hour or it could mean 5 initial appointments at $120/hour and 18 follow-ups at $108/hour. Although this seems like a lot of numbers and scenarios, it helped me to figure out how many clients I wanted to be able to see per month. Once I figured out a client goal number, I worked on a marketing plan. I mentioned in my last blog post that I wanted to work on more programs and content versus services. I love what I do as a dietitian; however, I find myself working a lot and only being able to bill (I accept insurance) for a portion of that time. I want to free-up my time and still hit my income goals, which would mean decreasing the "service" portion and increasing the "product/program" portion.

Step 6: Overview 
In summary --> Desired Yearly Income (Factoring in Business + Personal Expenses + 25% for Taxes) divided by 12 months = Monthly Income Goal. Another option = Desired Yearly Income divided by 52 weeks (or 50 if you take out a week for vacation and another week for sick/personal time*) = Weekly Income Goal. From your monthly income goal, you can determine how many billable hours (and ultimately clients or classes) you will need to reach this. It really helps knowing your hourly rate.
*Normally, with being employed, you may get paid for personal, vacation and sick days. If you are self-employed and offer a service, if you don't provide the service you don't get paid.

As a way to check my progress monthly, I created two sort of "snapshot" documents for my finances. The first is the yearly look at my total income, total expenses, and net profit. I made this so I can see where my peak months are for income. The second document I created was for my monthly overview. I tracked the number of appointments (scheduled, cancelled, re-scheduled), classes ran, business and personal expenses, and total income received from both classes and counseling. I also include how many miles I drove that month for business. I was using apps to track my expenses/income before; however, I really like having the paper copy to just have it all laid out in front of me. I just recently got Quickbooks and I really love it, but again just like having my own sheet that makes sense to me.

I hope this blog helped you at least a bit in figuring out your own income/expense goals. As someone who doesn't have a background in finance/accounting, I wanted to just be able to share my process for setting income/client goals. Leave a comment and let me know what other resources have helped you with figuring out finances. I hope to post my snapshot documents on my website; however, if you wanted a copy to get you started, shoot me an email :)

Tips for Setting Fees in Private Practice

After turning down an opportunity for a another set of contract classes that I had run in the past, I thought this would be the perfect time to talk about how important knowing your worth is and how to set fees based on that. It is hard to put a price on the service provided as a Dietitian. I want to help people and almost feel guilty charging too much and losing a client; however, at the same time, I rely on my business for income now. I have changed my fees multiple times in the past few years, so today's blog is going to guide you through my thought process and give you tips for setting your own fees (for individual sessions + classes).

Research Dietitians in Your Area
One of the first things I did when trying to figure out what to charge for counseling sessions was to see what other RDs were charging near me. A few did not list their fees on their website (I will talk about this in other blogs); however, the majority were in the $120-$175 range for an initial 1-hour consultation. I ended up going a bit lower since I had just started my practice and didn't have a masters degree or specialty certification yet.

Factor in Expertise + Education
As I mentioned earlier, I low-balled my initial fees for counseling; however, after getting my masters and having my practice for a year or two, I bumped up my fees to match what others charged in my area. When setting your hourly rate or counseling fees, think about your education, experience, certifications, etc. Your knowledge and level of experience is adding to the value that the client receives in the session (or class).

Base off of Insurance Fee Schedules
If you are a provider for insurance companies, you will have a flat rate that they will reimburse you and that changes slightly from initial to follow-up visit for MNT. You can use the rate that insurance reimburses for self-paying clients or choose to make that a little bit lower since they are paying out-of-pocket. The fee schedule for insurances helped me to alter my pricing a bit.

Triple Your Hourly Employee Rate
Something else I thought about when setting fees for counseling was determining what I was paid hourly when I was an employee and multiplying that by 3. Three seems arbitrary; however, I thought that 1/3 goes to me, 1/3 to taxes, and 1/3 to time spent on prepping. This can just help to give you that baseline rate to build from.

Offer Packages + Add-ins
When I think about my initial counseling fee, I also factor in what other "service" I bring to the session. Will the session include bio-metrics? Will I calculate nutrient needs? Will this be an in-home visit or office-based visit? If your initial session is simpler, you can charge a bit lower for the hour and have add-ins that clients can choose from. Say they want menu planning help, that can be added for an extra $60 (or whatever you will charge). Maybe they want a nutrient analysis done for their current meal plan, that can be an extra $50 or so. I also find it helpful to offer packages to clients.

Note About Charging for Classes
The classes were the hardest for me to determine rates for; however, I found the formula below to help me:
Start with Base Rate - $100/hr (I base this off of my flat counseling rate)
+ Travel Expenses - $.50/mile
+ Parking Fees
+ Prep Time/Lesson Development - $40/hour
+ Cost for Supplies/Handouts

When I determine how I am charging for a class, I alter it on a case-to-case basis. My base rate my be lower or higher depending on if this is an ongoing class or a one-time seminar. If I am driving for more than 30-minutes, I may also add in a fee based on the time spent in my car. Parking may be free for some classes/areas; however, others tend to be $20 just for the hour, so this will change too. If I created lessons on this topic before, I may charge $30 or $40/hour for prep time. If this is a new topic or the client wants it to be more involved, then I may charge $50 or $60 for the hour of prep. Lastly, I factor in a few dollars based off of how many handouts I needed. If I am providing a cooking class, I estimate the amount of food needed and will have another fee added to the pricing.

There are so many ways that you can calculate fees for classes. I have often charged a flat rate (lower than $100) and then added in a cost per person ($20/head) with a minimum number required to run the class. Charging for classes will definitely vary per client/company. For some non-profits, I have accepted a lower rate for a one-time class in exchange for them distributing my business cards or keeping me on a list as a dietitian. It is ultimately up to you to decide what you feel the most comfortable charging.

Final Tips
Setting fees for individual clients and group sessions is often difficult. One of the key things I have learned is really knowing your worth and not being afraid to walk away from something. I have had companies/organizations try and take advantage of my services. I even had one goes as far as guilt tripping me into thinking I was a monster for trying to charge even 1/3 of what I normally do. I am all about giving back to my community and providing free programs/seminars. What I need to be careful of is keeping the balance between free and paid work. I often think about if doing something will open doors for me or create opportunity. If the answer is yes, I will provide a free service (i.e. lunch n' learn for a company I may partner with, teaching in a school for the day, etc). If the answer is absolutely no (or slim), I rethink my decision. After all, one of the reasons I went into private practice, which I am sure may be the reason for many, is having the ability to choose your own destination.

Leave a comment and let me know if this blog was helpful to you in determining how you will set fees for your practice. Was there something else you thought about that I didn't mention?

Stay tuned for my next blog that will break down billable hours + setting income goals.

Two-Month Private Practice Anniversary

Today official marks the two-month milestone of quitting my full-time job and jumping into a full-time private practice. If you have read my previous blogs, I recently wrote on finding out what success looked like for me and what direction I wanted to take my practice in. While I am still figuring out what my long-term goals are, I know that I am rushing for things to happen, which is not good. It mean it does make sense that I was getting ahead of myself since my practice became my sole income source. I was constantly trying to plan my next move, develop more ideas, create partnerships, and more! I was becoming overwhelmed and ultimately beginning to dislike the position I was in.

I thought back to my previous 3 years of just doing my practice on the side, without much real effort (minus the insurance provider part). During that time, I still gained clients and had opportunities arise. I realized I was stressing myself out over just 2-months of focusing all of my efforts on my business. I thought to myself that I really did a lot more than I was giving myself credit for. I did something scary and challenging by quitting my job in December. I reached out to potential partners and gain two solid ones on top of those I already was working with. I landed a contract for a 6-week class that turned into an additional 7-week class (since the participants were so happy with the program I did). I created and stuck to a more consistent blog, Facebook, Twitter, and Instagram post schedule. I began networking with other Dietitians in my area. I took the chance to run for a position with the Philadelphia Academy of Nutrition & Dietetics. I became a blogger for Eat Right PA. The list goes on and on.

You may be reading this thinking to yourself that it may be great I am doing all of these things; however, why should you care. Well, if you are in private practice or are thinking about it you may probably get to the stage that I am in where you wonder if you should be doing more. You may wonder why (constantly) you chose to do something that is scary and unknown most of the time. I challenge you to take a few moments and write out all of the positive things you have done in the last month or even week. Doing so can help you to put in perspective just how much effort you have put into your business. The reason why I do this despite all of the doubts I have is that it is so rewarding to have success in something that you worked so hard for on your own (i.e. without a large company supporting you along the way, especially financially).

While the first two months have been flying by I know that I am doing all the right things and I need to not worry so much about forcing new ideas or opportunities. I know that if I keep doing what I am doing on a daily basis (at the level of quality I am), these opportunities will come, just as they have in the past. Getting overwhelmed is stressful and to be blunt, useless. It paralyzes you and can inhibit your creativity and drive. If I start to get overwhelmed, I journal (which really helps me to see what I have accomplished already), I go for a walk, I make a list, I go to the gym, etc. Taking that time to clear my head gets me back in the game, gets me motivated, and helps me to weed through clutter to make real progress.

So, what are your stressing over that is useless and inhibiting your creativity and drive for success?

Check out my last blog post on "Tackling Your Business Fears"

Tackling Business Fears

How many of you reading this are putting something off out of fear? Fear is something that can be overwhelming and paralyzing. Fear of contacting a new partnership company. Fear of making the first step to starting your own business. Fear of driving. Fear of the dark. Fear of a new relationship. Fear of leaving the comfortable for the unknown. Fear of failure. Fear of change.

Recently, I have let my own fears drive my emotions and ultimately my private practice. Two months after leaving my full-time job, I started to panic. What if I don't make enough money to survive? What if I don't get any more clients? I began to feel unsure of my next step and had a dip in my motivation. After reading multiple business books and filling my social media with positive business owners, I realized that everyone has similar fears to mine; however, the key to overcoming them was doing something about it. I could sit and worry all day long and that wouldn't solve anything. In fact, that would probably contribute to the possibility of my worst fears happening since I was ultimately neglecting my business.

Through working with my own fears, I have laid out 3 steps that I believe could be beneficial in many situations. These steps are a combination of thoughts from books, articles, my own experiences, and friends and family members. I hope these steps will help you as much as they have been helping me!

Step 1 - Write out the worst case scenario
What could happen if your fears came true? One of my fears is not getting enough clients to sustain my business. This is what my worst case scenario looked like: Loss of clients (or lack of gaining new clients) --> Loss of income --> Drain or use my savings --> Lean on my boyfriend (since we live together) --> Close my business --> Feeling like I failed and disappointed those who believed in me --> Be forced to find an actually 9-5 job, which I wasn't thrilled about. One thing I did when I wrote out the worst case scenario was think about a rebuttal. Loss of clients, maybe I would find better ones? Use my savings, isn't this what I have been saving for anyways? Lean on my boyfriend, didn't we talk about this being a possibility and work it out financially? Feeling like I failed, well don't they know how hard I tried? Finding a 9-5, maybe it is something I will love? I feeling like having the little rebuttal almost helps you to emotionally prepare for what could happen and it makes it easier to settle those fears for the time being. When thinking about your worst case scenario, I would think about ways you could fix things along the way too. You don't want to have a small loss of income and immediately think you need to forgo the business and find a job. Think about steps you could take if just one of those fears start to develop and how you could rebound from it.

Step 2 - Write out the best case scenario
Let's say you want to take a risk and that fear is stopping you. Once you have your fears broken down, think about what is the best thing that could happen. Take my client example from earlier: Influx of clients --> Boost in income --> Ability to grow my business --> Hire assistant or an additional dietitian --> Allows me to do more creating behind the scenes --> More products developed --> More opportunities with new clients --> Working less to allow time for a family --> Feeling really awesome! The possibilities seem endless in this scenario. When you take a risk in your business or personal life, you have the opportunity to grow, make connections, and succeed.

Step 3 - Start your day with one thing that you fear
I was reading the "Tools of Titans" by Tim Ferriss and I came across a section that said something like, "What we fear doing most is usually what we most need to do," which i believe was an excerpt from a previous work of his. That quote resonated with me so much since I was in a place of worry and fear of my business direction. I decided then that I would start every day with something that I feared or something that I needed to do, but didn't really want to. Doing this made me feel charged, accomplished, and more confident afterwards. Instead of letting that fear continue to paralyze you, nip it in the butt first thing in the morning. It doesn't have to be a huge jump every morning, but instead, can be a small step in overcoming your fears.

Fear is definitely hard to overcome, especially in business. It takes courage and strength to push through the uncomfortable and grow. I would highly suggest finding someone close to you who could give you the honest truth about your fears. Are they even rational? Do you need a good shake? This person will need to be able to give you honest feedback in that they can't just agree with everything you say. Find someone who will challenge you and push you.

I hope reading this blog helped you to either take the first steps in identifying your fears or take actions to overcome them. Leave me a comment to let me know what you are working on!

Private Practice Tips: Organization & Prioritizing

I was recently approached by a fellow Dietitian and friend of mine about how I stay organized and prioritize my time. The organizational side of it seemed like a no brainer for me to comment on. I have always been "highly organized" (as some would say) since I carried my planner everywhere and when opened it was an array of colors, each meaning something different. Being in full-time private practice, I realized my method of keeping organized was still efficient, but, not as effective for managing my time properly and ultimately prioritizing things daily.

Now, I am definitely one for list making. I will go as far as adding "shower" or "eat", which some find hilarious that I even need to put those things on a list. Making a daily list is a great idea; however, I find it best to break down my priorities for business and personal health. When I would just write down everything I needed to do on a list, I would often not accomplish what I wanted (no surprise there). I also found that important tasks were getting pushed to later in the week. The unrealistic expectation I put on myself was actually making me feel less productive (see more on this from Week 1 of my Private Practice).

Honestly, if you still like the pen and paper method, which I love, getting yourself a good planner is the first place to start. The planner I have now allows space for you to set monthly and weekly goals/tasks. I usually put a bunch of ideas and goals on there sporadically and then take the time daily to break down my weekly tasks into daily priorities. I usually set 3-5 daily priorities for myself (as related to my business) and this widely varies based on what clients/classes I have scheduled. I also set personal/health goals for the day, which are always a priority. These personal/health goals usually involve things like exercise* and meal prep. Since my planner has space for me to write out weekly tasks, my daily goal is to take 1-3 items from that master list that isn't a priority for the day and get it done.

When thinking about prioritizing my daily tasks, I had to think to myself, "What am I doing out of habit?" Often, we do things without even realizing and they end up being a huge time sink. One thing I had to change when prioritizing, was checking my email every time my phone went off. I now limit this to about 3 times per day. Think to yourself what are you doing now that can be changed, eliminated, or simplified to allow more time for your priorities.

With making a priority list for the day, remember not to overbook yourself. If you are stretched to the max, the quality of your interactions can suffer. Also, don't continue adding to your list if you find yourself with more time to spare. Use that time to do something else you enjoy (hang with a friend, go for a walk, play an instrument, etc). I often felt like if I was done everything by 3pm, I still needed to do more after that. I mean, don't business owners work all hours of the day?! It was hard for me to get used to the idea that I didn't need to put in 10-12 hour days anymore and if I did, it was for a particular reason and not my status quo.

Last point I have for you with organization and prioritizing is to be okay with having to re-prioritize your list. I woke up one morning and realized that my Wordpress "about me" section was from 4-years ago. Turns out that when I updated my "about me" I only did it for the one page and not the other...oops. That instantly became my priority for the day. I ended up spending about 2 hours redoing my Wordpress layout. The next day, I ended up spending 3 hours updating my "services" page on my website. This replaced the time I was going to spend following up with potential partnerships. Was it a good choice? Definitely. A lot of businesses will go directly to my website to find out what I do, especially if I just reached out to them for a potential partnership proposal, so having a well polished website is crucial.

I hope this helps you to organize your business (or daily habits) to be more effective and efficient. Leave a comment about how this has helped you or let me know you tips for staying organized!


**Just a side note here. As a Dietitian, I talk about exercise with my clients for the various health benefits; however, I make it a priority for my daily business life because I find that it helps me to recharge, clear my mind, and just feel better overall. I usually aim for a short, 15-minute, workout daily and a 45-minute workout 4 times per week. I also try and get up every hour from my computer to walk around my apartment. Your workout schedule can be quite different from this and my routine is not an indicator of any "gold standard" approach.