Practice Management Blog

How to Start a Therapy Private Practice

Starting your own therapy private practice can be fulfilling and rewarding. And, with the ever-increasing demand for mental health services, this path offers plenty of opportunity for growth.

In fact, the mental healthcare field is projected to keep growing over the next 10 years; and at an above-average rate for several specialties.

But, owning a private practice involves responsibilities beyond clinical work. From managing finances to marketing your services, there’s much to consider. As Chris Stout notes, “Successful practice in whatever area or specialty takes work; there are no overnight successes. But being successful is quite doable.”

With the right guidance and strategies, navigating these responsibilities becomes more manageable. This article outlines some crucial steps to help you launch and grow your private therapy practice successfully.

Let’s dive in!

Table of Contents

Before Starting a Therapy Private Practice

Here’s a discipline you’ll likely be familiar with as an allied health practitioner – research!

The first thing to do before opening a private therapy practice is to conduct comprehensive research to understand the regulatory landscape your private practice will operate in.

This way, you’ll be equipped to navigate the complexities of opening a private therapy practice and position yourself for success.

1. Conduct Research

Assess Local Demand

Evaluate the local demand for therapy services in your area. Consider factors like population demographics, existing mental health resources and any service gaps. This will help you gauge the potential client base for your practice and tailor your services accordingly.

Assess the Competition

Take the time to research existing therapy practices in your area. Identify their strengths, weaknesses, and the unique services they offer. If a particular practice is especially popular, investigate the services and packages it offers and assess its policies and customer reviews (if any).

Identify Your Niche

Determine what sets your therapy practice apart from others. Identify your niche or specialization based on your expertise, interests and community needs.

Whether you offer trauma-informed therapy, family counseling or EMDR, having a clear niche will help attract clients who connect with your approach.

When deciding on your niche, consider the type of therapy you find rewarding. It may be a particular population (e.g. children, adolescents, veterans, mothers), presenting concern (e.g. anxiety, trauma, burnout) an intervention (e.g. EMDR, ACT, IPT, psychotherapy) or a delivery mode (e.g. individual, group, online, workshops). Think about how you could position yourself as the go-to person for this in your local area.

Understand Therapy Regulations

Acquaint yourself with the regulations governing therapy practices in your region and local area. This includes understanding education level, licensing requirements for therapists, and any regulations specific to running a private practice.

Stay informed about ethical guidelines and professional standards to ensure compliance and uphold the highest standards of care.

Investigate Insurance Requirements

As a health professional, it’s imperative to investigate the types of insurance policies needed, typically professional liability insurance, general liability insurance and property insurance.

Professional liability insurance, also known as malpractice insurance, protects against claims related to the professional services provided, covering legal costs and settlements arising from allegations of negligence or harm.

General liability insurance offers broader coverage, protecting against third-party claims for bodily injury, property damage and advertising injury.

Additionally, if you own or lease a physical space for your practice, property insurance will cover damage to your premises and its contents due to events like fire or theft.

It’s also important to check whether there are specific insurance requirements for private therapy practices, as these can vary. An insurance broker familiar with the healthcare sector can provide personalized advice and ensure you have comprehensive coverage tailored to your practice’s unique needs. Your professional governing bodies or associations can also provide guidance on these matters.

2. Plan Your Finances

A crucial aspect of starting a therapy private practice is to establish a solid financial plan and, if necessary, secure funding. Here’s what you need to consider:


Explore opportunities to secure funding for your practice. Options might include the following:

  • A small business loan.
  • Grants for mental health professionals – research local resources and organizations that provide financial support to healthcare entrepreneurs.
  • Personal investment through savings.
  • Partner with other therapists to share bills and possibly even afford a larger space for more services.

Business Plan

Your new private practice will essentially be a startup business – and every startup business needs a comprehensive business plan. This is especially true if you’re considering applying for a loan to fund your practice.

Essentially, a business plan needs to do the following:

  • Outline your private practice’s mission and goals.
  • Illustrate the results of your market research.
  • Define your target market.
  • Specify the services you’ll offer.
  • Provide financial projections, including an estimation of your break-even point and the profit margins you’ll operate on.
  • Detail your marketing plan.

If this seems daunting, consider using the Power Diary guide to writing a private practice business plan.


Most reputable funders will want to see a detailed budget as part of your business’s financial planning.

Expenses to consider in your budget include:

Business Structure & Registration

Determine the most suitable business structure for your practice. Whether you’ll be operating as a sole proprietorship, partnership, LLC, or corporation, you must understand your jurisdiction’s business registration requirements.

Consider consulting with a legal professional or accountant to ensure compliance and understand the potential tax implications of the business structure you’re considering.

Compensation Model

Explore insurance requirements (for example, Medicare) to understand the reimbursement process for therapy services. Familiarize yourself with the client insurance payment process, or decide whether (or under which conditions) you’ll accept private paying clients.

Choose a compensation model that aligns with your practice’s goals and client population. You may decide to accept insurance payments, operate on a private pay basis or adopt a hybrid model that combines both approaches.

Rate Determination

When setting your rates, consider factors like your expertise, market demand and local economic conditions. Conduct market research to benchmark your rates against competitors while ensuring that your pricing strategy adequately reflects the value of your services.

3. Find the Right Location

Choosing the right location for your therapy practice is crucial for its success. When selecting a physical location, prioritize convenience and accessibility. A site with excellent visibility and ample parking will make it easier for clients to access your services and enhance the attractiveness of your practice. Ensure the building complies with local zoning regulations and fire codes, which are essential for legal compliance and client safety.

If you’re not ready to commit or haven’t been able to find the right location, starting a telehealth-only practice is a potential option. This model requires a secure and private space in your home for conducting appointments, ensuring confidentiality and a professional setting for your sessions. Telehealth practices must also follow best practices in digital security and privacy to protect client information and maintain trust.

4. Decide on Staffing

Adopt a strategic approach to recruitment to build a cohesive and capable team that supports the growth and sustainability of your practice.

Carefully consider your staffing needs with the following key points in mind:

Solo Practice vs. Recruitment

Decide whether you’ll start as a solo practitioner or if you’ll need to recruit support staff or additional therapists. Beginning as a solo practice allows for more autonomy and control over the business, but as your practice grows, you may need to expand your team to meet demand.

Assess your workload, financial resources and long-term goals to determine the most suitable staffing approach.

Start Small & Expand

It’s advisable to start small and gradually expand your team as needed. This approach allows you to maintain quality control, manage costs effectively and ensure that each new addition aligns with your practice’s values and culture.

To limit your overheads, consider hiring virtual support staff, such as receptionists or administrative assistants, to handle non-clinical tasks and free up your time for client care.

5. Choose the Right Practice Management Software

The right practice management software will enhance your business’s efficiency, productivity and security.

Your practice management software should be secure and user-friendly so essential tasks such as scheduling, billing and client data management are streamlined. A comprehensive system centralizes these functions, allowing you to manage your practice more efficiently and focus on providing quality care to clients.

Key Features to Consider

Look for software that offers features designed for the needs of therapy practices:

  • Online booking: Enable clients to schedule appointments conveniently through a secure online portal, reducing administrative burden and improving accessibility.
  • Telehealth integration: Telehealth capabilities are essential for offering remote therapy sessions. Ensure the software supports HIPAA-compliant telehealth services.
  • Automated invoicing: Streamline the billing process with automated invoicing and payment reminders, reducing human error and ensuring timely payments.
  • Reporting tools: Access insightful reports on practice performance, client demographics and financial metrics to inform decision-making and track progress over time.
  • Security measures: Choose software with robust security features to safeguard sensitive client data and maintain compliance with privacy regulations like HIPAA.

6. Develop a Name & Brand

Invest time and effort into naming and branding your practice to create a strong and distinctive identity.

Your practice’s brand is more than just a name or logo; it influences the overall impression clients have of your practice. A well-defined brand distinguishes your practice from competitors, communicates your values and expertise, and builds trust and credibility.

Running a Private Therapy Practice

1. Internal Organization

Establish robust intake, billing and scheduling systems to ensure smooth operations and enhance client satisfaction with your therapy practice. This will save you time (and money!).

  • Calendar: A calendar with a waitlist function helps therapists stay organized by efficiently managing appointments, filling cancellations and arranging available time slots to accommodate clients’ needs promptly.
  • Operations manual: A practice operations manual serves as a comprehensive operations guide to administrative and professional staff alike. In it, you can outline policies, procedures, and protocols, promoting consistency, compliance, and efficient day-to-day operations.
  • Reporting and analytics: Reporting systems provide valuable insights into practice performance, client demographics and financial metrics. This will empower you to make data-driven decisions, track progress and identify areas for improvement.
  • Client interactions: Features like online booking, invoicing and online forms streamline client interactions and enhance convenience, accessibility and the overall client experience.
  • Telehealth: In-platform telehealth capabilities enable therapists to offer remote therapy sessions. This expands access to care and accommodates clients who have a preference for virtual appointments.

2. Client Management

Delivering a professional experience for clients is paramount in private therapy practice. Using efficient software makes this much easier.

  • Online forms: Online forms simplify the intake process, allowing clients to complete necessary forms conveniently from their own devices, reducing paperwork and streamlining administrative tasks.
  • Appointment booking: Online booking enhances accessibility for clients, allowing them to schedule appointments at their convenience, 24/7.
  • Payments and invoices: Features like online invoicing, contactless payments and automated invoice generation streamline billing processes. This improves efficiency and convenience for therapists and clients alike.
  • Therapy notes: Using a practice management system for therapy notes offers many advantages, including secure storage, easy access and adjustable templates.
  • Telehealth: Telehealth enables therapists to connect with clients remotely, expand reach, and provide flexible care options, particularly in situations where in-person sessions aren’t feasible or preferred.

Marketing Your Therapy Private Practice

A comprehensive marketing plan is essential for success when starting a private therapy practice. It’s also an essential part of your business plan.

Here’s how to approach it:

1. Develop a digital marketing strategy

Digital marketing encompasses online tactics aimed at promoting your practice and attracting clients.

  • Website and SEO: A professional website is a crucial tool for establishing credibility and visibility online. Incorporating search engine optimization (SEO) techniques helps improve your website’s visibility in search engine results, making it easier for potential clients to find you when searching for therapy services in your area. If you’re a telehealth-only practice, SEO is even more important as you’re not limited to local referrals and will need to extend your reach.
  • Social media: Social media platforms offer an excellent opportunity to engage with your target audience, share valuable content and build relationships. You can increase brand awareness, foster community, and attract potential clients by establishing a presence on platforms like Facebook, Instagram and LinkedIn. Consider which platform your target population is likely to access information on therapy services.
  • Email marketing: Email marketing allows you to communicate directly with clients and prospective clients, providing valuable resources, updates and promotions. By nurturing relationships through email campaigns, you can maintain engagement, encourage repeat visits, and generate referrals. Add a mailing list sign-up button on your website to capture new leads.
  • SMS messaging: SMS messaging provides a convenient and immediate channel to reach clients, send appointment reminders and share important updates. With high open rates and quick response times, SMS messaging can enhance client communication and engagement. It also helps reduce cancellations and no-show appointments.
  • Google ads and paid advertising: Paid advertising through platforms like Google Ads allows you to target specific keywords and demographics, increasing your practice’s visibility to potential clients. You can drive traffic to your website and generate leads efficiently by investing in targeted paid advertising campaigns.

2. Offline Marketing Techniques

Offline marketing techniques can definitely be worth the investment.

In our experience, these are the best:

  • Referral introduction letters: Send referral introduction letters to local healthcare providers, like GPs, to introduce your practice and encourage collaboration.
  • Networking events: Attend networking events within your community to create opportunities to connect with other professionals, establish partnerships, and promote your practice. Networking allows you to build a referral network, gain insights into community needs and enhance your visibility.
  • Brochure distribution: Distribute brochures or informational materials in local businesses, community centers and healthcare facilities to raise awareness of your practice and services. Brochures serve as tangible reminders of your practice, making it easy for potential clients to learn about you.

Additional Considerations

We’ve covered the fundamentals of starting a therapy private practice, but there are a few more considerations to bear in mind.


As you set up your private therapy practice, ensure compliance with all relevant regulations to protect client confidentiality and maintain ethical standards.

Compliance with regulations like AHPRA, HIPAA and other relevant data privacy laws is paramount for building a practice that your clients and referrers trust.

Continuing Education

Staying current with industry trends and advancements through ongoing learning and professional development is essential for providing quality care. Engage in ongoing education to enhance your skills, stay abreast of new therapeutic techniques, and adapt to evolving best practices in the field.


Starting a therapy private practice can be an exciting venture filled with opportunities for growth and impact. It creates flexibility and space to follow your own interests by working with client populations you’re passionate about.

As we’ve explored, there are multiple factors to consider, from crafting a solid business plan to implementing effective marketing strategies and ensuring compliance with regulations.
With the right tools and support, the journey becomes more manageable. That’s where Power Diary comes in. Our comprehensive practice management software provides everything you need to get your new business up and running.

Ready to take the next step in building your therapy private practice? Sign up for a FREE TRIAL of Power Diary now – no credit card required.

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