Start a life coaching business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your life coaching business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a life coaching business?
Starting up a life coaching business is a low-cost endeavor. Business owners need reliable transportation, a phone, a computer and internet access. Other expenses include marketing costs and insurance.
To keep initial expenses minimal, most business owners use their personal vehicle, phone and computer when starting out, and they meet clients in public places (e.g. coffee shops or business centers).
What are the ongoing expenses for a life coaching business?
The ongoing expenses for a life coaching business, like the startup expenses, are low. Ongoing costs include expenses for insurance, marketing, transportation, internet access and a phone. Coaches that hire employees and open offices also have labor, rent and utility expenses, but coaches don’t have to take their business in this direction.
Who is the target market?
Your clients will be people that are looking to make improvements in their lives. They may be people who feel like they are caught in a slump and need a kickstart to start succeeding the way that they want to, or they may be already successful individuals that are looking for someone to help coach them through successfully managing the various tasks and situations that they have to handle.
Regardless of the situation in which your clients find themselves, they will be looking for a life coach who gives off an aura of success, confidence, and support.
How does a life coaching business make money?
A life coaching business makes money by charging clients for coaching services. Coaches often either charge an hourly fee or request a retainer. (A retainer is when a client is guaranteed that a professional, such as a coach, will be available for a certain amount of time in a given week or month.)
How much can you charge customers?
Top life coaches charge as much as $3,500 per hour to help CEOs and other executives, but few are able to command such high salaries. Most life coaches’ hourly rates fall between $75 and $200 per hour coaching a client, which doesn’t typically include prep time. When working on a retainer, coaches typically charge a client between $500 and $2,000 per month.
How much profit can a life coaching business make?
Citing an ICF study, the Bureau of Labor Statistics reports that the average life coach earned $61,900 in 2015. This is substantially higher than the median annual wage of $36,200 that year.
How can you make your business more profitable?
Life coaches can increase their revenue by offering coaching online, or running classes or seminars. Online coaching doesn’t require traveling to meetings, so life coaches are able to serve more clients. Classes and seminars also help coaches reach more clients, as they can speak to several people at once in each setting. Classes and seminars can be especially successful after a coach has a list of established clients to recruit to a class or seminar.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your life coaching business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a life coaching business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In businesses where services are provided on an extended basis, a services contract is often put in place outlining terms and conditions of service.
Life coaching businesses should require clients to sign a services agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, and service level expectations.Here is an example of one such services agreement.
Coaching Disclaimer & Waiver
Life coaches need to make it clear to their clients that they are not trained medical professionals. This can be accomplished by having clients sign a release of liability form.
Certificate of Occupancy
A life coaching business may be run out of an office, which helps provide a space for meetings. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a life coaching business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your life coaching business will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a life coaching business
Radio and newspaper advertisements can be incorporated into a life coaching business’ marketing plan, but few efforts are more effective than word-of-mouth marketing. Business owners can ask their current clients for referrals to other potential clients, possibly offering a free meeting as an incentive to refer someone. They also can attend networking events, where people can get to know them. Even if no one at a networking event needs life coaching, they might recommend someone else who could use the service.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
A life coaching business can distinguish itself by specializing in a particular niche, which may be a particular industry or area of life. Focusing exclusively on a specific niche may limit a business’ target market, but it also sets the business apart from generic life coaching businesses. A business owner who is specialized will be able to anticipate clients’ needs better and offer more unique insights, both of which are benefits that clients may seek out.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Life Coaching Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Anyone who has been able to achieve their own goals and would like to help others may be well-qualified to be a life coach; however, there are courses available to teach coaches the most effective strategies to use with clients. Coaches typically have strong interpersonal skills, as the success of a life coaching business depends entirely upon the business owner’s ability to connect with and assist other people.
Business owners’ calendars need to be able to accommodate meetings with clients, but these meetings can be scheduled during business hours, evenings or weekends. Many life coaches have started their businesses by working as a coach part-time during non-business hours while remaining employed part- or full-time, and then transitioned to coaching more as their business grew.
What happens during a typical day at a life coaching business?
Life coaches spend much of their time meeting with clients. Many coaches meet with each client two to four times in each month. Meetings usually last between 20 and 60 minutes, but this doesn’t include doing pre-meeting preparation, driving to and from meetings, and taking post-meeting notes. An hour-long meeting may easily take up two hours of a business owner’s time, especially if it’s held at a client’s location.
Coaches can reduce the time they spend driving to and from meetings by having clients come to an office. Clients may not want to drive to an office, though, and running an office increases overhead. When not meeting with clients, life coaches often spend time building on their own skills by attending seminars and marketing their businesses.
What are some skills and experiences that will help you build a successful life coaching business?
In most places, there is no legal obligation to obtain certification for life coaching. Anyone can start a business and be a self-proclaimed life coach. However, becoming a certified life coach can provide a lot of benefits that will help you succeed in your coaching. Two of these benefits are very important.
First of all, certification helps to distinguish you from the “self-proclaimed life coaches” that have sprung up online. It is not uncommon for someone to abuse the lack of legal certifications in order to take advantage of clients. So your potential clients will worry about the legitimacy of your business if you are uncertified. Certification will provide your clients with a sense of trust before you even begin to work with them.
Secondly, certification involves training that will help you become the best coach you can be. Not only will training help you learn techniques that will help you service clients as well as you can, it will also help you learn how to think like a successful coach in order to succeed in your own personal and professional endeavors.
You can learn these beneficial life coaching strategies and methods through books, such as The Life Coaching Handbook, and classes, like the training programs offered by the International Coach Federation (ICF). The International Association of Coaching (IAC) also has resources available for members.
What is the growth potential for a life coaching business?
Life coaching business’ brands often revolve around the business owner. Even if a business has employees providing coaching service, the business owner is usually the leader who oversees all coaching. Therefore, they become the face of the company.
Because the business owner is largely a life coaching business’ brand, the growth potential is somewhat limited. Business owners often garner a reputation within a geographic region or an industry, and this market eventually defines how large a business can become.
TRUiC's YouTube Channel
For fun informative videos about starting a busines visit the TRUiC YouTube Channel or subscribe below to view later.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a life coaching business?
When working as a life coach, it’s vitally important to “dress for success.” Clients hire life coaches to help them be successful, and portraying an image of success will give clients confidence in a business. Life coaches should both look professional and act professional whenever they’re seeing clients.
Having a credential can also give clients confidence. The most widely recognized credentialing body is the ICF, which offers associate, professional and master coaching certifications.
How and when to build a team
Life coaching businesses can be run by one person, and some coaches never hire employees. Others find that hiring a personal assistant streamlines their workflow, as an assistant can help prepare documents and schedule meetings. A few life coaches hire other employees to coach clients in specific areas. Having several employees, each specializing in a different area of coaching, helps a business appeal to a broader market and lets it provide more comprehensive coaching.