CREATING A BUDGET – HOW TO MAKE A BUDGET FOR YOUR COACHING BUSINESS

CREATING A BUDGET – HOW TO MAKE A BUDGET FOR YOUR COACHING BUSINESS

Hi there, coach. I have a question for you.

Do you know if your coaching business is making any money? Do you know if you’re profitable? If not, it’s time to make friends with your money and create a real business budget. In this video, I want to show you how to build a detailed business budget for your coaching business so you can forecast your income, your expenses, and you always know if your business is making money.

No matter how new you are in business, you should have a budget.

Right now is the best time for you to implement one. With a budget, you can see what investments will do to your bottom line. You will know your breakeven point and you can also forecast what will happen with your money and your income as you add more people, as you increase advertising, for example, as you launch new programs, and you can plan out your entire year to make sure you hit your income goals.

Now, budgeting and finances and dealing with money is scary for many people. I know that, and that’s why so many of you don’t have a budget and you’d rather not look at your money, right? You don’t look at your bank accounts. You don’t look at your credit card statements, but that’s a big mistake.

Make Friends With Your Money

It’s time to really love your money, love your budget, because that will make you feel confident in your abilities to run your business. You will know what you can invest in. You know what you can afford, and you will always have money left over in your account to move forward with your business. That’s very, very important.

Download the Budget Template Now 

Right now is a really good time for you to actually download my template. Start to plug in your own information and your numbers as I walk you through how to set up your business budget.

Let’s take a look at your budget template. What you’re looking at right now is a template filled in with sample data. What you need to do now is actually fill in your own data, of course. Now, let me walk you through all these line items so you know exactly what to do with your budget template.

Filling Out Your Budget, Step by Step

At the top, you’ll see your program income. Type in your program name. So, I have a hybrid program and an upsell program. You may have one program, two programs. If you have more programs, literally feel free to edit this budget and add additional rows where you can enter all of your programs’ names and your programs’ sales of course, as well.

The Columns at the Top Are Your Months

So, you have January, February, March, April, May, June, and so forth. What you want to do is literally start wherever you are right now. So, if right now is September, we’re going to start filling everything in September and you can hide the rest or you can even delete the rest. Then, over here, you can copy this budget and start over.

When It Comes to Your Line Items

Plug in how many clients you think you will get every single month or you can go back and say, “How many clients did I actually enroll every single month?” So, for program number one, I have 20, 20, 20, 14, 16, so I actually fill in how many clients I’m enrolling into my programs every single month and I have this plugged in here for every program I have in my coaching business.

Now, all of my program line items here and my clients add up to my total income. So, let’s take a look at this formula here, for example, in January. This formula is B3, which is my program number one, which is 20 times 4000, which is my assumed program price, plus B4, which will be my upsell program, times 8000, which is my upsell program price. Because there’s nothing here for my upsell program, my total comes out to be $80000, so 20 times 4000.

So, when you’re looking at these formulas, make sure you change a couple of things. Make sure you change your prices. So, you may want to change the 8000 and also the 4000 here. Make sure you change the 8000. Make sure you change the 4000 and make sure your actual program prices are in here so that your total income is accurate.

Take a Look at Your Expenses

Now that we have your income in the budget, let’s take a look at your expenses. The first couple of rows are your operating expenses, and this is usually for coaches, all of the online tools that we’re using. So, what you want to do here is literally go through your monthly credit card statement or your bank statement and take a look at all the tools that you’re using and you want to enter them here one by one. If anything is missing, which will probably be the case for you, again, make sure you enter additional rows in this file and enter them here and literally add all of your monthly expenses.

Credit card fees are a formula for me, so I assume you will pay 2.3% of your income in credit card fees. So, depending on which payment processor you’re using, that percent might be different. So, if you’re paying less, change this. If you’re paying more, change this, as well.

Then, I have line items here for ManyChat, for QuickBooks, for Liquid Web, which is web hosting, Wufoo, Dropbox, Podio, Ontraport, Click Funnels, literally all of the little tools that we might be using in our business. Again, all this data here is fictitious, okay? None of the pricing here is necessarily accurate. None of these tools are necessarily used in my business, okay? So, I put these in here to give you some examples and some starting points so that the budget would make sense for you.

You need to do is make sure you enter the accurate expenses you have in your business. Make sure only your operating expenses and your tools are in this budget so that this accurately reflects what’s happening in your business.

Further down below, I have a line item here for a sales team. You may not have a sales team right now, but if you do, you can use it. The formula for your sales team is based on your income and it’s based on a certain commission level. Again, these numbers are completely fictitious and you want to enter what really applies to you.

Understand the Formula

Just to make sure you understand the formula, this is your income, so B6, times your commission rate. In this example, we’re assuming that you pay 10% commission. Rows 31 to 34 in our budget are for advertising, and I have them broken out separately because that is usually a big expense in your business and an expense that drives your income. So, I have Facebook Ads, Facebook Ads management, that’s what you might be paying to someone who runs the ads for you, Google Ads, and then also Google Ads management. So, make sure you put the appropriate prices in here as well.

Team Members

This might be your coaches, your VA, your copywriter, your website designer, your brand designer, and everybody else that is supporting you in your business. Be sure you enter their names here or if you’re trying to forecast and plan, you can put their job titles in here because you’re planning to hire someone in the future, right, and you can also plug in how much you’re willing to pay them or how much you’re planning to pay them to forecast your budget and your profitability.

Row 47 is simply a team total, because I feel it’s nice to know how much you’re paying for just your team. Then, row 48 is a total operating expense line item, which is your team plus your ads plus all of your regular operating expenses.

Ad Hoc Expenses

Now, down below here in row 50 to 54, I have other ad hoc expenses. These are things that are not monthly, so things like sales page bills, retreats and events, photo shoots, maybe coaching, maybe travel. Here, you have some space where you can enter information and things that you purchase in your business that are maybe one time, right? They’re not recurring every single month and you can pop them in here whenever they occur.

Other Expenses

That brings us down to row 55, which is the total for any other expenses you have. Row 56 is your grand total. Those are all of your expenses in your business and it’s literally just a formula, and the formulas are already in this sheet done for you so you don’t have to change anything there.

Your Income Taxes 

Then, we drop down to 58, which is your income before taxes, so that takes your income at the top minus all of your expenses, brings it down through your net income, and then there’s a tax line item. I have assumed 35%, but again, based on your unique situation, that might be different, so make sure you change the .35 to whatever your tax rate might be.

Your Net Income After Taxes

After taxes, you have row 60, which is your net income after taxes. Then, I also give you a profit margin calculation at the bottom in the pink. That is your net income out of your total revenue that you’re generating, so that allows you to track what your profit margin looks like and how much money you actually have left over at the end of every month.

Your Totals 

One last thing, I want to show you is on the right hand side in column N, you have your totals. So, there’s a total income. There’s a total expenses, and of course, also a total profit margin. So, this is where you can take a look at your annual profitability, your annual income, your annual expenses and make sure all of this makes sense for you.

If you have any questions on the budget or how to use it, feel free to leave me a comment below. I would love to help you out. Don’t be afraid to play with the formulas, play with the numbers, and of course, I hope this serves you and really puts you into that power position when it comes to managing your money.

Bonus Tips

I’d like to give you some bonus tips and things you should be doing with your budget frequently to make sure that you’re getting the most out of it.

Tip Number #ONE –  Tip number one is to figure out your breakeven point. Knowing your breakeven point is really important if you want to hit your income goals and your profit goals, right? It’s not all about income. It’s really about what’s left at the end of the month in your account, right, what your profitability looks like.

So, when you have your budget all set, you can then play with those numbers and you can increase your income, you can play with your expenses, you can add more advertising, reduce advertising, you can add more team members, you can let team members go. You can really play with those numbers and see where you land and see what your breakeven point is so that you always know how much money you need to generate in your business in order for you to break even at least and also make the profits you want to make.

Tip Number #TWO-  Figure out your cost per customer. One really important thing for you to know is how much a client actually costs you. Now, you might be wondering, “Well, how am I going to figure that out?” Well, it’s actually quite easy with your budget. When you know your overhead expenses such as your online tools, you know your advertising and marketing expenses, you know your team expenses, you know your financing expenses, you know how much you pay for certain things, you can factor them into a total and then you can at the top figure out how many clients you’re actually bringing in with a certain level of expense. That’s what does it take for you to bring in a certain number of clients, and then you can do some simple math to calculate your cost per client.

So, for us, for example, a client has advertising expense, right? There is commission for my sales team. There is team hours, so my coaches spend their time coaching my clients and answering emails and being on coaching calls and Q and A calls and whatnot. I am making a list of all the things I need to pay for and dedicate to a customer to make sure I know what my cost per customer really comes down to.

The cost per customer then also of course helps you figure out if you’re charging enough, right?

Next time you wonder about how much you should be charging for a coaching program, look at your expenses as well and see whether what you’re charging right now makes any sense and what your profit margins really are.

Tip Number #THREE-  Forecast annual sales. One thing many new coaches do frequently is be very shortsighted, and that’s okay, right? It’s not your fault. You’re looking at the now. You’re looking at this month and this week and how much money am I making right now, but something that you also need to keep in mind is your annual goals because you will have fluctuations in your business. You have seasons. You have ebb and flow happening, right? One good month could be followed by a bad month or a not so good month and you can make that up next month, as well.

Especially with the evergreen business model that we have and that we teach you, you will be enrolling clients every single month, so don’t get so hung up on just one month or one week or even one day. Look at the big picture and take a look at how much you want to be earning in one year. What’s your annual income goal, right? Then, use your budget to plan it out, to forecast it and model it and use those numbers to really guide your investments, to guide your marketing, to guide where you focus your own time to maximize your chances of hitting your annual income goals.

Tip Number #FOUR-  Be really aware of high expenses. Sometimes there is so much happening in our business, and we have so many tools and so many things we’re doing and so many investments that we don’t even know how much we’re really paying, right? If we’re really honest, sometimes that happens, and that’s okay, but when you have a budget and you have all of these numbers in front of you, you can take a look and say, “Well, what stands out? Am I paying too much for something? Are any of these numbers really high compared to something else? Am I overpaying somewhere? Where can I save money?”

Every quarter, at least once a quarter, I sit down with my budget and my accountant and we go through everything line by line by line and we say, “Are we paying too much? Where can we save money? Where we can be more efficient? Where can we negotiate more? Can we go with a different vendor for credit card processing, for example, and save some credit card processing fees,” right?

With your budget, you will have ideas and insight. You’ll have a vision into your money situation that will empower you to make those important decisions, save money, and boost your profit line, your profit margin one by one every single month.

Once a quarter, sit down and take a look at your line items, your expenses. Take a look at where your money actually goes and ask yourself whether you’re making smart decisions with your money.

I hope this exercise makes you feel empowered, makes you feel like you’re making smarter decisions in your business, and it gives you the tools and the insight you need to grow and scale your business very successfully.

Stay focused on your goals and stay focused on you finances because now you know how important that is, and move forward towards growing a successful coaching business.

Do you want to build a successful online coaching business, but you’re not sure how to get started and you’re scared of wasting time and money on the wrong steps? Let me be your coach and show you the right steps to quickly launch your business, attract the perfect clients, and multiply your income. To learn more, go to coachingbusinesstraining.com.

Now, I would love to hear from you. In the comments below, let’s have a money conversation. Let me know how you’re feeling about your money situation and download my budget and fill it out. When you fill it out, think about how it makes you feel, how empowered you feel, how clear you feel, and how on top of your finances you feel.

 

 

 

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