If you’re looking for a quick way to make a million dollars a year, entering the education and coaching industry might be your golden ticket.
However, scaling this type of business to a hundred million dollars or beyond presents its own set of significant challenges.
Here’s everything you need to know about the pros and cons of breaking into this field.
Why Education and Coaching Businesses Are Attractive
The landscape of digital courses, membership sites, and coaching has seen explosive growth.
They’re among the easiest types of businesses to scale to $100,000 a year or $200,000 a month relatively quickly.
The low operational costs and the ability to package and sell your knowledge make them incredibly appealing for newcomers.
Fast Start, Moderate Growth
A digital course business can ramp up very quickly. In stark contrast to traditional businesses that might take years to see substantial income, these education-oriented businesses can start generating revenue in a matter of months.
The rapid growth, however, becomes challenging to maintain as you climb higher.
The Goal
If you’re looking to flip your business for a substantial exit—think $25 million, $100 million, or even $250 million—the education and coaching space may not be right for you.
Very few information-focused businesses scale to ten million dollars a year, let alone a hundred.
Key Considerations for Entrepreneurs
What’s Your Goal?
If your goal is to build a business you can sell for millions, education and coaching might not be the best route. The brands that have reached these lofty financial goals are typically deep-rooted and have been around for decades.
However, if you’re aiming to make $1-3 million a year, a coaching or digital education business might be the fastest way to achieve that. You can offer niche, high-value content with minimal overhead.
Problem Solving
Next, consider what types of problems you are comfortable solving. In an education business, the issues you’ll face include creating and updating compelling content, managing your brand, and ensuring customer satisfaction.
On the flip side, traditional businesses require a lot more operational oversight and management skills to scale effectively.
The Benefits and Challenges of Educational Businesses
Quick Wins, but Tough Scale
It’s relatively easy to make your first million in an educational business. You can swiftly package your expertise, sell it, and provide immense value to a niche audience.
However, these businesses lack recurring revenue because once someone learns from you, they typically don’t come back for the same content.
Key Man Risk
If you are the face of your business, the one driving sales and creating the content, it becomes incredibly challenging to step away without harming the business.
Your team’s loyalty and the brand’s strength are often tied directly to you, making it difficult to sell the business as an asset.
Real-Life Scenarios
I recently consulted three business owners: one in the painting industry, another running a salon chain, and a third setting up home gardens.
Each found themselves contemplating a switch to an educational business, drawn by the lure of quick cash flow.
However, their operational skill sets capped their potential for growth.
Switching from Traditional Business to Education
If you’re running a traditional business (like painting or accounting) and consider switching to an education business, it’s not as simple as it looks.
Retaining Focus
It’s crucial to focus on one model. Juggling both can drain your focus and resources.
If you do decide to switch, fully commit to it by selling or cutting ties with your existing traditional business.
Testing and Scaling
When transitioning, it’s wise to test your educational offerings on a small segment of your target audience before a full-scale launch.
This approach helps gather valuable feedback and fine-tune your content without spreading yourself too thin.
Why Traditional Business Still Holds Value
If your goal is to build an asset that offers a significant exit without requiring your constant involvement, traditional businesses still hold the upper hand.
Long-Term Rewards
Traditional businesses may grow slower and require more investment upfront, but the long-term rewards are substantial.
The best returns often come later down the line, and once you cross certain thresholds, scaling becomes comparatively easier.
Building an Asset
Traditional businesses can become valuable assets that someone might want to buy.
If you’re continually investing in growth, building infrastructure, and establishing strong operating procedures, you can create something sellable that doesn’t depend entirely on you.
Committing to Your Choice
If you’re at the crossroads, consider your goals and problem-solving comfort levels seriously.
The educational business route offers a quicker path to making a million dollars annually, but scaling it significantly is challenging.
Traditional businesses, while slower to grow, offer the potential for a lucrative exit without being overly dependent on the founder.
Final Thoughts
The primary takeaway is to appreciate the pros and cons of each model.
Whether you’re starting fresh or considering a pivot, your decision should be based on your long-term goals and the types of challenges you’re ready to tackle.
Remember, focus is key—pick a path and commit to it for the best chance of success.
