Business coaches come in all sizes and shapes. Entrepreneurs will have a relative willing to devote time, a school friend with business experience, professionals who charge for the service, investors with a reason to promote your success and more.
But by far the best coaches are those that have lived through the process you’re going through and built successful enterprises in your same industry. Especially if they have sold their companies and live comfortably upon the proceeds, these people are often the most willing to help and the most patient through the process.
One great source for coaches is among fellow members of a CEO roundtable organization, Young Presidents Organization or similar association where you are comfortable with the coach candidate and know something about his or her style. Another is through industry associations or civic groups such as Rotary or Lions Club. Some larger communities have organizations of corporate directors, composed of a combination of service providers and professional corporate directors. I’ve personally been involved with the ABL Organization for almost thirty years and share problems and solutions with a monthly roundtable of smart CEOs from companies of all sizes.
If you take smart money from a good angel or venture organization, the lead investor usually becomes your board member and has a vested interest in your success. If you are lucky enough to create competition among investors for your company, you can select the investor or group with an individual who has experience in your niche and identifies with your vision.
How do you pay a coach? If the coach is also a significantly large investor such as a VC fund, the board member-coach will offer a limited amount of time outside of board work at no extra cost, all for the good of the investment. Professional advisors, consultants, are typically paid by the half day or full day, charging anywhere from $400 per half day at the low end up to $3,000 or more at the high end for a full day of work. Some charge by the hour, making themselves available much as an attorney, keeping track of hours spent on phone calls and emails with you. And some will willingly work for stock options, an amount to be negotiated based upon time spent and stage of corporate development. Years ago, I co-wrote my first book, profiling just such a person, trading his time and experience in exchange for equity – and managing to become wealthy in the process by picking and aiding great young companies that grew large and were ultimately sold at a tremendous profit. We had no term for such work in those days, and created the phrase “resource capitalist” to describe the person and process. He brought resources to the table from personal experience to a great contact base, and was able to help speed the time to market while introducing the company to great potential buyers at the right time in the process. His average percentage of a company was 5% in return for spending a day a week as I recall.
Jokingly, I used to tell people that I worked for food, with so many free lunches being offered from all sides. But alas, there is no free lunch. And over the years I have vastly curtailed the practice. However, there surely are experienced executives out there who’ll work for a meal. It is worth asking.
There must be many more creative ways to pay a coach, especially for early stage businesses. The one warning: avoid those looking to become partners, asking for larger portions of equity than, say, 5% when they contribute no cash to the enterprise. There may be times when such a person can truly be a founding partner in a young business and devote enough time and resources to warrant more, but this is taking on a partner in every sense of the word, and should be done carefully and only after spending time with a number of the person’s references and becoming comfortable with the person, ready for the long run.