Ask Joe: How to Make a Budget | POP 608

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Image of Joe Sanok. On this therapist podcast, podcaster, consultant and author, talks about how to make a budget.

How do you structure your business budget? Which budgeting essentials should you make sure to include in the annual planning? What do general marketing budgets look like?

In this podcast episode, Joe Sanok answers your questions about how to create a budget.

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In This Podcast

  • Keep tabs on your numbers
  • Budget essentials
  • Marketing budgets
  • Overall budget

Keep tabs on your numbers

Have an idea of how much money is coming in and going out of your business.

As a general rule of thumb I would take whatever came in, subtract the costs [and] all the expenses, and then I would pay myself 50% of whatever the net was. (Joe Sanok)

Why 50%?

  • To keep ample money aside to pay tax when the time comes
  • Save an emergency fund valued at a couple of months of expenses.

Budget essentials

Assuming you are budgeting for a business, some of the essentials you need are:

  • Electronic health records if you are billing insurance
  • Having an assistant that answers phones and schedules intake
  • Savings of at least 10% of the business value that you can put into marketing

Very few therapists are putting money into marketing, and so even if 5% of your budget is going into marketing, that’s a huge amount that you’re putting into the marketing to get your name out there. (Joe Sanok)

Marketing budgets

There are three key important aspects to marketing a business.

Brand Knowledge:

You want your customers to know that you exist. Work on boosting your company’s general brand awareness.

Brand Attractiveness:

What is your unique selling point? How do you make your practice stand out? Some finances from the marketing budget can go into:

  • Getting professional assistance with taking fun, professional, and light-hearted headshots for your website
  • Doing video marketing
  • Paper-click advertising

Brand Trust:

Now that people know and like you, you need to get them to trust you. This is done through you creating content that resonates with your clients and speaks directly to their pain points.

Overall budget


As a telehealth therapist, you may not be spending that much on rent, however, if you own property for your business, the general rule is not to pay rent that is more than 15% of your overall gross income. This depends on where you work, as some property markets are more expensive than others.

Keep an eye on trends:

Are you spending more on marketing overtime than you expected? Are you spending more on staff overtime than expected? Notice where things are growing and where things are contracted and adjust your budget accordingly.

Your income:

Make sure that you are taking at least 50% of the net income home. Run your numbers, starting with how much you want to bring home a year, and work backward to find how much you should be making per session to make that annual amount a reality.

Useful Links mentioned in this episode:

Check out these additional resources:

Meet Joe Sanok

A photo of Joe Sanok is displayed. Joe, private practice consultant, offers helpful advice for group practice owners to grow their private practice. His therapist podcast, Practice of the Practice, offers this advice.

Joe Sanok helps counselors to create thriving practices that are the envy of other counselors. He has helped counselors to grow their businesses by 50-500% and is proud of all the private practice owners that are growing their income, influence, and impact on the world. Click here to explore consulting with Joe.

Thanks For Listening!

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Podcast Transcription

This is the Practice of the Practice podcast with Joe Sanok, session number 608.

Well, I’m Joe Sanok your host and every single week I’m doing these Ask Joe shows where I take questions from you about private practice. So you can go over to and submit your question there, and hopefully I’ll get to it. I’ll also give you a shout out if you put your name in there. So today we have a question from Marissa Monday from Restorative Counseling Services in Atlanta, Georgia. Marissa had a few questions. So we’ll probably do a couple of episodes with Marissa’s questions, but the first question she had is how do you create a budget that’s not profit first? How do you create a budget that’s not profit first? Well, there’s a couple of things that we want to think through just when we’re thinking budgets at all and you want to have more money coming in than going out.

So as just a basic principle, let’s start with that that you want to have a basic idea of what’s coming in. So before I started doing profit first, which I loosely do that, I think it helps you stay organized, but there’s a lot of different ways that you can do this. As a general rule of thumb I would take whatever came in, subtract the costs, so all the expenses, so that could be rent, marketing, whatever and then I would pay myself 50% of whatever the net was. So why 50%? Well, for a few reasons, I will always want to have more than enough money at tax time. At the end of doing my taxes for each year, then I would do a payout. So say over time I’m growing that fund and paying myself 50% of it and then tax time comes and there’s $50,000 in the account and then maybe I only owed 10,000.

So then I may say, “Okay, I want to keep a few months of expenses for my rent or if I have an assistant or other systems, I might want to keep a few months of those expenses in there in case we have a down month.” So maybe there’s that 50,000, I owe 15,000 in taxes, so now I’ve got 35,000 in there. Maybe I decided I’m going to keep 15 in there so then at tax time, I would pay myself out that 20 additional thousand as a disbursement, an owner disbursement. So that’s one way to do it where you’re kind of building up the fund throughout the year, and then you do a bigger payout. You can also kind of do some payouts after you do your quarterly taxes.

One year I had an accountant that I ended up firing and he was so off with my quarterly taxes. At tax time I owed $30,000 more than I thought. Luckily I’d used this method where throughout that whole year I was just saving up the money. So I actually had that money just sitting in the account. I thought it was going to be a payout to me and my family, but it wasn’t but at least I had it. I didn’t have to do an extension or kind of be underwater. So as kind of a global approach, and again, I’m not an accountant, I’m not a bookkeeper. I’m speaking from personal experience. My attorney always makes me say that. So just make sure that you’re talking to some professional at some point with your budget.

So when you’re looking at making a budget, you want to think about a few different things. You’re doing this as a business not as your volunteer work, I’m assuming. So we want to make sure that you’re making a good amount of money, that money isn’t just going all over the place. So there’s some basic things that you’re going to need to have. You’re going to need to have probably electronic health records, especially if you’re billing insurances. It’s almost always in your interest to have some sort of assistant or virtual assistant that’s answering phones, scheduling intakes even if you’re a part-time practice. I had a virtual assistant even when I still had my full-time job, because then we can have the phone calls throughout the day, get those people scheduled. In it was super efficient. So you want to look at those efficiencies.

Also when you’re building your budget, you want to make sure you have at least 10% or so that you can put into marketing. Very few therapists are putting money into marketing. So even if you’re doing 5% of your budget is going into that marketing that’s a huge amount that you’re putting into the marketing to really get your name out there. So when you’re thinking about marketing, there’s a few different things that you want to think through. So Zig Ziglar teaches us about know, like, and trust. So first you want people to even know that you exist. So that, if a friend says, “I’m going through this thing. Do you know any good therapists that you come to mind if you’re a good fit for that person?” So we want to just do general brand awareness.

Next we want to have the people like you. So that you have kind of a unique selling point, that you stand out, that you aren’t just your typical practice that helps people going through anxiety, depression, whatever. You want it to be, that you stand out. So sometimes those marketing dollars can go into having great professional and fun and lighthearted, headshots done. It could be doing some video marketing. It could be a number of different things. So then you may also want to do some pay-per-click advertising through Google or through Facebook or Instagram or LinkedIn, depending on what your goals are.

Also know like trust, now we want to definitely make sure that people trust you with what you’re talking about, what you’re helping people with. So that’s going to be through your website, through blogging, through that sort of marketing. So some of your budget you may want to have go into that.
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I’m a big fan of experimentation of doing A-B testing. So if you’re putting a thousand dollars into one thing and a thousand dollars into another, see which one wins. If you’re putting five hours of your time into one thing and five hours into another, see which one wins, which gives you the best return on investment. So you’re then going to be looking at your overall budget. I mean, if you’re a telehealth therapist, you don’t need to worry as much about rent, but most people are going to have some sort of office. You typically don’t want that to be more than 15% of your overall gross income but in some markets that’s really unreasonable. So I mean, if you’re in downtown New York, midtown or wherever, that’s going to be more expensive than if you’re in more of a rural community where maybe there’s not as much competition for business space.

So you’re also going to want to look at how these trends work over time. So are you spending more on marketing over time than you expected? Are you spending more on staff over time? Where are you seeing things grow and where are they contracting? So when you build out that budget you want to make sure that you’re at least taking 50% of that net home. And really, that amount, you can quickly figure out the math that if you each week, just multiply that out by how many weeks that you’re doing it. So let’s just run some basic numbers. So one thing that I do when I’m doing a budget is I’ll take the amount that I want to make and multiply it times 1.5 at minimum. So let’s say I want to make a hundred thousand dollars, multiply that times 1.5, so that’s $150,000 a year that needs to come in.

Then you need to run your own numbers to see if that 1.5 variable is accurate, or if you need to increase that to 1.6, 1.7 to account for taxes and other things. Let’s say we use that 1.5. Now I can say, okay, how many weeks a year do I want to work? So maybe I want to take four weeks off. So we’re going to divide that 150 by 48 weeks. So that means I need to bring in $3,125 per week. So now I can either divide that by what I’m charging, to know how many sessions I need to do, or I can look at my schedule and see how many openings I have and then that tells me what I need to charge. So you can do it either way.

So let’s say I look at my schedule and I see that on Mondays I want to do three sessions, on Tuesdays I can do five, so now I’m up to eight. On Wednesdays. I can do five more so now I’m up to 13 and then say you have, I don’t know, you can do seven on Thursday, so around 20 sessions a week. So if I say, I don’t think that I’m going to have many no-shows, but let’s do it based on 22 sessions a week, you have a little buffer, so if I take that $3,125 a week, divide that by 22 sessions, that means I have to be making $142.4 cents every single session. So you may say I’m going to just charge $150 per session and be private pay or I’m going to be out of network. Or if you’re taking insurance where you’re only getting $115, that means your private pay needs to be significantly higher, like $175, $180, so that you can hit that financial goal. So when you know your numbers, that then allows you to predict your budget. It allows you to do so many other things.

Well, that’s the Ask Joe show today. We’ve got more questions coming up.

We really want to thank Gusto for being a sponsor. Gusto is the best payroll management system out there. It’s what we use at Practice of the Practice. If you use promo code Joe at checkout, you’re going to get three months for free to test it out. We love Gusto. Gusto has made things so much easier, even in Group Practice Boss over and over when people are hiring their W2’s, they’re using Gusto across their practice, just to make the taxes and all of those things that are just a pain to keep track of, all of those in order.

So thanks so much for letting me into your ears and into your brain. Have an amazing day. I’ll talk to you soon.

Special thanks to the band Silence is Sexy for your intro music. We really like it. And this podcast is designed to provide accurate and authoritative information in regard to the subject matter covered. This is given with the understanding that neither the host, the publisher, or the guests are rendering legal, accounting, clinical, or other professional information. If you want a professional, you should find one.