What is the financial reality in coaching today.
Recently, I have noticed a lot of misinformation going around on the topic of money and coaching. On the one hand, I see some pretty suspect training schools and various gurus inferring anybody, with little effort or preparation can leap into coaching and make a fortune, instantly. And on the other hand, I see some doom and gloomers, (and a few characters trying to scare coaches into working with them), telling the world that nobody in coaching makes a decent living.
While I suspect it’s part of our collective experience that many good people struggle to make a living at coaching, it is not true that coaching is a profession that most people can’t make a good living at.
As to the potential upside, the latest ICF sponsored study conducted by Price Waterhouse Coopers (in which some 5,415 coaches in 73 countries participated) showed the average annual income for a full time coach to be $82K, and that part time coaches on average earn $26k a year. In doing some prep work for a presentation I gave at the last ICF conference, I got some help digging through the tons of data that came out of this study. One of the interesting findings was that the average hourly rates reported by executive coaches were $299, business coaches $196, career coaches $161, and life coaches $136. (Not exactly starvation wages by most standards.)
As to a distribution of income, another study conducted by Grant And Zackon, which involved over 2,500 coaches and was published in the Autumn 2004 in the International Journal of Evidence Based Coaching and Mentoring, showed that 70% of all coaches were charging over $100 /hour, 25% were charging above $200/hour and only 10% of the total were charged over $300/hour.
Despite the evidence that many coaches are doing just fine, it is absolutely true that many coaches do struggle to earn a decent living. One of the frequent messages I share with coaching audiences is that, as an industry, we need to do more to raise awareness of just what it takes to succeed in this young profession. I believe it is a huge disservice not to openly discuss the real challenges people face when they consider a self-employed career in coaching. (Over the years I have had so many prospective coaches call to pick my brain on this topic that I finally put up an article on my site covering my best advice and estimates on the time, costs and challenges of a journey into coaching.
It genuinely hurts me to see good coaches and great people contemplate abandoning their dream of coaching for a living.
However, no matter how much information we get out there – on the need for potential coaches to acquire the basic financial/marketing/entrepreneurial survival skills – it is a sad fact that a high percentage of all small businesses do fail. (The figures generated by the U.S. Bureau of Labor Statistics typically show that a full third of all Professional and Business Services fail in the first 2 years. And when you see how quickly coaching is growing around the world this adds up to a lot of struggling people.)
Anyway, the point is that there is a start up curve and a risk of failure for any new business. Also, not everyone is cut out to be a self-employed professional, and there are currently few opportunities for coaches to let someone else do the marketing for them. If you want to be among those that succeed in this vocation, you have to take responsibility and get prepared. No one else, not the training schools, your coach, or the coaching industry as a whole, can be of much use to you if you do not approach this journey with realistic expectations, sufficient reserves of time and money, and a commitment to learn the key business and coaching skills.
Maybe I have seen a few too many clips of Dr. Phil, berating his guests but I agree with one of his mantras, you really can’t change things that you don’t acknowledge. So, in service of raising awareness, and in hopes of minimizing the suffering of those who are called to coach, here is my list of the actions that have the most negative impact your ability to make a decent living as a coach:
- Get no training, or sign up with the cheapest, unaccredited school that will train you in a matter of weeks, via DVD, and promise you a quick path to success.
- Fall in love with the coaching skills, spend all your time and money learning them, and never think about, or budget anything, to learn the basic business and entrepreneurial skills.
- Jump into coaching with an all or nothing approach, without researching, or budgeting for, how long it will take and how much it will cost you. (Longer than you expect and far more than the cost of tuition.)
- Wait until you have finished all your training, all everyone else’s training, and gone on to get two or three PhDs before you believe you are finally competent enough to begin to coach.
- Never attempt to find an ideal client group (niche) and thus waste a lot of time and effort on ineffective, unrelated, marketing initiatives directed at people who cannot afford you or are too stubborn to get any help with their problems.
- Attempt to sell this new generic service called “coaching” – that very few people really understand or want – as opposed to finding an existing need which can be better solved through coaching.
- Never do anything to proactively manage your stress, so you will always be at level 1, reacting to the circumstances in your life instead of creating from them.
- Never grow as a human being, or develop a daily reflective practice, so you remain stuck in your habitual reactions, wresting with your shadow or pain body, and never grow in self awareness.
- Never aspire to master the coaching skills or seek a reputable independent credential that establishes your competence in the marketplace.
- Try to do it all by yourself, instead of connecting to colleagues (free coaching circles, ICF chapters, using this network, hiring your own coach, etc.) for the support, information and shortcuts you will need.
- Try to reinvent the wheel as relates to finding out what works for marketing coaching services so you can fall into the very same potholes that all the coaches ahead of you have, and quit when you get discouraged. (And you will get discouraged dozens of times along the way.)
- Price your services on your fears and insecurities, as opposed to actually doing the marketing work to see what other professionals charge, or what your clients actually use the service for and can afford.
- Believe you need to be some kind of business whiz with a Harvard MBA to coach anyone in organizations or small businesses.
- Offer only one solution, 1 to 1 coaching at one price level, so you only have one offering on the shelves of your virtual store.
- Don’t keep track of how you spend your time and money each week, and have no idea how long you have to launch your practice before you run out of money.
- Don’t have goals for your practice and have no idea how much time you must market each week to achieve the number of new clients you want.
- If you are not getting any clients from your current marketing efforts, keep doing what you have been doing until you run out of money.
- If you are not getting the results you want, believe it is because of your inherent incompetence, or unworthiness, and shrink away from the world. (As opposed to trusting we have all gone through the same thing, (and we all have our fair serving of incompetence and insecurities), and ask for help.
- Coach just for the money, never treat your clients – your brothers and sisters – as the great gifts and teachers they are, and never be grateful that coaching is giving you an opportunity to be of service to the world, every day.
A good measure of struggle and even the occasional business failure does not mean you are a bad coach or a bad person. It is often simply the price you pay to learn how to be self-employed. I know many great coaches who are struggling to make it through their first few years. I know many good coaches who have to transition into coaching while keeping their day jobs. Many other good coaches have had to go back to work part time when their coaching business took longer to get off the ground than they had hoped for. Failure in business is not failure in life. Usually you learn a ton from it, and come back wiser and stronger.
If you are called to do this work, my hope would be that you find the information you need to succeed as a coach with the minimum amount of struggle. And even if it takes you 2 or 3 years, or 2 or 3 attempts, to find a way to earn a good living doing what you love, I hope you can keep going.
This work is important and the world needs you.
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