How Much of My Net Worth Should I Put at Risk to Buy a Business Coaching Franchise?

How Much of My Net Worth Should I Put at Risk to Buy a Business Coaching Franchise?

Today I want to answer a frequently asked question we often hear from business coaches who are considering buying a business coaching franchise. That is: How much of my net worth should I put at risk to buy a business coaching franchise?

My answer is simple.

Ask yourself how much you can afford to lose.

I’m not trying to be melodramatic here, but I spent over 10 years in the business coaching franchise industry and have studied the performance of the business coaching franchise brands for another decade on top of that.

It is not atypical for a business coaching franchise brand to have a franchise failure rate in excess of 50%–some are even higher, unfortunately.

A business coaching franchise isn’t a sure bet. It’s an investment. And investments carry risks.

Anyone who specializes in investments will give you the same advice, whether you’re considering stocks, bonds, or any other investment.

Don’t make a risk so big that if your investment fails, it would ruin you financially.

Ask yourself how much can you afford to lose.

If you’re wealthy enough to absorb the risk of losing $100,000 to $200,000 if your franchise fails, then that’s fantastic. But I’ve seen a lot of potential franchisees put a pretty significant amount of their net worth at risk to get into a business coaching franchise.

And I’ve seen far too many of those folks lose it all.

Anybody who specializes in investments will give you the same advice, whether you’re considering stocks, bonds, or any other investment. First and foremost, ask yourself how much can you afford to lose.

How to Calculate Your Risk

Remember, a typical business coaching franchisee will invest about $200,000 in the first couple of years alone just to get the business going.

Expect to pay about $50,000 to $75,000 for the franchise fee, another $50,000 to $100,000 in working capital while trying to get your business up and running, and monthly royalty payments anywhere from $12,000 to $24,000 a year.

You can very easily invest as much as $200,000 to $250,000 within the first two or three years.

Take your time to think through this. You don’t want to be in a position where your home, your retirement, your net worth is exposed. There are considerably less expensive options available to help you get into the business coaching industry. Before you put your net worth at risk, ask yourself: could I lose this and stay afloat?

If you want more help thinking through your options, we’ve got an ebook for you: The Business Coaching Franchise Buyer’s Guide. We look at all the major business coaching franchise brands, analyze them, and show you how to do due diligence so that you can make an investment you’re comfortable with.

Sometimes the Best Business Coaching Tools Don’t Include Shiny New Stuff

Sometimes the Best Business Coaching Tools Don’t Include Shiny New Stuff

On the lookout for the best business coaching tools for growing your coaching business? One of my most important business coaching tips is this: although shiny new business coaching tools may be tempting, you can never go wrong sticking to the tried and true business techniques that have worked for you in the past.

Allow me to illustrate with a story…

A while ago my family enjoyed one of our best summer holidays ever. Kathy, the kids, and I spent a wonderful week in Anglesey–a little island  area off the Northwest coast of Wales.

We lay on the beach in the sun most days, while the kids went off swimming, fishing, or paddling around in our little boat. Fantastic stuff.

We weren’t initially planning to go. We’d reviewed all the fancy brochures describing exotic and far-flung destinations. We read about lots of intriguing places we’ve never visited, but what we really wanted was leisure.

We were struggling to reach a decision, then one evening Kathy turned to me,“What would you say was the best holiday we’ve had, ever? The one you’ve most enjoyed?”

“Honestly,” I replied, “when we rented that apartment in Anglesey a few years ago.”

“Me too,” Kathy agreed. “Why don’t we just go there again then?”

So we did. And that was that.

And we had a brilliant time again. It suits us. Easy to relax and do nothing–yet plenty for the kids to do.

It’s so easy to be tempted by all those exciting new adventures featured in the brochures. But sticking to what we knew worked for us resulted in a great time. 

Use the Business Coaching Tools You Already Know Will Work!

The same idea–sticking to what you know–may apply as it relates to your business coach marketing.

It’s so easy to be lured by a “shiny new object” syndrome as a temptation for tinkering with your business coaching systems for marketing or replacing some of the proven business coaching tools in your toolbox. And I’ll admit, I’m a huge advocate of shiny new stuff in the field of digital marketing. I’ll tell anyone who asks that these techniques have been the most effective business coach marketing tools I’ve ever used.

But often the best thing you can do is ask yourself the same simple question Kathy asked me: what’s worked the best for you before?

Often the best thing you can do is ask yourself the simple question: what's worked the best for you before?

If the “old school” business coaching tools like networking, direct mail, conference presentations, or referrals, have worked well for you before, chances are they’ll work well for you again.

Of course, I don’t want to discourage you from experimenting. Go ahead and try out new business coaching resources, but please don’t do so at the expense of business coaching tools that you know actually worked for you in the past.

We all are eager to learn new business coaching tips for marketing a practice, alternative business coaching techniques that may help attract new clients, and fresh business coaching resources that may help grow your clients’ businesses, but if the business coaching tools you have used in the past have proven effective, plan to stick with them until you find some business coaching tools that truly represent something better. Don’t stop doing what works!

Your established business coaching systems may not be exciting and new, and you may have become a bit bored with some of your business coach marketing strategies over time. But before you replace those trusted, dependable business coaching tools for promoting your coaching business, remember: success doesn’t always require shiny new tools.

Whether you’re just starting out in your business coaching career or you’re looking for fresh, proven ideas to accelerate your coaching business, check out the Coaches’ Coach FREE 30-day trial HEREWork with pros and learn proven techniques to grow your business. It’s just a click away. Sign up right HERE.

Smart Targeting and Prospecting for Your Business Coaching Practice

Smart Targeting and Prospecting for Your Business Coaching Practice

Are you targeting and prospecting the right kinds of clients as you’re working to build your business coaching firm?

Because if you aren’t, no matter how strong your marketing materials are, no matter how skilled you are at selling, you’ll find yourself constantly frustrated.

You need to discover your “sweet spot”–the right size and type of business that converts profitably for you. Sounds simple enough, right?

Until you realize that the sweet spot is different for each coach.

So how do you determine what kinds of businesses to pursue?

Here’s a hint: it’s based on your personal conversion rate.

What Size of Company Should You Target?

Follow this rule of thumb:

The LOWER your sales conversion rates and price and length of your average coaching engagement, the SMALLER the businesses you’ll need to attract in order to make it pay.

The HIGHER your conversion rates and average coaching engagement, the LARGER the businesses you can recruit.

The LOWER your sales conversion rates and price and length of your average coaching engagement, the SMALLER the businesses you'll need to attract in order to make it pay. The HIGHER your conversion rates and average coaching engagement, the LARGER the businesses you can recruit.

Why?

Because it costs more to acquire bigger businesses than smaller businesses.

Let’s do the math together.

Let’s say your conversion rate is 5%. That means it takes 20 leads to convert one client to a coaching program. If you’re marketing to a list of businesses with gross annual revenues around $350,000, and investing $200 per lead, you’ll land at least one new client for every $4,000 you invest (20 x $200).

In order to make this profitable, you need to sell a $1,500 program and keep your client an average of 3 months. The upside is that it costs less to attract smaller businesses, minimizing your risk.  The downside is that when you deal with clients in this revenue bracket, you’ll end up spending more time and effort chasing them down and getting them to pay.

To further illustrate my point, let’s say you pursue larger businesses–say clients with revenues in excess of $1 Million.  You’ll probably wind up investing around $400 per lead (that’s twice as much as before), simply because they’re more expensive to attract. Assuming your conversion rate stays the same (around 5%), it will take $8,000 to land that one client, as opposed to the $4,000 you were spending previously.

Your risk just skyrocketed, because that means you’ve got to get clients to sign up for a $2,000 per month program and keep them for at least four months just to break even.

Growing the Size of Your Target Client Over Time

Start small at first. Then, as you improve your skills and increase the value you bring to the table, you’ll be able to move on to bigger and better businesses.

For example, by the time I sold my first coaching firm in the early 2000’s, we were converting 10% of leads. Cost of acquisition was rock-bottom ($2,000)…which means we broke even on our first monthly check!

Then, because of the value we offered clients, we kept them around for an average of 9 months.

In other words, we had a return on investment of over 900%!  For every $2,000 we spent to get a new client, we had $18,000 coming back.

Incremental improvements in sales conversion as you’re getting started will lead to gains in retention–which will lead to improved client quality–which will increase your conversion and retention rates! So always look to the next tier of companies you can be targeting. Stretch yourself, even as you continue to prospect clients you’re more comfortable with. This way, you’ll be able to grow your confidence, grow your capacity, and grow your revenue!

Just starting out as a business coach and looking for more great tips and tricks? Download our FREE ebook, How to Become a Business Coach.

Your Marketing Plan for the New Year

Your Marketing Plan for the New Year

Are you ready to make 2020 your best year yet as a business coach?

It’s time to dig deep where most coaches struggle: with a marketing plan.

Too many business coaches have a feast-or-famine cycle, where they kick their marketing into high gear when the clients dry up, and then let it languish the rest of the time–which only restarts the cycle over.

The trick is to have a consistent marketing program that is bringing in leads continuously–with a goal of closing two new clients per month.

This will allow you to grow sustainably over time, while mitigating the panic of inevitable client attrition.

Ideally, you’ll grow to the point where you can bring on associate coaches and build a true business coaching firm!

But it all starts with creating a consistent and effective marketing machine.

Today, I’m going to walk you through the exact steps I take with clients and subscribers to determine a) which marketing strategies you ought to be using; and b) the metrics you need to master to create a sustainable business.

Two Key Questions for Your Marketing Plan

First, I want you to ask yourself two questions:

Is your practice oriented around a particular local region or a particular market niche without regard to geography?

Do you have a marketing budget of about $2,000/month?

Depending on your answers, you need to focus on the following lead generation strategies:

I recommend that you start working through ONLY the lead generation strategies recommended for you here. Many coaches attempt too many lead generation strategies too quickly, and end up doing all of them poorly–leading to frustration and, ultimately, the demise of their businesses.

Many coaches attempt too many lead generation strategies too quickly, and end up doing all of them poorly--leading to frustration and, ultimately, the demise of their businesses.

Your goal is to go not wide, but super deep on the strategies you choose so that you really master them.

Target Conversion Rates

Once you’ve deployed the right mix of marketing strategies, you should be generating around 50 leads per month. That might sound like a lot, but it’s really not.

After years in the business, it’s exactly the right sweet spot for most solo coaches–as long as you convert leads through your sales process at the industry average, as follows:

  • Make 400 dials per month to both new and past leads–those who have downloaded a lead magnet from your website, responded to a piece of direct mail, or have been referred to you by a colleague or strategic partner. With a 10% conversion rate on your dials, 40 of them should turn into Silver Bullet calls.
  • Out of those 40 Silver Bullet calls per month, you should get a 20% conversion rate to eight Complimentary Coaching Sessions.
  • Of those eight Complimentary Coaching Sessions per month, aim for a closing rate of 25%–which will give you the aforementioned two new clients per month!

Want to learn more about the lead generation strategies I’ve suggested above? Download our FREE ebook, Secrets of a Business Coaching Rock Star, with a whole section on lead generation for beginning and growing coaches alike. Don’t miss it!

Business Coaching Franchise Myth: Franchisees Own Their Own Businesses

Business Coaching Franchise Myth: Franchisees Own Their Own Businesses

Here’s a common business coaching franchise myth: the idea that you own your own business.

In fact, in many cases, a franchisee who has paid for the right to “own” a business usually has fewer rights than most employees! Most franchisees don’t truly own their own businesses because a franchise can be taken away or shut down for misconduct. A franchisee is subject to the whims of the business coaching franchisor, no matter how crazy.

Franchise manuals often dictate exactly how you have to run your business, even if your local circumstances or business instincts would lead you to make another choice. That means you are bound to comply with your franchisor’s directives, no matter what.

As a business coach, this often means you are restricted from generating new business and leads in ways that you would otherwise pursue, such as marketing outside your geographical territory–even if you’re pursuing a market niche that wouldn’t necessarily require local boundaries.

Franchise manuals often dictate exactly how you have to run your business, even if your local circumstances or business instincts would lead you to make another choice. That means you are bound to comply with your franchisor's directives, no matter what.

What’s more, franchisors may restrict your ability to run an independent business coaching practice after you terminate your agreement or if your business coaching franchise license expires. This presents a huge problem for the business coaching franchisee! Should you leave the franchise, you can be restrained from competing with your former franchisor and forced to leave the business altogether. By comparison, a terminated employee at least retains the right to work in his or her chosen profession, albeit in a different company.

Bottom line for you? It’s vitally important that you perform your due diligence and ensure the franchise you’re examining provides you the autonomy and independence you need to run your business the way you see fit.

Before you invest, we recommend the following critical steps in your due diligence process…

Business Coaching Franchise Due Diligence

First, check out your franchisor’s reputation online. Go to www.ripoffreport.com and type in the names of the business coaching franchises you are considering. Include the names of the founder(s)/owner(s). This should help you get a sense for whether or not you’ll get the flexibility you need to run a business that can be successful. Next, Google the phrase “business coaches who have left XYZ” and get a sense of what people are saying about their franchise experience on the way out.

Next, read through The Business Coaching Franchise Buyer’s Guide and start working through the Business Coaching Franchise Buyer’s Due Diligence Checklist.

Finally, as an alternative to buying a business coaching franchise, consider enrolling in a FREE 30-Day Trial of the Coaches’ Coach members only site! It’s our complete business coaching system, including customizable marketing campaigns, sales scripts, client training materials, business optimization modules, and more. Now, you can get a FREE 30-day trial. One of our clients recently closed $1,500 in recurring monthly revenue after just 3 days with our system…think what that could mean for YOUR business!