Xendoo List: 6 Steps to Building a Million Dollar Coaching Practice

You have the smarts, experience, and credibility. You know how to coach individuals to perform at their peak and help corporations reach their profit potential. Now is the time to develop your thriving coaching business, right? Right. But remember, starting is the easy part. The real challenges come when building your one-man practice into a million-dollar business.

Are you getting repeat work from current clients? Do you have a steady stream of referrals rolling in? What kind of reviews are you getting? Are you certain you have all the skills needed to be a successful coach? If not, consider setting your trajectory towards prosperous growth with these six coaching practice tips.

Step 1: Create Your Foundation

You can’t get the answers you need until you ask the right questions. When developing your life coaching or business coaching practice, it’s important to first figure out who your ideal clients are. What problems do they have? How can your particular approach to coaching and training solve their problems?

Once you determine whom you’re talking to, it’s time to create your pitch. Specifically, what are you going to say to convince prospects you’re the coach who can best help them to resolve their issues? Remember: No one really wants a coach; they want solutions. Your unique selling proposition should reveal the prospect’s path to success by identifying their problem, speaking their language, and presenting the value only you can offer.

Step 2: Reach for the Low-Hanging Fruit

When you’re a growing business, it’s important to be choosy when spending money to attract clients. Overspend too fast and you’ll be out of business before you know it. The good news is, you can wrangle your first clients for little money or even for free. Start with referrals from your current clients. If they’re happy with your work, they’ll share the experience with others. And, there’s no shame in asking them to put you in touch with people or companies who would benefit from your services. In fact, you’d be doing their colleagues a favor.

Once you’ve done that, you can put yourself out as an expert through informative and educational content. You can also create strong alliances with like-minded organizations to increase the flow of clients in your direction. For instance, if you specialize in coaching accountants, team up with accounting associations. Position yourself as an asset to their members and they will spread the word for you.

Naturally, you can still do online marketing and develop additional ways to reach the decision-makers who are in a position to hire you. But, look for the cash-free options first.

Step 3: Sealing the Deal

So now, you have prospects coming your way. How do you close the deal? What if they don’t have enough money or want to pay your preferred rate? Remember, coaching is not a one-size-fits-all service. Direct, detailed, and deep conversations are a terrific way to engage with prospective clients. This allows you both to determine how well you’ll work together. This approach allows you to explain away any objections they may have, while at the same time build your value in their minds. It’s a great way to prove you are on their side.

Remember to be flexible. If they want more training than coaching, offer those services. If they want more coaching, let them know what’s available, too. Once they start to customize what you offer to their needs, it will be harder for them to turn down working with you.

Step 4: Making Clients Stick

Long-term relationships are the most profitable. And, your current clients will consistently be your best source of recurring revenue. As long as you continue to deliver superior value and help your clients achieve solid results, keeping them happy (and paying) for years to come should be no problem.

Step 5: Scale Up

Once your business is up and running, be careful to avoid any trap that limits how much money you can earn. If you’re trading your time for dollars, it’s going to cap your revenue. That’s because there’s only so much time in the day, which means you will only be able to so much money.

How do you get around this? Start to build your private practice into a multifunctional company. After all, you’re a trainer; you know how to build systems and methodologies. Develop a proprietary intellectual property that others can use to sell on your behalf. Teach your system to other coaches and team up to take on bigger clients and projects. This not only expands your reach, but it also enhances your reputation as an expert. And, that higher profile allows you to start charging more money for your time.

Step 6: Your Million-Dollar Business Strategy

Now that you’ve set your foundation, established your methods, fine-tuned your marketing, and considered your own growth and expansion, all the components are in place to execute your million-dollar business plan. The key now is to maintain these smart practices consistently. This starts with making a commitment to provide your clients with top quality service and insight every time you make contact.

And never neglect to continue coaching yourself. There’s always more to learn…and more to earn.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Best Business Structure for Consultants

As a professional consultant, you spend plenty of time determining how other businesses work. But, how much time have you put into determining the shape of your own business? Choosing the best legal entity for your enterprise will help minimize your risks and maximize your profits. That way, you can concentrate on consulting.

What’s best for your business? That depends. The type of legal entity you choose can affect how hefty your pile of paperwork and administrative duties are, the amount you pay in taxes, and how exposed you are to personal liability in the event of a lawsuit. You don’t want damages that coming out of your own pocket, either in the form of cash or seized assets.

The Most Common Legal Business Structures for Consultants

There are four primary types of business structure you’ll want to consider for your consulting business. Here is a breakdown of what makes each unique:

Sole Proprietorship

If you’re the only person involved in your consulting business and if your business is not incorporated, you’re probably already a sole proprietorship. This is usually the case if you’re freelancing or acting as an independent contractor.
What’s great about a sole proprietorship is that, typically, very little paperwork is required. You don’t have to register as a sole proprietor with your state. You may, however, need to file a DBA certificate if you’re operating your business under a name different than your own. DBA stands for “Doing Business As”.

Depending on where you operate, your state may require DBAs to obtain certain licenses and permits.

In the eyes of the law, sole proprietorships are considered to be “pass-through” entities. This means that both your business and personal assets and liabilities are considered one in the same. As a result, you don’t have to file a separate tax return for your business; the profits and losses of that business simply pass through directly into your tax return. When tax time comes around, you just report the business income and expenses on your individual Form 1040, Schedule C. Easy enough. But, keep in mind you will be responsible for withholding necessary income taxes like self-employment taxes, which pay for Medicare and Social Security.

The biggest knock on operating as a sole proprietorship is that it exposes your personal assets to risk. For instance, if a client blames your consulting for financial losses and sues for negligence, your personal assets, including your bank account and house, could be up for grabs if they win. That’s a risk you need to make certain you’re prepared to take.

Limited Liability Company

It may surprise you to learn that Limited Liability Companies (LLCs) are not incorporated businesses. Instead, they’re unincorporated structures that involve one or more owners.

Like a sole proprietorship, all of the LLC’s profit and losses pass through to the owners’ individual tax returns. Personal income and self-employment tax also need to be withheld by each owner. There is also more paperwork involved. The Secretary of State requires you to file the Articles of Organization (there is a fee). And, it’s considered good form to draft an operating agreement for your LLC. This agreement lays out what is expected of each LLC owner.

So, why form an LLC? Unlike sole proprietorships, LLCs offer better asset protection, including shielding owners from personal liability. This can happen if your business gets sued for negligence, caught up in illegal activity, or in the event, one of your co-owners is found responsible for personal wrongdoing.
The only way your personal assets are at risk is if the operation of the LLC “pierces the corporate veil” and it is determined that there is little difference between the owner’s assets and those of the business. In that event, personal assets can be taken. To avoid this, it is important you distinguish yourself from your business, starting with keeping separate bank accounts.

A good rule of thumb is to form an LLC only if there is more than one owner. That’s because a single-owner LLC is generally treated as a “disregarded entity”, where business and personal assets and liabilities are not considered to be separate from each other.

S Corporation

An S Corporation is an incorporated business structure where stock shares are appointed to owners, thus making them shareholders. You can have up to one hundred shareholders in your S corporation. This can be a good structure for consulting businesses, specifically because it can shield your personal assets, as long as you keep business and personal assets separate.

To create an S Corporation, the Secretary of State requires new businesses to file articles of incorporation and pay the filing fee. A board of directions must also be appointed.

As with a sole proprietorship, the profits and losses of the S corporation flow through to the shareholder’s personal tax returns, where it will be taxed at the individual rate instead of the corporate rate. S Corporations can also pay dividends to shareholders. The benefit here is that those dividends are not subject to self-employment tax, resulting in substantial savings for the corporation. However, if a shareholder provides a service to the S Corporation, the corporation must pay the shareholder a salary, which is taxable.

Another benefit S Corporations have is that they avoid the double taxation of C Corporations.

C Corporation

If your top concern is making absolutely sure you cannot be held personally liable for your business’s actions, then a C Corporation may be for you. These are usually large incorporated businesses with many employees and shareholders. And like S Corporations, C Corporations are required to distribute shares of stock in order to appoint their owners, making them shareholders.

As with an S Corporation, the Secretary of State requires you to file articles of incorporation, while also electing a board of directors who will assign business activities to the officers.

Your C Corporation will be required to pay appropriate taxes on all profits. In addition to that, all employees of the C Corporation will also be required to pay taxes on their earned income. Because taxes are happening at two levels here, it creates what is known as double taxation.

However, your C Corporation will not have to pay corporate taxes if it ends up showing a loss for the year. This can happen for unlimited years due to the fact that C Corporations are generally presumed to be for-profit enterprises. Showing a loss can create savings benefits at tax time. But, this is something you should speak with an accountant or tax adviser about for guidance specific to your situation.

Even if you are the only shareholder in your C Corporation, meaning you own a 100% stake, you are exempt from personal liability for business debts and a lawsuit, provided you do not pierce the corporate veil.

Which Structure is Right For You?

When choosing the structure for your consulting business, the first thing to determine is whether or not you want or need to incorporate it. It’s not required. But, it may offer advantages. And, those advantages may outweigh any paperwork or maintenance required by incorporating. Next, consider what each type of entity offers. Are they easy to form? What are the tax ramifications? How much risk are you taking on in the event of a legal dispute?

LLCs tend to be preferred by consultants. That’s because they offer the flexibility of a small operation while also protecting your assets. However, forming and maintaining an LLC requires paperwork and fees. If you would prefer not to deal with that, then a sole proprietorship may before you.

S Corporations are typically more suited for large consulting businesses with several shareholders and employees. It provides the asset protection of an LLC but places more responsibilities on the shareholders.

Unless your consulting business is on the verge of becoming a large firm, chances are a C Corporation is not right for you. They can be unnecessarily large and complex, and don’t offer many advantages beyond what you can get with an LLC or S Corporation.

Ultimately, you are the only one who can decide which business structure is best for you. Whether you’re a business consultant, IT consultant, accountant, or offer general strategy, taking the time to determine your structure now will pay off later.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Accounting Software for IT Consultants

You know the saying, “If you can’t love yourself, how are you going to love anybody else?” The same goes for your consulting practice. If you’re not taking care of your business, how are you going to help clients take care of theirs?

No matter what kind of consultant you are, one of the most important ways to ensure your business is stable is to manage your accounting. True, this may be the least fun part of the job. But, that’s why they invented accounting software. It makes managing your books and tracking your finances so much easier. How do you choose the best accounting software to use? You let us help…

Consultant Specific Accounting Needs

When it comes to managing your books, IT Consultants have different needs from small business consultants who have different needs than big business consultants. Naturally, their accounting software should be able to your particular consulting considerations. The three big ones are:

Time Tracking:

As a consultant, your business is predicated on exchanging time for dollars. Time is money. That’s why your accounting software needs to be able to accurately track the time you dedicate to each client. That way, you can bill them properly. It’s also important to track time so you can analyze where most of your effort and energy being spent, especially if you’re using value or package pricing. With this information, you can reconsider how you spend your time if you’re not getting back the financial return you want.

Billable Expenses:

One advantage of having a consulting business is that many business expenses can be passed on to your clients. But to do that, you need accounting software that can track billable expenses and apply them to the proper client invoices. It’s even better when your software can automatically add markup charges to those expenses. Want to get deluxe? Some accounting software lets you attach images of receipts to expenses, for those clients who require such proof.

Mileage Tracking:

Being a consultant means you’re often on the go. That can put miles on your personal vehicle for business purposes. You’ll want accounting software that makes it easy to track those miles. That way you can bill your client for them. And in some instances, you can use them for a tax deduction on your annual return.

Keeping Balanced with a Balance Sheet

Most consultants sell services, not products. Most consultants have little business debt. And few consultants prioritize building equity in the early days of their business. This reduces the need for a balance sheet that tracks product inventory or fixed assets. But, it doesn’t eliminate it.

Here’s why: If you don’t have a balance sheet, you’ll be left with an “open” accounting system. That can make your bookkeeping a little less accurate because you won’t have a separate reconciliation feature, which ensures that all your expenses and income are properly recorded.

Does this mean you should only use accounting software that provides a balance sheet? Not necessarily. In fact, there is a system recommended below that doesn’t do this. However, if your accounting software isn’t reconciling your accounts, make sure you have another way to do it regularly.

The Top Consultant-Friendly Accounting Software

 

When it comes to accounting software, you have plenty of options. And many of those options are quite good. The best ones are easy to use, incredibly functional, and affordable. Here are our three favorites…

Our Top Pick: Xero

Xero is an accounting software designed by the small business accounting experts at Xero. So naturally, it’s tailor-made for consultant-sized businesses.

• It’s easy to use. Simplicity is the key with Xero. It makes bookkeeping a breeze. And that will only encourage you to keep on top of your accounting, no matter how busy business gets.

• Xero is backed by accountants and bookkeepers. The experts at Xendoo have helped hundreds of small business owners. If you need help using the software, these folks are your lifelines. They can have you sailing smoothly in no time.

• A simple, convenient mobile app. Consultants spend much of their day on the go. Xero’s handy app lets you keep tabs, and even categorize your expenses, client invoices, and other bookkeeping tasks wherever business takes you.

• Consultant friendly features. Xero serves up the features consultants most often rely on, including billable expense tracking along with markup options, easy integrated time-tracking solutions, and precise mileage tracking. You can also use Xero’s mobile app to take pictures of receipts and connect them to your expenses listings.

 

Two things really push Xero to the top of the pack—customization, and interface. Xero lets you customize the dashboard to prioritize your most important functions. Visually, it’s very appealing to the eyes and uses simple language for easier understanding. That makes it less intimidating. After all, you’re not an accountant. Why should you speak like one?

Runner Up: Quickbooks Online

Quickbooks Online has many of the same features as Xero, including an easy interface, a mobile app, and important features like billable expense tracking, plus time and mileage tracking. They also have a support network of accountants and bookkeepers to help you set up and manage the software.

Where Quickbooks falls short compared to Xero is its lack of customization. And visually, it’s just not as appealing to use. Powerful, but less attractive. Ultimately, it depends on your personal (and aesthetic) preference. Between Quickbooks Online and Xero, you can’t really go wrong. But, we still suggest Xero.

Honorable Mention: FreshBooks

Xero and Quickbooks Online are both accounting software powerhouses. But, if you’re looking for something a little simpler to help you manage the basics of your business accounting, consider FreshBooks.

Originally started as an invoicing and time-tracking software for self-employed people, Freshbooks has evolved into a full accounting system. However, it does not provide a balance sheet function. Therefore, it’s only for businesses willing to have an open accounting system.

There is still plenty you can do with Freshbooks, including tracking expenses and denoting which are billable, plus invoicing and payment collection. And, if you have their MileIQ integration, you can track and import mileage expenses. A big plus is a fact that FreshBooks can connect to your bank and credit card accounts, so you won’t have to spend time entering data. This is helpful since you won’t have an in-program balance sheet for reconciliation.

As with Xero and Quickbooks Online, Freshbooks is backed by a large group of bookkeepers and accountants that are certified on the program. If you’re looking for simple and reliable, Freshbooks is a great business accounting option.

Honorable Mention: Zoho Books

Quickbooks Online, Xero, and Freshbooks all rely, to some degree, on third-party apps to round out their functionality. However, Zoho Books keeps everything within its software ecosystem. This is great for simplicity’s sake. And, it’s ideal if you prefer Zoho products. You can integrate Zoho’s accounting transaction modules with their other products including Mail, OfficeSuite, and CRM.

However, Zoho only receives honorable mention for three reasons:

• Reimbursed expenses: Instead of listing reimbursed expenses as income, Zoho Books reduces the expense. There’s no change to your bottom line. But, it can be helpful to have those reimbursed expenses broken out as separate items listed on your profit and loss statement.

• Cost: It’s not that it’s expensive. But, if you start adding too many of Zoho’s transaction modules, the costs can pile up higher than what you would pay for a subscription to Quickbooks Online, Xero, or Freshbooks.

• Accounting support: It’s not easy to find accountants or bookkeepers that are fluent and support Zoho Books. That means you’re on your own to figure it out. Not a big deal if you have some understanding of accounting and bookkeeping. But if you don’t, you’re going to lose valuable time getting started; the time you could be using to make more money.

Selecting the Best Accounting Software for Your Business

Guess what happens when you hire out an accountant or bookkeeper—they’ll need you to have accounting software to keep track of expenses and client billing. So, knowing you’re going to need accounting software—and that you’ll sometimes have to use it yourself–it’s important to select the one you’re most comfortable with. If that’s a full-sized system, look into Xero (our favorite) or Quickbooks Online. If you want something simpler, investigate Freshbooks or Zoho Books.

Good news

Each of these accounting software makers provides a free trial period. That way, you can test-drive each to see which you like best and which is most suited to your consulting business needs. When you do, just test the features you anticipate using the most rather than setting up your books exactly how you want them.

No matter which system you choose, they’re all going to help you stay on top of your bookkeeping and billing. That way, your consulting business can stay strong and always be in a position to increase profitability. Even better, with your business in tip-top shape, you’ll now be able to help your clients without worry.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Fort Lauderdale-Based Xendoo Raises $3.5M

Holiday Gift Books for the New or the Aspiring Small Business Owner

Do you know someone who’s just started their small business, or is dreaming of doing so? This gift-giving season, help them achieve success with these 10 great reads. Written by world-renowned experts, they offer wisdom, actionable tips, and motivation for the entrepreneur’s journey.

Start, Run & Grow A Successful Small Business 6th Edition

by Toolkit Media Group

A comprehensive resource for information on every aspect of your operations, from financing to marketing to human resources. Hundreds of case studies, checklists, and business plan templates are included to keep you on the right path.

Start Your Own Business 7th Edition

by Rieva Lesonsky and the staff of Entrepreneur Magazine 

What better guide could you ask for than this group of experts? More than 30 years of collective advice covers launch fear, idea testing, funding, business structure, social media marketing, and much more.

The Business Planning Guide

by David H. Bangs Jr. 

Written by a former banker and entrepreneur and considered a classic in its field, this book offers a practical, real-world approach. Bangs help you analyze your strengths, weaknesses, opportunities, and market conditions before launching a business venture.

The $100 Startup

 by Chris Guillebeau 

Leverage your talent, passion, or hobby into a business, and enjoy a life of adventure, meaning, and purpose while making a good living. Guillebeau shares case studies of entrepreneurs who built very modest budgets into businesses earning $50,000+.

The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It

 by Michael Gerber

Small business owners can be held back from success by their expectations, assumptions, and even technical expertise. Michael Gerber provides an experienced guide through every stage of a business, from start-up to growing pains to maturity.

The Startup Owner’s Manual

 by Steve Blank and Bob Dorf

Aimed at those who want to start a Silicon Valley-style scalable business, Blank and Dorf detail a well-proven, step-by-step process with 100+ charts and checklists. Their formula is taught at Stanford, Berkeley, Columbia, and many other universities worldwide.

Million Dollar Consulting

 by Alan Weiss

If you’re looking to sell your expertise at the C-suite level, Million Dollar Consulting is your go-to reference. Essential strategies for attracting clients, writing proposals, pricing, delegating labor, managing your time, and more are explained.

Flying Without a Net

 by Thomas J. DeLong

It takes more than business knowledge to be a successful start-up; you also need the right attitudes and work practices. DeLong explores the personality traits, courage, and anxieties common to entrepreneurs, and teaches how to develop your strengths.

Founders at Work

 by Jessica Livingston

If they can do it, so can you! Read the inspiring stories of famed entrepreneurs’ early days from the ’80s to the present. Steve Wozniak (Apple), Max Levchin (Paypal), and others share their challenges, successes, failures, and lessons learned.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Accounting Tips for Coaching Businesses

Whether you’re a life coach, math tutor, or engineering consultant, sharing your expertise as a sole proprietor gives you the independent lifestyle you want. Here’s how to ensure that it gives you the financial rewards as well.

The secret lies in good bookkeeping practices. Knowing how much of your income is profit, adjusting the budget to maintain cash flow, sending invoices and paying bills on time, minimizing taxes, and more.

Automate bookkeeping tasks.

Good software, such as Xero (the pro-quality system we use at Xendoo), can relieve you of many hours of labor and the costs of human error. This cloud-based platform automatically imports bank transactions to your books, generates profit & loss reports, enables digital access from any internet-connected device, sends invoices and reminders, tracks payments, and much more.

Collect the right data.

Which activities and which clients are bringing you the greatest return on investment? How do you calculate how much to spend on acquiring customers? To answer these and similar questions, you should be tracking these metrics:

• Monthly recurring revenue (for businesses with regular ongoing clients)

• Profitability of your products and services

• Customer lifetime value

Get paid on time.

As we mentioned above, your accounting software should be able to generate invoices, track when they get paid, and automatically record that info in your books. It will also:

• Make it easier for your client to pay through online options

• Send overdue reminders according to your pre-determined schedule

• Help your business look more professional

Consider requiring advance payment.

Avoid getting burned by deadbeat clients with a contract that stipulates partial or complete payment in advance of the service. The contract should detail every aspect of the service to be provided so that you don’t end up giving away extra hours of work due to mind-changing or hand-holding.

Improve cash flow #1: reduce expenses.

A coaching business doesn’t have as many expenses as a retailer or manufacturer. But you still have some, and they should be accounted for. Otherwise, you’ll never know why your bank balance keeps coming up short. Track how much you spend on:

• Office expenses (rent, utilities, supplies)

• Coaching related materials that you provide to clients

• Travel (plane tickets, restaurant meals, gasoline)

• Insurance

• Debt servicing (interest, bank fees)

• Equipment depreciation

• Subscriptions (software, magazines)

• Education

Improve cash flow #2: increase income.

In other words, get more clients and/or increase the value of the ones you already have. To bring in new business, your marketing plan should include:

• Lead generation from targeted prospect pools and client referral programs

• Sales funnel touchpoints

• Social media presence

• Monitoring results so you can ditch the underperforming strategies

To get more business from current clients, be sure you’re maintaining your service standards, giving them more than they expected, and finding bigger problems to solve so that you can charge higher fees.

Generate meaningful reports.

Your accounting software can be a big help in understanding where your business stands in reality as opposed to what the budget says it should be. You’ll need these reports:

• Monthly profit & loss statement

• Monthly balance sheet

• Monthly cash flow statement and forecast

• Chart of Accounts customized for your business

• KPI (key performance indicator) tracking

Plan for large purchases.

The day will come when you want to overhaul your website, create an online course, or cover lost income due to illness. If you don’t have at least some of the funds on hand, you could be risking your whole business. Keep your long-term savings in a separate bank account, so there’s less temptation to draw on them for everyday expenses.

Decide how to get extra help.

You may have started as a one-person operation, but as your business grows the workload will quickly become overwhelming. You may choose to add employees to support your core business, such as assistants or sales reps. Or you could outsource areas of the business that are not your expertise, such as bookkeeping.

Xendoo specializes in small business accounting, from real-time bookkeeping to timely financial reports to tax prep. By taking all that work off your plate, we let you get back to the coaching activities you do best. Check us out with a one-month free trial

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.