Do you genuinely love supporting and motivating people to see them thrive? Are you a good listener? Do you know how to analyze life situations and approach stressful situations and crossroads with a balanced view and healthy self-perception?
If you answered yes to these questions, starting a life coaching business creates a unique and incredibly rewarding opportunity to help others while earning a solid income. The life coaching industry is experiencing rapid growth as more people recognize the value of working with a coach to achieve their personal and professional goals.
While having coaching skills is essential, starting a successful business requires more. So, if you’re interested in learning more, read on to find out what it takes to start your own life coaching business.
Business Description
Life coaches work with clients to help them create positive change and growth in their lives. As a life coach, you meet with clients, listen to their goals and challenges, encourage and motivate them, and support them in designing action plans to achieve what they desire. Life coaches work with individuals in areas such as relationships, career, wellness, and personal development to clarify their goals, identify obstacles, and create actionable plans for overcoming challenges and reaching success.
This business makes money primarily through client sessions, which can be conducted one-on-one or in group coaching settings. Sessions can be in person, over the phone, or through video conferencing, offering flexibility in how services are delivered. Additionally, life coaches may generate income through workshops, seminars, online courses, and selling related products like books or digital resources.
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Industry Summary
In recent years, the life coaching industry in the United States has gained considerable momentum as more and more people seek guidance to enhance their personal and professional lives. According to the International Coach Federation (ICF), there are over 100,000 professional coaches, and the industry generated over $4.5 billion in revenue in 2022.1
This industry growth can be attributed to several factors, including heightened awareness of the importance of mental health and well-being, increased focus on personal and professional development, and the rise of remote work and flexible careers. As societal priorities continue to shift, the demand for life coaches is expected to grow even further, making it an attractive option for aspiring business owners.
Steps To Start A Life Coaching Business
Step 1: Figure Out Your Coaching Niche
When starting a life coach business, one of the first things to consider is whether you are going to serve a particular niche. While you can certainly be a “general” life coach, that can be difficult to market as it’s difficult to be the expert for every topic. Additionally, you may get requests for areas that you are uncomfortable with.
So, what are you passionate about? What areas do you feel the most knowledgeable about? What are the areas in your life that you feel most excited and engaged with? These are the areas that you should focus on when choosing your niche.
Also, consider the type of clients you want to work with. Do you want to coach executives, entrepreneurs, creatives, or students? Each of these groups has different needs and preferences to consider.
Taking time to answer these questions will help you focus on the types of coaching you will focus on and then attract clients who need your specific area of expertise.
You can get started by making a list of all the things you’re passionate about. This can include everything from fitness to nutrition to gardening to personal finance. Once you have a good selection, start narrowing it down by considering which topics you feel most knowledgeable about and which would be most helpful to your clients. For example, if you’re passionate about both fitness and personal finance, but you feel like you have more experience with the latter, then you may want to focus on coaching people on their financial goals.
Once you’ve decided on your niche, it’s important to get specific. This means figuring out who your ideal client is and what kind of problems they need help with. Do some research on the internet and see what kind of advice is already out there for your chosen niche. Then, start brainstorming some solutions that you could offer your clients. Remember, as a life coach, you’re not selling products or services – you’re selling solutions. So, focus on how you can help your clients overcome their specific challenges and achieve their unique goals.
Step 2: Write a Business Plan
After getting set with your niche, the next step is to develop a clear and concise business plan. While a business plan is most often thought of as something needed to get funding from a lender, and that isn’t usually a concern for this type of business, the business plan process will help you lay out your goals and objectives, as well as provide a roadmap for how you plan to achieve them.
The plan has you think carefully about your marketing strategy, operational plans, and financial projections, and perhaps most importantly, it gives you greater clarity and confidence as you launch your life coaching service.
Related: How to write a business plan
Step 3: Register the Business
To properly register and make your life coaching business legal, follow these key steps and consider the specific information related to choosing a suitable business structure, registering the business name, and obtaining the necessary licenses.
Choose a business structure: The first task is to decide on the type of business entity that best suits your needs. Common structures include sole proprietorship, limited liability company (LLC), partnership, or corporation. Each has different legal and tax implications.
- Sole proprietorship: This structure is the easiest and least expensive to set up. It’s suitable for those starting a life coaching business on a small scale or individually. However, it offers no liability protection, as your personal and business assets are not separate.
- General partnership: Ideal for two or more individuals starting a life coaching business together. Similar to a sole proprietorship, this structure doesn’t offer liability protection, and partners share legal and financial responsibility for the business.
- Corporation: This structure provides liability protection by separating your personal assets from your business assets. Starting a corporation is more complex and costly than other options.
- Limited Liability Company (LLC): An LLC combines the benefits of a corporation and a sole proprietorship or partnership, offering liability protection while maintaining simplicity in management and taxation.
Related: Comparison of business structures
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
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Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.
Related: Finding a domain name for your business
Obtain business licenses and permits: Depending on your location, there will likely be a variety of general business registrations needed before opening. These could include a business license, seller’s permit, and Employer Identification Number (EIN). Also, while not super common, if you’re operating from home, you’ll want to verify whether there are local registration requirements for home-based businesses.
Related: State guides for general business licensing
Certification: While not legally required to operate a life coaching business, getting certified as a life coach can enhance your credibility. Organizations like the International Coach Federation (ICF) offer certification programs that are globally recognized.
Related: Common business licenses, permits, and registrations by state
Step 4: Set Up Operations
You have your business plan ready, and registration is complete. Now comes the fun part of setting up your life coaching operations so you can start serving clients!
The first decision is whether to operate from a home office or a commercial space. This choice largely depends on your business model and the nature of your clientele. For instance, if your focus is on busy professionals, a location near office parks or easily accessible by public transport might be ideal. Conversely, if you’re targeting families, a spot closer to schools and parks can be more advantageous. Consider the demographics of your target market carefully when deciding on a space. Operating from home offers convenience and cost savings, but it might not be ideal if meeting clients in person is a significant part of your business model.
With the location out of the way, it’s time to finalize your coaching methodology and materials. Whether it’s through customized worksheets, specific coaching models, or unique session formats, these materials will become the backbone of your coaching practice.
Step 5: Create a Marketing Strategy
As a life coach, you want to help people find fulfillment and happiness and make positive changes in their lives. However, getting clients to notice and trust your brand can be challenging. This is where effective marketing strategies play an important role.
To start, take the time to think about who your ideal clients are and what positive changes they’re looking to make in their lives. This understanding can help shape your marketing efforts and make them more appealing to those you can serve best.
Consider using social media platforms to reach more people. It’s easy to create profiles on platforms like Facebook, Twitter, Instagram, or LinkedIn. These sites can be valuable for sharing engaging content that will help your target clients. Not just a one-way street, social media also allows you to engage with other life coaches and professionals in related fields.
Getting active in your local community can help, too. Look for local gatherings and introduce yourself as a life coach. If possible, lend your time and skills to volunteer events and organizations that align with your ideal clients.
Don’t forget other marketing strategies like attending industry conferences, showcasing positive client feedback, writing guest posts for popular websites, or you could even start your own podcast. Each of these can help drive more attention to your business and solidify your reputation in the field.
Step 6: Prepare to Launch!
Starting a life coaching business involves a series of steps, many of which lay the foundation for a successful and sustainable practice. While we have covered core steps such as registering the business, setting up operations, and marketing, there are some additional tasks to consider. Each person’s needs will be different based on their business model and vision.
Business insurance: Obtaining business insurance is an important step for safeguarding your practice. Common types of insurance for a life coaching business include Professional Liability Insurance, which protects against claims of negligence or harm from your coaching services, and General Liability Insurance, which covers general business risks like accidents or injuries.
Setting up bookkeeping: Setting up an accounting system will handle daily transactions, taxes, and financial statements. Options include hiring a bookkeeper or utilizing accounting software.
Draft legal documents: You may want to prepare some legal documents, like a service agreement, terms of use, and a privacy policy.
Network and build partnerships: Networking and building partnerships are crucial for growth and referrals. Connect with other professionals, such as therapists, nutritionists, and career counselors, and join organizations related to life coaching. These connections can provide valuable referrals and collaborative opportunities.
Opening a business bank account: Opening a business bank account can help you better keep track of your business income and expenses.
Common Questions When Starting A Life Coaching Business
How much does it cost to start a life coaching business?
Starting a life coaching business involves some costs, with total starting expenses typically falling between $3,000 for a home-based business and $10,000 or more if you plan to operate out of a professional space. Here is a detailed look at probable expenses to assist you in better understanding the financial aspect of launching your life coaching business.
Office space: Depending on your preference for a home office or a commercial location, this cost can vary significantly. If you choose a commercial space, anticipate having to pay a security deposit, which can range from $1,000 to $5,000. Also, don’t overlook the cost of any renovations and furniture for the space.
Equipment: Basic office supplies, a reliable computer, and a suitable phone are the basics for a life coaching business. Expect to allocate approximately $1,000 to $2,000 for essential office equipment.
Business registration: Registering your business is a formal measure of establishing your company. Depending on your state, the cost of business registration can range from $50 to $500.
Insurance: The upfront cost for professional liability insurance for a life coaching business usually falls in the $500 to $1,000 range.
Marketing: Initial marketing expenses, including items like branding, website design, and promotional materials, might total around $500 to $2,000.
Training and certifications: While optional, professional certifications can lend credibility to your business. If you choose to pursue this, set aside approximately $2,000 for certification programs.
Miscellaneous expenses: Factor in an additional buffer of around $500 for any unexpected expenses during setup.
How profitable is a life coaching business?
The profitability of a life coaching business can vary greatly depending on factors such as the number of clients, the rate charged per session, and the operating expenses.
To look at the potential profitability of a life coaching business, let’s look at an example.
Starting with revenue. According to the International Coach Federation, the average hourly rate for life coaching is around $244.2 If a life coach works 20 hours per week, seeing one client per hour, they could potentially earn $4,880 per week, or $244,000 for a 50-week year.
Next, let’s consider expenses. Operating a life coaching business involves several expenses, including utilities, office expenses, marketing, and insurance. These costs can vary greatly depending on the specifics of your business, but for the sake of this example, let’s assume that these expenses total $50,000 per year.
Subtracting these expenses from the total revenue gives us a pre-tax profit of $158,000 per year. This is a significant income, demonstrating the potential profitability of a life coaching business.
It’s important to note that these figures are estimates, and the actual profitability of a life coaching business can vary.
