How to Start a Life Coaching Business

These days, everybody wants to achieve their career goals and be “fully self-realized”, which is why life coaching is seeing sharply increased demand. Life coaching is now a billion-dollar US industry, poised for strong growth in 2022. 

Business executives have long used life coaches to elevate their performance, but now people of all ages and backgrounds are seeking them out to boost personal and professional performance. You could launch a life coaching business from the comfort of your own home and help people lead more fulfilling lives while making a good living. 

But before you start stretching your coaching muscles, you’ll need to understand what it takes to start a business. Fortunately, this step-by-step guide details all the tools and techniques you need to get your life coaching business off the ground and on the path to success. 

Step 1: Decide if the Business Is Right for You

Pros and cons

Weighing the pros and cons of a life coaching business will help you decide if it’s right for you.

Life coaching industry trends

Industry size and growth

• Industry size and past growth – The US life coaching industry is worth $1 billion in 2022. After seeing a slight decline over the last several years, the industry is back on the rise.((https://www.ibisworld.com/industry-statistics/market-size/life-coaches-united-states/))
• Growth forecast – The US life coaching industry is expected to grow by 4.9% in 2022.
• Number of businesses – As of 2022, there are 18,233 life coaching businesses in the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/life-coaches-united-states/))

Trends and challenges

Trends within the life coaching industry include:

• Advances in digital technology and the recent pandemic changed the way life coaches delivered services. Many coaches now coach exclusively through audio-video platforms instead of meeting clients in person.
• While life coaching has traditionally been most popular with adults, today more kids and teens are seeking out these services. Life coaches help younger clients deal with stressors like bullying and make major decisions like choosing a college major.

Challenges within the life coaching industry include:

• A lack of regulation in the coaching industry has caused clients to hold life coaches more accountable than ever before. Obtaining life coaching certification helps build credibility, but programs can be expensive. 
• Burnout within the life coaching industry is common, as coaches expend a lot of emotional energy helping clients. Scheduling time for self-care is a must. 

What kind of people work in life coaching?

• Gender – 67.5% of life coaches in the US are women, 32.5% are men.((https://www.zippia.com/life-coach-jobs/demographics/))
• Average level of education – The average life coach has a bachelor’s degree.
• Average age – The average age of a life coach in the US is 35.

How much does it cost to start a life coaching business?

Startup costs for a life coaching business range from $2,900 to $6,900. Costs include a computer, website, and advertising.

Becoming a certified life coach makes you more attractive to prospective clients and can help you better market your services. Coaching certification costs range from $100 to $875, depending on the level and specialty you choose. 

You’ll need a handful of items to successfully launch your life coaching business, including: 

• Computer
• Software
• Website

Start-up Costs	Ballpark Range	Average
Licenses and permits	$100-$250	$175
Insurance	$100-$300	$200
Marketing and advertising	$750-$1,500	$1,125
Website setup	$1,000-$3,000	$2,000
Software	$100-$250	$175
Computer	$850-$1,600	$1,225
Total	$2,900-$6,900	$4,900

How much can you earn from a life coaching business?

The average cost of life coaching is $125 per hour. Later, if you work with business executives, your rates will likely be much higher. You’ll have very few ongoing expenses, so expect your profit margin to be around 90%. 

In your first year or two, you could do seven one-hour coaching sessions per week at $125 per hour, bringing in $45,000 in annual revenue. This would mean $40,000 in profit, assuming that 90% margin. As you build a reputation and your coaching business grows, you could raise your hourly rate to $175 and do 14 sessions per week. With annual revenue of $128,000, you’d make an impressive profit of $115,000. 

What barriers to entry are there?

There are a few barriers to entry to a life coaching business. Your biggest challenges will be:

• Extensive marketing and networking to build a pipeline of potential clients
• Competition from other life coaches

Step 2: Hone Your Idea

Now that you know what’s involved in starting a life coaching business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research life coaches in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a life coach who offers online courses on personal development, or on building stronger relationships.   

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your services

Your life coaching services will depend on your specific niche and level of expertise. Some coaches also offer group coaching programs or self-paced online courses. 

You can also combine life coaching with business coaching.

How much should you charge for life coaching?

Typical rates for life coaching range from $75 to $200 per hour. Life coaches who work with business executives often charge rates in the thousands, but this is generally after years of building up a reputation and a record of success. Aim for a profit margin of around 90%.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be adults who are looking to better themselves and improve a certain area of their lives. They may need help navigating relationships or changing careers. Your ideal clients will depend on your specific coaching niche. Providing advice and helpful information on social media platforms like Instagram and Facebook is a great way to find clients. To attract business executives, focus your marketing efforts on LinkedIn. 

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Life Coaching Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “life coach” or “life coaching”, boosts SEO
• Name should allow for expansion, for ex: “Life Mastery Coaching” over “Personal Development Coaching”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Life Coaching Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: A brief summary of the business plan highlighting key points and objectives.
• Business Overview: An overview of your life coaching business, including its mission, vision, and values.
• Product and Services: Detailed information about the life coaching services you will offer.
• Market Analysis: A study of the target market, including demographics, trends, and potential clients.
• Competitive Analysis: An assessment of competitors in the life coaching industry and their strengths and weaknesses.
• Sales and Marketing: Strategies for attracting clients, promoting your services, and growing your business.
• Management Team: Information about the key individuals responsible for managing and running the business.
• Operations Plan: Details on how the business will operate, including location, equipment, and processes.
• Financial Plan: Financial projections, including income, expenses, and funding requirements.
• Appendix: Supporting documents, such as resumes, references, and additional data that complement the business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to life coaching. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your coaching business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a life coaching business. You might also try crowdfunding if you have an innovative concept.  

Step 8: Apply for Licenses/Permits

Starting a life coaching business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your life coaching business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as Quenza, MCO, or Nudge to or schedule coaching sessions, track client goals, or create a custom online app.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

Here are some powerful marketing strategies for your future business:

Kickstart Marketing

• Professional Branding: Your branding should convey professionalism, empathy, and inspiration. This includes a compelling logo, professional business cards, and a well-designed website.
• Direct Outreach: Network with local businesses, community centers, and professional groups. Offer workshops or speaking engagements to introduce potential clients to your coaching services.

Digital Presence and Online Marketing

• Professional Website and SEO: Develop a website that highlights your coaching services, client testimonials, and success stories. Use SEO best practices to rank for searches related to life coaching, personal development, and professional coaching services.
• Social Media Engagement: Utilize platforms like LinkedIn for professional networking, Instagram for motivational content, and Facebook for client engagement and sharing valuable resources.

Content Marketing and Engagement

• Inspirational Blog: Share blog posts about personal growth, success stories, and practical life coaching tips. This helps establish your expertise and provides value to your audience.
• Email Newsletters: Regular newsletters can keep your clients and prospects informed about your services, upcoming events, and useful life coaching insights.
• Video Content: Create videos offering tips, sharing client success stories, or providing glimpses into your coaching process.

Experiential and In-Person Engagements

• Workshops and Seminars: Conduct workshops or seminars on topics related to your coaching specialties. These events can attract potential clients and showcase your expertise.
• Networking Events: Attend or host networking events to connect with potential clients and other professionals in related fields.

Collaborations and Community

• Partnerships with Related Service Providers: Collaborate with therapists, nutritionists, or career consultants for cross-referral opportunities.
• Community Involvement: Engage in local community events or charity initiatives to increase visibility and build your reputation as a positive force in the community.

Customer Relationship and Loyalty Programs

• Referral Programs: Implement a referral program that rewards clients for bringing new business to you.
• Follow-Up Sessions: Offer follow-up sessions to past clients to check in on their progress and remind them of the value of your coaching.

Promotions and Advertising

• Targeted Online Advertising: Use platforms like Google Ads and Facebook to target individuals interested in personal development and life coaching.
• Public Speaking and Media Appearances: Seek opportunities for public speaking or appearances on podcasts, webinars, and local media to share your expertise and reach a wider audience.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your life coaching meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your life coaching business could be:

• High-caliber coaching to jumpstart your career
• Break out of your comfort zone with executive coaching
• Access next-level confidence – and success!

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a life coaching business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in life coaching for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in life coaching. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a life coaching business include:

• Administrative Assistant – greet clients, schedule appointments
• Marketing Lead – Manage social media accounts, generate leads
• Accountant – Bookkeeping, create invoices and financial reports

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Life Coaching Business – Start Making Money!

Becoming a life coach can be a hugely rewarding way to make a living, and right now the market is seeing strong growth. You could help your clients develop and make the changes they need to succeed, make great money and maybe even become the next Tony Robbins! 

Now that you’ve done your homework, it’s time to get out there and start coaching your way to big-time success.