Is Business Coaching a Pyramid Scheme or Scam?
Episode 11 of the Self-Made Mamas Podcast
Okay, grab a coffee and get comfy for this one, because today I’m going to do a little deep dive into a topic that is becoming increasingly relevant as the online business space becomes more and more saturated. Is business coaching kind of like a pyramid scheme? If it’s not a pyramid scheme, is it still a scam? I am a self-made business coach and my answers may surprise you—so let’s get into it.
Is business coaching a pyramid scheme? Is it a scam? Is it legit? These are all super valid questions, and I think the answer is truly both yes and no. To really lift the curtain on this I’m going to explain in detail how my personal business model works, and then how things are done at large in the industry. My hope is that by transparently sharing this information, you’ll be able to make informed and empowered decisions about what kind of support you want for you and your business. Bear with me while I explain my business a bit for you. I promise it’s for a purpose!
My Business Model
As you probably know if you’re listening to this, I am a business coach. Self-Made Mama is a coaching and education brand—we serve client-based business owners through a variety of courses and coaching options. I would say, though, that I’m not actually a true coach, I’m more of a “coachsultant”. This is obviously a made-up word, but it’s honestly the best way I can describe the work I do. An article published by Indeed.com about career development describes the difference between coaching and consulting like this: “Coaching requires developing the client’s abilities to solve a problem themselves using a wide range of tools, however, consulting involves helping the client solve their problems.”
I think this is a pretty accurate, if very simple, explanation of the difference between coaching and consulting, and in my work through Self-Made Mama, I like to do both. In my experience, entrepreneurs need both soft skill development and accountability, and technical, strategic guidance to really get results. When I first started, I was purely consulting. I had never coached anyone before, I was just coming to the table with a lot of technical skill and practical experience. I believe that coaching is its own skillset, and while I knew I could help my clients with their soft skills, I was super hesitant to brand myself as a coach given this disparity.
Quickly realizing there was no getting away from the soft skill development and mindset work needed to really affect change for my clients, I began investing time and money into my coaching skills so that I could serve my clients at that level as well. I studied motivational interviewing, NLP (which I don’t really use), learned different coaching techniques and frameworks and threw myself into personal development work so that I would feel confident walking the walk and not just talking the talk.
I find that every client and every call is different. It’s part of what I love about this work. Sometimes a client will log on to a call and they are experiencing crippling imposter syndrome, or they are inadvertently self-sabotaging, or they have something going on personally that is undermining their focus and mindset when it comes to business. Those calls require me to put my “coach hat” on—a lot of asking questions, a lot of active listening, and a lot of open prompting to help them unravel what’s going on for them. Then some exercises or ideas for them to go and put into action. On the other hand, sometimes a client gets on a call and we will spend an hour pouring over and editing their website copy, or fixing the tech inside their funnel, or coming up with client attraction strategies. On those calls, I am definitely playing more of a consultant role, and I do a lot of the talking and teaching because that is what the client needs at that moment. In our weekly group call for The Society, I bounce back and forth between coaching and consulting as we hot-seat our way through the group. It’s dynamic and interesting, and sometimes challenging, but overall I find it incredibly rewarding to see my clients get results. That’s why I have never dropped the consulting or ignored the coaching and have chosen to work in this hybrid way.
In my business, there are basically three ways to learn from me:
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- You can buy a self-study course, which I keep fairly low ticket in cost. They range from $27 to about $297. These are designed to solve specific problems and are marketed that way For example, Naptime CEO is a time management workshop, The $5K Formula is focused on nailing down your market positioning and messaging.
- You can join The Self-Made Mama Society, which is a group coaching program that comes with a comprehensive self-study curriculum and a couple of private coaching calls with me. The focus of the program is to help you Sell Out Your Services and Add Profitable Digital Products, in that order. This program is designed to be an investment that grows with your business. In other words, it’s comprehensive and highly supportive, and you don’t need to upgrade to anything else unless you want to.
- Lastly, for established entrepreneurs and professionals, you can work with me 1:1 in my UPLEVEL program. If you’re already successfully running a business or seeing clients as a professional and you’re ready to take things from that solopreneur space to being a big-deal online brand, UPLEVEL is where we can do that work together. This program is consulting heavy—lots of technical support, auditing, hands-on marketing work, etc.
That’s pretty much it! A couple of times a year I may release a small self-study course, but only when I see a really big need for it and know it’s something my audience needs and wants right now. There is actually one of those coming this Fall, so keep your eyes open for that. It’s so juicy and I’m very excited about it.
An important note here (and you’ll see why this is relevant later on in the episode): I serve almost any client-based business owner. If you have skills, education, or experience you want to use to serve clients, I will work with you. While I do have a couple of clients who also offer business coaching in specific niches, they make up the small minority of my roster and I will only take them on with the understanding that we will work to develop their unique methodology and market proposition, not to regurgitate mine. Thankfully I have incredible clients who want to be unique in the marketplace and this is really not an issue, which I’m very grateful for.
If you are running or launching a client-based business and want to sell out your services and create profitable digital products, then listen close. The doors to my flagship program, aka my third baby, The Self-Made Mama Society are opening soon and I want you to get on the VIP Waitlist so you don’t miss out. The Society is the only program of its kind on the market—designed specifically to be accessible, hands-on, and results-oriented. I know there is no one-size-fits-all magic pill in online business, and that’s why The Society is a combination of cutting-edge curriculum, weekly group coaching, hands-on FB group support, and one-on-one sessions with me. If you want the best community, the most transparent and genuine support, and direct access to real expertise and action-focused coaching, head to theselfmademama.com/society to get on the list and get access to an exclusive VIP bonus when the doors open.
The Business Coaching Industry
Now I’m going to zoom way out from my business and talk about the business coaching space at large. This is where things start to get a little pyramid-like and questionable, so buckle up!
I believe there are countless genuine service providers out there who have incredible skills and knowledge to share when it comes to growing your business. However, when we look at the online business education space as a whole, it is dominated by a few “OG” experts, their most successful students or mentees, then their most successful students or mentees, their most successful students and mentees, and then thousands and thousands of people using the same 10 methods with varying degrees of underwhelming success.
I would argue that the reason these people are unsuccessful is because everyone at their level has learned exactly the same stuff from the people who came before them, and they are all trying to teach it to the people below them. These people now have not 10 experts spouting the same stuff at them, but thousands. Do you get where I’m going with this? Does it remind you of a certain geometric shape, maybe one we typically associate with MLMs?
Let’s say you’re one of the first few people to join a new MLM company and it takes off. Almost everyone who joins after that is going to be in your downline. You are going to be monetarily rewarded no matter how saturated the market is because you were there first. The people who join years later, however, have very little chance of making a living. There is not enough market share left, there are fewer people to recruit, and the products are now old news to customers outside of the company.
In the online business education space, if you were one of the first to start doing this—think Amy Porterfield, James Wedmore, Caitlin Bacher, Tim Ferris, Marie Forleo, etc—then you are effectively at the top of the pyramid. I think in actuality, Tony Robbins is at the top of this particular pyramid, but that’s a deep dive for another day! I’m not here today to rip on any entrepreneur in particular though, but to talk about the structure of this whole thing and what it means for us as online business owners and consumers of educational content.
We’ve got these founding online business educators. They built their businesses in a pretty fresh market, full of doe-eyed wannabe entrepreneurs and freelancers who saw these people making millions from an email list and an Instagram account and wanted a piece of the pie. These original educators are teaching their own methods, let’s assume in good faith, at the time. The first few ‘rounds’ of customers go through their programs, and as with anything, some are more successful in implementing than others. A few particularly, shall we say, tenacious individuals realize that there are thousands of people who don’t know about or can’t afford to learn from the OGs. They recreate the programs they just took, maybe with a little spin, maybe not, it doesn’t matter. Their program is priced lower than the one they took, and they market to a slightly different group. This happens a few times, and by about 2018 there are multiple levels of marketers teaching almost identical methodology at different price points to different people. Now, here’s the rub. At this point, that methodology is now outdated and oversaturated. Unless you have an in with one of the top levels of entrepreneurs (let’s say by paying $50,000 to join a mastermind group with them and have them share you with their audience—yes that’s a thing you can do) you are essentially now selling ice in the antarctic. Every couple of years, the tactics being taught at the top change, and sure enough, the methodology trickles all the way down.
Currently, the method du jour is to quickly scale to 7-figures and beyond in revenue by selling a group program priced between $8000 and $15000 dollars. Enroll 8-10 people a month, and there’s your million. These programs are, in reality, no more valuable than a $2000 program or coaching retainer. Surprise surprise, though, they are backed by multiple levels of highly successful online business educators, usually through airtight affiliate partnerships with strict NDAs. They also usually have a few star students who are making tons of money, but until you get inside these programs, you aren’t told that these students are usually already rubbing shoulders with high-level online business educators and have access to partnerships, ad budgets, and resources that most people joining the program won’t have. These programs usually come with a strict “agreement” that you have to sign when you enroll, and this protects you from exactly nothing except being able to get out of your payments. My program and client roster is full of hardworking entrepreneurs who have been taken in by one of these offers and ended up out thousands of dollars because they were sold a methodology that either doesn’t work at scale or doesn’t work without the help of many other factors they did not have access to.
If my clients disclose the program name and creator to me, which is entirely up to them, I add it to a page in my notebook where I track these experiences. Let me tell you, the names on that page are all connected, and the lines are very triangular. I am going to record a whole other episode about this particular complex, but for now, I just want you to understand that the “gurus” of online business are not just people like you and me who happened to find success at the same time and are now friends. These are highly lucrative business partnerships and affiliate pyramids that serve no one except those who participate in them. While I am sure there is some value in each of the programs offered by these people, I can assure you that the price points are not determined by the value of the product but instead by revenue targets and lead acquisition costs.
Is Business Coaching a Scam?
Now let’s move on to the second part of the question we’re addressing today—if business coaching is not a pyramid scheme, is it a scam? Technically, even in the very triangular upper echelons of online business, what’s going on does not qualify as a pyramid scheme by definition. Let’s settle for calling it pyramid-like, or better yet, just kind of gross and unethical.
When we travel down to the bottom of the pseudo-pyramid, we find thousands of much less well-known business coaches, strategists, experts, etc, who may or may not be using methodology from the top tiers. At this level, though, that matters much less than whether or not they actually know what they’re doing. I like to say that the beautiful thing about online business is that anyone can become anything they want to be, and the ugly side of online business is that anyone can become anything they want to be.
I could wake up tomorrow, start a new Instagram, and brand myself as any kind of expert I want. No one could stop me, and if I was good enough at marketing and sales, which I am, I could probably convince you to buy my offer. You as a consumer would have no way to verify that I actually know what I’m doing or have proven results. If I were really committed, I could join someone’s overpriced mastermind full of high-level entrepreneurs, be on all their podcasts, and get them all to vouch for and sell my offer on my behalf. For a bit less money, I could have professional photos taken, get beautiful branding, a flashy website, and I could pay for features in bogus publications that sound legit (Yahoo Finance I’m looking at you) so that you, the consumer, would think I was an established expert in my niche.
This sounds ridiculous, but it happens every day. I have watched brand new business owners start “coaching” within a few months of becoming self-employed, regurgitating concepts they’ve learned from more established entrepreneurs, and usually marketing themselves based on unverified income claims that they retroactively make true by enrolling clients.
Ultimately it’s up to you whether or not you take issue with that, but as someone with extensive marketing and business experience prior to stepping into an education role, I do. There is just no way I would be able to get my clients the results they get if I didn’t have varied and dynamic experience and skills. Paraphrasing what a more advanced entrepreneur taught me might make sales for me, but it wouldn’t help my clients unless I was teaching them to do exactly the same thing. This also happens every day. Now we have business coaches teaching people to become business coaches who teach people to become business coaches…oh look, it’s another pyramid.
I want to be clear again that this is absolutely not the case across the board. All over the internet, there are great people doing great work, but the issues I’ve described today are very prevalent in this space. For that reason, it’s crucial to be really discerning and critical about what you buy into and what content you consume. This episode is already quite long, so I’m going to record a separate episode with some advice for choosing what kind of support to invest in for your business. I’ll break down the different ways you can invest in your business, when to consider each option, how to weigh your investment and get the best results, and more.
I’m also going to record a separate episode about the ethics of online marketing—particularly all the parallels I have found between cults, cult-like companies, and the online business space, so stay tuned for that! I need to do a bit more research first and make sure I’m bringing you factual information, but it’s going to be good! For now, I hope you found this helpful and informative. If you loved it, make sure to share it to your stories and tag me so we can connect!
Action Items
A. Take a look at who you’re following online and what they’re teaching.
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- Stop consuming content that feels cookie cutter or regurgitated.
B. Most importantly, don’t be afraid to ask questions and think critically before investing in a coach.
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- If you’re being sucked in by flashy income reports that may or may not be real, it’s a red flag. A good coach’s proof is in how their clients succeed, not what’s in their bank account.
- If you are being locked into a large financial contract you can’t get out of, it’s a red flag. A good coach knows that not every client is the best fit for their program.
- If you can’t easily see proof of success for this coach’s work, it’s a red flag. A good coach is happy to give references.
- Do your homework.
Thank you so much for joining me for this episode of the Self-Made Mamas Podcast. You can find more information about working with us at theselfmademama.com or connect with us on Instagram at @selfmademama_. I can’t wait to chat.
