I was taking a group-coaching session inside our Mastermind program last week, when one of our clients asked this great question:
“I’ve hired a couple of coaches on part-time basis, because I don’t have enough to pay them more yet. The PROBLEM is I’m afraid they’ll want to work elsewhere to make more money – or even start their own side-business, that could conflict with my business, or at least just distract them. What do you do about this?”
The truth of the matter – as I explained to this fitness studio owner – is that if you can’t commit fully to your coach, then neither can they commit fully to you.
That’s totally fair when you think about it.
You want to grow your company, sure. But they have a right to meet their own financial needs.
Ultimately, its your responsibility to grow your company to a point where:
a) It has the cashflow budget to pay out for a full time position, and
b) You have the mindset to step out of that role & trust someone to take over
Another big trap coaching-business owners fall into is paying their specialist contractors too much.
This often happens because they bring on a new coach when they have just 3-5 hours a week to give. They pay out the demanded £25-35 per hour ‘going rate’ most solopreneur contractors expect (yet rarely deserve…)
When your practice then gets busier & you create more & more hours for your coach – at the SAME high rate of £25/hour compensation – you realize that you’re paying way over the odds, and their payroll is cutting your profit margins to shreds.
It works out that its cheaper for you to keep doing the coaching – so you sack them and jump back into it to save costs.
Problem is, now you’re back where you started!
So what to do?
First, realize these big financial & team compensation issues largely come from shaky foundations that were laid months or even years ago.
That means there’s no simple ‘fix’.
You either need to change things up in your business by increases prices or making cuts elsewhere…
Or, you’re gonna have to have some uncomfortable conversations with your team members, telling them about the new job structure and compensation plan you’ve laid out based on what the finances tell you is needed.
This of course is never easy. And it sucks, to be honest.
But you must take responsibility by accepting that your months (or years) of building on poor operational & financial foundations would have to cave in at some point.
Its like when a client spends 10 years getting out of shape – then he wants to ‘fix’ it with a 30-day plan. Sorry, not gonna happen.
You’re gonna have to make some compromises.
Change things up.
And wait until things settle back down in the new direction you desire.
And there may be some sacrifices along the way.
So here are a few elements where fitpros (and other coaches) tend to go wrong – and how to rectify, or at least minimize, the damage:
#1) Generally undercharging clients for your services
Most coaches simply aren’t charging enough. I’d say the vast majority of coaches / consultants are around 30% under what they could be charging. When you’re a one-person solopreneur, you have GREAT profits so you don’t care about a 30% difference.
After all, whether you make £60 or £90 an hour isn’t a HUGE deal – because £60 is still a great number, and is higher than most people get.
However, when you want more FREEDOM from the business, that extra 30% is your ticket out of there.
That’s the margin that is required when you want to pay for your freedom, and let someone else take over.
Don’t box yourself into a corner by undercharging just to get clients flooding through the door… but then you don’t have enough profit to pay someone else to take the clients back off your hands.
#2) Paying your coaches too much from the start – and not quantifying their potential return
Paying a coach in the UK £25 an hour to help run your fitness camp sounds reasonable… until you realize that for them to work a 40-hours workweek gives them a £4000/month retainer!
And in most cases, that means they are getting paid more by the company than you are.
I teach clients inside the Expert-Business Mastermind to set things up differently.
The fitpros & coaches in my program are taught to create their own apprenticeships – where potential team members actually pay them for that opportunity.
After all, if you’re at the stage of expanding, you must have a SYSTEM for getting results that works.
Why shouldn’t other coaches pay to discover that system, and knock years off of their career development?
Our coaches go through a progression structure from Apprentice all the way to Master Specialist, where their compensation increases only based on the additional responsibility (and therefore R.O.I) they bring to the company.
This way, you control the expectation of what is paid, and often the apprenticeship will make your business cash-positive before you pay anyone.
One fitness coach from the UK was able to generate £7500 by selling two apprenticeships to clients that both wanted to one day become coaches for him.
I mentored a life coaching business to create & sell a $4000 apprenticeship program. We generated over $150,000 upfront from this program, and later hired 2 coaches full time from the experience. Those coaches are doing great, and the business owners have been able to step out of 99% of operations and delivery, and now finish work before 10am most days, while their business shoots into low 7-figures.
#3) Hiring Either Too Early or Too Late
Another major crack in the foundations of coaching business comes from mis-judging the time – and the reason – for outsourcing.
Either hiring too early, where often the owner is trying to run away from responsibility, and delegate our of fear.
This means you rush to hire someone, and you’re not sure what tasks they’re supposed to do, nor how to make the position profitable. This costs the business money.
Plus, the coaches that hire to avoid responsibility generally fail to train or indoctrinate their new team member in the best way to do things. This leads to them creating even more fires you now need to put out.
And if you’re one of the coaches that wait too long to hire help, its because you’re getting burned out drowning in clients, yet the money to hire out isn’t.quite.there.yet.
But the problem here is from charging too little, as we already talked about.
Your diary is getting fully booked, yet because you’re undercharging there’s never enough profit to pay someone else.
Unfortunately many coaches believe the solution to being busy but not profitable is to …. get MORE clients?
That’s because they make the foundational error of mistaking ‘Revenue’ for ‘Profit’.
They think, “To afford help, I need to create more revenue”
– FALSE.
Instead, always think, “To afford help, I need more PROFIT”.
Revenue doesn’t grow a business. Profit does.
The way to eliminate these mistakes and get your business profitable is to understand the “33% Ratio” Guideline.
In summary, in hindsight its easy to see why the area of operations & finance kills the growth of most coaching business. The symptoms of poor operational structure are so deadly, yet intangible, its difficult to trace them back to the root cause. Until now.
This article should have shed light on how getting organisational structure and financial forecasting right in the start-up phase will smooth out your scaling potential & eliminate uncomfortable situations like this from even happening.
That’s the importance of learning how to grow a real expert-business, that isn’t founded upon ‘hustle’ or ‘positive thinking’ alone… but on foresight, a growth structure & a proven business plan to follow.
To access my full operations & financial training for coaching businesses (and my workbooks to track your finances effortlessly) then see if the Mastermind is for you.
