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This episode, called What Is Your Coaching Business Model? is the 6th in my Coaching Business Checkup series, which is all about how to strategize the most important parts of your business. If something isn’t working well in your coaching business, it might be a lack of strategy holding you back.
At the end of this whole series I’ll have a downloadable Coaching Business Checkup Assessment you can use to diagnose and treat what’s ailing in your business so you can fix it and thrive.
The show notes for today’s episode can be found at prosperouscoach.com/67
Just in case this business model idea is totally new to you, let’s define what a business model is and why you want one.
Why Have a Business Model for Your Coaching?
A business model is literally a design for the success of your business. It’s a structure you create that makes your business viable. In other words, it’s your plan for earning good money as a coach.
Like many aspects of your coaching business, your business model can’t really take shape until you have targeted a viable audience and developed a smart coaching niche. Those decisions are the cornerstone … everything else you build for your coaching business comes from that.
Notice I said a moment reliably attract people to your offers. That takes strategy. It’s a far cry from what I did for so many years at the beginning, which was what I call the “I hope it works” approach to business.
Without a business model, you are leaving your success up to dumb luck.
No doubt, you experienced a lot of business models just living in the modern world but you might not have thought much about it. I’ll just name a couple to help you understand the concept
Let’s take Netflix. You get an account. Pay monthly. And for that low fee, you get access to their impressive catalog of TV series and movies to stream on demand.
That’s called the Subscription Model. It has 3 main parts:
Subscription service + Options the consumer wants + Delivered on demand
It is something you could create someday. More about that in a minute.
How about Uber? Their model is called Create the Marketplace, which operates on supply and demand
SUPPLY = people with cars who want to earn
+ DEMAND = people who want to get someplace now without driving
It’s very specific and innovative. And this is close to what a coach needs to do. You identify a BIG PROBLEM that a specific audience faces and create a hunger for your program which helps to solve that problem through coaching.
The Simplest Coaching Business Model
A while ago I aired an episode called The Simplest Coaching Business Model and it’s been a favorite with record downloads. This episode goes deeper into what’s involved.
By the way, thank you so much for going back to my earlier episodes! I can’t tell you how often I hear that people are binge listening to every episode. That’s a great way to learn a lot fast.
It’s a great sign that episode is popular. It means that coaches now are much more business savvy than I was when I started. So well done you. Keep that up!
For a coach, the simplest business model is to offer 1:1 coaching.
Here’s how I help my clients develop this business model with 2 important twists:
- Choose a viable audience
- Find out their BIG PROBLEM – the one that will prompt them to seek your services
- Develop a high ticket private program designed to solve that problem. That’s one twist!
- Create ways to continuously build awareness about you.
- Drive traffic to a website with an authentic non-salesy conversion process or two. That’s the 2nd twist!
- Invite ideal prospects to an enrollment conversation and enroll them.
What’s so great about this simple business model?
- It’s the easiest model to start with
- You quickly learn how to coach your ideal audience
- You can earn a 6-figure profit with relatively low labor and costs
- It’s a satisfying way to make a positive impact
And here are a couple of bonus things that I love about this model:
- You’ll only spend your private time with highly motivated prospects and clients
- And you’ll build a strong referral network that’s free
I’ll be talking more about how critical these two things are for your sanity in an episode soon.
There are other business model options that might help you scale up and reach more people in less time. However, consider that you could also keep your life and business simple. If you create a meaningful program with milestones that are important to your audience you can charge quite a bit for it. I covered this is Episode 66.
The Challenge of Scaling Coaching
Scalability is one of the biggest challenges in coaching businesses. To scale, people start thinking about “passive revenue”, a concept often attached to revenue streams such as:
- online courses
- selling books, ebooks and other products
- membership programs
It sounds so good, doesn’t it? I’ll just create a few online courses and put it online and boom! Passive income! I’ll make money while I sleep.
Here’s the thing that I learned the hard way, there’s nothing passive about it. While the bulk of the content creation is done up front, the costs and labor to keep revenues flowing in are relatively high.
A good rule of thumb to remember is the higher number of people you want to buy what you’re selling the more marketing it takes. And it’s a style of marketing that’s highly promotional. It takes a team of people to pull it off. So not passive at all.
The Affiliate Marketing Model
Where people really excel at these scalable business models is when they are already well known in their industry. Think Tony Robbins, Brendan Burchard and Marie Forleo. They not only have a huge leads list of their own, but they also have other experts with huge leads list willing to help market the program or product for a kickback (also called an affiliate fee).
The affiliate fee is often 50% of the sale. And tracking all of that requires special programs and website.
The business model is called Affiliate Marketing and is composed of:
Email marketing with affiliates + a live or canned event + sales page + online or live course
There’s one business model being highly marketed to coaches right now, which I call the Evergreen Webinar Model. It involves:
Ads on social channels + webinars + online courses
This model is touted to be highly lucrative and I can see how it absolutely could be over the long run.
Experts selling the training to learn this business model often have testimonials like this …
“I just had my first $15,000 month!”
And that alone has us frothing at the mouth to sign up for the training.
But it’s important to realize that to earn that $15,000 in revenue in one month this individual may have invested up to or beyond:
- $4500 on ads
- $3000 on virtual assistants and web design
- months of content creation
- the cost of the training to learn this model $8 – $10,000
The way that business model becomes profitable is over time when costs per sale start to decrease. Just the continuous investment can literally kill a coaching business.
Yes, it could be an amazing business model later on. But, for a new coach who isn’t already well known and who doesn’t have a significant network of potential clients and marketing partners, it can be very difficult to pull off.
Another costly option is membership programs. Back in 2006 when membership programs were trendy, I took nearly a year to create a comprehensive online course called The Coach’s Power Path. It was a vision I woke up with one day and truly thought I’d earn loads while helping hundreds of coaches.
In short, it was a colossal failure. I invested 10’s of thousands in that venture and never got close to earning it back, much less profiting.
I just didn’t realize how complicated it was — not only to create the curriculum and the entire back end of the membership site — but also to constantly market in ways that I really disliked. It was exhausting.
Later a marketing expert told me that most membership programs are loss leaders, which means it’s only a low cost offer to raise awareness and trust so you can offer people something higher priced and higher touch.
What About Group Coaching?
Group coaching is a much simpler business model than selling courses, membership programs and products. And, for many target audiences, gathering people with the same big problem or goal will greatly add to their transformation.
What you need going for you for this model to work is the 6 strategic steps I mentioned before for 1:1 coaching PLUS a developed network in your target audience. It could be your own leads list, a connection with a center of influence or a good sized following on social media.
That’s something you can build on your own without a lot of costs or any assistance!
I recommend groups for coaches who have a year’s experience or more in 1:1 coaching and that amount of time building visibility online.
So now, do you know what your intended coaching business model is? Have you strategized who you work with, what they want that they’ll invest in and how you’ll enroll enough of them to earn well? You’re on your way!
In the Next Episode: Calling All Coaches to Innovate and Lead