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After twelve years of bookkeeping for coaches, Mark reveals the three places coaches predictably leak money — and why the antidote is simpler and slower than most expect.
Short episodes about money management for coaches running simple service businesses. I'm Mark Butler. My goal with this show is to convince you of one thing: for most coaching practices, bookkeeping isn't strategic, it's hygiene. You don't need to become your own CFO. You need your numbers to be current and accurate so you're not scrambling at tax time, and you need to be able to answer one or two simple questions about your money. That's it. I've been running a bookkeeping firm for coaches for over a decade, and this is the conversation I have with my clients all the time.
Mark Butler: Hey, this is Mark Butler, and
you are listening to Money for Coaches.
Today, I want to talk about and answer
the question that I've been asked most
in the 12 plus years that I've been
a bookkeeper for coaches, and that
is, "Where do coaches leak money?"
The answers will not surprise you,
and there are not many of them.
I think I will just answer that
question with three ideas today.
The first one is that
coaches buy coaching.
Now, is that a money leak per se?
I don't think so.
It's not by default a money leak.
I like to buy coaching as a coach.
I like to buy experiences as a coach.
I'm not much of a course
purchaser anymore.
I'm really not one to join a
mastermind or do another certification.
But I've worked with my own
personal coach for several years.
I did certifications I did
certifications before that.
And so for me, spending money on
coaching by definition is not a
leak, but there's a certain way to
do it that does start to look like...
I'll say it this way, like it has
a higher possibility of regret.
As we talked about in the last episode,
you want to have clarity in your
practice finances, because when you're
deciding whether to spend on the next
thing, whether that's a retreat or
coaching or a course or a certification,
you want to know two things.
You want to know, can my practice support
that purchase with its own earnings?
And number two, what would be the
alternative use of that money in my life?
Now, my bookkeeping service doesn't
solve the second one, but it
absolutely solves the first one.
Is the practice generating
enough to cover the purchase?
If the answer is yes, then I don't think
it's a very hard decision, especially
if the answer to the second one is
that you're able to do those things
that you want and need in your personal
life without the money that you're
about to spend on the next coaching
program, certification, or retreat.
I have observed over the years that
there are times where coaches, in hopes
of generating additional revenue or in
hopes of generating their first revenue
because they haven't really made any
money yet, they can start to feel a
little bit desperate about it, and as
they feel some desperation, they are
more likely to sign up for courses, group
coaching, and masterminds that promise
them, that promise increased income.
I will tell you that after having
seen this at least dozens of times in
a one-on-one context and definitely
hundreds of times in my observations of
my bookkeeping clients over the years,
I cannot draw a strong correlation
between money spent on these kinds
of programs and increased earnings.
Sometimes the people who spend money
on those programs increase their
earnings, and sometimes they don't.
What I will say from, as an opinion,
and anecdotally what I will say is
often the people who end up increasing
their income through income-increasing
programs are those who it seems
to me were going to do it anyway.
So, where spending money on coaching
courses, trainings, and retreats can
become a money leak is if a person is
habitually, even maybe compulsively,
buying the next course or the next
training to try to solve a problem that
the previous X number of courses and
trainings has not, have not solved.
That's what I would call a money
leak, and I think we as coaches
want to be on the guard for that.
We don't wanna look back and say to
ourselves, "I wasted a bunch of money
on courses and trainings trying to
generate new income and feel like I
don't have anything to show for it."
That's where there's some patience
and some confidence and maybe some,
good advice or counsel from a fellow
coach could come in very handy.
So the first big money leak potentially
is that coaches buy coaching
Number two and three are kind of a
toss-up because they are travel and
hiring people to do stuff for you in
your practice, which is different from
hiring coaches and joining programs,
and I'll talk about that in a minute.
Let's talk about travel first.
Now, as I look through my clients'
transactions in the bookkeeping
practice, my clients are still traveling.
They're traveling a lot less than they
did back in what I would call the coaching
gold rush of 2017 to 2022, during which
time I and my peers and my friends seemed
to be flying somewhere else every month
or every other month to get together and
get in a big conference room and listen
to speakers and frankly have a great time.
And these days I call
that business vacation.
I don't know that there's a strong
strategic or financial benefit to doing
that unless you happen to be a coach
or a service provider who does support
other coaches, in which case getting on
a plane or getting in a car, paying for
a hotel may make perfect sense if it puts
you in the room with the people you are
best positioned to serve and who are most
likely to be excited to work with you.
Then it becomes a very real marketing
expense to go to these live events.
For the rest of us, When you're
deciding whether to get on an airplane
and go stay in a hotel, you just
want to know why you're doing it
and what you expect it to produce.
I think it's a money leak if you're
going to a bunch of these while telling
yourself the story that they are for
the purposes of growing your practice.
but then you just go have an amazing
business vacation with your peers and
your colleagues and have a great time, but
it doesn't have any meaningful impact on
your practice, that could be a money leak.
On the other hand, if you know why you're
doing it, and the reason you're doing
it is for, an enjoyable time away with
like-minded people and content that you
find enriching, then I wouldn't call it
a money leak, especially if the money
that you're spending fits into your life.
But that does tend to be the
second of the three big areas
where coaches spend lots of money.
It's on travel.
The last one is spending
money on other human beings.
A book I read years and years ago
called How to Get Rich by some British
magazine publisher back when you could
get rich as a magazine publisher.
The only line I really remember from
that book is that overhead walks on
two legs, meaning people are expensive.
And coaches are at particular risk of
spending money inefficiently getting
support from other human beings.
Now, what is in play there?
Most of the people that I've interacted
with in the coaching world over the years
have not come from entrepreneurship.
They have not come from a
business or a job where they were
responsible for profit and loss.
So when they go to spend money on
support, they don't have experience
with looking at how to spend that money
efficiently for return on investment.
What they hear is in their certifications,
their group coaching programs, or their
masterminds, they hear things like, "Well,
you've got to have a virtual assistant."
So they say, "Well, I've got
to have a virtual assistant."
And then they ask their peers,
"Who's your virtual assistant?"
And then they tell them, and then
they go and hire that person.
The average coach, as they get started,
and I definitely include myself in this
group as a newer coach, when I was a
newer coach We don't even know what to
do with ourselves, let, let alone what
we're going to hire someone else to do.
So we say things like, "I'll hire this
coach to manage my calendar and to manage
my inbox," but no one is emailing us,
and there's no appointments to set.
so then you get into these interesting
situations where the new coach feels
like they have to have a virtual
assistant, and then they're asking
the virtual assistant for advice, and
then the virtual assistant becomes a
quasi business coach, and you need to
do this, and shouldn't you do that?
And now the virtual assistant is
encouraging them to spend even
more money on software, maybe on
advertisements, maybe on courses and
training programs, and now there's
a compounding expense to the expense
of having the virtual assistant.
And this is, of all the places I've seen
coaches spend money over the years, I
would say that I've seen them overspend
on support from other human beings.
They do it largely because they don't
want to fall behind their peers and
because they want to look like their
peers, and they also do it because
entrepreneurship, not that I consider
opening a coaching practice really
entrepreneurship in its purest form, but
a self-employed initiative, a project like
a coaching practice can be very lonely.
By the way, that's why people sign
up for a lot of masterminds and fly
across the country to retreats and
things like that, because it's fun
and soothing and validating to sit
in a room with like-minded people.
It just happens to be costly in dollars.
So I have seen over the years where
people will hire a virtual assistant
or something like an online business
manager, and then they develop this kind
of enmeshed relationship with that person
because they don't want to be alone.
They can't tolerate the discomfort of
being on their own in their practice,
and then they're hiring that virtual
assistant to work 15 or 20 hours a week.
They may not even have one or two
hours worth of work to do, and now
they're spending a bunch of money
that's not really giving them anything,
all of it, if it's done without care,
can combine to be really destructive
to the coach's confidence and their
sense that the whole thing is working.
That's the great risk.
I'm not dogmatic about how people
use their money for the most part.
What I hope for you and for my clients,
for the people whose bookkeeping I
do, is that you'll spend your money
in a way that is as protective and
supportive of your fragile confidence
as a new practitioner as possible.
And if the money goes out too quickly in
too many directions in too short a period
of time, the biggest threat is that it
will pile up as evidence of your failure.
I won't view it that way.
That's not what I'm saying.
But I've had plenty of peers and clients
who say things like, I've spent all this
money and I have nothing to show for it.
Or they will say, every time I turn
around, someone is telling me that
I need to spend another $1,000 or
another $3,000 or another $5,000
on this or that or the other.
That's what I would call a money leak.
The solution, the antidote to all that
potential pain is just to slow down.
It's to think a little bit harder.
It's to be willing to fall behind
because the truth is you're never
falling behind, but it's being willing
to feel like you're falling behind.
It's being willing to figure a few more
things out for yourself on the technical
side of the practice or set aside some of
those technical questions because we tend
to spend money solving technical problems
when we don't even really have them.
It's slowing down and
saying, what is my practice?
my practice is delivering support,
conversation, and maybe insight to people.
And to do that, what do I need?
I need a computer, a phone,
maybe $30, $40, $50 a month in
sort of website expenses and
software to support this process.
But I can hang out there for quite a
long time experimenting and iterating and
fumbling forward, feeling uncomfortable,
but knowing that discomfort is helping
me develop skills, including the skill of
discerning between what's good value for
money and what is potentially wasteful.
And then as I develop that discernment
And as my efforts start to pay off
and a little bit of money starts to
come into the practice, then I'm able
to make a much more confident and
frankly much wiser decision about
do I hire that person to support me?
Do I fly across the
country for that retreat?
Do I sign up for the next certification?
So not all money spending is leaking money
in a coaching practice, of course, but
you also don't have to spend money to make
money in the way that we tend to justify
spending thousands of dollars on products,
services, and experiences and people that
may or may not really move us forward.
Slow down.
Always consider your
next best alternative.
Be willing to feel the discomfort of
falling behind, even though you aren't.
And just recognize that the time is going
to pass and you can develop the skills
and you can develop the relationships
and you can develop the practice.
And the truth is you can do all of
that without spending a ton of money.
I hope that helps and I
will talk to you soon.
Oh, and don't forget, if you'd
like to start keeping very careful
track of your incomings and your
outgoings in your practice finances,
I could be the guy to help.
Go to getplucky.io,
and we will take great care of you.
Talk soon