If you’ve been following me for any amount of time, you probably realize that my success in building a successful business coaching firm wasn’t anything magical. It wasn’t luck, it wasn’t skill, it wasn’t experience, and it wasn’t talent.
It was good old fashioned trial and error.
The difference between me and other business coaches who haven’t been as successful is that I worked extraordinarily hard, erred extraordinarily often…and learned extraordinarily fast as a result.
I documented everything I did. When it failed, I threw it out. When it worked, I kept going, expanding my knowledge and experience as I went.
I developed systems around the successful strategies I discovered.
Eventually, I organized this massive collection of coaching materials and protocols into the most comprehensive yet easy-to-use business coaching methodology in the world. And then I copyrighted it.
That’s because I knew that my goal was to move from a one-person show to a full-fledged business coaching firm with multiple coaches and a functioning business that brought in cash-flow I could enjoy…with or without my daily involvement.
Now that’s freedom.
A Business Coaching Firm That Runs Without You
A couple years ago, I came across an article from the Harvard Business Review that inspired the development of what I now call the Firm Profitability Dependency Chain—in which building a profitable business coaching firm is based on 7 essential “links.”
I call the links “dependencies” because the weight of each successive link hangs on the one before it. Working backward from the end…
Link 7: Fantastic Profitability
Obviously, this is our goal. It’s been fascinating to observe the incredible variety of answers I get when I ask the following question of aspiring business coaching firm builders: “What do you believe is the single most important driver in firm profitability?”
No one ever gives the right answer–which is…
Link 6: Low Client Acquisition Cost
The fact is, it’s impossible to build a wonderfully profitable firm capable of delivering completely passive income if your client acquisition costs are out of control!
Making money as a firm-owner is all about driving down your marketing and sales costs. The most common (though not necessarily the easiest) ways to do this are as follows: getting the majority of your clients through referrals and strategic alliances, servicing ever-higher quality (read: better-paying!) clients, and keeping these clients longer and longer. So, what does it take to achieve this?
Link 5: Raving Fans
Over the last decade of business coaching firm-building, I’ve found that until you develop a robust reputation in your community or market niche as a genuinely great coach, who delivers substantially more value to your clients than your services cost, you’ll never be rewarded by your market with an abundance of revenue that you invest almost no cash to produce.
Obviously, in the early stages of developing your business, you’ll have to invest tons of money in higher-cost marketing strategies, but this must be reduced over time if you hope to make great margins!
So how do you develop an army of raving fans? You’ve got to deliver…
Link 4: Effective Coaching
Most business owners will give you about three months to prove the value of coaching. By then, they better have a fatter bank account or it’s game over.
So how do you deliver effective coaching?
Link 3: High-Quality Coaches
No mystery here.
It takes a great coach to deliver great value to produce an army of Raving Fans.
When you’re building a firm, you don’t have the time and cash flow to hire mediocre coaches and wait a couple years for them to become the kind of leaders they need to be to keep great clients. Every respected authority on building great companies agrees that the ability to attract and retain high quality human capital is THE competitive edge in the increasingly knowledge-based economy of the 21st century.
Do you really believe our industry is exempt from this universally accepted business axiom? Not a chance. So, given that, what’s the single most important requirement for on-boarding and retaining such top-shelf talent? Easy.
Link 2: Massive Cash Flow
Trying to recruit a top-gun business coach won’t be easy without cash. You need great cash-flow so you can afford to pay your coaches a compensation package comparable to what they’ll be leaving.
AND, just as importantly, there needs to be a big upside. That’s why we’re big believers in revenue percentage splits as a compensation model. It’s the only model that’s ever worked in building coaching firms around the world. Great coaches never have to leave a firm if they can grow their income and eventually buy into the firm they helped build–or even multiply it over and over.
Great coaches never have to leave a firm if they can grow their income and eventually buy into the firm they helped build--or even multiply it over and over.
But, how do you create this wonderful cash flow to build an amazing team?
Well, again, it’s pretty simple, though not easy.
Link 1: Personal Coaching Success
I don’t believe you’ve really mastered this business to the level required to build a great firm until you’ve hit six figures and stayed there for a year or more. What must you do to be a six-figure coach? You must consistently deliver high-value coaching services in your market until your market is willing to reward you with ever more clients, who pay ever more money, for ever less effort on your part.
And when this starts to happen, it’s magic!
For more great insights on how to build a business coaching firm that runs with out, download our FREE ebook, Secrets of a Business Coaching Rock Star.