One of the major aspects of
your business coaching career is going to involve finances. As you will most
likely be operating as an independent contractor or sole proprietor of your
business coaching service, all financial responsibilities for your coaching
business is entirely on you. Even if you work as part of a coaching firm or
collective, you are still going to be responsible for your part in the
As you prepare for your
business coaching business, you need to make sure that you are covering all of
your bases. Even if money is nowhere near your list of motivators for getting
into the business coaching field, it still is going to be important. This
article will cover the financial aspects of your business coaching career,
including setting your prices for your services, managing your business
expenses, billing options, record keeping, and insurance information.
Setting Your Prices
The claim that nothing in life is free is true, and your
business coaching services are no exception. When you offer your services to
clients, you need to have the cost of those services in mind beforehand. Some
clients will want to discuss price before making a decision about employing
your services. Often, the cost of service or product will make or break a
customer's decision to purchase it.
While you could simply base the prices for your coaching off
what your fellow coaches are charging, it really isn't going to do you much
good. Yes, it could allow you to compete with them within your market, but
doing so might end up costing you. Setting a price for a product or service
needs to take three things into account: time, the cost to you, and the
affordability for your audience.
clients are more than a source of income and you need to view them as such. By
this point in your business development, you should have at least a general
idea of who is going to be a part of your target audience. Think about what
they make on average during, let's say, a year. Even if you use a general
estimation based on information from their industry, are they going to be able
to pay your estimated price for your services? 1 If your proposed
rates are well above what your audience can afford, then you may need to head
back to the drawing board and rework things.
price of a service or product should offset the cost put into it. If you put
five dollars into something, you should at least be able to get your five
dollars back when you sell that item. For business coaching, your rates for
your services are going to take into account your business expenses, like those
listed below. Any supplies that you use in your coaching sessions are going to
cost you money as well, another factor you need to calculate for cost. Same
goes for the labor put into the service. When you are calculating your costs
for your coaching rates, don't get greedy and inflate your estimate to build up
your profit. 2 Doing so can be harmful to your clients,
your reputation, your local market, and to the business coaching industry at
Time-The amount of time
that goes into a product is also going to have an impact on its price. Most
sellers and producers will have an estimate price per block of time, taking
into account all the aspects that do not normally come with a price tag. They
will then take that estimate and apply it to the cost of the item. For
services, there cost is often broken down in a similar manner of a set price
per block of time, typically an hour. As you cannot accurately price something
like the value of a skillset, most business coaches have a set rate for their
coaching. For example, you could have an hour's long session at a set price and
then have an additional cost per half-hour after that initial hour.
Operating a business is
going to cost money, no matter how frugal you attempt to be. Your business
expenses are going to depend on how what you need for your business, based on
what you've laid out in your business plan and how you've structure your
of distance, traveling is going to be a part of your business coaching career.
You will need to be able to go to your clients somehow, safely and on time. If
they are close enough to drive there, the cost of gasoline and maintenance for
your car are going to be regular expenses. Some clients, especially if you need
to travel a great distance to get to them, will offer to cover a portion of
your travel expenses but you shouldn't expect that to happen all the time.
Network and continuing education activities, like conferences and seminars,
will also be a part of your coaching services travel expenses and may require
additional financial planning.
not necessary to have employees for your business coaching service, especially
if you are a small operation. However, if you do expand to the point where you
decide or need to hire employees, you will need to pay them. As the
owner-operator of a business-which your coaching service is-you are responsible
for providing for any and all staff members, no matter their role in the
company. Establish what an employee will be paid in terms of salary and make
sure that it is in compliance with any and all hiring laws.
Rent and Utilities-If
you have a retail space for your business coaching service, changes are you are
going to have expenses for the space. You'll need to pay rent-on time!-if
you're leasing, and probably a mortgage of some sort if you are the property
owner. Even if you own the property outright, you will need to pay for the
utilities necessary for the business to function: electricity, heating and
cooling, and internet. If you are based out of your home, you will still have
some of these expenses, but they will just be a portion of your costs that you
already pay for your home.
Your coaching will not be financially successful if you
are sloppy with your bookkeeping. Any and all financial records pertaining to
your business coaching should be documented and organized for several reasons.
While keeping track of your finances will allow you to monitor your progress
and ensure that you are not falling behind on paying for any business expenses,
it will also help you avoid breaking any laws.
finances are going to tell you what you need to pay in taxes every year. The
IRS's business classifications will affect what
you have to pay for your taxes, your potential deductions, and what you can get
It is recommended that you keep any records
that provide evidence of your expenses and income, and they should be kept as
long as necessary to prove them. 3 In the event of an audit, you
will need that information to prove that you have been honest with your taxes
and that you are not committing fraud.
records for your coaching business will allow you to make sure that your
clients are paying for services rendered. Disorganized bookkeeping may result
in errors, like misplaced payments and failure to send invoices. It is your
responsibility to make sure that your clients are receiving notice about
payments that they need to make and that you track when they do or do not make
those payments. It's one thing for your client to make a mistake and miss a
payment, but it's another thing entirely for you to be negligent and accuse
them of not paying.
will need to keep track of your business coaching service's supply usage.
Failing to pay attention to your inventory-especially for items that are
crucial to your business-is frustrating and foolish. It is simply common sense
and can be an embarrassing error for a business coach. No matter how busy your
coaching makes you, always keep track of your inventory and make sure to
replace what you need. Keep a record of what you have, tracking when you got it
and how fast you go through your supply, in order to avoid problems.
The billing process for your
business coaching is basically how you will be paid for your services. It does
not need to be overly complicated, but it does need to be functional enough to
avoid causing problems for you or your clients. A standard billing process
should include accepted payment options, receipts, or invoices for services,
and a policy for refunds.
invoices you send to clients are going to be the receipts detailing what
services were done, when they were done, and their costs. All invoices you send
to your coaching clients should include a full breakdown of what you did for
them per your business agreement. You should have the total payment required
and when it is due clearly marked. If your invoice is overly
complicated, your clients will not know how to interpret it and it may result
in misunderstandings and missed payments.
you submit a bill to a client for your coaching services, you should make it
clear what payment options they have. Cash payments are often too impractical
and inappropriate for business transactions and are simply not recommended.
Most businesses will pay through a company credit card or a wire transfer
between accounts. Check is also a possible option, but it depends on how
comfortable you are with the issues that can arise-losing it, insufficient
funds, fraud, etc. The payment options you make available to clients may be
impacted with how you have your business accounts set up, as well as any fees
that might be incurred through credit transactions.
refunds for business coaching services can be a bit tricky. If you have a
policy that is too lax, you run the risk of clients taking advantage of it. If
it is too strict, then there's the chance of you may abuse it. Determining
grounds for a refund should be something you establish before you sign your
first client and the policies related to refunding should be clearly laid out
in the contract. What those grounds are will be up to you, but most will
consider offering a refund if the contract is canceled before a certain point
or if services are not as advertised.
When buying insurance for your business coaching service,
you will need to take inventory of your assets to determine coverage. The
insurance company will do the same and decide what they will cover, but you
should still have some idea of what you need to look for in an insurance
policy. Standard coverage should include your place of operations, your
services, and your general liability. If you are working out of your home, you
may need to make a few adjustments to the policy you have for it, depending on
the requirements of your insurance company.
You are legally required to provide insurance options for
your employees. At minimum, you will be federally required to purchase three
types of insurance: unemployment, disability, and worker's compensation. 5
What will be covered underneath each one will be determined by the
policies of the state you are operating out of. Additional employee insurance
requirements may be set forth by your state laws. It is your responsibility to
determine what you are legally required to do for your employees, and you may
consider going beyond those requirements if you so choose.
Employers are required by
law to have business insurance, as well as provide an insurance policy for
their employees. Those who are self-employed or are independent contractors,
like most business coaches, will often choose to purchase insurance for the
sake of covering their assets related to their business. 4