This is the definitive guide to business coaching. In this article, you’ll learn everything you need to know about how business coaching works, why business coaching is important, the different types of business coaching, and how to find a coach that matches your needs.
What Is Business Coaching?
Business coaching is a discipline that involves an independent coach and a business owner (and often their leadership team) working together to improve key areas of the business.
Often, business coaches help their clients improve key metrics like cashflow, gross revenue, net profit, and customer acquisition cost. In other cases, though, coaches focus on less measurable things – the work-life balance of the business owner, help develop systems for efficiency, team development incuding culture and leadership training and of course personal development that supports our outcome for clients – To create a profitable enterprise that works without you.
In every case, the goal is the same: help the business become better.
Business Coaching Definition
Business coaching is a process where a professional coach works with a business to improve one or more business metrics. These metrics can be quantitative (measurable), such as gross income, or qualitative (subjective), such as executive work-life balance.
Difference Between Business Coaching and Mentoring
Business coaching and mentoring are two concepts that are often confused. It’s easy to understand why: business coaches and mentors both work with owners and executives, both are focused on long-term success, and both tend to be highly experienced business operators.
Mentoring, though, is a more intimate, often informal relationship that involves an exchange of knowledge between two people; the mentee is usually less experienced or less knowledgeable than the mentor. Although professional mentors do exist, most mentoring scenarios develop organically, in the same way that master-pupil relationships have existed in different forms for centuries. Mentoring also typically concentrates on personal growth and skills development.
Business coaching, on the other hand, is a professional services discipline that aims to improve commercial outcomes at an organisational level. Business coaches typically aim to improve one or more business metrics over time – their mandate is to create healthier, more profitable businesses that are set up for long-term success.
What Does a Business Coach Do?
Most business coaches work at a strategic level. A business coach might help a client do any of the following:
- Formulate a Plan based on the business’ long term goals
- Assess their product-market fit
- Develop or align their strategic narrative
- Refine their brand positioning
- Clarify or alter their ideal customer persona (ICP)
- Assess their current business situation and identify areas for improvement
- Develop a business strategy and/or an action plan
- Articulate a business vision, set long-term objectives, and designate short-term SMART goals
- Provide tactical or problem-focused advice to solve specific challenges
- Help the business owner or CEO maximise their business impact through lifestyle and mindset changes
- Act as an independent adviser and confidential sounding board
How these services are delivered depends on the individual coach and their business model. Most coaches favour one-on-one sessions conducted at regular intervals, but hybrid models that combine meetings with other forms of learning, like group sessions and asynchronous education, are increasingly popular.
Why Is Coaching Important in Business?
Coaching is important for businesses of all sizes and sectors, but small businesses and SMEs/enterprises need it for different reasons.
Small business owners are often product- or service-oriented. They’ve built a successful business because they love what they do – whether they’re lawyers, builders or chefs – and they’re good at it. But that expertise doesn’t necessarily mean they have a lot of business knowledge.
Understanding finances, driving revenue, learning how to manage and hire effectively, and knowing how and when to scale can all be difficult to learn as a small business owner. Instead of learning through experience, which can quickly lead to business failure, owners can get advice from coaches who’ve done it all before. For them, business coaching is a shortcut to critical information.
The CEOs of SMEs and enterprises, by contrast, already know how to run a business. They don’t need help learning the fundamentals. For them, business coaches represent an independent perspective, whose knowledge of systemisation and lean operations can help their company gain a competitive advantage.
For both small business owners and CEOs, though, business coaches aren’t just consultants. They’re accountability partners, sounding boards, and supporters – the people you can turn to for advice and encouragement when you feel like you’re slowly sinking underwater. Being at the top, whether as an owner or an executive, is a lonely place, and a business coach can be there for you in a way that no-one else really can.
What Is Business Success?
Business success is an emerging business function. Think of it as the business coaching of the future.
Unlike coaching, which is often viewed as an optional service for companies that need help, business success will become an essential part of future organisations. Its role will be to amplify the CEO/owner, correcting risks and inefficiencies and actioning opportunities across all departments.
It will be defined by three key traits:
- It will take an objective, bird’s-eye view of the company that encompasses all other departments and functions.
- Its KPIs will be tied to business profitability, sustainability, and resilience.
- It will be a small, agile function directly answerable to the CEO or business owner (unlike other functions, which are often constricted by layers of management).
As business success becomes more widespread, more and more business coaches will become ‘business success practitioners’ instead. They’ll keep delivering the same services as they always have, but with an increased role in larger, more complex organisations.
When Do You Need a Business Coach?
Larger organisations with multiple management layers should consider creating a business success function as soon as possible. Having business success in place means company-wide weaknesses and opportunities don’t get ignored – it also gives the CEO more time to focus on steering the company instead of putting out fires.
But what about small businesses? What about micro-businesses and solopreneurs? If you’re still growing your business, hiring a business coach can seem like a low priority. You understand business success is important, but that new deep fryer or concrete mixer or accounting software is more important (at least, right now).
To work out whether you need a coach sooner rather than later, ask yourself these six questions:
- Am I lacking clear goals (where I want to go), a clear business strategy (the path I’ll take to get there), or a clear business plan (the steps I’ll take to execute my strategy)?
- Am I feeling stressed, overwhelmed, or struggling to see past next week?
- Do I want to grow my business faster?
- Could I benefit from confidential advice from someone who’s done it before?
- Could I benefit from having someone look objectively at my business to help me spot opportunities and weaknesses?
- Do I need an accountability partner who keeps me focused on my goals?
If you answered ‘yes’ to any of those questions, it’s time to make room for coaching in your budget.
Business coaching can also support you with essential business functions, like organising your finances, driving revenue, hiring the right people, retaining customers, and building a brand.
Benefits of Business Coaching
Business coaching can help companies in many different ways. In this section, we’ll look at the eight most common benefits that come from hiring a coach.
Orient Your Goals and Visions
Goal-setting in a business context can be challenging when doing it alone, especially as a founder or a business owner. You need to be able to identify where you want to take your business – while still keeping your personal objectives in mind.
For example, not every business owner wants to build a multi-continent behemoth with hundreds of team members. Some people love earning a living on the tools and don’t want to move into a purely managerial role. Other people prefer working alone – for them, the work-life balance of a solopreneur is the key objective.
A business coach can help you clarify your personal objectives, and then translate them into goals for your business. For example, if you wanted to retire at 40 with a lot of money, your coach might help you scale your business to the point where a competitor will pay well to acquire it.
Critically, a business coach knows how to create SMART (specific, measurable, achievable, relevant, time-bound) goals. SMART goals are an excellent way to narrow your focus and improve your accountability, but they need to be realistic – you can’t expect to scale from four team members to 50 in six months. With the right advice, you can set objectives that help you make progress towards your ultimate ‘end goal’.
Create a Strategy and a Business Plan
Once you’ve set your goals, you need to work out how to accomplish them. Let’s say you want to scale your landscaping business from three team members to 15 team members in the next 12 months (because 15 team members working at a profit margin of 30% helps you meet your personal goal to buy an investment property in the next two years).
You need a way to actually make that happen (your strategy). For example, you and your coach might look at your competitors and see that most of them don’t have very good marketing, so you decide to hinge your strategy on highly targeted, aggressive marketing.
You then need a plan with SMART steps – how will you accomplish your strategy with your current resources? Your business plan will cover things like brand positioning, objectives, key staff, financials, assets, liabilities, your ICP, your marketing channels, risk management, your products/services, and your pricing.
Having a strategy and a business plan means you aren’t just working with the vague hope that your goals will meet themselves. A good business coach can help you formulate them both in a way that’s suitable for your company.
Improve Profitability
Turning a profit – having money left over after expenses, costs, and taxes are deducted – can be difficult, especially if running your business involves staff, premises, or expensive equipment. There are three main ways to improve profitability:
- Improve your pricing.
- Increase your sales volume.
- Decrease costs.
A business coach can work with you across all three areas. Typically, your coach will start with a trend analysis to assess how profitable your business is over time, before reviewing other key statistics like gross revenue pipeline, win/loss ratio, customer acquisition cost (CAC), CAC payback period, customer churn rate, profit margin, and OpEx (operating expenses, broken down into fixed expenses and variable expenses).
Once they identify the things holding you back from profitability, they’ll develop an action plan to get your business back on track.
Enhance Efficiency
Efficiency is an overused term in business, but it’s still an important concept, and one that your business coach will help you make the most of. It’s about maximising productivity while minimising waste and maintaining quality – in other words, doing more with less.
To help you enhance your business’s efficiency, a business coach will help you install systems that regulate how you create and deliver your product or service. A system means that a certain thing is done the same way each time, which leads to better quality and less wastage.
Let’s say that you owned a small restaurant. You could just hire waiters, tell them what needs to be done, and let them do it. But every waiter would do things their own way – customers would have different experiences, and some waiters wouldn’t perform as well as others.
Alternatively, you could have a system. Every 15 minutes, one of the two on-floor waiters works their way from one side of the restaurant to the other, checking on each table, collecting plates, refilling water, and upselling additional drinks and desserts. With that system in place, you know that every guest will have their needs met without feeling harassed by the waitstaff crossing over – and your waiters won’t spend time aimlessly wandering about.
Once you have systems in place, your business coach can help you increase their efficiency by identifying time and resource wastage.
For example, your coach might explain that doing everything one table at a time isn’t ideal. Instead, that waiter could conduct three runs across all tables: collecting empty dishes (allowing them to pile on more plates before returning to the kitchen), refilling water (allowing them to fill multiple tables in one go), and checking on each table while taking additional orders (which feels more seamless for guests).
A simple system change could allow that waiter to, over the course of a night, save a huge amount of time. They might even become so efficient that you decide you only need one waiter on floor at a time, reducing your expenses.
Because business coaches often work across multiple industries and business types, they’re normally experts at implementing best-practice systems and making existing ones more efficient.
Rework Pricing and Messaging
Choosing how you market your product/service is important. Your messaging can affect how appealing your customers find it – and, as a result, determine how many units you sell.
Messaging includes answering questions like:
- What problems does the product/service solve for our target audience?
- What features or aspects add the most value, and why?
- What makes it different to or better than competitor products/services?
- When our target audience thinks of X, do they think of our product/service as well?
- What proof do we have available to support our messaging?
Messaging is one of the most important parts of your go-to-market strategy for your product/service. As a small business owner or founder, you probably understand the features of your product/service very well, but a business coach can help you translate them into messaging points that get customers to buy.
A business coach will also work with you to analyse the effectiveness of your pricing strategy.
For example, a professional services provider could significantly improve profitability by switching from per-hour pricing to per-project pricing. Loss leader pricing for a particular product could draw customers in the door, or penetration pricing could be used to gain a foothold in a competitive market.
The right pricing strategy can give you a huge advantage over other businesses – just think about how Netflix’s subscription streaming model changed the world of television forever.
Support Healthy Teams
All businesses, regardless of what product or service they sell, are human businesses. People (your staff) work to solve problems for other people (your customers). So, while it’s definitely important to get your pricing, marketing and financials right, how you build and treat your team is just as critical.
A business coach can help you put in place onboarding and training processes for new staff members, give you advice about employment options (full-time versus part-time versus casual versus contractor), and teach you how to hire the right people.
They can also provide guidance around HR policies and employee classifications. As an employer, you must provide a safe and healthy work environment, abide by relevant laws (like anti-discrimination legislation), and compensate employees/contractors in the right way. You should only get legal advice from a practising lawyer, but a business coach can give you general information from a business perspective.
Create Work-Life Balance
As a small business owner or a founder, it’s normal to work harder than a nine-to-five employee. You’re building your dream, and sometimes that means working outside of standard business hours. But there’s a difference between focused determination and workaholism.
Workaholism means:
- working more than 60 hours per week because you don’t have efficient systems in place;
- neglecting other parts of your life, like your family or your health;
- not having hobbies outside of work;
- often feeling emotionally, mentally or physically drained;
- being unable to ‘switch off’ outside of work; or
- feeling guilty or lazy if you aren’t at work.
Workaholism is often reinforced by the ‘grindset’ culture that many VCs and entrepreneurs promote.
Unfortunately, success isn’t a corollary of working more hours. If you want your business to take off, you need to move from the mindset of an individual contributor (“I’m measured by the hours I put in”) to a CEO mindset (“I’m measured by the outcomes I achieve”). That means using systems and technology to free up as much of your valuable time as possible.
Having a poor work-life balance also causes other problems, like:
- a higher risk of burnout;
- increased stress levels;
- less creativity and innovation; and
- a higher risk of acute and chronic diseases.
A business coach can help you put systems into place to create a more hands-free business. Instead of having to be constantly at the wheel, always available, always slightly stressed, those systems can restore your work-life balance, create time for friends and family, and keep your spark of creativity alive.
Have an Experienced Sounding Board
Being at the top, whether as a CEO or an owner, can be lonely. You can’t always talk to employees, and your loved ones can’t necessarily understand what you’re going through.
A business coach can act as a sounding board for your business struggles. They’ve been where you’ve been, what you tell them is confidential, and they care about helping you win. Often, you won’t even need their advice – just talking through your problems out loud can help you come up with your own solutions.
Peer-to-peer learning groups are also excellent ways to get fresh perspectives on your challenges. ActionMEMBERSHIP’s Elite Membership, for example, includes weekly sessions with a small group of other participants. You get a non-judgemental environment to talk about business problems, as well as the opportunity to learn how others have overcome similar scenarios.
Types of Business Coaching
Small Business Coaching
Small business coaching is the most common type of business coaching. A small business is any business with less than 20 employees. Micro-businesses are small businesses with one to four full-time equivalents (FTEs), and solopreneurs are small businesses with no FTEs.
Small businesses often get a lot of value out of business coaching because of the way they normally evolve. In a typical small business, the owner starts on the tools, working closely with their product/service and growing over time. They normally supply a product/service that has built-in market demand.
Because small businesses grow organically, many owners aren’t experienced business operators. They’ve learned on the fly, so having an experienced coach show them shortcuts can be massively helpful. Most small business coaches focus on the fundamentals: setting up good financial systems, improving go-to-market strategies, and putting systems in place to make the business more efficient.
Coaching for Tradies
Tradie business coaches are an example of small business coaches who have chosen to focus on a particular vertical: trades. They work with everyone from plumbers and mechanics to sparkies and builders.
Tradie coaches typically focus on helping tradies go from being on the tools to being hands-free owners. They use deep, industry-specific knowledge to help their clients improve cash flow and increase profit margins, which are two key challenges faced by many growing trade businesses.
Most tradie coaches are either former tradies who’ve walked the walk or veteran business operators who have decided to niche down into trade.
Coaching for Accountants and Financial Planners
Like many professional services, accountants and financial planners don’t normally struggle with cash flow or profit margin – instead, their challenges revolve around automating routine tasks, finding good talent, and scaling the business.
Coaches who specialise in growing accounting and financial planning practices tend to focus on systematisation, human capital management, and GTM strategy. Many financial services firms have difficulty differentiating themselves from competitors or seeding demand for their services, which is why many financial business coaches prioritise marketing as a key part of their coaching services.
Executive Coaching
Executive coaching is slightly different to traditional business coaching because it focuses on executives as individuals – what their ideal career outcomes are, and how they can reach those outcomes as quickly as possible.
Executive coaches help owners, founders, and C-suite executives hone skills like communication, leadership, management, and acuity. Like other types of coaching, executive coaching normally starts with an alignment of strategic goals, followed by a gap analysis of tactical skills required to get there.
Strategic Business Coaching
Strategic business coaching is coaching for companies that are not small businesses – in other words, any company with more than 20 FTEs. When a strategic business coach steps in, the challenges faced by the CEO or owner are often more strategic than tactical. Good fundamentals are already in place, but they’re having trouble scaling past a certain headcount, or they’re struggling to break into a new market, or they’re being undercut by a new, aggressive competitor.
A strategic business coach can step back, take an objective look at the situation, and offer experienced, unbiased advice. Often, they’ve worked as C-suite executives themselves. They also often have strong networks, which you can use to find reliable vendors and A-class employees.
Entrepreneur and Startup Coaching
Although startups and small businesses can look similar from the outside, they’re actually very different types of organisations. Startups typically have two key traits:
- They’re designed to grow. Their goal is to capture as much of their total addressable market (TAM) as possible.
- They’re going from 0 to 1, rather than 1 to 2. This means that they’re either solving a new problem or solving an existing problem in a radically new way.
Most small businesses, on the other hand, have no expectation of growth, with solutions that are similar to those of their competitors.
That’s why entrepreneur/startup coaching is very different to small business coaching. The goals are more ambitious, the risk of failure is much higher, and the operational environment is often challenging. Startup coaches must be creative and mentally tough, with the ability to correct weaknesses in early-stage companies. They also need to know how to push back against entrepreneurs, who are often intelligent, charismatic people with track records of success.
What to Look for in a Business Coach
Once you’ve decided you need a business coach, it can be hard to choose between different coaching services. Here’s how you can decide.
The first thing to consider is cost. Many business coaches have their rates displayed publicly; you can also email them asking them for an approximate price range. Once you’ve got a list of different coaches and their prices, work out the highest rate your budget can accommodate, and disqualify any coaches that exceed that rate.
After that, look at which people or groups that each coach targets. If, for example, a coaching service specialises in working with tradies, it’s probably not the best fit for your law firm.
Now you’ve got a list of affordable coaches who are probably a good match for your business, you can start looking at social proof. According to online testimonials and reviews, which coaches deliver what they say? You can also see which coaches have a proven background in business – if they’ve been a founder with a successful exit or a C-suite executive for a large company, they probably know what they’re doing.
Finally, book consultations to assess which of the remaining coaches feel like a good personality fit for you. Many coaching services offer free 15- or 30-minute consultations.
What Qualifies Someone to Be a Business Coach?
If you Google ‘business coaching course’, you’ll see hundreds of ads and websites promising to turn you into a business coach. Unfortunately, business coaching is one of the few professions where experience is critical.
A good business coach typically has the following traits:
- Experience in business, normally at a management or executive level
- A proven ability to grow or stabilise businesses
- Strong communication skills, including the ability to hold you accountable
- A coaching approach that works for any industry (unless they market themselves as an industry-specific coach)
To initially screen coaches, you can look at their websites and social media to see what previous clients say about them. Detailed testimonials and success stories can be hard to come by, but a good coach should have at least five or six.
You can also take advantage of the 30-minute free consultations that some coaches offer. An introductory consult can be a great way for you and the coach to assess each other and see if you’re the right fit.
Finally, you can ask other business owners what coaches they use or use coach-finder tools from globally recognised providers like ActionCOACH.
How Much Should I Pay for a Business Coach?
Business coaches in Australia charge anywhere from $80 per hour to $500 per hour. Hourly rates vary widely based on the individual track record, experience, and demand for a particular coach – for example, a junior management consultant-turned-coach would charge much less than a C-suite executive with a record of successful businesses.
If you like a coach but they cost too much to see each week, explore affordable subscription alternatives like ActionMEMBERSHIP.
How to Measure Business Coach Results
Measuring the effectiveness of a business coach can be difficult. There are two main ways to do so:
- positive KPI movement over quarterly timeframes; and
- the gut check.
A ‘positive KPI movement’ means a metric that’s important to your business, like gross revenue, is improving. For example, if the gross revenue for a stable business increased by 10% quarter-over-quarter, that would normally be a sign that your coaching efforts are working.
Different KPIs are relevant to different situations, so you’ll need to use your judgement. It wouldn’t make much sense to measure your coach’s success based on gross revenue if they’d been helping you recruit new employees. Work with your coach to select KPIs that align with their efforts.
You can also use ‘the gut check’. As a founder/owner, you’re normally close enough to day-to-day operations that you have a good feel for how things are going. Are your employees happy? Are customers liking the new pricing model? Does the worksite seem to be running more smoothly?
A gut check can be great way to assess your coach’s effectiveness – but keep in mind that it’s subjective, which is why a gut check should always be combined with measurable KPIs before you make a keep/let go decision.
Important: business coaching is a long-term initiative. Some coaches will get you results in the first few weeks, but most business situations aren’t as easy to improve. Measure your coach’s success over quarters (90 days), not weeks or months.
Summary
Business coaching is something that every business needs. In the same way that we accept advice from teachers and friends, business coaches are there to give us the shortcuts and save us from learning through failure.
Plenty of business owners and founders do try, fail, try, fail, and then succeed. There’s nothing wrong with that. But it is wrong to assume that failure is a natural part of business.
By working with a coach, you don’t have to spend 10 years working gruelling 60-hour-weeks before you ‘crack the code’ to success. You don’t need to burn millions in VC funding before you learn how to create a profitable startup. You don’t need to put off your health, your family, or your life until you’ve ‘earned’ them through failure.
You’re entitled to success, to a strong, profitable business, and a good coach will help you get there.
