Risk Tolerance

What’s your level of risk tolerance?

When people hear the phrase “risk tolerance” they usually think of the stock market. Financial advisers use this phrase to help clients determine an investment strategy, you can use it to determine your business strategy.

How do you respond to risk in your life? Do you like taking chances? Does the idea of building a practice excite you or would you prefer a more predictable income stream? We all have different capacities for risk and our tolerance is influenced by factors like our family history and current financial situation. If you are partnered with children, your financial responsibilities might be greater than if you are single. The opposite could also be true, I was single and had significant medical expenses when I was starting my practice. You may have unresolved anxiety about money that causes you to worry even though you have enough.

I have a high tolerance for risk, I inherited it from my grandfather, Charlie, who started a successful construction company during the Depression. When I decided to switch careers from software to psychotherapy, I knew I wanted to be in private practice. I gave myself a three-year deadline and poured my heart, soul and savings into building my practice. I told myself that if my business was not profitable in three years, I would find a part-time job to supplement my income. When I hit the three-year mark, I had nearly met my goal and I decided to forego finding a part-time job.

It may take some trial and error for you to figure out how to allocate your time and resources. Some people prefer to earn a steady paycheck from a part-time job while they build their business, while others may prefer to take the plunge like I did. Both paths require financial clarity and a dedicated commitment to marketing and networking. The ebb and flow of clients and income is inevitable for therapists in private practice and each of us must find our own way to manage the risk and financial responsibility that comes with being self-employed.

I’ve found it helpful to explore my financial challenges with my therapist, family, friends and business coach. Understanding your risk tolerance will help you make wise choices for your private practice and your investments.

Maria Gray, LMFT, NMP, CGP, is a certified group psychotherapist in private practice in Century City, where she specializes in trauma and addictions. Maria is committed to supporting therapists who want to overcome underearning, and she offers individual business consultation and live, online, courses. To learn more, go to more, go to www.mariagray.net.