There’s nothing boring about earning well as a coach.
But coaches often avoid setting financial goals and tracking expenses to plan for profit.
What’s up with that?
Well, in my early years, I failed to act like I even had a business, so I get it! I just wanted to coach and help people.
I steered clear of tasks that felt corporate because I’d left that world for good.
So, … I didn’t set a budget for my business. I chronically OVERSPENT on online courses, certifications and whatever bright shiny object landed in my inbox.
Know what I mean?
Then it dawned on me — I wasn’t operating a legitimate business. I just had an expensive HOBBY!
That’s when I got serious about profit, which is about pricing higher and controlling expenses.
I’m about to share my own expenses with you and spending pitfalls coaches can easily avoid.
Run a Lean Lucrative Coaching Business
This episode is inspired by a smart question about expenses from one of my VIP Mentoring clients. It sparked a dynamic conversation!
The first thing we talked about was pricing to stay in business and grow. Listen to Episode 191 – Low Pricing Could Kill Your Coaching Business for an eye opening take on how low pricing hurts your clients and how to shift to a healthy wealth mindset.
We spent most of our session time on Bright Shiny Object Syndrome. Isn’t it amazing that there’s a name for this? That’s because it’s a rampant problem for most coaches.
It comes from an insatiable desire to learn and grow. But the shadow side is a belief that the answers to your problems are best solved by spending money. It’s a scarcity orientation. “Maybe THIS online training, Tony Robbins event or app will make the difference.”
Here’s a rule about expenses if you’re struggling with Bright Shiny Object Syndrome:
Only invest in what you need right now …
not what you think you might need someday.
Don’t get me wrong. Running a lean business doesn’t mean being cheap. There are times where an investment in a business mentor, for example, will help you earn profits faster, where chronically buying self study online courses and indiscriminately buying apps on subscription won’t.
Smart expenses are directly tied to your specific business goals and generate a return on investment because you take leaps ahead in knowledge and ultimately save time.
Finance experts say expenses should be no more than 30% of total revenue. But imagine your profits if you could cut expenses down? My expenses are 1/4 what they used to be because I work at it. That’s more profit to cover my household expenses, save aggressively and have fun.
Beware of Stacking Up Subscription Based Apps
More than ever, there are fun and innovative apps for business, each coming with a monthly price tag that seems innocent. What’s $39.99 per month, right? But if you get a dozen apps all with monthly subscriptions that price or higher, you’ll spend $480 + each month just on apps beyond other expenses.
I always opt for the free version of apps where it’s enough to serve my needs. For example, I use the free version of Canva. It’s great! All those little doodads and premium design tools are really not necessary.
I don’t pay for Zoom. The Pro version, at $160 per year, may be essential for you if you want to use Zoom for your coaching calls. I just use my cell phone or WhatsApp for international clients and my clients are thrilled to be off camera another hour of the day.
Similarly, I don’t pay for LinkedIn, which is my primary social. It’s worth considering whether for your audience and your business model you need Premium, which is currently $29.99 per month or $360 per year. That’s a chunk!
The lowest paid version of many apps is plenty. For example, my podcast host, Buzzsprout (affiliate link), at $12/mo is all I need. And, because I refer a lot of my clients to that app for their podcast I’m often credited for my monthly subscription. You too might be able to use affiliate links to refer new customers to apps.
I use Keeper Security to keep track of hundreds of passwords for my business and home life. It’s only $2.92/month and worth it because I only have to remember 1 password.
I have Google Workspace for $15/mo for two emails partly because Gmail is the best at stripping out spam. You get a lot of spam the longer you’re in business. It saves me looked at 40 – 100 emails per week that I never wanted.
I’m lucky to be grandfathered in to two important services at very low prices. Aweber (affiliate link) is my email campaign company. I pay nothing because I refer so many people to it. I use TimeTrade by Engageware for my scheduling app which is $30 annually! Calendly is $120/year.
The most expensive apps I use are Quickbooks Plus at $480 per year to manage my own accounting & tax prep and A2 Hosting (affiliate link), a friendly, reliable web hosting company that doesn’t hammer you to buy products. That’s $240 annually. Your new website hosting will be a lot less. My website has a lot of pages dedicated to 8 years of blogging and 6+ years of podcasting episodes.
All together, my annual expenses —including wifi, my phone, occasional computer consulting and CPA are below $3000 per year. That’s a far cry from the $12,000 per year they were before I started planning for profit.
Planning for profit is really just about being mindful.
Pay attention to your choices, where your money is going, how much you’re earning and how you can increase that.
Check out Episode #58 Start Planning for Profit in Your Coaching Business, which also talks about the 3 phases of coaching business development.
Think Twice About Buying Online Courses and Expensive Events
The area where coaches spend most is on training — additional certifications — many of which won’t bring a return on investment, online tactical training that might not ever get implemented because there’s not enough support, and glitzy events hosted by luminaries.
You get sucked in through their pretentious scarcity marketing. You think :“if I don’t do this, I won’t succeed”. That’s dangerous thinking. Your success is more about belief in yourself and strategy.
Think Twice About Coach Portals & VAs
Those all-in-one systems for coaches are rarely worth the investment. Do you really need to have a portal where your clients find guides and notes? You don’t really need things like that unless you’re working with dozens of clients at the same time. No, thank you.
Similarly, Virtual Assistants and other employees are only needed for complex business models. I’ve tried 4 different VAs in my business and spent so much extra time checking and correcting their work that I let them go. At $25-$50 per hour that can steal a lot of your profit.
It can take a full year to adequately train a VA so it saves you time. That time could be put instead to developing smart systems and templates and fashioning your business in a sustainable way.
I’m 20+ years in and I administrate every aspect of my business myself and I’m earning more than ever before, while working less.
I believe in a simple business model. It’s about doing deeper one-on-one work with fewer clients, charging more and working only 30 hours per week.
This is what I teach new coaches in my 5-month VIP Mentoring program — Coaching Business Breakthrough.
and also teach some experienced coaches whose Frankenstein businesses have gotten overly complex and stayed low income.
Imagine an easy to run, profitable business that leaves you time for all the other things you want to do in your life.