This episode is part of my Money Mastery series.
I’m about to suggest a new mindset and practice that will help you take a big leap in the amount of money you earn from your coaching business — even if you’re a brand new coach.
It’s all about taking yourself seriously as a business owner and graduating from that hobby-like coaching business to what’s called a going concern – a sustainable business that reliably provides for you and your family.
There are two parts to this episode. In the first I’ll explain the 3 phases of coaching business development. You’ll see why soon.
The second part is about planning. Are you wincing at that? Planning to earn could actually mean that you do earn and earn well.
I’m purposefully keeping this part very basic so if you’ve been a CFO in a corporation or a CPA or this is your 2nd entrepreneurial experience, you may not need this episode.
But if you’re a new coach longing to earn well in your first business then what I’m sharing may shift something inside you that needs shifting.
So first …
3 Phases of Coaching Business Development
The Startup Phase
This is what I help new coaches to do right from the get go. In the phase you create your business foundation:
- Decide on the big problem you solve for a viable audience
- Develop your niche, brand, messaging, website and signature program
- Learn how to effectively enroll higher paying clients
- Choose a set of marketing strategies to attract your audience
- Fully take on the role of business owner
- Plan all aspects of your business including earnings
- Begin to transition into full time coaching
I’m taking a stab at a metaphor to hopefully will help you understand the importance of each of these phases. let’s pretend your desire to have a coaching business is an apple tree seed. For good measure, you put several of these vision seeds into healthy soil, give them water, warmth and light. Soon, little sprouts come up.
You leave the strongest seedlings to grow and sacrifice the rest. That’s when you nail down your niche and audience. The goal is to have one little tree to focus you love and attention.
The Establish Phase
This is where your business begins to feel real. You will:
- Consistently put out good content targeted to your audience
- Develop your reputation
- Build your leads list and followers on social media
- Master enrolling clients
- Earn enough to quit your job
- Grow your website SEO
- Find spheres of influence or colleagues who can help your star rise
- Establish the ideal rhythm and flow of your business
- ·Fine tune your business to maximize profits and work smarter
Back to the metaphor … your little tree has set down strong roots and delivers its first harvest.
The Maintain or Scale Phase
You’ve made it!
- You’ve found your sweet spot. Now maintain it. Enjoy it.
- Or, if you’re hungry to do more, expand into new programs, products or markets.
This is where your apple tree becomes a reliable producer. It not only feeds your family, but also can grow into a whole orchard if you want.
So why did I tell you about these phases?
Partly so you know that reaching that desired place of the sweet spot requires successful completion of the stages before it.
If you’re listening to this podcast you’re likely in that Start Up phase. You may have just finished coach training and are beginning to develop your business model. You may have done bits of that and think you should be earning well.
The Start Up phase is the most important phase. Because, without a solid foundation, nothing will grow.
Coaches often ask me how long it will take before they are established and earning well as a coach. And I say it depends on you. How quickly you can successfully start up and take your business seriously.
Why the Market Isn’t Saturated with Coaches
Every month there’s a continuous flood of new coaches graduating from coach training and beginning the Start Up Phase.
Many coaches never complete that phase either because they intentionally move on to something else or their business doesn’t take root. Strong roots are the critical part for sustained growth.
And that’s why the field of coaching isn’t saturated with sustainable coaching businesses and may never be.
It may seem shocking or sad to say this, but this is a natural thing. Lots of people stream into entrepreneurial businesses of all types but don’t stay in them. The need to graduate from one phase of business to another is what levels the playing field.
Entering into an entrepreneurial business is a hero’s journey no matter what the outcome. There’s value to the journey even if it ends by getting off the path and onto another.
The reality is that everyone hits some roadblocks in each phase of business development that could lead to closing up shop.
The trick is not to give up on yourself or your business. Listen to episode 49 if you haven’t already – The Only Good Reason to Give Up On Your Coaching Business.
It’s about developing the patience and other skills to allow your coaching business to blossom.
So now, with the phases as background, let’s move onto the second part of this episode, which is Revenue and Profit planning 101 …
If you have your foundation set, help yourself move from Start Up Phase into Establish Phase by:
1. Creating an expense budget. Adjust it as needed to improve profits.
2. Setting revenue and profit goals quarterly.
3. Tracking and reviewing your business financials monthly or quarterly.
4. Making improvements and set better goals every year.
Now, I can hear you groaning. Maybe you’d rather do cold calls than set financial goals and track them.
But I’ll tell you, there’s solid proof that stepping into the CFO role of your business dramatically increases how much money you’re able to provide for your family from your coaching business.
If you set revenue goals, you’ll earn more than if you do not set goals.
If you set profit goals, you’ll have more money earn year for the things you care about.
I remember setting my first money goals in my coaching business. When I didn’t reach them I got bogged down in shame and a sense of failure. But then I learned the trick to financial goals. Hold them lightly as potential milestones but take them seriously in terms of action to earn.
Think Profit Not Just Revenue
A quick distinction between revenue and profits …
Revenue is the money you’re paid for your services and products. (So if you have 10 clients and they each pay you $10,000 for a yearlong program, that’s $100,000 in revenue.)
Profit is the money you keep after business expenses, costs and taxes are subtracted from revenue. (So if you pay 20% in taxes and spend $2000 to attract each of those 10 clients that leaves you with $60,000 in profit. That’s not a bad profit but perhaps you could do better.)
So, if you want to end your year with $100,000 profit, aim to make $140,000 in revenues at least. Then do the things day-to-day, week-to-week, month-to-month to make that happen.
The Beauty of Hustle
Have you set revenue and profit goals for your business? If you haven’t, you’re in good company.
Here’s the truth of it … Most new coaches simply wake up every day and do what they feel like doing in their business instead of what will really help them shift to The Establish Phase. They hope it will result in enough clients and income each year.
That mindset and habit is for a hobby business but not a going concern – a business that provides well for you and your family.
To step fully into the business owner role and earn more, plan your revenue and profits. Then plan exactly how you’ll earn and work your plan.
That’s called hustle.
What would motivate you to generate that kind of hustle where you’re serious about earning?
If you already have a job or if your income from your coaching business isn’t really needed to pay the bills, it’s harder to summon the hustle to really make things happen and get to that Establish Phase and then the Maintain or Scale Phase.
How will you generate enough hustle to earn well as a coach?
To start, create a need for the money you’ll earn then pay yourself a salary out of your earnings to cover that need.
For example, commit to yourself that you’ll pay your mortgage or rent each month from your coaching business income. Move the money from your business checking to your personal checking and call that a salary.
Over time, add in more bills or perhaps X number of dollars to go into a college or vacation fund each month.
Be sure it’s a monthly amount that you have to make. That will help you get into a rhythm.
You’ll need to keep enough money in your business account to cover your expenses. And this will help you see the real financial value of your business.
You may realize that you’ve got too many monthly expenses, too many apps and services you’re paying for that are reducing your profit.
It’s good to realize that sometimes when other coaches or business owners brag about their revenue that the money spent (or expenses) to reach those revenues is a high proportion of the money they’ve made. In other words, their revenues may be high but so are expenses. That means profits are low.
You’ve heard me praise the value of a simple business model for coaches. Listen to episode 5 if you haven’t heard it yet.
Sometimes, it’s better to keep a low overhead and simpler business model than to buy into that idea of passive revenue or scaling up, which can result in low profits and a massive amount of work.
I’ve shared my personal story about this. I scaled up my business in 2006 and earned multiple six figures over the next few year but profits were low because of all the apps and assistance I needed in order to sell my online training programs, group and retreat programs.
If I did those things now, I’d be wiser about the way I did it, no doubt.
Still, not everyone needs an empire to have an enjoyable coaching business that earns well. And no matter what it’s best to start with a simple model and then grow into those more complex and involved ways of earning later.
In the Next Episode I’ll explain a way to package and price a signature program that helps you earn well on low expenses so your profits are high.