Why You Should Start a New Life Coaching Business
Life coaching is about helping people deal with what’s going on in their lives and assisting them in creating a better present and future. It involves a mix of psychology, counseling, interpersonal skills and understanding how you can help a client realize their potential.
Here are some statistics on the power of life coaching businesses:
Generated annual revenue in the U.S., Self-improvement as a whole is a very successful sector.
Generated revenue of life coaching in the U.S. each year, and this is expected to grow to around $1.3 billion in 2022.
Average yearly income for life coaches a year, and some coaches can earn over $100,000 a year.
- The main areas that life coaches help with are personal improvement, family and relationships and weight loss and fitness.
- Many customers for life coaching businesses are located on the East or West Coast of the U.S.
- The number of coaches in the world increased from 47,500 in 2011 to 53,300 in 2018
- There are currently around 18,300 life coaches in the U.S.
- Life coaches normally have multiple clients and typically charge between $200 and $500 a month for services
Why You Should Start a Business and Executive Coaching Practice
Business and executive coaching is very different from life coaching. When you’re working with senior management, you need to have an excellent understanding of business, strategy, financials, organization, culture and the unique pressures that face executives when making major decisions.
Generated revenue of Business Coaching in the U.S. a year.
Number of business coaching organizations in the U.S. employing over 100,000 people
- The main areas that business coaches help with are executive development and financial management
- Studies show that there is between a 500% and 700% return on investment for money spent on business and executive coaching services
- Business coaching helps executives increase their productivity by over 80 percent
- Executive coaching delivers improvements to areas like productivity, work quality, organizational strength, customer service, working relationships, cost reductions and profitability
This is why life or business coaching ventures are so exciting — how can you be part of that success? We're here to help you figure that out.
Is Professional Coaching Right for You?
Although it can be exciting to become a life or business coach, there will be significant demands on you. Here are some of the things you can expect.
A Day in the Life of a Life or Business Coach
Here are some of the typical tasks you’ll be performing on a daily basis:
- Marketing for new clients
- Dealing with inquiries from potential clients
- Reading the latest research and studies in your field
- Traveling to meet with clients or having them come to you
- Holding coaching sessions
- Writing up coaching sessions
- Dealing with financials and administration
- Life coaches: Ongoing training in psychology, counseling and related fields
- Life coaches: Researching specific questions or problems your clients may have
- Business coaches: Learning about the business you’re providing coaching for, including strategy, financials and the executive team
- Business coaches: Research into the sector or industry of the business you’re providing coaching for
Skills Needed by a Life or Business Coach
The following skills will be very useful in your role as a life or business coach:
- Excellent interpersonal and influencing skills to talk with and listen to clients
- Powerful analysis and investigative skills to get to the root of an issue
- Good marketing skills to promote your coaching business
- Strong administration skills so you can stay on top of your schedule and finances
- Strong research skills so you can understand the history and context of the individuals and businesses you’re helping
What Your Coaching Clients Are Looking For
Ultimately, people come to a coach because they want to improve their life or business.
What Life Coaching Clients Want
- Dealing with particular issues in their past that are stopping them moving forward
- Helping them come to terms with their existing life circumstances and challenges
- Preparing them for the future and giving them useful tools and techniques
- Reassuring them about how you’ve helped previous clients
- Practical help for what they specifically need assistance with (family relationships, nutrition, lifestyle or other areas)
What Business Coaching Clients Want
- Proven return on investment for business coaching services
- Demonstrated understanding of their business and sector
- Strong expertise in dealing with specific needs (e.g., productivity, management styles, culture or organizational change)
- Detailed statistics on improvements as a result of business coaching
Validating Your Professional Coaching Business Idea
Remember, the ideas above are just a starting point. You can define and tweak exactly what type of life or business coach you want to be through conducting your own research.
- Identify your coaching business’ unique selling points (USPs):Whether you’re competing on your niche, results, pricing or something else, your USPs set you apart from other coaches and encourage clients to come to you.
- Look at who your competitors are in the space: Having competitors is a good thing as it shows there’s a market. Look into the other coaches operating in your niche and area.
- Understand your market: Clearly identify exactly who your clients are likely to be through the niches you serve. This will be essential to your marketing, communications, sales and client support.
- Talk to clients: Speak with potential customers to understand what they want from your coaching services, and validate this by asking if they would commit to spending real money on them.
Not every idea you have will make it through to becoming a coaching business. There are all sorts of reasons to say “yes” or “no” to specific businesses, so think about what your strengths and weaknesses are so you can choose a business you’d be great at.
Your Life or Business Coaching Business Needs a Plan
You need to define how you’re going to run your coaching business, market yourself, get sales, make a profit and grow. This can only come about through creating a watertight business plan. It will help you get your thinking in order and show your commitment to your life or business coaching company.
You will need to look at financial projections for your coaching business. What are your expected sales and revenues? What is your profitability? How much money will you keep in the business to grow it? How much will you pay yourself and others?
Business plans do vary slightly, but they should all cover the following areas:
- 1 An executive summary with the most important points from your business plan
- 2 Your goals and what you hope to achieve with your coaching business
- 3 A description of your life or business coaching niche, background information and context
- 4 A market analysis and likely demand
- 5 An overview of how your life or business coaching organization is structured
- 6 Your business model
- 7 How you will market and sell your offerings
- 8 Financial projections, revenue and profitability
- 9 Appendices
We’ve got the perfect guide to writing your business plan.
Choose the Right Business Structure and Register Your Coaching Organization
There are five main business structures you can have in the U.S., and it’s important to choose the right one. We’ve shared your options below. They are:
This is the "default" business structure and is what your life or business coaching venture will be if you decide not to create a more formal structure. We don\'t recommend this type of business as it doesn't give you the legal protections you need.
This is a type of business that is formed when two or more people work together without creating a more formal business entity. Like a sole proprietorship, it may not give you all the protections your life or business coaching organization may need.
Limited Liability Company or LLC
The Limited Liability Company (LLC) is ideal for most life or business coaching startups. An LLC is easy and inexpensive to set up, and has the least administrative requirements of any formal business entity.
This is a more complex type of business and isn't generally recommended for smaller organizations.
These are the largest and most complex types of businesses and are typically far more than the average entrepreneur will need.
Setting up Your Life or Business Coaching Operations
Once you've legally created your coaching business, you’ll need to get some other things in place.
Location of Your Coaching Business
Almost all coaching entrepreneurs can work from home, although you may need a dedicated space to meet with clients (or you may want to travel to their home or business location). This is great as it reduces your office costs considerably. Don't forget that if you work from home, you can write off part of your utility and housing costs against your taxes.
Equipment for Your Coaching Business
It’s likely that the only equipment you will need to run your life or business coaching venture is a computer, laptop, tablet or smartphone. You will also want to invest in a wardrobe that keeps you presentable for client meetings.
Marketing Your Coaching Business
Marketing will be a huge part of your coaching business. Naturally, you will need an awesome website, but you'll also need to get branding, newsletters, digital ads, social media accounts and other channels in place.
Software and Processes
Life or business coaching entrepreneurs make extensive use of software; see our great list of the top apps at the end of this guide.
To begin with, you probably won’t need to hire anyone else for your life or business coaching business, especially if you’re a good administrator.
Life or Business Coach Qualification, Certification and Training
It will likely help you to prove your expertise as a life or business coach with the right qualifications. Types of qualifications and certifications will vary depending on your chosen field.
Finances and Taxes
You will need a separate business bank account for your coaching business. You might also want to consider a business credit card. Additionally, you will also need to keep careful bookkeeping records to file business and personal taxes. Here at Incfile,
we can even help you file your taxes.
Our Start a Business Checklist will get your boutique business going in the best possible way.
Rules, Regulations and Taxes for Your Coaching Business
You will need to explore local, state and federal licenses and permits, and we can also help out with researching your business licensing needs.
Taxes for Professional Coaches
Taxes are a fact of life if you’re in business, and there are various ways you will need to file and pay them. This can include self-employment tax, state income tax and federal income tax. Depending on where and how you’re selling products and services, you may also be liable for sales and use tax.
As a rule of thumb, we recommend holding back around a third of your earnings to pay your taxes. We can also prepare and file your tax returns for you.
Maintaining Your Professional Coaching Organization
There are certain forms and legalities you need to follow to keep your life or business coaching business in good standing.
File an Annual Report
Depending on the state you’re located in, you will probably have to file a report every year. This report tells the state about any major changes to your business, and we can file your Annual Report on your behalf.
Pay Estimated Taxes
You will be expected to pay estimated taxes on what you plan to earn in the current business year. Typically, you will need to pay estimated taxes in April, June, September and January (of the following year).
Renew Business Permits and Licenses
Your federal, state, regional and city licenses and permits may need to be renewed on a regular basis, typically once a year.
File Your Taxes
You will need to file your taxes once a year.
Pay Payroll and Sales Taxes
If applicable, you will need to make payroll and sales tax payments on a regular basis.
Prepare Your Taxes
You will need to work with your accountant to prepare all the taxes you need to pay.
Insurance for Your Professional Coaching Organization
Most life or business coaching organizations should have comprehensive business insurance. There are various types.
Workers Compensation Insurance
Workers’ compensation insurance provides coverage for job-related illnesses, disabilities or injuries that affect employees. Regulations for this insurance vary from state to state. It typically covers areas like medical costs, loss of earnings, compensation and retraining.
General Liability Insurance
This insurance protects your coaching business from claims due to being sued. This may include injury to members of the public, property damage, personal liabilities, legal defense and more. It can help protect your business from financial penalties and bankruptcy.
Home and Auto Insurance
If you are working from home on the administration of your coaching business or driving a vehicle for work, check whether your existing home and auto policies cover you for work use of your home or car. If not, you should either expand your policy so you’re covered or get dedicated business insurance.
Useful Online Tools for Professional Coaches
Here are some really great online tools for managing your life or business coaching business. They will reduce the time you spend on administration, help you to collaborate with others and free up your time to grow and manage your new venture.