Scaling Profits in Your Coaching Business (with Jos Willard)

Benchmarks and levers for dialing profits for coaching businesses

Profit benchmarks are dependent on the business phase. For solopreneurs, it is recommended to keep at least 85-90% of everything they make after payment processing fees, website payment, and a few apps. When bringing in employees, it is recommended to have $150,000 in revenue for every full-time equivalent employee, although this can vary based on the business type.

Coaching businesses should keep a minimum of 25-30% profit margin regardless of the business stage. If involved in the business, 30% is the minimum and achieving a sweet spot of 40% is possible. 

Managing cash flow and time flow is crucial in maximizing profits. Determining the real revenue involves separating income and "materials and subcontractors" and allocating money into buckets, starting with profit and then owners' pay.

Managing cash flow and time flow

Jas's program, Profit Flow, focuses on managing cash flow and time flow. Money and time are two fundamental resources that businesses control. Coaching businesses should be putting everything in its appropriate bucket, such as separating the money that flows straight through the business and what stays. The real revenue is what remains after deducting materials and subcontractors. Then, they should allocate this real revenue into profit and owners' pay.

The importance of scaling profits for coaching businesses

Scaling profits is crucial for growing a coaching business as it enables greater impact and investment in the business. Efficiency in building a business can help increase profits, and the coaching industry is unique in that clients pay for the coach's knowledge and time, not just the product. It's essential to recognize this and use it to your advantage to build a profitable coaching business.

Simplicity vs. Complexity: Why simplicity wins in the coaching business

Many entrepreneurs and marketers tend to make their systems and strategies too complex, leading to reduced efficiency and profitability.

The problem with the complexity for coaching businesses

Simplifying business systems and strategies is key to success, as complexity can hinder efficiency and profitability. While the human mind may enjoy complexity, entrepreneurs and marketers should avoid adding unnecessary steps, processes, and funnels that can confuse customers and lower conversion rates. 

Trying to monetize every lead can result in a convoluted system that decreases the close rate. Instead, coaching businesses should focus on finding simple solutions to keep leads engaged and simplify their approach to increase profitability.

The importance of simplicity for coaching businesses

Simplicity is crucial for coaching businesses because it allows them to make more efficient use of their time, people, and resources. Instead of focusing on adding more steps or processes, businesses should focus on leveraging what they already have. This means finding simple solutions to problems, optimizing their current systems, and making sure their business is easy to understand for customers and employees alike.

How to increase your coaching business's ROI and profitability

There is a straightforward exercise that can significantly increase ROI and profitability for any business owner in just five minutes. 

The exercise involves 2 steps:

1. Identifying the different buckets where the money goes in the business, such as profit, owner's pay, taxes, and operating expenses
2. Comparing the time you spend on your purpose, essentials to stay alive, and investing in resources like people and enjoyment 

This comparison brings awareness and helps you become more intentional about how you invest your time and money.

Many business owners believe they can handle everything and often end up doing more work than what the business pays them. This exercise will help coaching businesses recognize areas where they can invest more time and money, making them more reinvigorated and energized businesses.

How to invest time in the purpose of your coaching business?

Setting aside one hour a day or one day a week for your purpose and blocking it in your calendar. This intentional investment in your purpose will help you show up as a more energized and plugged-in business owner, infusing your people and creating a massive difference in your company.

Key takeaways from this podcast

Understanding benchmarks and levers is crucial for businesses seeking to optimize their performance and achieve their goals. Coaching businesses, in particular, should focus on managing cash flow and time flow, allocating money into buckets, and simplifying their systems and strategies to increase profitability. By investing time in their purpose and leveraging what they already have, coaching businesses can increase their ROI and make a greater impact. With the right strategies and mindset, coaching businesses can achieve the profitability and success they desire.