Life Coaching Math. Or an introduction to income planning for the rest of us.
Pocket protector at the ready?!
Today we’re going to do some coaching math. (Put an S on the end of that if you feel like being British for the day.)
Don’t worry. It’ll be nice and easy. And I’m going to hold your hand every step of the way and tell you that you’re doing great.
So… let’s pretend my star mentoring client and imaginary blog sycophant Life Coach Marjorie comes to me with the goal of making $100,000 a year from coaching next year.
Superstar Life Coach Marjorie!
That’s a good goal.
Marjorie’s a great coach. She’s the best, in fact.
But without a concrete plan showing how she’s going to make that money, it’s unlikely that Marjorie is going to wind up achieving her income goal simply by being brilliant.
Thankfully, Marjorie and I are a great team. She’s a life coaching superstar, and I’m an annoying guy who makes her write dates and numbers on piece of paper until it looks like some kind of plan.
And this is a good thing. Because the plan is going to show Marjorie how she can go from zero to $100,000 a year.
So we write $100,000 at the top of our piece of paper. This is our target. We brainstorm how we’re going to get there…
My regular coaching rates are $200 a month, explains Life Coach Marjorie.
Great.
I think I can probably maintain 10 clients a month on average over the year, she goes on to say,
So let’s write that down (pretending that taxes, expenses and other undesirables don’t exist…)
10 Coaching Clients per month @ $200 = $2000 per month = $24,000 per year.
Cool.
But it’s not quite $100,000 yet.
Marjorie could try to reach her goal, by doing on of the following:
- coaching 50 people a month
- increasing her rates to $1000 a month
Fortunately, Marjorie is smarter than that.
And she has been listening to me when I harp on about the value of producing information products to support her coaching service. She thinks it would be a good idea to write a small downloadable eBook on goal setting.
I do too.
This downloadable book will:
- provide a nice customer entry point for people who aren’t yet ready to stump up the $200 for Marjorie’s coaching
- increase her credibility and establish her as an authority in the personal development / coaching field
- make her money
Marjorie thinks she can write the 20 page book and get the design and distribution sorted out in a month.
She’ll sell it as a $19 download. She estimates that 40 people will buy it every month.
40 eBooks per month @ $19 profit = $760 per month = $9120 per year
That’s pretty good going for a month’s work.
Marjorie thinks she has another book in her. This one is going to be a larger, more comprehensive affair. It’s a manual for housewives who want to get back into work.
She thinks she’ll be able to write it and get it on the market in 3 months. She’ll sell it as a $69 download, with an option to pay extra postage for a printed version. She thinks she’ll sell 20 copies a month.
20 Printed Books per month @ $69 profit = $1380 per month = $16,560 per year
As Marjorie is the greatest coach in the world, she thinks it’s only fair to impart some of this magic on other coaches. She decides to record a CD program with recordings of real coaching sessions. She takes on a few new coaching clients at reduced rates on the agreement that she may record the sessions. She asks her friend’s son to edit the sessions on his computer. She arranges for a fulfillment house to manufacture and distribute the CDs on her behalf.
This takes 2 months.
She sells the CD program for $150. Due to the small expected volumes it costs $15 to manufacture and ship the CD sets. She expects to sell 10 CD sets a month.
10 CD Programs per month @ 135 profit = $1350 per month = $16,200 per year
And if we add this up we come to:
Total projected, 6 months into plan: $65,880 per year.
So far in our plan we’ve covered 6 months. Marjorie is well on her way to reaching her target next year.
We’ll stop here, but Marjorie might want to go on to write some new eBooks, start a subscription service, run tele-classes or produce another high-end physical product (or two.)
All of these will provide extra income. The introduction of new customers via an increased channels will result in more repeat business, and many of the numbers above can be expected to grow.
This is an interesting model to play with and think about and it’s a good basis upon which to build a plan…
…but don’t believe the numbers in this example. We’ve made some pretty huge assumptions here. All products have a limited shelf life and there are many other costs which have not been considered in the model.
I think the most interesting thing that comes out of this is the realization that the one-one-one coaching model is not very scalable. I’d advise everyone, coaches or otherwise to be on the lookout for ways to supplement their income. This is where the money lies…
Be creative. You rock!
JJ Jalopy.
P.S. If you’re interested in more thinking along these lines, you should check out Andrea J Lee’s awesome book Multiple Streams of Coaching Income.
If you get it using this link here, I’ll receive enough money to buy myself a lovely cold beer. And that would be nice, wouldn’t it? Especially on a summer day like this. Go on… I’m a happy drunk, I promise…
Comment by Duane Cunningham
3 July 2009
Hi JJ,
Superb bit of maths coaching there and the use of the wealth creation principle of ALL super successful entrepreneurs!!
Simultaneously implementing income streams!!
You Rock!
Duane
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Comment by John Ho
4 July 2009
JJ,
That’s very kind of you doing the maths for your readers and the would-be coaches!
Multiple streams of income concept has been around for years. So NOW is the time for all of us to implement it!
Like your immediate previous post, “What people most need is to actually do the stuff they already know they should be doing.”
John Ho
Numerology Expert Helps Understanding Personality for Better Influence & Persuasion (WordPress Blog)
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Comment by JJ Jalopy
4 July 2009
@Duane – Thanks. I was wearing tweed at the time. Could you tell?
@John – Thanks mate. It’s a simple concept, but one that involves a lot of work… It’s possible to set up multiple income streams which almost run themselves, but it’s an awful lot of work to get them set up. What Tim Ferris neglects to mention in the four hour workweek is that it probably took him a couple of years of 100 hour workweeks to set all his systems up!
Comment by Darryl Pace
7 July 2009
Dude, this is great stuff — a fantastic illustration and reminder of what we need to do to build our information-based empires!
Health, Fitness — Darryl Pace
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Comment by Anthony Lemme
8 July 2009
That was some promising math. I know of one guy that is pulling in $100,000.00/day on a regular basis. He just does what he needs to do without too much thought.
Anthony
http://www.anthonylemme.com
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Comment by JJ Jalopy
12 July 2009
@Anthony – When you plan it out it becomes easy to see where these numbers come from. It’s a simple business of adding more income generating ideas.
Comment by Lisa McLellan
14 July 2009
I want to be Marjorie! Love the numbers – looking for my $100,000 per year.
Lisa McLellan
Babysitting Services – Babysitters and Nannies
Comment by JJ Jalopy
14 July 2009
@Lisa – Yeah. Marjorie is totally cool. It’s good to have her back, I think…
Comment by Pam Schulz
16 July 2009
How cool to be Marjorie!
Pam
Expert Houston Retirement Planning & Wealth Management Services
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