The Checklist for How to Start a Life Coaching Business
If you’re wondering how to start a life coaching business, you’ve come to the right place. CoachRanks is proud to be a knowledge hub for both new and veteran coaches. Our aim is to educate coaches on how to create and grow their practices. Today, we’re offering this guide to help you understand the basics of getting started.
How to Start a Coaching Business Checklist
To help make this guide memorable, we’ve distilled the following sections into a checklist. Consider jotting these down or copying them into your own document to keep yourself organized. This checklist represents some of the most important things to consider when thinking about how to start your life coaching business.
The CoachRanks checklist for how to start a coaching practice:
For some, addressing all of these steps may not be necessary. However, in our experience working with coaches, you’re likely to benefit from having a clear grasp on these areas of your business. The remainder of this article will share some key insights and considerations for each of these checklist items.
Setting Up Your Business Structure
If you’re just getting started wondering how to start a coaching business, you’ll likely be deciding between two main business structures: the Sole Proprietorship and Limited Liability Company (LLC). Let’s quickly review each of these self-starter options for coaches.
Sole Proprietorship
For those eager to get started quickly, the sole proprietorship is often the simplest business structure for life coaches. This structure typically doesn't require complex filings or excessive paperwork, especially if you operate your coaching business under your own name. It's a direct approach to launching your coaching practice with minimal hurdles.
However, be mindful of several key responsibilities:
Federal Income Tax: Prepare to pay estimated taxes quarterly if your tax liability is above a certain threshold.
State Income Tax: Depending on your state, you may face state income tax requirements. This often means additional estimated tax payments.
Self-Employment Tax: A portion of your income will need to cover self-employment tax, which is essential for your financial planning.
While sole proprietorships are easy to set up and manage, they lack personal liability protection, unlike an LLC.
Limited Liability Company (LLC)
An LLC offers some extra benefits—namely, personal asset protection from business liabilities. This structure also allows for more tax flexibility compared to a sole proprietorship. The formation of an LLC involves more paperwork and possibly higher fees, but it brings added security and professionalism to your practice.
Also worth noting: Clients may perceive an LLC as an extra signal of a committed and professional coach. The decision to opt for an LLC should be based on your business's specific needs and risk tolerance. LLCs are filed at the state level, and each state has its own process and fees—information you’ll want to flag down depending on where you live.
Online vs. In-Person Coaching
While it may seem obvious, deciding how exactly you’ll deliver your coaching is a key step in launching your practice. Here are some key considerations for virtual, in-person, and hybrid approaches to coaching.
How to Start a Coaching Business Online
Starting an online coaching business opens doors to a diverse and global clientele that isn’t bound to any one location. In this digital era, life coaches are increasingly turning to virtual platforms (Zoom, texting, phone calls), enabling them to connect with clients from all corners of the world. An online coaching business not only broadens your potential client base, but also offers unparalleled flexibility and cost savings.
For those honing in on this approach, it often requires a strong online presence. This includes learning digital marketing for coaches and leveraging social media to engage with clients beyond your immediate locale. Virtual coaching can be particularly advantageous in terms of operational costs, as it typically requires less overhead compared to in-person setups.
How to Start a Coaching Business In-Person
Conversely, in-person life coaching remains a common approach, especially for those looking to establish their presence in a specific community. This method is akin to traditional services like visiting a doctor's office, where the personal touch of face-to-face interaction can add value for clients. Creating an in-person coaching business from home often involves navigating local regulations, such as zoning laws and any specific rules regarding home-based businesses.
This approach is particularly suited for those with a substantial local network or those who wish to build one. It allows for a more personal connection with clients which can help coaching engagements flourish. When setting up an in-person coaching business, it's important to consider the logistics of your coaching space. For example, will you rent a dedicated office or build out a suitable area in your home?
Blending Both Approaches
Our ultimate recommendation here? If possible, embrace a hybrid model by integrating both in-person and virtual coaching. This approach allows you to cater to a wide array of client preferences, combining the personal touch of in-person meetings with the accessibility and convenience of online sessions. For many coaches, this blend offers the optimal balance, maximizing your chances for building reach, credibility, and ultimately a healthy book of business.
Pursuing a Coaching Certification
Let’s get the big question out of the way: Do you need a coaching certification to become a coach? The short answer is no.
The coaching industry is largely unregulated, which means there is no certification requirement to call oneself a coach. This reality brings pros and cons. Some may see the low barrier to entry as a good thing, as technically anyone can be a coach. On the downside, this contributes to market saturation, and a wide disparity in coaching quality.
For clients wanting to hire a coach, a certification may be viewed as a major plus. A coach who has undergone the certification process shows a commitment to the profession. And the certification process is designed to be a major education milestone for coaches, meaning a lot can be learned about how to be a great coach.
The most worthwhile certifications are approved by the International Coaching Federation (ICF-certified) and costs can range from $5,000 to $20,000. It’s not a small investment! However, the cost often pays for itself for those who have long term plans to stay in the industry. If you’re thinking about a certification as you ponder how to start a life coach business, we recommend reading our guide on the best coaching certifications to boost your credibility.
Your Coaching Niches and Positioning
With some of the logistical considerations covered, what will your coaching practice actually look like? In other words, what kind of coach are you? Which coaching niches are you an expert in? What are the outcomes you can help drive for your future clients?
This exercise is commonly referred to as determining your “positioning” or “branding” in the coaching space. If you’re familiar with the CoachRanks blog and newsletter, you may know our prevailing philosophy that all coaches should “niche down,” or find a pocket within the coaching space where they can truly shine as a specialist. For more on this strategy and why it works, check out this guide on coaching niches, which explains our thinking in more depth.
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As you embark on how to start a life coaching business, your positioning provides a guiding light for some key elements of your practice, including marketing and sales. For example, let’s say you’re a career coach for women of color. Establishing this positioning immediately helps you…
Update your LinkedIn header or other social media to reflect who you serve
Start publishing content on topics relevant to your audience
Develop some “outcomes” you help generate for your clients in this audience
Connect with prospects as an expert in their challenges and opportunities
By establishing your positioning early, you’ll be ahead of the game. Don’t be yet another coach with generic positioning! There are thousands of “life coaches who help create transformations.” Dig a bit deeper and you’ll stand out from the crowd, optimizing your chances to build a healthy book of business.
Launching Your Go-To-Market Strategy
Your positioning is an element of your overall go-to-market strategy. Other elements of a strong GTM plan include your sales and operations strategies. In other words, how will you bring your coaching business to market successfully? How will you get leads, sales, and happy clients? How will you actually operate the business on a day-to-day basis?
Every coach will have different answers here. Some may have a very strong professional network, so their GTM strategy may be to get coaching leads from LinkedIn. Others may hold webinars, write content, or create referral programs in order to generate interest in their business. If you’re serious about starting a coaching practice, you’ll be wise to have some ideas on how you’ll go to market.
As part of your go-to-market strategy, you may want to draft up a simple life coaching business plan. Doing so will help organize your ideas by documenting them on paper. In our business plan template for coaches, we cover the following areas:
You may notice some overlapping topics between that guide and this one. Together, both articles provide for a robust overview of some top considerations for anyone wondering how to start a life coaching business.
Don’t Forget: It’s a Grind!
In closing, don’t forget that starting any business is a grind. If it were easy, everyone would do it. Starting a coaching practice is an entrepreneurial venture. You should be prepared to work hard, experiment, pivot, and be patient. Great businesses aren’t built overnight. Rather, they build slowly, and progress compounds over time. If you’re passionate about coaching, perhaps the best advice is simply to stick with it. You’ve got this!
