Performance Coaching for Entrepreneurs: A Complete Guide

Read most performance coaching guides, and you’d think this little-known coaching form only helps HR and managers run productive teams.

And it does.

But the outsized focus on big companies with hundreds of employees ignores MOST entrepreneurs, business owners, and their teams.

Did you know more than half of all U.S. small businesses have 5 employees or less?

Or that a full 23 million small businesses are run by just one¹https://www.fundera.com/blog/sba-definition-of-small-business brave, determined soul (the owner)?

These “microbusinesses”–companies with just 1 or 2 full-time employees–often have teams of freelancers, vendors, or partners.

Their team members are not “employees.”

So why aren’t we talking more about performance coaching for these companies that comprise the majority of all “small businesses”?

This guide will discuss both.

But first, an important note:

A performance “coach” is different from a performance “strategist.” (For more info, see Business Strategist, Consultant, Mentor, Coach: Who’s Best for You?)

This guide uses the term “performance coach” to refer to both coaches and strategists.

What is performance coaching?

Performance coaching is a strategic way of helping humans to build transferable skills and competencies, to set clear, measurable goals, to plan and take actions to achieve those goals, and to proactively anticipate obstacles to growth.

The coach or strategist works independently with the person being coached. The coach/strategist may be a trained professional from an external organization, a supervisor/team lead from within the company, or even a fellow colleague.

An excellent performance coaching program can help any human improve work performance. How depends a lot on the coach, their coaching model, and the person being coached.

Let’s explore.

Is coaching employees different from coaching other team members?

Yes. Many differences are due to company size, structure, and the legal role of the worker.

Size & Structure

A performance coaching program for a 1,000-employee company can look a lot different than one at a 2-person company.

One way employee performance coaching differs for small vs. large companies is the number of warm bodies able to coach. In larger companies, coaching could naturally be the responsibility of HR. There’s also potential for a mentorship program, instead of (or in addition to) performance coaching.

In smaller companies–like microbusinesses with under 10 employees–each worker often wears many hats. Not being able to offload this responsibility to another department, for instance, can make things tricky.

That’s because microbusiness employees often have closer working relationships by default. Your business partner, team lead, or marketing person might also be your spouse, sibling, son, or daughter!

So it’s best to hire a neutral third-party coach, rather than doing the tricky work of trying to foster respectful, high-impact coaching relationships with family. But if hiring an external coach isn’t an option, all team members who’ll be coaching others should complete a quality coach training program²https://www.universalcoachinstitute.com/.

Also, ensure your team is aligned on company mission, vision, purpose, values, goals, and KPIs. Passing these company vitals down through the coaching curriculum empowers your coaches to prioritize performance goals and preempt problems.

It’s tough to focus your program around effective employee performance unless you’re in agreement on company basics.

Legal Role

Another key difference in coaching for larger orgs vs. smaller companies is keeping the legal boundaries of “employee” vs. “contractor” clear.

Microbusinesses may be more prone to hire independent contractors for important part-time or as-needed roles. And by law, companies can’t technically direct the work of contractors³https://www.irs.gov/pub/irs-pdf/p1779.pdf.

Courts use three categories of facts to determine whether workers are employees or contractors: behavioral control, financial control, and relationship of the parties. Coaching contractors could create legal trouble, unless done very strategically, with smart contracts in place.

For this reason, it’s not recommended to coach non-employees.

But if you choose to, ensure the service offered is strictly coaching–not advising or strategizing–and consult an attorney to play it safe.

How is performance coaching different from small business coaching?

These two coaching types both help improve business performance. One just does it directly, while the other is a bit indirect.

Business coaching is focused on the business, helping it perform better in one or two specific areas. Performance coaching is focused on the entrepreneur (or team), helping them perform better in all areas of work and life.

You’ll tackle specific goals or setbacks with your performance coach.

But your work together is more likely to boost your work performance than business coaching.

For instance, you and your business coach may tackle “business issues”–like finances, back-end organization, marketing, hiring and such–pretty directly. You might discuss strategies and plans to improve those specific areas.

If you have trouble implementing the plan, you may do a bit of mindset work to help you through the “block.”

On the other hand, you and your performance coach may tackle personal performance challenges that stop you from easily, effectively, or enjoyably starting, growing, or managing your company. You might discuss strategies and plans to resolve those specific challenges.

If you have trouble implementing, the quality performance coach may help you address the root of the block, to ensure it doesn’t resurface later in your life or work. So you’ll likely dig deeper into personal blocks and skill building than you would with a business coach.

That’s not to say you won’t address business challenges with your performance coach. You probably will!

Performance coaching just focuses more on helping you see and stop the hidden personal patterns stifling ALL professional progress.

In doing so, you’ll likely reshape your mindset, clarify your decision-making, build self efficacy, and strengthen many skills that help you handle tough situations with more decisiveness and less stress.

Since business coaching is situation-specific, the work you do with a business coach or strategist may only help in that specific situation. (Ex: Building a social media marketing plan to promote a new product.)

And if you decide not to go with that plan, the time or investment spent on coaching may be wasted.

But since performance coaching is entrepreneur-specific, the work you do with a performance coach helps you strengthen transferable skills and competencies. It helps you increase your ability to create and IMPLEMENT a situation-specific action plan, but also all other plans across your business.

Who uses performance coaching and why is it important?

Performance coaching can help entrepreneurs, company owners, and really, any human improve performance and achieve a goal. But for entrepreneurs and small business owners…

It helps the organization. When a company owner hires a coach, you perform better and are often happier, more fulfilled, more organized, and more efficient. This means you’re easier to work with, more enjoyable to work for, and you do all-around better work. Your insight, planning, and ability to stay consistent are enhanced. Your entire organization runs more smoothly from the top down.

It helps the individual worker. When hiring a coach for a particular team member, their confidence, efficacy, and efficiency improves. Job satisfaction gets a boost, as the employee or worker feels valued and well cared for through the provision of growth opportunities.

It helps the team. When hiring a coach for your team, each team member’s level of skill, consistency, focus, and productivity improves. It becomes easier for them to do their work. And as each team member’s role efficiency improves, it creates a less stressful, more enjoyable work environment for everyone.

It helps the ecosystem. Your small business performs better as your people do. This benefits the local and global economy, both in job creation and customer/client satisfaction, from the increase in quality of your products or services.

What are top factors that lower work performance?

Work performance is typically reduced by one of six SAPPERs: situational influences, autonomic or abstract influences, physical influences, practical influences, external or environmental influences, and/or relational influences.

“SAPPERs” function just how they sound: They drain the vitality from people and processes, causing slowdowns (or full-out roadblocks) in any organization.

The six SAPPERs that erode work performance:

1. Situational (i.e., major life event causing worker underlying distractions or despair)
2. Abstract/Autonomic (unconscious, involuntary mental/emotional responses to stress)
3. Physical (pain, tension, stiffness depleting energy and focus)
4. Practical (lack of SMART goals or concrete action steps for growth and maintenance)
5. External/Environmental (i.e., noise or lack of work space)
6. Relational support (inadequate or complete lack of support; isolation)

Take a moment to reflect:

Exactly what happens when you (or your team) try to achieve your Big Goal? Where and when do things start to break down?

Read more about SAPPERs and how to identify yours here.

Who’s a good candidate for coaching?

Whether you need employee performance coaching, team coaching, or 1:1 performance coaching for you, certain qualities make it more likely your investment will pay off.

The good coaching candidate:

• is driven, determined, won’t make endless excuses;
• has a reasonable amount of self-awareness, willing to learn;
• considers analyzing/adjusting their behavior when others sense self-sabotage;
• is open to outside perspectives on their behaviors, habits, and goals;
• will openly communicate concerns, ideas, fears, and needs with their coach, to get support;
• is in a reasonably stable phase of life; and
• is ready to create and take actions to improve their situation, by any means necessary.

Who performance coaching isn’t good for

Entrepreneurs or team members not quite ready for the structure and commitment of a coaching relationship might be:

• unwilling to seriously consider feedback on their behaviors, habits, and goals;
• in the middle of work/life upheaval, major adverse experiences, or trauma;
• unwilling to do the independent work required, outside of session, to progress;
• prone to challenge or oppose everything their coach notices, advises, or recommends;
• foregoing their basic needs (food, shelter, healthcare, etc.) to invest in coaching;
• wanting/needing to reflect or vent extensively on past hardships, events, or traumas;
• expecting massive change or breakthroughs from a single initial (or handful of) session(s).

An entrepreneur with the above qualities may be deemed “not coachable” by certain types of coaches. Whether or not that’s fair or justified is a different matter.

The onus is on both the coach and the entrepreneur to ensure that entrepreneur’s success.

It’s important to note that if they’re not receptive to coaching at a particular period in their lives or careers, the entrepreneur is not always (or even often) to blame. They may just have too much going on in one area or the other. They may also be seeking the wrong type of coaching for their situation.

Benefits you may expect from coaching

Every entrepreneur and their company is different. So the benefits you may experience depend on many different variables. That said, some potential benefits of performance coaching include:

• building and strengthening skills that help you manage work/life more easily;
• setting clear, measurable, achievable goals that reflect The Real You;
• creating specific and realistic action steps to help you meet those goals;
• sticking more consistently to your chosen action steps;
• in case of delays, helping you see whether the plan or the goal should change;
• pinpointing any disconnects in what you think you want vs. what you actually want;
• identifying and reducing internal resistance to trying, choosing, or changing;
• viewing yourself more objectively, with less judgment and self-blame;
• proactively pinpointing potential roadblocks that might keep you from the goal;
• prioritizing your health and relationships while improving your work performance;
• figuring out how to do THE LEAST work possible to achieve what you want;
• and more.

It’s good to go into a coaching relationship having a reasonably clear idea of the benefits you expect. This helps you understand whether a particular coach or program suits you.

It also ensures you and the coach start with the same expectations, avoiding disappointment later. And it helps you both guide the program or relationship toward the exact benefits you want, making it more likely you’ll view coaching as a successful, positive investment.

How to know when it’s time to try it

It may be a good time to hire a performance coach if you, your team member(s), or your partner(s):

• have had a Big Goal for a while, but are spinning your wheels;
• are too busy “fighting fires” to work on The Goal;
• can’t decide on first (or second, or third) steps to go from “planning” to “taking action”;
• have performance anxiety in tough moments that keeps you from implementing;
• are unsure exactly what, specifically, is stopping you from moving forward.

The performance coach is an experienced third-party trained to spot when you’re stuck, help you maximize your potential, and accelerate progress toward The Big Goal.

This form of coaching goes beyond the typical supervisor/employee “performance management” process large companies use to track business objectives. Performance coaching is a more intimate process of personal/professional development, so the business runs better and grows faster as a whole.

How much does it typically cost?

What’s the “average” investment for coaching?

That’s a bit like asking the cost of a car, house, watch, or pair of shoes: it varies widely.

Case in point, depending on what survey the data comes from, entrepreneurial coaching may cost anywhere from $85/hr to $1,000/hr or more.

And a several-months long coaching package could range from $3,000 to $20,000 or more per program.

To put this into perspective, we must note the cost of performance coaching depends on things like:

• the coach’s years of experience, if any,
• the coach’s professional background and credentials,
• whether the coach is a freelancer or runs a company,
• the length of the coaching program (weeks, months),
• the category of coaching (professional/career or personal/life),
• whether the coach has their own unique methodology,
• your expected outcomes from the program,
• benefits the program may include, besides live sessions,
• the length of live coaching sessions,
• the coach’s specialty area,
• the coach’s geographic location,
• and more.

The required coaching investment is important for your budgeting. But you can also apply this simple formula to help decide if a program is right for you:

(Outcomes x 12) – Investment = ROI

Outcomes: Monthly earnings increase after finally achieving your Big Goal
Investment: The monetary cost of coaching
ROI x 12: Your return-on-investment for the year (should be a positive number)

For example, maybe your Big Goal is to finally buy an investment property that will generate $1,000/mo.

And you’re considering a 6-month coaching commitment that requires an $8,000 investment.

($1,000 x 12) – $8,000 = ___ ROI
($12,000) – $8,000 = $4,000 ROI

By the numbers, this coaching commitment may be a solid choice. After your investment of $8,000, you might expect an additional $4,000 revenue in Year 1, and an extra $12,000 revenue in Year 2.

Of course, quality coaching helps workers improve across many areas. So it can be tough to really quantify an exact increase in earnings. Depending on the type of coaching and expected outcomes, it may be more appropriate to measure coaching success by more subjective metrics, like increased skills, abilities, and work performance.

This again highlights the importance of coming to coaching with a good idea of what you expect to get out of it.

Components of a quality coaching program

When we want to achieve any goal, we typically follow a process that looks something like this:

• Assess the current state (Point A)
• Set a specific, measurable goal (Point B)
• Create/Follow an action plan to get from Point A to Point B
• Get support activating the new plan (w/follow-up)

Quality coaching programs follow a similar flow.

What may differ is the methodology: how the program proposes to help you get there.

For instance, Major Force’s 3-part methodology helps impactpreneurs to:

• identify and reduce SAPPERs causing self-sabotage and poor performance;
• TAILR their behavior to build healthy, lasting habits; and then
• create Minimum Daily Action Steps that help them achieve their 1-year goal.

Make sure the coach or program you choose offers some form of assessment, goal setting, action planning, and personalized support.

Should your top-performing employees be performance coaches?

This option may only make sense for you if your company is large enough.

The consensus of other performance coaching guides is to have company top-performers coach their peers.

This seems risky for many reasons.

Just because a team member excels at something doesn’t make them qualified to teach it, or coach others around it.

Top-notch teachers are patient, high-level communicators. They’re organized and structured enough to guide others in a clear way. They have a passion for what they’re teaching. And they know how to motivate others without pushing too hard, or giving them too many passes.

Finding those qualities in a coach or performance coaching company can be hard enough. Should you expect your team to crush this role too, on top of their other work?

Turning team members into coaches also runs the risk of stressing out your top performers. They could end up saddled with more responsibility than they want or even realistically think they can manage.

Being branded a top performer is a high honor. It’s easy to see how they may accept a coaching role out of obligation because it’s something they “earned.” But experienced performance coaches are certified and specifically trained. They know how to guide clients in structured, clear ways that fit their unique levels of ability.

On the other hand, “promoting” your team to performance coaches could create improve morale. It could foster a strong coaching culture of belonging and self-worth, and help employees value their roles more. Teaching your managers to coach could be a key part of a strong business development strategy.

The most important thing is to know your organization. And if you do choose to give team members this big job, consider enrolling them in a quality coach certification program⁴https://www.universalcoachinstitute.com/.

Remember, certification isn’t mandatory to coach. But the structure, curriculum, and specific coaching techniques they’ll learn from it give your company the best chance for success.

Your performance coach needs a coach, too

Every coach, strategist, advisor, consultant, or other specialist should have their own equivalent professional. This ensures they stay at the top of their game and can do their job well.

While your performance coach doesn’t have to see their own coach each day of the year, they should receive coaching fairly regularly.

This point highlights another problem with turning employees into coaches: continued growth and accountability.

If you make every top-performing team member in your company a coach … who’ll coach all the coaches?

How to determine whether performance coaching is successful

Typically, you’re hiring a coach or enrolling in a program to finally achieve The Big Goal.

Of course, if you reach that goal, you’d likely consider the coaching successful.

If goal attainment is the measure, “success” looks different for each entrepreneur. One might want to become a more confident public speaker, so he can run weekly classes or workshops. Another business owner might need to reduce performance anxiety, so she can lead her team in trying a new marketing tactic.

But there are other ways to determine whether coaching is a success.

• What if you don’t achieve your Big Goal … but you leave more confident and capable?
• Or what if you “only” achieve 75% of a goal you’d been trying to reach for years?
• Or, what if coaching helps you realize your goal wasn’t a good fit, and it changes?

In these scenarios, you wouldn’t have achieved your Big Goal.

But would you deem coaching a waste of time, energy, or money? Probably not.

Three other ways you might decide if coaching is successful are to consider:

• The coaching model/methodology. What are the specific outcomes promised? Did coaching deliver on those?
• Your quality of work in your role. “Success” can mean you more efficiently run the company. It can also mean you’re easier to work with, or you simply feel happier and more fulfilled doing business.
• Your specific skills or traits. Success isn’t always measured in objective improvements we can “see.” Success is often a feeling. Ex: You feel more confident, capable, etc., at work.

And again, whether coaching is successful also relates to how “coachable” you are at this particular stage.

Just remember performance coaching is an ongoing process of continuous improvement. Be open to tweaking your goals and expectations as you grow forward.

Implementing performance coaching for you/your small company

If you’ve determined performance coaching may be a good fit for you, follow these steps to increase the likelihood of success:

1. Ensure you’re ready to go deep. If you don’t really have the time, energy, or drive to dig in and do the work a coaching relationship requires, maybe hold off on this decision until you do.
2. Get clear on what you want to achieve. Bare minimum is either having a goal in mind, or knowing what skills or abilities you want to improve.
3. Ensure a “coach” is the type of professional you need. Though no one talks about “performance advising,” maybe that’s just the support you need. Do the research to decide if you need a coach, strategist, advisor, or mentor.

And if you decide to hire a coach (vs. train your team to coach):

4. If possible, consider a coaching specialist over a generalist. Does the coach specialize in working with a particular type of client, and/or helping clients get a specific result? Or do they offer to help any and every employee “perform better”?
5. Ensure the coaching methodology fits. There’s no use working with a coach whose model involves you journaling every day if you hate journaling. And no use working with a coach who requires six hours of weekly work if you only have three. Check out their coaching process to see if it feels aligned.

The Bottom Line

Performance coaching is a valuable tool for entrepreneurs looking to take their businesses to new heights. By working with a qualified coach, you can finally break through your weak points, set clear goals, and develop strategies to overcome obstacles.

Whether you’re just starting out or looking to scale, performance coaching can provide useful guidance and support to help you reach the next level. With the right mindset and approach, there’s no limit to what you can achieve.