Choose Your Business Coach Wisely — They Can Make or Break Your Business. 5 Things You Must Consider When Hiring a Business Coach.
So you’re considering hiring a business coach?
A business coach will lead you, guide you, direct you, and mentor you toward the success of your business… or run it into the ground. I’ve seen many instances of both.
So, for the run it into the ground business coaches or as I prefer to call them…
The Expensive Bad Advice Coach
I met with a gentleman who owned a retail store. As business coaching is not just my job it’s my way of life, naturally, the conversation led to questions about his business challenges and successes. When I asked what his greatest challenge was he replied, “trusting people”. I asked what he meant by that. His reply was “I hired a business coach about a year ago ran up an $18,000 line of credit to pay the coach and almost lost my business taking his advice. And if you can’t trust a business coach, who can you trust?”
The Nickle and Dime Coach
I spoke to another business owner who had just established her business. Her business coach charged her $500 to form her LLC. She asked him for a copy of the certificate. In addition to charging $500.00 for forming the LLC, her coach charged her for a copy. Finally, when I recommended that she retrieve the username and password from him to log on to the State Corporation Commission website, he refused to give it to her. Which meant he had total control over the renewal of her business status forever – or at least until she took measures to remove him as the registered agent. Without the account information that can be a long tough road.
I should mention that in our state the cost of forming an LLC is $100. And there’s nothing wrong with having a registered agent. I often recommend it. However, the business owner should always be in total control of the SCC account.
The Pay Me More Than Your Business Net’s Coach
Another business owner hired a business coach who offered to take a portion of her sales as payment. She asked me to review the contract. I must admit. I was shocked and angry. The contract stated that the coach would receive 25% of all GROSS sales. We quickly ran a few numbers and saw that she was headed straight out of business. Her profit margin per product was only about 6%. Her net income after expenses was approximately 3%. 25% of her gross sales immediately made every sale greatly loss making.
The What The Heck Happened Coach
Another remarkably successful business closed its door after 7 years in business coaching. When I inquired as to why they closed. The coach stated that “it wasn’t his fault. They just didn’t expect so much competition in the market.” WHAT?! First, this was a unique business. This was a long-standing, highly profitable business. People flew from all over the world to become a client of this business, paying tens of thousands of dollars to participate in their program… for dozens of years. I still don’t know what truly happened. I just know that competition should NEVER be the reason for a strong, reputable, profitable business to close – especially after 7 years of working with a business coach!
The Rookie Coach
I took on one of my very first clients as a coach years ago. While I was proud to win ActionCoach Rookie of the year, I was truly a rookie. Sure, I had a background in cash flow projections, financial and business analysis, management, and a whole host of skills too long to mention. However, what I did not know at the time was that this particular client didn’t understand how to calculate profit margins. I assumed, and we all know what happens when you do that, that since she was a business owner she had priced her services with the profit margin she stated. Boy, was I wrong!
We systematized the entire business and began marketing. This client gained about 1 – 2 new clients per month before coaching. Very quickly (with the strategic marketing we put in place) they began to average 3 – 7 new clients a DAY! Sounds great! Who would want to grow their client base by 5,000%? Everyone right? Well, everyone except the business that is loss-making for every new client.
The client did not understand how to price her services. She did not understand how to include an overhead percentage. This business owner did not understand the effective labor rate of an employee. So every time she gained a new client she was losing money. As a result of my assumption and her lack of business knowledge, the business was bleeding! Rookie move coach! I learned very quickly to first check the financial health and profitability of a business BEFORE creating a marketing machine.
So when I say a business coach can make or break your business. I mean they can make or break your business and you.
That’s just a few examples of the “breaks” – now for the makes.
Loss Making to Profit Making
My very next client was in for a treat. First things first! We run all of the numbers! Sure enough, almost every project they did was loss making. Their gross revenue was in the millions. However, they were broke. They were losing about 19% per job.
I recommended that the client immediately (based on our calculations) begin job costing and increase his prices to include overhead, effective labor rate, variable expenses, a 20% profit margin, etc. I thought he was going to fire me. He said if he raised his prices he’d never get another job. I said “Good! Then we can stop losing money!” That drove the point home. He did, in fact, take my advice and is now a very profitable business.
From Overwhelmed to Super Successful
After coaching for about 6 months I was approached by a woman who owned a small home based company. She had approximately 14 employees. Their revenue and profits were pretty substantial for a small home base business. This woman had her Masters. She was a former executive. Needless to say, she was one smart cookie. So why would she hire a business coach? She was overwhelmed, exhausted, and ready to quit. She was so overwhelmed with the day to day of running a business that she was at the point she was willing to take a reduction in her income to just work for someone else. But she had a passion for what her company provided.
We met and I’m ecstatic to say that today she employs over 100 people, works about 20 hours a week, now has 4 businesses (that run without her), several means of passive income, and spends more time traveling and with her family than she ever imagined she could.
Changes in REG’s Created a Questionable Future – Changes In Coaching Recreated The Future of Success
I received a call from a business owner one day who was worried about a few changes she made in her business based on recent regulation changes in her industry. She called to ask if she could just hire me to help her figure out if she had made the right changes and if her company was going to survive. For 2 years this company had been very successful. Now, since the changes in regulations, which changed the model of her business, she was seeing a decline in her net income month-over-month… not a good sign.
I told Betty that she could not hire me to review her new model and finances and offer her advice. However, I would gladly do that for free. A good coach, an honest coach, a compassionate coach, doesn’t nickel and dime business owners. A good coach will offer their time as a way to give back for that one and done situation. Betty and I met for about an hour. By the end of the conversation, Betty and I realized that there would need to be many adjustments to her once successful company in order to survive. We realized that the majority of all of the clients were now loss making after the change.
Betty had never calculated overhead or profit margins.
Within 90 days, yes it took that long to uncover where the issues truly lied and to make all of the adjustments, I’m happy to say that Betty’s business is profitable with positive cash flow once again! Betty is excited and has even started another business that will provide her with additional passive income. She often reminds me as we look back at how things were when we started working together that her company would have had to close it’s doors in November if we had not made the proper adjustments.
Trading Time For Money To Passive Income
Another local client was trading his time for hours. His rate was $95.00 per hour. Which means if he wasn’t working then he wasn’t generating income. We all know that’s no way to live. Although, that is exactly how most people live. Money is just an idea backed by an action. There is always a way to generate income that provides a means of passive income (income that continues to be generated without you physically being there, such as rental income). Passive income should be a large part of your conversations with your business coach. Life is too short to spend your life, your time, in exchange for money.
This client has projected approximately $106,000.00 in net passive income for the end of 2017. This company’s net income, trading his time for money, prior to coaching was about $8,000.00 per year and zero passive income. This is a life changer for this gentleman.
That is exactly what the best business coach does.
They will lead you, guide you, direct you, support you, motivate you, encourage you, empathize with you, push you, activate and ensure that your achieve your dreams.
So, what should you consider when hiring a business coach?
While there are many certification programs for coaching, my experience has been that the majority of the programs focus on teaching the participants how to sell coaching, and a few basic coaching skills, not business skills. Don’t be fooled by fancy certifications. Because a coach is certified does not mean he or she is qualified. Interview several coaches before hiring. Here are the top 7 questions you must ask a coach during your interview.
How do you analyze the financial health of a business? Insist that they be specific. Keep asking questions until you see their level of expertise.
What is the average profit margin in my industry? To be honest there is no right answer from a good coach on this one. A good coach doesn’t care what the averages are. A good coach will blow average profit margins out of the water.
How many passive income avenues do your current clients have?
Who are your past and current clients and may I meet with them to discuss their experience with you? Trust me, you’ll want to talk to their past clients. There’s a reason that they’re no longer clients. Yes, they may have achieved what they set out to OR they may be out of business. Or they may have had a poor experience.
Who are some other coaches in the area that I should interview? Again, a good coach will share the names of other coaches. I encourage anyone who is interested in coaching to interview the other coaches in the area. There are two reasons for this. We all have different styles, expertise, and engagement levels. Reason one… you need to find the right coach for you. Reason two… As a confident coach who is more than a coach to her clients, I am certain that after given an informed choice of coaches their choice will be me.
How long have you been coaching? Years in business doesn’t equate to a good business coach. However, if you can gauge the time he or she has been coaching, with their number of past and current clients, you will have a pretty good idea how successful he or she is.
What is your retention rate? Good business coaches build long-term relationships with their clients.
Because birds of a feather truly do flock together… Who does the coach associate themselves with? A good coach will have relationships with pillars of the community, with admirable people. Look at all of the coaches social media, Facebook, LinkedIn, Google+, just to name a few. See who they are connected to, read their conversations. Take the reviews with a grain of salt. Most business coaches ask for reviews. If a client isn’t happy or goes out of business chances are there won’t be a review. Because the business coach didn’t ask for one.
While in every industry, there are many honest and ethical people — and many dishonest and self-serving people. Business Coaching is no different. There are business coaches that will sell you coaching just to make a sale. Some will offer advice just to give advice. There are some who will take advantage of business owners who don’t fully understand agreements. Many will keep adding lists of to-do’s just to keep you paying month over month. They will make guarantees that hold no merit.
DON’T BE FOOLED BY GIMMICKS
A good coach will be transparent with you. They will put your best interests first. Your success will be their report card. My success is gauged based on these areas of my clients success: Increase in net profit, Increase in passive income, decrease in number of hours worked, increase in family time (or the leisure of my clients choice) number of new jobs created, goals achieved, dreams achieved, and the happiness of my clients and their teams. Read the fine print about their “guaranty”.
YOUR EXPECTATIONS, GOALS, and DREAMS.
In addition to interviewing a business coach. Write down what your expectations are, what your goals are, (You can begin setting smarter goals here.) what your dreams are, and how hiring a coach would bring value to your business and your life. Be very clear with the business coach when you meet. Ask him or her directly how they will meet your expectations, how they will ensure your success, and what immediate steps you could take even if you didn’t hire them. Remember good business coaches love to give back even if you decide not to work with them.
Finally, each of us has different values, morals, and ethics. We all have unique talents, strengths, challenges. Every one of us communicates with a different style. Look for a connection with your coach. Do you share the same values, morals, and ethics? Those things should never be compromised. Your business coaches talents should compliment yours. If you’re great at marketing, but challenged when it comes to numbers. A business coach who is talented with numbers but not strong in marketing may work for you. If you are a naturally reserved person, an outgoing business coach who will push you out of your comfort zone may be a great fit for you.