Revenue is the life juice of your business. Are you planning to make your coaching business and your (mental) health viable? Then keep reading… This article is for you.
There are two common scenarios, regarding revenue, that can cause unhappiness. They happen naturally in every business. And they can be anticipated with proper planning.
The first is when you are (thinking of) starting a coaching business. You need time to build a system for creating clients. So that you have predictable revenue. What is the most important metric to measure success? How do you know that you are on track?
The other phase is when your agenda is packed with clients. You may feel overwhelmed or burned out. While this can be temporarily a good thing, being in this situation for a long time is bad for your health. How can you make more time available while keeping or increasing your income level?
Before we dive deeper, let’s get something straight first. In order to get revenue, you need a coaching product that clients actually want to buy.
If you are starting with a new coaching product, then you may want to read my previous article first . Creating something that your clients desire. This is the first step. Also, when you already have a product and want to scale up.
Your coaching business is (almost) starting up
Going from zero to one is the most difficult part. You need to create a consistent system for creating clients. And that can take some time and new skills to learn.
What is the most important metric to track success?
You may have read many articles and posts about having 10k-months as a revenue goal when starting out. Although this number is a great goal to reach, the amount of revenue is not the most important thing to focus on at the start of your business journey.
Traction is what matters to make a viable coaching business.
What do I mean with traction? Traction is when you can create clients in a predictable way. With a predictable number of clients, it is easy to see how much revenue you will get for a specific price point.
A traction roadmap is a tool to forecast your revenue goals and the number of clients it requires. With your roadmap, you can evaluate different options to have a viable business. You can also use it to measure if you are on track.
Creating your traction roadmap
A viable coaching business is a business that keeps generating predictable revenue in the future. Start by setting a yearly revenue goal that you want to achieve in three years from starting your business.
Three years is not too long to visualise. And it gives you enough time to build up your predictable system of growth to make your business viable.
You can find this revenue number by looking at what amount of money you require to support your desired lifestyle. This is your monthly freedom number. By multiplying your freedom number by twelve, you have the minimum revenue goal that you want to reach.
How your traction roadmap looks depends on your desired income goal and how you want to help clients. For instance, having a monthly recurring retainer will give you a different roadmap than doing single sessions.
Measure with traction milestones
Every business starts with zero clients. You will need some time to get traction. Especially when you are a new business owner. How fast it goes, depends on a lot of factors.
A rule of thumb is that you can set milestones by 10x-ing your number of clients (multiply by ten). By 10x-ing your number of clients, you can outline milestones in your traction roadmap.
Set the first milestone to get your first 10 clients. Your next milestone is 100 clients to scale it etc. So, you can outline a traction roadmap over a time of three years.
Instead of ten, you can also use a different number. For instance, when you only need one or two clients per month because you do one-on-one coaching at a higher price point.
Your roadmap will give you an indication of how many clients you need. Your conversion rates will indicate how many sales conversations you require to get to this number of clients.
Conversion rates depend on your industry and of course the action you take. When you track the numbers, then you can calculate your own conversion rate.
How do you prevent burnout?
For every level of income, there are business models that you can apply. A business model is a visualisation of the different pieces of the puzzle that your business requires to make it viable.
It makes sense that when you work one-on-one with your client, then you can help fewer clients in a month. Doing one-on-one is an example of a business model. Doing group coaching sessions and online courses are other examples of business models.
You can combine different business models or create your own variations. For instance, mix group and one-on-one in a program.
What you do when working with clients – your solution – is one part of the puzzle. A common visualisation tool is the Business Model Canvas, created by Alexander Osterwalder. Another one is the Lean Canvas, created by Ash Maurya.
Your business model helps you to plan the number of clients and the amount of revenue you need to ask, in relation to your traction model. So that you can have two tools that help you to keep your business healthy and viable.
Having a model and the traction roadmap makes it possible to plan how many clients you need and want each month. Without being overwhelmed and burning out. The model you choose depends on your current situation and what kind of work- and lifestyle you desire.