Many coaches struggle to find a sweet spot where they can build their practice and have fulfilling impact with clients. In this article I suggest four niches in the market to avoid, and one large arena that seems to be wide open for coaches.
First, here are four niches that are over-rated, yet where many coaches put their stake in the ground:
One: NOT Executive at huge companies.
When coaches think about working with CEOs, what often comes to mind first is working with CEOs and executives at Fortune 500 and other massive companies. In my opinion, this is a fool’s errand.
First, a swarm of consultants, coaches, and other advisors is dying to get in and coach people in this very small, limited market. How on earth will you compete against the McKinsey’s of the world, especially when the boards of these companies often have McKinsey alumni filling seats? How will you compete against best-selling authors, or someone with the brand recognition of Marshall Goldsmith?
There are something like 35,000 coaches in the marketplace, and more if you consider professionals who coach in addition to providing other forms of professional services like consulting and training. There are hundreds of thousands of consultants. The odds are not in your favor.
Second, the life cycle to make a sale in a huge company is long. If the C-level executive doesn’t hire you directly, good luck. You have to go through Human Resources, Procurement, and who knows how many other forms of vetting.
I know one coach who invested all of his time and resources to get into a massive bank. Three years later he is still trying, and his coaching business – and family – is suffering as a result.
Third, these companies are often stagnant. They are bureaucratic, and it is hard to get things done. It can take a year to do something that you or I could do from a home office in a month.
Fourth, CEOs and leadership of these companies often come and go quickly. It is hard to get traction with them while they rotate from one C-level assignment to the next.
If you are already coaching well-known, marquis companies, congratulations! Keep it up. It is terrific to be able to say that you coached a well-respected and well-known company.
But if you aren’t already in this space, be careful. It might not be worth the effort to break in. Most importantly, there are thousands upon thousands of smaller companies that make better targets, as you will soon read.
Two: NOT middle managers – unless you are already coaching at the top
One way into the huge companies, and really any company, is by working with middle managers. Many coaches work in this space. I want to suggest that you should only work with middle managers if you are already working at the top levels of the organization, and they request that you also work with middle managers.
If you are working with middle managers and not the top, you put yourself in a tricky position. Here are three reasons why:
First, you are not positioned as a coach to senior leadership. By working with middle managers, it becomes hard to move up the totem pole in the organization. You might not care if you have a strong practice and are making a good living, but I would suggest that you would do better by positioning yourself at the top first, and then working down on request.
Second, getting into middle managers can have a long sales cycle. Once again, you have to go through multiple gatekeepers to get the job. Few middle managers have the decision making power to hire you directly. And when you are done with an assignment, you go right back to HR, and not to the people who experienced your great work directly.
Third, it can be heartbreaking to coach middle managers. They have a really hard, perhaps impossible job. Very little is in their control. They are often suffering as senior leaders change direction, stack on new priorities, cancel projects that are almost complete, and reduce resources. They rarely get acknowledged for their hard work. They have to figure out how to engage their direct reports while also adapting to their own manager’s style and quirks. If you don’t mind some coarse language, for middle managers, life is a s**t sandwich and it is always lunch time.
For the coach, this means that a lot of your work is about helping middle managers to cope. For instance, I worked with associates at a major law firm early in my coaching career, and discovered that they had almost no room to change. They had to bill out a crazy number of hours. They had to work with dysfunctional partners. Very little was in their control, except whether to stay and endure, or to go in a different career direction.
I only like to coach middle managers when I also work with senior leadership. That way, I can bring both together to create a strong culture and have a real impact on the work that everyone is doing.
Three: NOT startups – unless they are very well funded
Many coaches target business startups. There are two reasons why this strategy is a poor idea, unless you are targeting well-funded startups.
First, depending on the statistics you read, somewhere between 80 percent and 96 per cent of all business startups fail. The odds of you choosing the right client that will succeed, or even be around to pay you for a while, are very low. If your client fails, you don’t look so great, and you also lose a source of income.
Second, startups are usually so busy trying to survive that hiring a coach is the last thing on the founder’s time.
The one exception is well-funded startups. These companies are backed by investors and have the resources to grow. The investment team is usually smart, and helps put the company on track to hit its milestones. Meanwhile, while the company hires staff, they often need a coach to help resolve conflicts and build organizational capacity. Many founders, especially in tech, are difficult to work with. A coach can help them smooth out their rough edges and learn to communicate in more effective ways.
Four: NEVER, EVER small mom and pop businesses
The business coaching franchises typically target this market. It is a terrible market for coaches. Mom and pop businesses – like local dry cleaners and restaurants – rarely have the money to pay a coach for a long time. They usually don’t have huge aspirations, and so the business doesn’t grow. The issues they face are boring, at least in my opinion, because there’s not a lot of complexity in what they are doing.
I don’t know any coaches who have been able to make six figures coaching this market, and I know a lot who burn themselves out chasing after tiny pieces of business that go nowhere.
Enough bad news. What is the ideal market for coaches?
Despite the bad news above, there is a huge market where coaches can thrive. It is working with companies where the following criteria are met:
1. You work at the top, with the CEO and senior leaders.
2. You position yourself to reach the CEO and senior leaders directly, without having to jump through the hoops that Human Resources and Procurement require.
3. The company is small enough to still be dynamic, yet large enough to engage a coach for a long time.
There is a huge range in size for these companies. Some can be well-funded startups with no revenues yet. For going concerns, I have found success in organizations ranging from as little as $3 million to as high as $1.5 billion, but I would say that the sweet spot is in companies with revenues between $5 million and $250 million. Non-profit organizations in some markets (like San Francisco and other places with strong foundation support) can also be a good target, even with smaller revenues; they often can be savvy in raising funds from foundations and donors to build capacity.
There are a number of advantages to this approach. First, if you join the right associations and market well, you can get direct access to decision makers. You don’t have to become a commodity on the approved Human Resources coaching list. It is nearly impossible to meet Fortune 500 CEOs, but the CEOs and leaders of smaller and mid-sized companies are usually much more accessible in your own community.
Second, you can work at the top and the company is still nimble enough where you and your clients can make great things happen. Instead of working with your clients to steer a blimp, you are working to drive a more nimble jet.
Third, because these companies are growing, they always have problems. You can keep client for a very long time.
Fourth, it is fun and rewarding to work with companies that are flexible and dynamic, where you can have impact.
Find a niche within this space
If you agree with my logic, you still have to find a niche in this space. For instance, specialize by:
– industry or at least sector (e.g., financial services, retail, technology);
– job title (e.g., CIOs, CEOs);
– geography, ideally while also including a niche from above (e.g., Boston’s leading coach to biotechnology executives);
– demographics (e.g., coaching millennial CEOs);
– psychographics (e.g., coaching CEOs who have a strong Christian faith; family-owned businesses); and
– a compelling problem that you solve, again ideally combined with one of the above criteria (e.g., leadership presence coach for executives in technology).
I see too many coaches who struggle to find their niche, and go after the extreme ends of the market. They end up chasing companies that are too big and take too long to get into, or they stagnate with small companies that are going nowhere and really can’t afford a coach.
Find ways to get yourself in front of decision makers in the middle of the market. Your practice will become more rewarding and more satisfying if you do.