What to Look For When Hiring a Small Business Coach
Most small business owners consider hiring a coach at some point in their journey. Here is what to look for when hiring a small business coach according to a former bank director and small business owner.
If you've been on the fence about reaching out for help, consider the fact that there are ZERO public companies without a board of directors. No one creates a large company without some help.
A top-notch business coach is like having a mini-board at a fraction of the cost of a full board. That's why coaches are most commonly used for small businesses that can't afford to shell out $50k a month for a single board meeting.
Companies Don't Hire Business Coaches or Boards Because They Like Giving Away Cash
The first time I sat on a Board of Directors, it was eye-opening. There were probably fifteen of us in the room, and no one was working for peanuts.
The company didn't do that because they liked handing out wads of cash. They invested in a board because they knew that having external accountability and ideas would earn them far more than what they paid. They also knew that failing to comply with government regulations results in hefty fines far exceeding what they were paying us.
Coaching Should Go Beyond Getting More Business
Most business coaches can help you get more business. A good coach will also know the rules and be able to help set your business up with a firm foundation so that you can support that growth. They should also be able to help you refine your offerings and processes to improve your bottom line and create a steady revenue stream.
No Meditation Sessions Please
When I say going beyond getting more business, I'm not talking about meditation sessions where you spend all your time getting to know the inner you. I'm all for that stuff, but find a yoga class if that's what you need, not a business coach.
You Should Have Clear Action Items From Each Coaching Session
Your coach should spend most of their time focusing on refining your product and service offerings to maximize profits, cleaning up your service, looking at the books, reviewing marketing and sales. After each call or visit, you should have clear ACTION items to be completed before the next call.
Your Business Coach Should Help You Refine Your Processes
They receive an email with further instructions, and if they follow those instructions and I think there's a good chance I can help them, they'll end up on the phone with me. If we decide it's a good fit to work together, their next step is to pay the first invoice, and then we'll start meeting regularly to come up with other specific action items.
A good business coach should be able to help you refine your own processes so they are clear. Clear processes make it so that your business can scale because once you have that, you can automate it or train other people.
Your Coach Should Help You Lay the Foundation
I was visiting with a small business owner who owns a moving business the other day. We were talking about expanding his business beyond him, and an analogy came to me. Expanding a business without a firm foundation is like stacking a heavy dresser on top of a wobbly glass end table in a moving truck.
“Expanding a business without a firm foundation is like stacking a heavy dresser on top of a wobbly glass end table in a moving truck.”
If I dumped an extra 5,000 orders on you tomorrow, would you be able to handle that? A properly set up business should be able to easily expand to accommodate new business. Don't start with a flimsy glass table as your foundation or your business is going to shatter into a million pieces when you add something heavy.
Your Business Coach Should Encourage You to Cover Your Assets
Things are relatively simple when it's just you, but following the rules gets more and more critical and complex as you grow and add people. That's where a good business coach can help. I've seen multi-millionaires go bankrupt virtually overnight because their business was built like a house of cards and when the wind blew it all came tumbling down.
Your coach should be able to help you follow the rules and make sure you have things like a proper LLC operating agreement, subcontractor agreements, policy manual, and insurance to cover yourself in the event of a problem.
Business coaches are not lawyers, but if your coach can't speak intelligently about at least some of the regulations and liability concerns, be worried.
Run if Your Coach Tells You Not to Worry About the IRS
I've seen far too many small business owners go pale as they find out that they owe tens or even hundreds of thousands of dollars in back taxes plus fines. Make sure your business coach is asking you about that area of your business.
Your spouse is right; you cannot continue to operate a growing business out of your household checking account without eventually facing the consequences.
If you don't think the IRS is watching, think again. If your business coach is advising you to ignore regulations, run.
Regulation Violations are Expensive
I remember asking during one board meeting what the consequences of ignoring a violation cited on an audit report were as it required us to hire additional people to stay in compliance. The answer was approximately $2.3 million every year. We voted unanimously to hire the people necessary to satisfy the regulation.
A business coach isn't your accountant or attorney, but they should be able to help get your business set up with a solid foundation so you can grow.
A Good Business Coach Capable of Building Their Own Business Isn't Cheap
A survey by Lodestone global that evaluated 331 companies reported that the average board of director member's fee is $25,000 for a retainer. Companies are also paying an average of $2,250 per meeting and $1,000 per telephone conference, for total annual compensation of about $36,000 per year per member. Some companies also paid additional amounts for attending committee meetings.
Though a board of directors' pay pales in comparison to that of CEOs, compensation for board service can inch into the half-million-dollar range—and in a few cases, much higher. Below is a list of the highest-paid boards of directors at large-cap companies, based on annual retainers awarded to all non-employee directors, according to Equilar data.
|Company Name||Annual Director Retainer|
|The Goldman Sachs Group||$575,000|
|Valeant Pharmaceuticals International||$475,000|
|Everest Re Group, Ltd.||$447,030|
If someone is offering to coach your business for $50 or $100 per live session, run.
You want to hire someone who has actually built a business and managed people, not someone with only second-hand knowledge. A person like that isn't likely to get out of their cozy bed for $100.
A Small Business Coach Isn't the Same as a Board Member
Most reputable small business coaches won't charge as much as a public board of directors member because they don't have the same responsibilities.
Going to jail if the company didn't follow my advice or I missed something was a possibility when I served as a board of directors member. I had to sign legal documents stating that I understood those responsibilities, and take out additional insurance to cover myself.
A formal board of directors has legal responsibilities and voting rights on what happens in an organization. They can even fire the CEO if necessary. A small business coach isn't going to jail if you fail to follow some regulations because you're still in charge.
A private business coach is someone who is giving you their opinion. Unlike a formal board member, they are not legally bound to your organization.
Your business coach shouldn't charge you millions every year like a Fortune 500 board of directors member because they don't have the same responsibilities. But good ones are still not cheap.
Industry-Specific Knowledge is Overrated
When I was hired to be a bank director, I had never worked in the industry before. That's the reason they hired me, they wanted fresh ideas from a successful small business owner.
I have worked with many businesses across a wide variety of industries. I've found that management problems are the same because people are the same. Sales are also still sales, although there are differences between retail and high ticket sales. Service is service, again with minor differences between industries.
Hiring someone outside your industry is sometimes a good thing because they can bring in fresh ideas. Just make sure they have run a successful business personally and managed people.
TLDR: When looking for a small business coach, make sure they have run a business and managed people. Make sure they know how to lay the proper foundation so you can grow and aren't simply pushing lead generation. Expect to pay well and ask more questions if they are really cheap, this is one area you usually get what you pay for.