The Numbers You Should Know Before You Sign a Lease for Your Therapy Practice

By ProfitWise - a Visa Business Plans company

A therapist came to us excited about a new office she was considering.

The space was beautiful. It had several private rooms, a comfortable waiting area, plenty of parking, and enough room to bring other therapists into the practice later. More importantly, it felt like the kind of place where she could see herself staying for years.

The rent also seemed manageable.

That last part is where the conversation became more interesting.

When you’re looking at a commercial lease, it’s easy to focus on the monthly rent. If the practice is already bringing in substantially more than that amount every month, the numbers can seem to work.

But rent doesn’t exist in a vacuum.

Once we started talking through the space, other costs began to come up in the conversation. There would be furniture for several offices, a security deposit, utilities, internet, insurance, and some improvements she wanted to make before seeing patients there.

Then we talked about the additional rooms.

Her plan was to eventually bring other therapists into the practice, which made sense. The larger space gave her room to grow. The question was how long that growth would take.

If those offices sat empty for six months, the practice would still be paying for them. If it took a year to build the additional caseload, she needed to know whether the existing practice could comfortably carry the space in the meantime.

That’s a very different calculation from simply asking whether you can afford the rent.

At ProfitWise, this is the kind of conversation we have with business owners before they take on a significant new expense. We can look at what the practice is currently producing, what it costs to operate today, how much cash is available, and what would happen financially under different scenarios.

For a therapy practice, that may mean looking at how many additional sessions would be needed each month to comfortably support the new space. If other therapists will eventually join the practice, we can also consider how quickly that is realistically expected to happen rather than assuming every office will be occupied right away.

There’s also the length of the commitment to consider. A commercial lease may last several years, and a practice can change considerably during that time. Your caseload may grow exactly as expected, or circumstances may change along the way. Either way, the lease payment will still arrive every month.

None of this means you shouldn’t take the bigger office. Sometimes moving into a larger space is exactly what allows a practice to grow.

You simply want to understand what that space will require from the business before you fall in love with it.

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