Financial Literacy & Business Models For Online Coaches

All right, y’all welcome back to part two of the Financial Literacy and Business Model Conversation. So in the last episode, we went pretty deep into the conversation of revenue and knowing your numbers and figuring out your actual cost and living expenses and budgeting. So in this episode, i want to go a little bit deeper and continue that conversation so that we can bring everything full circle and unpack what kind of business models make sense for you, how to really set up your business in an equitable way, how to pay yourself an equitable salary, as well as having the conversation of knowing what kind of business models you want to be incorporating into your business, how you want to be marketing, how you want to be selling and how you want to essentially run your business. So, all that being said, let’s dive on in. I’m just going to adjust this briefly. There we go, okay, okay.
So if you’ve watched the last episode, if you haven’t, please go back and check it out, but if you have, by now you should have your numbers. You should know. Okay, these are my cost of living expenses. This is what I need to be earning as a bare minimum every single month to cover my cost of living. That is your owner’s pay. So you can go ahead and if you’re writing this out on a sheet, calculate that say okay, this is my owner’s pay every single month, this is what I need to be paying. Now, what you pay yourself for your living expenses is separate from what you are paying to run and operate the business. The other expenses that we want to look at are the actual business expenses. So these are things like the softwares that you pay for professional development, trainings that you’re doing, any type of marketing services that you use, whether it’s hiring copywriters, web designers, social media marketers, et cetera. All of those would be under business expenses And those are separate from your owner’s pay. So your owner’s pay is what you’re paying yourself And then your business expenses are what the business is also paying for on top of paying out your owner’s pay.
So in the last episode we kind of throw out some numbers here. We’re just going to work with what we’ve got. We’re going to say that our owner’s pay is $3,000 a month And then we’re going to say that the business expenses to run and operate the business whether for softwares, for VA, for team, for all of that is $1,000 per month. So right now, our total cost to operate the business on a monthly basis and pay ourselves is $4,000 per month. Now if we brought in $100,000 from the launch playing off with the model that we were talking about in the last episode, then that means our total annual cost for the business is $40,000. Actually, just kidding $48,000. 12 months, not 10. $48,000 is what the total cost is just to run the business, which means out of the $100,000 of revenue that we generated, we’re down to just over $52,000 of actual profit, which means the business profit was 52. The business profit margin was 52%. So again, not bad. But what we want to look at here is recognizing that what the business is profiting is not $100,000 of profit, that’s revenue. Then you have what the business actually profits after all of its expenses.
Now I find this conversation really important because I think when we’re looking at business models what we want to create and what we want to do there tends to be a lot of hype around the trendy model of creating a digital course or a group program that you then scale to the moon and you make millions and millions of dollars off of it. Now what’s not oftentimes disclosed when we’re looking at these business models is the actual cost of running and delivering that kind of program or service. And I think it’s important because if we don’t actually know what the cost is like how much is it actually going to cost you to have the team or the support or the systems or whatever it is that needs to be there then we can easily romanticize the idea of doing that and think that that’s what we want. So what we want to start to unpack when we’re looking at running a business and growing a business is if my current launch model that I’m doing I’m launching a group program let’s say, allocates the possibility for me to bring in a total potential earnings of $100,000 based off of the amount of I’m charging per person in my total client capacity meaning how many people can I actually support then we know that at the bare minimum, the business is going to be managing a 52% profit margin with that specific offer.
Now, what we were talking about in the last episode was if we don’t want to be solely dependent on an open cart, closed cart once a year type of business, because the repercussions of that on the what is the word I’m looking for or on the conservative side, is if, for whatever reason, we don’t hit the mark and we don’t hit our goal of the maximum of clients, then that means our business is at the potential risk of being at a loss for the year, and so we want to protect ourselves by saying, okay, great like this is one thing that I want to be doing, And I would like to ideally, optimally, have a sold out program every single year, but in the case that I don’t, i also want to make sure that I have another offer or another service that I can offer that is evergreen, meaning we’re rolling year round, people can purchase at any time, and that supplements the income depending on whether or not we were able to hit our revenue goal with with our launch. Now, this is something that can be really easily done, whether it’s through one to one services or ad hoc add ons or other things that you might offer, and personally, my approach with this is having a one to one service that is more of the baseline that my one to one services, where I generate the steady revenue to ensure that my cost of living is taken care of, and then the group program in that transitional process is additional revenue on top of that, so that I’m not 100% dependent and scrambling every month or every launch to try to hit all my revenue goals through the launch itself, but instead I’ve supplemented my income strategically And I know how many hours I need to be working with one to one clients and how many spaces I have for one to one clients to cover my cost of living so that I can go through the launch process without feeling like this really high pressure thing. Now that might feel like a lot of information for some of you. I know that this conversation of money and finances and structure and business models isn’t actually a common conversation had in the industry, unfortunately, but I think it’s really really crucial. Important because when we start to think about the business model that we’re building, we start to think about what we’re creating and what we’re developing, we can do it more intentionally and more strategically. Now here’s what I mean when I say that. And when we think about how we want to live our lives and how much we want to be spending time, money and energy on specific things in our lives, when we actually know what something costs, both from a time and energy perspective, then we can decide how much of it do we actually want to do, and this is a conversation of scaling.
So When we think about scaling, it tends to be a very overused term in the online space. That’s just about this idea of you just grow, grow, grow, grow, grow to infinite numbers until you hit multi-million dollars or seven or eight figures or whatever the new 20 word is. But the reality is that’s not necessarily what scaling is about. To build something to scale means to build something to the size in which it can be managed. It’s built to fit within the scope of the scale. It doesn’t mean we build it and build and build on, build beyond, because oftentimes what ends up happening is we tend to overbuild And a lot of times this is where we see implosion in folks’ businesses, because they are building for the sake of building versus building with intention to create a specific outcome.
The outcome is solely revenue generation versus looking at how do they want to be spending their time in the business, how do they want to be spending their time outside of the business, how much time do they want to be spending when it comes to business as a whole versus what other things are they doing inside of their lives to feel good and to feel great about what they’re doing. So, that being said, the next part of this process that I’m going to invite you into is getting clear on that for yourself. What are you doing the business for? Yes, the business is here to generate revenue and obviously do the work that you do. But the thing that we have to get clear about and create distinctions between is the business is there to be a service that you provide or a product that you provide that you deliver to the customer or the client that’s purchasing it? The business’s purpose is not to fill all of your deepest soul’s desires and meet all of your needs and make you feel amazing and great all the time. The sole purpose of the business is to provide a service or a product for the customer or client who is purchasing said service or product.
When we start to look at it through that lens, then we can start to remove a lot of the entanglements that come up around feeling bored with our business or feeling like it’s not as fun as it used to be or whatever. That is because our needs for fun and spontaneity and excitement and joy and creativity can be met in other ways that are not directly connected to our business, and this distinction is so, so, so, so important when we’re starting to untangle from a lot of the indoctrinations of the coaching industry specifically and any other type of personal development space. Your business is there to generate revenue and to deliver a service. Your sense of connection to you, connection to your life, feeling inspired and love, and whatever the things are, gets to come from other things outside of the business. And I feel like a lot of the times this gets really confused because we start to make decisions in the business based off of how we’re feeling in our personal lives and it can quickly become this really interesting thing where we’re making business decisions because we’re not feeling fully enlivened or connected in our personal lives, when that’s not actually a business issue. That’s a personal issue and we want to look at it as such. Yes, you want to feel good about the work you’re doing. Yes, you want to make sure that the work that you’re doing is within your scope of practice and that you enjoy it, and we want to make sure that we’re not trying to meet our need for new things or excitement or spontaneity or change through constantly changing the business model or need for self expression through the business. But we have that in other places and other spaces And this is also where, personally.
Again, these are just my opinions. These aren’t hard right or wrongs. Take what lands and leave what doesn’t. This is why I personally feel like having a personal brand can be tricky, because if your personal brand, if your personality is the brand, it can feel like you need to constantly be expressing and showing up in a certain way in order to grow the business, which can create a sense of codependency between your business and your personal life, and that’s why I have found over the years that it’s actually really helpful to have a business. That’s a separate thing from me, the person that I am, and that my personality, who I am, how I live my life, does not need to directly correlate with what the business or service does. This is also why, for me, i’ve developed different businesses and services so that I can express my different aspects of who I am and what I love and what I enjoy in different ways.
I have a business piece for doing the trauma work, which I really enjoy, but that’s not going to be something that I’m going to take in scale to multi millions, because it’s not ethical for me to do that, because the work is so deep, personalized and intimate. That’s something that is really the work that I enjoy doing on a one-to-one base and that’s always what it’s going to be. When I have things like working with numbers and doing agency work, i have my agency and I have a limit on the type of clients and projects that we take on per quarter, per month and per year so that I can have that sense of fulfillment there. But that doesn’t need to be the things that I’m scaling to multi millions. And then I have the program that I run with my business partner, which also meets a need where we get to have this really great group experience that I also really enjoy doing and that gets to be the thing that is more scalable in the sense that it has a lot more capacity for a lot more clients without it having to require so much time and energy for us because of the way that we’ve structured and set it up and priced it to make sure that that’s available and accessible for folks at all different stages and levels. So you can have diversity inside of your company and you can have diversity inside of the offerings that you’re doing.
And I think the biggest part is not setting yourself up for a situation where you’re dependent on a certain business piece or a business model to have to be the thing that meets all of your needs. It has to be the way that you express yourself and that you do all of the things. But instead you figure out what is the purpose of the product or the service in relationship to the problem that it’s solving for the client or customer that it’s for? And then you get to decide, okay, how does that work to best create the best result possible for that? And you do that for each product and each service and you figure out okay, how much time do I actually have and what’s the actual goal here For me and my personal life?
I’m not here trying to just make a ton of money and get to multi millions as quickly as possible. That’s not really the goal. My goal with the way that I run my business is I want to have projects that I really love and enjoy doing And I like to sink my teeth into things. So hence is why I have the agency. I also really enjoy doing deep, intimate work with clients and working on trauma and doing a lot of trauma resolution work. It’s the thing that feeds a different part of me that I’m like oh yes, we’re getting into some really meaningful stuff. Those things are there for my own need of a having fun projects that I enjoy doing, and then also like getting to do a little bit of my passion work, and then the group program gets to be its own little thing that meets a different need. So I share all of this because it’s important to reconcile with How are we setting up our businesses to support our lives And how are we differentiating between the business and our lives so that who we are outside of our business doesn’t feel like this empty, vacant hole where all we know ourselves as is the business owner, right. So we went on a little bit of a loop here, but I feel like this conversation is really, really important And what I’m going to leave you with for this episode is sitting down and getting really clear on how you want to be spending your time, on what it is you really want to be doing when it comes to your business and the services that you deliver, and how each of those services is meaning what specific results or problem that’s solving for the client, but also how your needs are being met inside of that and also how your needs are being met outside of the business.
So here are the questions for contemplation that I’ll invite you to reflect on as you now are discerning your numbers. One how much time do you actually want to be spending in and on your business on a weekly, monthly basis, meaning how many hours you actually want to be working, not just the time that you’re spending on calls, but the time they’re spending marketing, creative direction, financial planning, all the stuff that has to do with business. How much time do you actually want to be working in and on the business? When you know that, then it’s getting clear on okay, what’s going to be the model, the structure that’s going to support you living within the allocated time that you want to be spending, while also earning the revenue that you want to be earning, so that you can figure out the equitable pricing for your offers and for your services.
And then the second thing is going to be what are the other areas in your personal life, completely separate from the business, that you get to meet your needs for creative expression, for connection, for intimacy, for whatever it is that feels really, really important for you that does not have to directly do with the business, so that you can fill up your cup and you can feel like a whole human being and feel alive, and feel connected and feel on purpose, without having this sense of dependency, of it needing to happen through the business.
And what that does for us is it removes the pressure of needing to get the business to a certain place to where we can scale this thing.
Because the reality is, if we base our business and we base our needs off of having the business get to a certain place, our needs are always changing, our expression is always changing And so the business is always going to have to be changing, which means that the business is going to get to a place to where it never really has consistency because the constant change that happens with human evolution.
So if we can meet our needs for evolution and for growth and for personal development outside of the business, we get to evolve, but the business gets to be this beautiful thing that has consistency, that gets to grow to a place that feels manageable and scalable for how we want to live our lives, instead of scaling for the purpose of scaling. So have fun journaling and contemplating on these questions and on this conversation, just feeling into what’s coming up for you and what you’re, what you’re sitting with after this, what kind of questions are coming up? what are you contemplating now that you’re either unpacking or getting clear on or wanting more clarity on? and we will continue to deep dive into these pieces in future episodes. I cannot wait to see you there and I will see you very, very soon. Alright, y’all Bye.