Often, when I’m working with business coaches, I’ll ask: “What do you believe is the single most important driver in building a profitable business coaching firm?”
No one ever gives the right answer.
Some say “coaching skills.”
Some say “getting clients results.”
Some say “getting the good clients.”
Some say “charging more.”
And there are all sorts of other responses I hear.
Now don’t get me wrong, many of them are linked to profitability. But when you look for the SINGLE MOST important factor, it is none of these.
The single most important driver in building a profitable business coaching firm is simply this:
Low Client Cost of Acquisition
Because it’s impossible to build a profitable firm if your client acquisition costs are out of control! The lower your cost of acquisition is, the more cash flow, stability, and revenue you’ll generate.
It's impossible to build a profitable firm if your client acquisition costs are out of control! The lower your cost of acquisition is, the more cash flow, stability, and revenue you'll generate.
In other words, this means mastering your sales and marketing.
More specifically, it means mastering high-leverage, low-cost marketing strategies—which, to be clear, also tend to require the highest effort.
- Getting the majority of your clients through referrals.
- Strategic alliances with non-competitive entities that serve a similar demographic (think accountants, marketing consultants, attorneys, etc.).
- Servicing ever-higher quality—which equals better-paying!—clients.
- Keeping these clients longer and longer.
It’s important to note that many of these strategies start to take off after you’ve established yourself in your niche. That’s because it takes time and skill to build up a network of trusted collaborators and satisfied clients. You can’t simply turn these strategies on and off like a faucet.
While you’re getting started, accept that you’ll probably need to spend more time on low-leverage, high-cost marketing such as digital advertising, outsourced telemarketing, and good old-fashioned direct mail. (That’s why I always recommend to beginning business coaches that they need to have a “war chest” of at least six months’ marketing budget before launching their practice full-time.)
But your objective should always be to cultivate relationships with clients and contacts who can help you deploy these high-leverage, low-cost tactics.
As you shift the balance of your marketing mix to these strategies from lower-leverage, higher-cost mass marketing efforts, you’ll see your cost of acquisition fall. More importantly, you’ll see yourself building the profitable business coaching firm you’ve always dreamed of!
For more great insights like this, check out our FREE ebook, Secrets of a Business Coaching Rock Star.