How can I set up a successful coaching practice?
While most coach training programmes teach you how to coach, few tell you how you can make a living from the new skills you have acquired. Maybe this is because most coaching schools are run by trainers, not successful coaches. We believe being able to set up and run a successful coaching practice is as much about the skills of running a business as it is about the skill of coaching. In this guide, we explain the nuts of bolts of how to go about setting up your practice and how to win your first few clients.
The hero’s journey
When I speak to coaches who have set up and established successful coaching practices, they invariably make two observations: It was much harder than they originally thought; and they’re really glad they had the discipline and perseverance to continue.
The closest metaphor I’ve found to starting a coaching business is Joseph Campbell’s metaphor of the hero’s journey in his book The Hero with a Thousand Faces. Overcoming the challenges in developing their own businesses not only helped these coaches to develop themselves, but it helped them to establish a genuine connection with the opportunities and challenges their own clients were experiencing. They’ve become heroes and heroines in the process.
To successfully set up a coaching business, you need to:
- get the clients you want
- work on the business as well as in the business
- develop and look after yourself – remember, when you start your business, you’re the most important resource the business has
Setting up a coaching business
When you’ve thought through the challenges and questions that follow, you’ll be in a significantly stronger position to set up and run your business. You’ll have set yourself up for success.
Legal and statutory considerations
In the UK there are several company structures available. Commonly used structures for coaching businesses include setting up as a:
- sole trader – where you are responsible for the business’s debts
- partnership – where you share any debts with the other partners
- limited company – where the company’s debts are separate, but you’re responsible for more detailed reporting and have additional responsibilities
Different legal structures face different tax obligations; they require different insurance arrangements; and their employment relationships may also be different. Considering which suits you, and your business partners, is an initial key decision. Your accountant is a good place to start when considering what the right option is for you; alternatively most governments provide information online.
Key questions about your business
When thinking about your business and its structure, a number of questions are worth considering:
- Purpose: Why do you want to set up a coaching practice? This may be obvious but writing this down can help clarify your thoughts. Is it about income, lifestyle, helping others, working with your partner? Is it for you? Your clients? Your community? Your country? Humanity? The clearer you are about your purpose, the more motivated you will be.
- Vision: When the business is really successful what will you see? What will you hear about it from others? How will you feel? How will you know when you have been ‘successful’? The clearer you are about your vision, the clearer you’ll be about the direction you need to take to get there.
- Plan: What are the steps on the route to achieving your vision? What resources do you already have and what do you still need? How will you prioritise between competing demands on your time and resources? What is your plan if something goes wrong? What is your exit strategy from the business? A plan helps you be effective and efficient.
- Activity: What do you need to do on a daily, weekly and monthly basis to get there? Activity creates the motion that moves you in the direction of your goal.
- Review: How are you going to review your progress? How are you going to make sure that you learn from events? Is business mentoring available in your region?
As a rule of thumb, 80% of your time should be on number 4 in this list, i.e. activity that moves you towards your vision; and 20% of your time should be on the other elements. This is much easier when you’ve thought through all the other elements before you start trading.
What else?
It’s best to come up with initial top-level answers to these questions, and then to look in detail at four key areas our business:
- customers and clients
- finance
- processes
- people – capability and learning
Each area deserves its own plan and metrics.
Customers and clients
Attracting customers and clients is such a key area in the business, that we’ve written a separate Insight Guide on the topic, #25 How can I market my coaching business (available on Henley Live for members of Henley Coaching Centre). Basically, without quality, paying clients, you don’t have a sustainable business.
The sooner you plan and start implementing your plan to attract and maintain clients, the better.
Finance
When starting a business, the key measure is normally cash flow. Cash flow is critical; not being able to cover your monthly expenses leads to bankruptcy. When starting a business, it’s worthwhile to have enough cash and reserves to last at least 12 months, to enable the business to become cash positive.
It’s also worth reverse engineering all the elements that impact cash flow, so you understand what levers you have. For example, the price you charge clients can have a significant positive impact on cash flow; clients going bankrupt or not paying can have a negative impact on cash flow.
Similarly, many successful coaches keep their day job, or run a part-time practice as they scale up their income. Having a mixed portfolio can be a very useful way to start.
It’s also good advice to keep expenses as low as possible, until you have fully tested what works. Avoid spending large sums on an expense website, brand, business card, letter head etc. This gives the impression of activity but can be a distraction from winning the first five clients. Our advice would be to make your client income fund these one by one. Clients don’t buy coaches because of their website or business cards. Of course, a nice business card or easy to find website, with some case studies and resources, is helpful to build credibility, but nothing beats speaking to potential clients directly.
Processes
The processes you develop will impact on your business. These include habits and routines, as well as the formal processes: from how you manage personal data to your client contract terms.
In J D Meier’s (2010) book, Getting Results the Agile Way, he suggests there are three keys to improve the results you get. These are time, energy and technique. It’s recommended that you plan out your week in advance and build in key routines, such as choosing three key outcomes for every day and every week, and a quick review at the end of the day, and at the end of every week. In addition, there maybe times during the day when you have both discipline and creativity, when you’re good at creativity, but have little discipline, when you can only do routine tasks. There are also times when it would be best not to work as you’re more likely to make mistakes. It’s useful for you to select what to do at the most appropriate time, when you have the appropriate energy level.
As a minimum, you’ll need an accounting system; this could be as simple as a spreadsheet. A customer relationship management (CRM) system to keep track of customers – again, a spreadsheet or database can meet this need for small companies; and a means of keeping up to date with legal and statutory requirements.
People – capability and learning
When you start a business, you’re the business’ key resource. What are the skills and capabilities that you already have? What do you need to develop?
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Learn more about the coaching programme offered by Henley Business School in Helsinki and attend one of our information meetings.
References
Campbell, J (2017) The Hero with a Thousand Faces. New World Library
Meier, J D (2010) Getting Results the Agile Way. Innovation Playhouse LLC
