When you extend your local coaching business service to a global online coaching service and you think about adding other services like online training, a membership site, or you plan to do live events like mastermind events then you want to have a business plan. Or maybe you even want to extend your coaching business by having other coaches working for you.
A business plan shows you exactly where your money will come from and with it you then can easily test what happens if you do more of this service here and what effects it might have on your other service there. You can tweak until you have the perfect mix and what’s even better, if something doesn’t go like you want, you can find ways to work around.
In this article, I will give you a simple business plan template that you can use to quickly and easily set up your own plan.
The easiest and best way to make kind of a startup business plan is to create an executive summary, 1 to 2 pages max that expresses your financial model. The biggest benefit that you will gain from it is clarity. It is not that easy to write out what you have in mind so that other people also can easily understand it.
Business plan outline:
- The Team
Is it only you or will you have a team working for you? Who will be on your team? Will there be any advisors/mentors? People who have done this before. Technology experts? Marketing experts? Salespeople? Think about who you want to have on your dream team.
- Unmet Need
This is a biggy! What is the unmet need in your market that you are going to solve with your business? What are people looking for that they don’t get yet? Or at least not in the way they want it to have? Or in a cheaper way? More luxury way? What is it that differentiates you from your competitors? This is called your Unique Selling Proposition.
- Market Size
What market niche do you go after and how big is it? If you want to sell coaching services to research scientist that search for butterflies in Antarctica, you might not make a ton of money with your services. Just kidding ;-), but you get the point, right?
- Competitive Landscape
Have a close look at your competitors. Why don’t they meet the market needs? What deficiencies do they have? Do they focus on a different segment than you do?
The answers to these questions give you a hint of what to focus on in your business.
- Your Solution
Now we finally come to your solution. What is so unique and interesting about what you do? What are you trying to bring to the market? Why is it better or in which way is it different from your competitor’s solutions?
What is your positioning vs. the positioning of your competitors? This somehow overlaps with the competitive landscape and your solution. Positioning focusses more on the level/category you are competing on. Do you compete on price? Status? Best service? What is it?
- Business Model
This is the core of your business plan and it describes your financial model.
How will you make money?
Who will pay you?
What is your cost for customer acquisition?
We will go much deeper into this later on in this article.
- Go to market strategy
In this section you answer the following questions:
How will you promote your product/services?
How will you get your first 10 customers?
What partnerships will be essential to get the visibility by your marketplace?
What’s the pricing?
What’s the packaging?
Geography to start with?
- Financial Projections
This section is the direct result of your financial model (your income statement)
How long will it take to reach profitability?
What revenue do you expect? In 1 year? 3 years? 5 years?
How profitable can this business be?
What are some of the major milestones coming up in the next 18 months?
If you’ve paid close attention, you may have recognized that sections 1 to 5 are about your brilliant ideas, while sections 6 to 10 explain how you are going to make money with it. Spend 60% to 70% of the time of creating the business plan here. I know you love your idea, but when the numbers show that it won’t make you money, then it’s just a hobby and not a business and you may need to work on something else.
What your bulletproof business plan tells you is:
• Does this business make sense?
• Is it feasible?
So, let’s move on to the most important part of your business plan now, the financial model.
The financial model for your business encapsulates all the assumptions that you make towards
• to whom you gonna sell your services
• how much you will sell – meaning how often do you talk to your coaching clients
• how the business will grow – do you have additional services like high-ticket mentoring
• what will be your expenses/costs
The Financial Model Framework
This model shows you exactly
• how your business works
• what the different levers are
• when you change something over here, what will happen there
Here’s the 30,000-foot view
The visualization of your Financial Model is the so-called Income Statement.
The Income Statement includes 5 numbers for the next 5 years. These numbers are:
• COGS (cost of goods sold)
• Gross Profit
• Operating Expenses
o R & D (development & research costs)
o S & M (sales & marketing costs)
o G & A (general & administration costs)
• Net Profit (or EBITDA – earnings before interests, taxes, depreciation, and amortization)
Let’s go over these numbers briefly.
Revenue is quite self-explaining. That’s what you get paid by your clients.
COGS means costs of goods sold – and yes, of course, this can be the cost of services sold too! In your daily coaching, this could be the cost for a web conferencing tool like a zoom that you use to do your online group coaching. Or if you run a live mastermind event, the costs for the venue would be included here too.
3. Gross Profit
Gross Profit is a number that you calculate. And it’s very easy, it is just your revenue subtracted by your COGS.
Revenue – COGS = Gross Profit
4. Operating Costs
The operating costs are summing up the costs for Research & Development, Sales & Marketing, and General & Administration.
Well, you might not have a lot of Research & Development costs in your business ;-), but you will definitely have costs in the other 2 categories.
costs for R & D
+ costs for S & M
+ costs for G & A
= Operating Expenses
5. Net Profit (EBITDA)
You can calculate the Net Profit by subtracting your operating expenses from your Gross Profit:
– Operating Expenses
= Net Profit
Project this numbers over the next 5 years! This will construct a financial model and will give you a pro-forma income statement.
Be realistic, the business model is there to help you gain clarity and to show you options when something goes wrong – and there’s always something going wrong, right? So, be realistic, it will help you along your way!