Apr 20, 2023

Why Business Coaching May Not Be Right For Your Company

The rapid growth of business coaching in recent years has been nothing short of remarkable. A 2019 study by the International Coaching Federation estimated that there were approximately 71,000 professional business coaches worldwide, up by a third from just five years earlier [1].

The global business coaching industry is now thought to be worth around $15 billion [2].

Yet, it is not a one-size-fits-all solution for every company, particularly those mid-stage scaling or fast-growing businesses that are in the throes of navigating a crucial period of their development.

A Misaligned Approach

Firstly, the need for an experienced and capable internal team cannot be overemphasized.

An external coach can offer general advice and an outsider's perspective, but they might lack the detailed understanding of your unique business environment and culture.

One study found that 65% of business owners believe that an external coach could not fully understand their business unless they have direct experience in their industry [3].

Furthermore, data from Gallup shows that companies with high employee engagement are 21% more profitable and see 20% higher sales [4].

This suggests that investing in internal leadership and team development could lead to greater long-term benefits than hiring an external coach.

The Pitfall of Overdependence

Another concern with business coaching is the risk of creating an over-dependence.

It can be easy for a company to rely on the coach for all their strategic decision-making, causing a stunting in the growth of internal leadership abilities.

The leadership team should be capable of navigating the company through challenges, without a perpetual need for an external input.

Investment Versus Return

The investment required for business coaching can be considerable.

The 2019 Sherpa Executive Coaching Survey reported an average hourly rate of $500 for business coaching [5].

For a fast-growing business, this substantial cost might be better invested elsewhere, such as in technology, marketing, or staff development.

One analysis conducted by the Chartered Institute of Personnel and Development found that businesses that invest in technology saw a 16% higher productivity rate, and businesses that invest in their employees experienced a 24% higher profit margin [6].

These figures suggest that alternate investments could potentially deliver a higher return than business coaching.

Evolving Needs

The needs of a fast-growing or scaling business can evolve rapidly, and a business coach might not be able to keep up with these changes.

Harvard Business Review reports that as many as 70% of fast-growing companies fail due to premature scaling [7].

In such volatile and rapid growth phases, the company may require more than a coach; it might require an industry expert, a mentor, or even a temporary executive.

Final Thoughts

This is not to dismiss the value of business coaching.

For certain businesses, coaching can provide essential guidance, facilitate improved leadership skills, and drive business performance.

However, for mid-stage scaling or fast-growing businesses, the limitations and risks outlined above should be considered.

An understanding of the unique needs and circumstances of your business is crucial in determining whether business coaching is the right investment for your company.

If you are an ambitious professional looking to achieve your business goals and take your business to the next level, click here if you'd like to Book a 30-Minute Coaching Session with Ross.