Ep 104 - How to Make a Profit as a Life Coach
Business Success + Life Coach, Debbie Shadid, is talking with you about how you can ensure you’re making a satisfying profit in your life coaching business.
Last week on the podcast, we talked about how to design the perfect offer for your ideal client. That involved how much time they needed to see the result and the price at which you’d charge.
How does that tie into making a profit in your business?
Many times, coaches create generic offers with a time frame and price tag that were pulled from somewhere else. It’s the “industry standard” so we think it must be suitable for us, as well.
But in order to make a profit, you need to look at some figures that are personal to YOU. By taking the time to look at a few key pieces of information, you can create a plan for profit quite simply.
Listen in on this week’s episode to learn what information goes into designing a plan for profit in your coaching business.
Transcript
00;00;06;05 - 00;00;24;04 | Debbie
Welcome to the Business Building Boutique podcast for new life coaches. If you are a newly certified coach who's trying to figure out how to grow your business, you're in the right spot. Join me each week to learn simple business growth strategies along with step-by-step marketing tips to get you seen by clients in your niche. I'm going to be your guide.
00;00;24;04 - 00;00;38;27 | Debbie
I'll tell you what to do so you can feel confident in your business. And here's the truth, ladies. You can build your dream coaching business without paid ads and without a fancy sales funnel. So if that sounds interesting and you're ready to get more paid clients, then let's get started.
00;00;41;18 - 00;01;07;15 | Debbie
All right. How are you guys? Well, what do you think about your offer? Have you listened to last week's podcast about crafting your offer? And have you been thinking about that? I'm wondering if you have been thinking about the process that you take your clients through to get their results. I hope so. Just want to mention again, if you guys have got questions, please reach out to me and let me help you through this process.
00;01;08;02 - 00;01;35;27 | Debbie
Okay. Today in episode 104, we're going to be talking about streamlining and planning for profit. I have this process where we plan for profit, which is a pretty good idea. It's a simple plan to create marketing and create your financial goals. All right. Today we're going to be talking about profit and I really do believe that this is going to be the most eye-opening episode that I have for you.
00;01;36;10 - 00;01;57;26 | Debbie
I first want to be clear with you about the reality of having a business. I want to make sure that you understand that what you charge has to cover all of what you require as income. If you have assistants that work for you, it has to cover your taxes, your retirement account, your health insurance; all of the expenses that go into your business.
00;01;58;05 - 00;02;28;04 | Debbie
We hear so often about somebody who had a launch and they made $100,000. What you do not know that you're not taking in consideration is what it cost them to earn the $100,000. They actually might have ad costs involved in that. And then, of course, they have administrative costs. They have taxes that come out of that. I recently did a launch myself, and it was very, very interesting to see what I netted out of that launch.
00;02;28;15 - 00;02;53;12 | Debbie
So you'll be able to do that at some point in your business. But this is the shift that I want you to have when we work through this episode today. I want you to be thinking about the fact that you really are in business. Your coaching business, let's imagine that it is just like a brick and mortar business; that your coaching business is the same thing as you going into business into a retail store.
00;02;54;05 - 00;03;13;23 | Debbie
The reason why I want you to think of that is that when you think of it that way, it's not just you sitting at home with a coaching certification. It is not just you coaching people in front of your computer on Zoom. You're in business when you think about it that way. When you have a brick-and-mortar business, you treat it like you're in business.
00;03;14;03 - 00;03;38;06 | Debbie
Of course, you buy inventory. Of course, you have a staff. Of course, you pay payroll. You do advertising, you pay insurance, and you pay taxes. All of that is part of what you know you're going to do when you start a business. This is the same thing as your coaching business, you guys. And as soon as you look at it that way, everybody else around you will begin to look at it that way, too.
00;03;38;06 - 00;03;59;04 | Debbie
So many women that I work with approach their business as if it's a hobby, it's their home-based business, and consequently, the people that they interact with are CPA, their banker, whoever it is, also kind of think, hey, well, you know, Debbie's got her a little home-based business. Well, that's not true, you guys. I have a big business and I treat my business like a business.
00;03;59;04 - 00;04;19;07 | Debbie
And that's what I want you to do, too. So you're going to want to invest in equipment, like don't use the same computer that you've had forever. Buy a computer that will support your business today. Treat this like it is a business. Don't just buy more coaching. I know we are all really good at buying coaching and thank God for that.
00;04;19;08 - 00;04;46;04 | Debbie
I'm grateful that you guys buy coaching, but all the other pieces need to come into play. So it's not just about you being a coach it's about you being a business person. This is going to be a significant mindset shift for you. And when you approach your coaching offers that we talked about last week and you think of the big picture of running a business and the expenses that go with that, your price is going to change accordingly.
00;04;46;16 - 00;05;04;17 | Debbie
I promise you. There are two pieces that I want you to think about when it comes to pricing. The first thing is I want to talk to you about undervaluing what you offer to your client. I want you to think about the result that you get for your client. When you think about the result that you provide, honestly, you guys, I'm pretty sure it's priceless.
00;05;04;19 - 00;05;31;09 | Debbie
How can you measure somebody having a new awareness that they didn't have? How could you measure somebody finally learning how to manage anxiety? How could you put a price on somebody finally healing a marriage? Right. How could you put a price on that? How can I put a price on teaching you how to be in business, how to market yourself, how to understand how to be profitable, and how to be the boss of your own business?
00;05;31;16 - 00;05;51;27 | Debbie
What I teach women changes them forever. It goes beyond you guys having a coaching business. You understand business. You're basically brought up to speed and you're in an online business now. You know everything about it. You're going to know stuff that your kids don't know, honestly. You're going to be prepared to take on different positions in the corporate world if you wanted to.
00;05;52;11 - 00;06;14;22 | Debbie
Right? Just from what I teach you. And you will be able to be a profitable coach. How do I put a price on that? So make sure that you are not undervaluing your coaching services that you sell. Make sure that you're charging enough and own that result and be able to talk to the client about the impact that your coaching has.
00;06;14;28 - 00;06;39;00 | Debbie
The second piece of pricing that I want to talk about is that you have to cover your expenses and you have to make the salary that you desire. This doesn't have to be that hard. Most of us feel overwhelmed when we think about money. And really, you guys, it can be simple. I'm going to try to give you a super simple way to think about how much money you need to make, the pricing that you need to charge, to be able to cover your expenses and make a salary.
00;06;39;12 - 00;06;58;05 | Debbie
I am going to be talking about some numbers today, so you might want to listen to this episode once and then come back and maybe even review the transcript so that you can look back at these numbers. So, the first thing I want you to do is to add up your monthly expenses. I want you to have this sort of set amount in mind.
00;06;58;05 - 00;07;22;23 | Debbie
And I know probably right now you're like, well, there is no consistent monthly amount of expenses. All right, then just figure out what you think it's going to be in the year and divide it by 12. You're going to have different expenses at different stages in your business. A lot of you guys right now are having high amount of coaching expenses because you're learning how to run your businesses, you're learning how to be coaches, you're having more expenses on services than you are on the pieces.
00;07;23;01 - 00;07;46;01 | Debbie
That you are using to acquire clients. So you're not spending money on paid advertising. Some of those pieces will come later, and your coaching expenses as far as you getting a coach, being a coach; those will decrease. I can tell you guys, though, it does not take much money to run a business. Most of you guys have subscribed and purchased things and gotten software pieces long before you needed them.
00;07;46;02 - 00;08;06;18 | Debbie
You've paid for calendars, online scheduling calendars that you don't even need. You can use the free version of a lot of things, and I just want to encourage you to see what do I actually really need that I've paid for and what don't I need? I will tell you four things that you need right now, and you can run your business for $64 a month.
00;08;06;29 - 00;08;29;12 | Debbie
All right. If you have a website through Squarespace, which is who I recommend, and probably Wix is about the same price, it's about $23 a month to have your website. If you do a domain-based email, which is the debbie@debbieshadid.com, instead of using a Gmail address. If you do domain-based email, it's about $10 a month.
00;08;29;20 - 00;08;48;26 | Debbie
Email marketing is something that I'm going to want you to do. If you use FloDesk with the referral discount code that I can offer you, it's $19 a month. So that is going to be a piece that you're going to want to have as well. And the last thing is Canva. You can get Canva for free, just like you could use your Gmail for free.
00;08;48;26 - 00;09;13;02 | Debbie
Your Gmail email for free. But I want you to have the pro version. It's much easier to use. It comes with better pictures and better things for you to create more professional graphics. Those four pieces together, your website, your domain-based email, your email marketing, FloDesk, that's what I'm recommending, and Canva - they're $64 a month. So most of you guys have the coaching expenses that I talked about on top of that.
00;09;13;02 - 00;09;31;10 | Debbie
And you should be insured. If you're not insured, I would recommend at some point. You probably don't need that today. If you don't have coaching clients don't pay for insurance yet. But those are some of the things that you're going to want to have in your business. That's about $300 a year. So let's just talk about the very beginning expenses of your business.
00;09;31;10 - 00;09;48;03 | Debbie
And let's just say to keep it simple, it's $500 a month. I know I said $64 a month for those four things, but most of you guys have coaches that you're paying as well. So $500 a month. Keep it simple. Then I want you, in this second part, to decide how much money you actually want to make a month.
00;09;48;13 - 00;10;09;17 | Debbie
What will be your take-home pay after you pay your taxes and your expenses? Yes, I said taxes. Now I live in the U.S., so I'm going to figure taxes based in just a general 30% sort of thing. I am not an accountant. I don't know what your tax rate is, but let's just talk in round figures so that you kind of conceptually understand this.
00;10;09;18 - 00;10;40;16 | Debbie
So let's just say that you want to have in your bank account, just like a paycheck of $8,000 a month, you're probably going to have about $3,000 taxes on that And you're also, as we mentioned, going to have about $500 in expenses. If you add those three things together, the $8,000 that you want to have in your bank account, the $3,000 you're going to pay in taxes, and the 500 in expenses, you're at 11,500 a month, which is times 12 months, $138,000 a year in coaching that you would sell.
00;10;40;17 - 00;11;03;00 | Debbie
All right. So when I work with you, let me just tell you, we're going to go step by step and figure this out, and it will be easy for you to understand but I know that you guys are having an eye-opening moment right now, like, wow, I never thought of this in this way. I really believe that when you know these things, the things that you never were told before, it is actually so much easier to run your business.
00;11;03;01 - 00;11;24;23 | Debbie
You can charge more and you can feel more confident about asking for the price that you need because you know that you're not being unreasonable with the price. You also are so much less likely to undervalue your coaching. You won't go out and charge five sessions for $100. And I see coaches selling that. Do not do that. Do not do that.
00;11;24;23 - 00;11;48;10 | Debbie
You're never going to make a living at that. So, if you are going to make $138,000 a year, just like what we talked about and you said to me, I have 20 hours that I can coach a week and not talking about the business building part. The time when you are working on your marketing, your social media, your email, that kind of stuff, I'm talking about actual hours of coaching because you actually only make money,
00;11;48;13 - 00;12;09;22 | Debbie
you're paid by the hour, for coaching. So, if you were going to work 20 hours a week and you wanted to make $138,000 a year, you would need to charge $133 per hour. Now, how did I come up with that number? Again, very briefly, if you work 20 hours a week times 52 weeks in a year, that is 1040 hours a year.
00;12;09;27 - 00;12;30;03 | Debbie
And if you divide that into the $138,000, it comes out as 133. Now I know for those of you guys who are accountants listening to me or really detailed people, I am doing some broad figuring here. I don't have a calculator in front of me and I, you don't need to have a calculator. You just need to understand conceptually what I'm saying.
00;12;30;16 - 00;12;56;12 | Debbie
All right. So 20 hours a week times 52 weeks is 1040 hours a year of coaching that you would do. Divide that into the 138,000 that we talked about and you would be charging $133 an hour. Now this gives you so much more awareness to go figure out your prices. So when you're creating that offer that I talked about, that is the right amount of time for your client,
00;12;56;13 - 00;13;19;20 | Debbie
the right amount of time to get the result. And let's just say for again the sake of keeping this simple, you decide it's 12 weeks. If you take 12 weeks, 12 hours of coaching, times $133 that we just figured, your coaching for 12 weeks would be $1596. So let's just call it $1600. All right, just somewhere around there.
00;13;19;21 - 00;13;40;18 | Debbie
Now you can understand the 12 weeks of coaching for $1600 is not out of line and I probably should be charging more because I deserve to make a decent amount of money. I have taxes, I have insurance, and I have all kinds of expenses that I need to cover, including my salary. All right, so, let me just open up another way that you can think about this.
00;13;41;00 - 00;13;59;02 | Debbie
One more layer of awareness that I'm going to show you, and that is that you could begin to think about your cash flow, about how it's going to work for you. Do you want to have payments come into where people pay you every month? Because that basically creates a salary for you. Or do you want to be paid in full?
00;13;59;09 - 00;14;20;07 | Debbie
That's another thing to think about. How well do you manage your money? Some of your clients actually might prefer to be able to pay in payments. That's up to you. This is also a time when you might start thinking about group coaching. I know there's a lot of resistance to this idea of group coaching because you have heard, oh, I need to private coach until I get this much experience before I can group coach.
00;14;20;07 - 00;14;42;06 | Debbie
But let me just tell you, it depends on what your niche is. It depends on what your program is but almost everybody can offer group coaching of some kind. So how could this work? Let's just take this same example and let's say you have 12 people that go into your same 12-week program. Remember we said the 12-week program is $1596.
00;14;42;13 - 00;15;17;26 | Debbie
If you take 12 people times that same amount of money, 12 x 1596, that's now $19,151. All right? Now you're talking about earning $19,000 plus in 12 weeks in the same one hour per week. Do you see how this really changes things? So, let's just say that you decided you were going to do two group coaching sessions per week, and remember they're 12 weeks long, so that's essentially two group coaching sessions per quarter,
00;15;17;27 - 00;15;43;21 | Debbie
okay? So, if I just figured that it's $19,000 and you do two of those at one time, you're at $38,000 a quarter for two groups, 2 hours of coaching a week. All right. If you take that times four you're like at $150,000 something a year. All right, that would be two group coaching, 12 weeks, two groups going on at one time, four times a year.
00;15;43;21 - 00;16;06;20 | Debbie
So each quarter you'd have two groups charging that same price, $1596, and you're at $150,000 something a year. It's a completely different way to look at it. So I'm not saying that group coaching is right for you or not, but I just want you to look at both so you can be informed. Maybe your people only want private coaching and that's okay too.
00;16;06;23 - 00;16;27;26 | Debbie
A couple of final thoughts that I want to introduce you to is when we work together, we'll put together a plan for marketing. This is another way to streamline and ensure that you have consistent leads coming into your business. We'll make a super-simple plan. You guys can market your business and make $100,000 in your business without spending any money on paid ads.
00;16;27;26 - 00;16;46;06 | Debbie
You do not need to turn on Facebook ads. In fact, I would really encourage you to wait until you really understand your business, until you know that your marketing and your copy and your offer are all perfect before you turn on those Facebook ads. All right. The last thing is that you want to have bookkeeping software. My favorite happens to be FreshBooks.
00;16;46;15 - 00;17;06;00 | Debbie
And let me tell you why, FreshBooks, I'll leave a link in the show notes for it. But FreshBooks, you can talk to them on the phone. Yesterday, I had a question about an invoice, had a problem with something that I had inputted something in incorrectly. Those guys spent an hour on the phone with me. They could see my computer and they could look at the screen.
00;17;06;00 - 00;17;25;27 | Debbie
They couldn't do anything on it, but they could tell me what to do. It is so worth getting software that you can get support with. So at some point when you're ready, you want to get bookkeeping software. When you do that, you'll invoice through there. You'll take the payments through there, and all of your expenses will go in there. And you'll be able to see if you're making money or losing money.
00;17;25;28 - 00;17;45;18 | Debbie
This is how you treat your business like a business, and you save for taxes. If you are not making money and you're not going to get bookkeeping software yet, do not worry. PayPal has free invoicing. Remember I just told you you could run your business on $64 a month. Use PayPal free invoicing. Use an Excel spreadsheet to keep track of your expenses.
00;17;45;18 - 00;18;06;03 | Debbie
You guys can do this. Think of this - not just for fun, the CEO of the business, but you are really in business. Treat this like a business. Show up to work like it's a business, and it will become a business so much faster. I promise you, you will begin to make money when you think of this from this point of view.
00;18;06;04 - 00;18;24;05 | Debbie
All right. As I wrap up this episode, I want to encourage you guys to join me in the Business Building Boutique. You've been hearing about it. And today's topic is just one of the many things that the coaches I work with, they have never thought about this. It is all a part of the step-by-step process that I teach in the Business Building Boutique.
00;18;24;06 - 00;18;51;11 | Debbie
Yes, the bottom line is, you're going to learn how to gain clients. That's what everybody hires me for. They want to have paid clients. They want more paid clients. They want to learn how to use the technology. They want to learn how to feel comfortable on social media. But part of all of having paid clients is having copy, you know, the website copy, the posting, whatever it is, whatever you write and say about your business, having it done in a way that people understand what you're saying. Being clear about the results that you provide.
00;18;51;12 - 00;19;12;12 | Debbie
Having a price that works for your ideal client, those are all the pieces that you guys didn't know that you needed. And yes, then once we get the clients coming in, I really want to teach you also to be profitable. All of us are in this to make money. Yes, I know. We want to change the world and your coaching does, but I know you also want to move this from a hobby to a career where you're really making a lot of money.
00;19;12;13 - 00;19;35;10 | Debbie
So I have no doubt that I have changed your mind about this. And I also have no doubt that this one single episode will undoubtedly change the way that you charge for your services. And I'm pretty sure that you'll have a much clearer picture of what you need to do. So, you only have so much time, you guys, and honestly, a lot of you guys are wasting it just trying to figure this out.
00;19;35;12 - 00;19;53;00 | Debbie
Let's get on a phone call. Let's talk about it. I will tell you exactly what to do and I show you exactly what to do in the Business Building Boutique. And yes, it's group coaching. And yes, you get some private coaching. You have email support from me, you have text access. I provide all the education, the worksheets, the guides, all of it.
00;19;53;06 - 00;20;12;09 | Debbie
All right, you guys? Have an incredible week. Think about the profits of your business. Think about yourself being in business and show up as the CEO of your business. All right. I will see you next week. We're going to wrap this up by talking about technology, another one of your favorite things. Okay, you guys have an amazing week. Talk to you then.
00;20;12;12 - 00;20;36;21 | Debbie
Bye-bye. That's it. Thanks for listening. Now it's up to you. Put what you learned today into action and do what you need to be seen and then be hired by clients in your niche. And if you're ready to stop wasting your precious time and get your business finally booked up, you're invited to join me in the Business Building Boutique for new life coaches where you will learn everything you need to be a coach with plenty of paid clients.
00;20;36;23 - 00;20;39;16 | Debbie
All right. Have an amazing week. Until next time, bye-bye.