HOW TO BECOME A COACH: 4 Steps for Building Your Business without Taking on Unnecessary Risk

October 12, 2021 | Written By N’kia

Coach, Business, mindset, goal, obstacle, intent/intentionality, execution, action, results, achievement, success, mentor, advisor, consultant, relationship

Entrepreneurs, there’s no better time to become a coach than the present!

Many entrepreneurs are drawn to the idea of being a coach. This is in part because coaching is more popular than ever before. The pandemic has led individuals, particularly those seeking to pivot, to engage in some level of introspection about what they really want out of life. So, it’s no surprise that individuals of all backgrounds and organizations in all industries are investing their hard-earned money in life (personal and professional development) coaching services. To an entrepreneur, that just screams “O.P.P.O.R.T.U.N.I.T.Y.”

Coaching can be an ideal career for those with an entrepreneurial spirit. A coaching business is flexible and portable, and its services are only limited by the coach’s vision and capacity. Sounds like an entrepreneur’s greatest wish come true!

Moreover, for some people, becoming a coach just “feels right.” Many new coaches will tell you they feel they’ve been coaching (although not always for pay) or interested in coaching for quite some time. Entrepreneurs who become coaches often say now that they’ve achieved a certain level of success, they feel helping others achieve their own goals is the logical next step. Entrepreneurship is about identifying a need and then fulfilling that need, and everyone’s goal is “success” (however they define it).

If you’re even considering becoming a coach, you likely have an entrepreneurial spirit; but that’s not the only thing needed to coach your way to success. Where there’s leverage, there’s risk. Below are a few tips for how to become a coach without taking on unwanted, unnecessary risk of liability.

But first, remember this acronym.

C.         … is for credentials.

O.         … is for opinions.

A.         … is for answers.

C.         … is for contracts.

H.         … is for how?

C(redentials)

Part of the appeal of becoming a coach is the fact that coaching is mostly a self-regulated endeavor. You decide the who, what, when, where, why, and how of your coaching business. You don’t technically need any specific type of education, training, licensure, or certification. In fact, in the U.S., there is no single credential that “qualifies” you to be a coach.

However, that doesn’t exactly give you carte blanche. Rather, with self-regulation comes the presumption that coaches 1) know what credentials they need and 2) will obtain and maintain their credentials for as long as they’re offering coaching services.

“Wait! I thought you said I don’t need special credentials?” Well, coaching does not usually require special credentials, but coaching in certain industries or about certain topics might. You may remember the case of a Florida teenager who posed as a doctor a few years ago. He somehow managed to obtain a commercial lease, medical equipment, employees, and patients. At times, he claimed he was not “practicing medicine.” He stated that he was merely “shadowing” a licensed physician. But according to reports, he introduced himself as “Dr.,” wore a stethoscope, listed various medical services on his website, offered medical advice, and performed at least one medical examination. So, his public avatar coupled with his actions equated to practicing medicine, for which a license was required.

What if he genuinely did not know that what he was doing was practicing medicine, or that doing those things required special credentials? This is the very conundrum coaches often face, as the lines between coaching and practicing something that requires licensure or certification isn’t always clear.

EX.       Can a “business coach” advise about a legal requirement? What about explaining the purpose of, or reasoning behind, the law?

EX.       Can a “wealth coach” advise about the “invest in your success” mindset? What about recommending specific investments?

EX.       Can a “wellness coach” advise about healthy eating and regular exercise? What about monitoring and analyzing glucose levels?

Nevertheless, pleading ignorance may not be enough to get a coach off the hook for “unlicensed practice of [fill in the blank],” since the laws related to professional credentials are oftentimes strict liability. (That means whether you knew what you did was against the law is irrelevant. If you did it, you’re liable for it.) In effect, this places the burden on each coach to figure out whether s/he needs special credentials, and to know where to draw the line if s/he doesn’t have them.

And here’s perhaps the cruelest irony in all of this. Most licensing and certification programs teach the distinctions between “practicing [fill in the blank]” and other things it could be confused with. But the students in those programs are the people who have already figured out that they need the license or certification to begin with.

Keep in mind that deciding the direction of your new coaching business doesn’t end with you asking yourself “Who do I want to coach?” or “What do I want to coach on?” You also must consider what credentials you need to be able to coach your target clientele and the topics you want to focus on. Ask yourself whether you have, or can quickly obtain, any required credentials. If not, you may want to pick a different industry and/or a different set of topics, at least until you do obtain sufficient credentials.

O(pinions)/A(nswers) 

Nowadays, the term “coach” is often used as a catchall term that encompasses everything from mentor to advisor or consultant. But in the world of personal and professional development, classical (traditional) coaching involves asking questions and offering resources. The coach does not provide opinions, suggestions, advice, personal anecdotes, or directives. (Note that this does not necessarily apply to more performance-based coaching, such as for acting, dancing, singing, writing, athletics, etc.). This is why, historically, coaching was considered a relatively low-liability profession. The coach was not telling a client what to think, say, or do. Therefore, the client was only relying on the coach to facilitate the client’s own discovery, not for the coach’s professional expertise in a specific subject.

Now with the more expanded use of the word “coach,” your coaching approach (more than your title) will likely determine your liability. Once you shift from asking questions and offering resources to making suggestions or giving directives, you also shift from the liability of a coach (relatively low) to the liability of an advisor or consultant (relatively high). At this point, it might not matter that you refer to yourself as a “coach,” rather than an “advisor” or a “consultant.” It also might not matter that your contract includes disclaimers or waivers that state that you are not an advisor or a consultant, that your services are not “advice” or “counsel,” or that your client is waiving the right to sue you because you are just a coach. What will likely matter most is the fact that your actions equated to that of an advisor or a consultant and, therefore, so did your risk of liability.

With that said, it is of the utmost importance to be intentional about how you market and deliver your coaching services. If you decide to take on more advisory or consultancy functions, be aware of the additional liability that comes along with doing so. On the other hand, if you decide to stick with a more classical coaching approach, be sure your prospective clients understand that before they hire you. You don’t want to find yourself in court because a client expected advice or counsel that you did not give. Either way, consider clarity about what you do and how you do it to be essential to your coaching success.

C(ontracts) 

An all too popular belief among business owners, coaches included, is that the purpose of having written business contracts is simply to get customers to sign something agreeing to pay. Sure, a written business contract is evidence of who agreed to pay, how much, and when. But it is so much more than that.

A written coaching agreement is a way to protect yourself (individually) from liability if a client sues. If the structure of your coaching business protects you from liability, to maintain your protection, you must run the business in a way that distinguishes between you and the business. The best evidence that the business (not you) entered into a coaching agreement with a client is a written contract in the name of the business. Without one, a judge is more likely to hold you (individually) liable for your business’ mistakes.

A written coaching agreement is also a way to protect yourself from being on the losing side of a “he said, she said” argument. Imagine a client hires you today, you coach them for several years, and then they file a lawsuit years after your coaching relationship ends. In three (… five … eight …) years, how well will you remember the discussion you and the client had today regarding the terms of your agreement? If your coaching business has become as successful as you hope and expect, how sure can you be that the conversation you are recalling was with this client and not with the dozens of other clients?

Additionally, a written coaching agreement might be a way to give yourself more time to file a lawsuit against a client if you ever needed to. Virtually every type of legal claim that you could make against a client, or that a client could make against you, has an expiration date established by the law. But in some states, the expiration date for a breach of oral contract claim is significantly shorter than the expiration date for a breach of written contract claim.

Further, a written coaching agreement is an opportunity for you to choose where and how client disputes will be resolved. In a time when most business services are being delivered electronically, surely you don’t plan to limit yourself to only coaching people in your State of residence. But will you know the laws of the State (or Country) of every single one of your clients, such as the laws that determine whether they can file a claim against you in their place of residence? Traveling for a lawsuit it not the ideal way to check a new travel destination off your bucket list. Also, what if you prefer for disputes to be resolved by arbitration instead of lawsuits, or vice versa? Without a written contract specifying your preferences, where a client files and what method of dispute resolution they file for might be left to their discretion.

The list of benefits of written contracts can go on and on. But to put it into perspective, most people venture into entrepreneurship because they desire a certain degree of control over their lives. And of all the things you could possibly do to take charge of your business’ future, using written contracts is one of the (if not the) most effective. If it helps, you might think of your coaching agreement as a kind of vision board that identifies the results you desire and serves as a reminder to work toward them.

H(ow) 

If you’ve made it this far, hopefully that means you’re still interested in coaching. But do you want to become a coach? Or do you want to become a coach AND protect yourself from liability? If the latter, here are some suggested action steps that could help you with both goals:

  1. Identify the requisite credentials, if any. If you don’t have them, obtain them before you begin coaching. Once you have them, maintain them.
  2. Choose your coaching approach. If you want the lowest level of liability, stick with the classical approach. If you want to venture into advising and consulting, see 1 above and 3 below.
  3. Evaluate your need for professional liability insurance. If you expect to deviate from classical coaching, it’s better to have insurance and not need it than it is to need it and not have it.
  4. Use written contracts.

Last, if you’ve already started coaching but haven’t taken all four steps, late is better than never.

In a way, entrepreneurship and coaching have always gone hand-in-hand – entrepreneurs report feeling they’ve benefited from coaching and most coaches self-identify as entrepreneurs. So, if you already know that you have an entrepreneurial spirit, coaching might be a great career choice for you. If you don’t know exactly where to start, try the “C.O.A.C.H.” acronym.

Contact N’kia to discuss your business’ legal needs. She can be reached at: nkia@parlatorelawgroup.com or 919-335-6399.

N’kia is Partner with Parlatore Law Group and dedicates her practice primarily to business law concerns, including business formation and development, employment, board licensure, anti-competition, contract formation and disputes, and intellectual property. She also handles a variety of general civil litigation matters, with her special interest being defamation (libel and slander). Her well-rounded legal background makes her well-equipped to meet her clients’ diverse needs. 

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