How to Start a Life-Coaching Business
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, you may have the natural ability to become a successful life coach.
Are you interested in learning more? Read on to find out what it takes to start your own life coaching business.
–
Business Description
First up, coaching is not to be confused with therapy! According to the Collins online dictionary, “a life coach is someone whose job involves helping people to improve their lives by doing challenging or worthwhile things.” This is perhaps a relatively narrow description. If you offer life coaching, you are a trained professional who guides your clients through self-discovery. You help them to put things into perspective, develop a more affirmative mindset, and motivate – even challenge them – to make the most of their potential and reach their life goals.
Industry Summary
A 2020 research report predicted a US mental health crisis, and recent years have certainly increased and accelerated the need for support through life coaching and other services.
According to IBISWorld, over 22,000 life coaching businesses are registered in the U.S. in 2022. That’s an increase of 6% compared to the previous year. Leadership coaching remains the largest segment, making up just over 30% of the life coaching market.
This industry is quite fragmented – none of the companies registered in the US holds a market share bigger than 5%.
Related Industries
Industry Trends
Life coaching is perceived and classified as a discretionary expenditure. That makes this industry heavily reliant on disposable income, corporate profit, and generally on a healthy economy and consumer confidence.
IBISWorld forecasts an industry growth of 4.1% by the year 2025. At the same time, it expects profit margins to become slightly narrower as wages increase.
Barriers to entry into the coaching industry remain low but are increasing, as are regulatory requirements.
Target Market
Life coaching is an umbrella term for quite a few niche skills and services. The largest market segment is undoubtedly the business sector, but personal and family relationship coaching also makes up over 13% of coaching products and services.
Here are a few examples of life coaching services:
- Leadership coaching for entrepreneurs, small business owners, and executives to be confident and effective leaders and understand their roles and the business environment around them.
- Personal development coaching to achieve a better work-life balance, a more positive mindset, and coping with adverse life situations.
- Career coaching for professionals seeking increased job satisfaction or a new career
- Relationship and social coaching for couples but also individuals who would like to be more confident communicators in social situations
- Performance coaching to boost effectiveness and productivity
- Intimacy coaching to feel more comfortable with intimacy and achieve a better relationship with a partner
Checklist for Starting a Life Coaching Business
If you’re thinking about starting your own life coaching business, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.
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 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 life coaching business plan is most often thought of to obtain funding, 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 forces you to think carefully about your target market, your marketing strategy, and your financial projections, and perhaps most importantly, it gives you greater clarity and confidence as you move forward with launching your life coaching business.
Related: How to write a business plan
Step 3: Name the Business
Another important step is coming up with a name to establish your brand. Typically a good life coaching business name should relate to the market you want to serve and be reflective of your coaching style and philosophy. The name should also be memorable, easy to pronounce, and short enough to fit on business cards and other marketing materials.
Once you’ve come up with a few potential names, run them past friends, family, and mentors for their input. Their feedback can help you finalize the perfect name for your new business venture.
Related: Tips on naming a business
Step 4: Form a Business Entity
A business entity (also referred to as a legal entity or business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a life coaching business, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
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:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 5: Open a Business Bank Account
As a life coach, you are in the business of helping people to improve their lives, and while you may be passionate about your work, it is important to remember that you are also running a business.
This means keeping track of business expenses and income and a separate bank account for your life coaching business can help you to stay organized and on top of your finances. By keeping your personal and business finances separate, you can more easily see where your money is going and monitor your spending. This can help you to keep your business on track and avoid financial problems down the road.
Step 6: Select Your Location
When starting a life coaching business, an important factor to consider is the location. With the increased acceptance of video counseling, running the business out of your home is ideal for keeping overhead low.
If your business model will include meeting people in person, operating from home may not be ideal. A couple of factors to research before deciding on a spot include; the demographics of your target market and the space itself. For example, a life coach who specializes in helping busy professionals may want to choose a location near an office park or public transportation. On the other hand, a life coach who works with families may want to choose a location that is closer to schools and parks.
After identifying the target market, it is important to consider the size and feel of the premises. A life coach business does not normally need a large office space, but it should have enough room for comfortable and private consultations and small group workshops.
Related: Choosing a business location
Step 7: Apply for Business Licenses and Permits
Becoming a life coach doesn’t require specific licensing as the industry is unregulated, however, getting a coaching certification is often recommended in order to develop professional skills and build credibility.
There may be a few different general business licenses, depending on the state in which the business is located. Some states and cities require a general business license, and some states require service-based businesses to obtain a sales tax permit.
Related: Common business licenses, permits, and registrations by state
Step 8: Get your Marketing Plan in Place
As a life coach, you have the opportunity to help your clients make positive changes in their lives. But before you can start coaching, you need to let people know about your business. Marketing is essential for attracting new potential clients, but it can be difficult to know where to start. Here are a few tips for marketing your new life coach business:
Go back to your niche and create a list of your target clients. Who do you want to work with? What kind of changes do they want to make in their lives? Once you have a good understanding of your ideal client, you can start tailoring your marketing efforts to appeal to them.
Use social media to reach a wider audience. Create profiles on popular social media platforms where your target audience hangs out, like Facebook, Twitter, Instagram, LinkedIn, etc. and share interesting and useful content that will help your target clients. You can also use social media to connect with other life coaches and professionals in related fields.
Get involved in the community. Attend local events and meetups, and introduce yourself as a life coach. You can also volunteer your time and skills to help organizations that serve your target clients.
Other ways to market your business might involve attending relevant industry conferences, using client testimonials, guest blogging on popular websites, conducting research studies, or even starting your own podcast.
Related: Low-cost ideas to market a new business
Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.
Step 9: Get Business Insurance
While not a requirement, it’s important to make sure you have the right insurance in place to protect your business. The type of insurance you’ll need will somewhat depend on the services you offer, the location of your business, and other factors.
Some common types of insurance for life coaches include general liability insurance, professional liability insurance, and business property insurance (whether seeing patients from an office or at their personal residence as most homeowner’s policies won’t cover business-related claims.
How much does it cost to start a life coaching business?
Life coaching has a low barrier to entry and low capital intensity. That makes it an excellent opportunity for someone with the right skill set to become self-employed and start a business.
Assuming you already have a relevant qualification, your most significant expense will be time and patience. You won’t need specialized equipment, large offices, or inventory to start a life coaching business, but you will need to invest your time and effort into gaining and retaining a client base. The success of your company relies heavily on word of mouth.
At the same time, a slow expansion of your customer base will allow you to start this business as a side hustle.
Other budget points to consider are creating your online presence, ideally with a booking system and advertising and marketing.
How profitable is a life coaching business?
Since a life coach business will have minimal overheads, a salary guide will provide a good indication of expected income.
ZipRecruiter provides a good breakdown of wage expectations per US State. That said, it will always be helpful to check out your competitor’s rates to arrive at a sustainable pricing structure for your services that fairly represents your expertise.
Are there grants to start a life coaching business?
It’s extremely rare to find a grant to start a life coaching business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.
What skills are needed to run a life coaching business?
Professional certification. Certification is not a skill, but professional credentials will be vital to attracting and retaining your customer base. So make sure you invest in it.
Certification will give your clients the confidence that they are in good hands and that their discussions with you are treated with discretion and confidentiality. You will also learn to set goals and define success (which will differ from client to client), understand advanced coaching techniques, develop mindmaps, and maintain professional, ethical boundaries.
There is a raft of coaching certifications and specializations available. We recommend you seek advice and register with the International Coaching Federation for a comprehensive overview and accreditation information.
Interpersonal and problem-solving skills. For clients, life coaching is often quite an emotional process. Therefore, empathy, patience, calmness, and tolerance are must-have interpersonal skills to help them through self-discovery, overcome hurdles and reach their goals.
At the same time, you will also use your analytical and research skills to help map a plan for your client. This journey may also call for decisiveness, adaptability, flexibility in thinking, coaching technique, and approach.
Good interpersonal skills will also help you advertise your business within your community and create networks within the industry.
Final Thoughts
Nobody is born a life coach, but you can become one if you have a passion for helping people and can pair it with an analytical mind and a positive attitude to life. As such, this can be quite a demanding occupation but a hugely rewarding one at the same time.
According to an ICF study, over 70% of respondents indicated a positive change in communication and interpersonal skills and their relationships after attending social coaching sessions. How’s that for a tremendous impact?
