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INDUSTRY REPORT 61143

Business Coaching in the US

Back to school: Favorable economic conditions enabled companies to expand their operations

Thi Le | September 2019

Business Coaching in the US September 2019

About IBISWorld IBISWorld specializes in industry research with coverage on thousands of global industries. Our comprehensive data and in-depth analysis help businesses of all types gain quick and actionable insights on industries around the world. Busy professionals can spend less time researching and preparing for meetings, and more time focused on making strategic business decisions that benefit you, your company and your clients. We offer research on industries in the US, Canada, Australia, New Zealand, Germany, the UK, Ireland, China and Mexico, as well as industries that are truly global in nature.

Contents ABOUT THIS INDUSTRY..................................3

Industry Definition............................................................ 3 Supply Chain..................................................................... 3 Major Players....................................................................3 Main Activities.................................................................. 3 Similar Industries..............................................................3 Related International Industries........................................3

AT A GLANCE...................................................5

Key Statistics Snapshot.................................................... 5 Key Trends........................................................................5 SWOT in the Industry........................................................ 5 Executive Summary.......................................................... 5 Industry Structure............................................................. 6 Key Industry Data..............................................................7 Products & Services Segmentation.................................. 8

INDUSTRY PERFORMANCE.............................9

Key External Drivers.......................................................... 9 Industry Performance..................................................... 10 Industry Data Timeseries................................................12

INDUSTRY OUTLOOK................................... 13

Revenue Outlook.............................................................14 Industry Life Cycle.......................................................... 14 Products & Services Segmentation................................ 16 Supply Chain................................................................... 16 Products & Services........................................................16 Demand Determinants....................................................18 Major Markets................................................................ 19 International Trade......................................................... 21 Business Locations........................................................ 21

COMPETITIVE LANDSCAPE.......................... 22

Market Share Concentration...........................................22 Key Success Factors...................................................... 22 Cost Structure Benchmarks...........................................23 Basis of Competition...................................................... 24 Barriers to Entry.............................................................. 25 Industry Globalization..................................................... 25

MAJOR COMPANIES......................................27

Major Players..................................................................27 Other Companies............................................................ 27

OPERATING CONDITIONS........................... 28

Capital Intensity.............................................................. 28 Technology & Systems................................................... 29 Technology & Systems................................................... 30 Revenue Volatility........................................................... 30 Regulation & Policy......................................................... 31 Industry Assistance........................................................ 31

KEY STATISTICS.............................................32

Industry Data.................................................................. 32 Annual Change............................................................... 32 Key Ratios.......................................................................32 Industry Financial Ratios................................................ 33 Additional Resources......................................................34 Industry Jargon...............................................................34 Glossary..........................................................................34

Legend Icons are used throughout the report to indicate impact on the industry.

Negative impact

Neutral impact

Positive impact

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About This Industry Industry Definition This industry includes companies that offer short duration courses and seminars for management and

professional development. Training is provided through public courses or employer training programs, and the courses can be customized or modified. Instruction may be provided at the company's training facilities, client or educational institutions, the workplace, the home and via TV or the internet.

Supply Chain Supply Industries

IT Consulting

Office Supply Stores

Internet Service Providers

Commercial Leasing

Computer Stores

Book, Magazine & Newspaper Wholesaling

Demand Industries

- Consumers

- Public Administration

- Colleges & Universities

- For-Profit Universities

- Conservation & Human Rights Organizations

- Testing & Educational Support

Major Players There are no major players in this industry

Main Activities The primary activities of this industry are:

Providing management development training

Providing professional development training

Providing quality assurance training

Providing business coaching

The major products and services in this industry are:

Management development training

Professional development training

Quality assurance training

Business coaching

Other

Similar Industries 54161 - Management Consulting in the US

This industry advises clients on human resource and training issues.

54161b - HR Consulting in the US

This industry advises clients on personnel policies, benefits and compensation, as well as recruitment and retention.

61121 - Community Colleges in the US

This industry prepares individuals for careers and offers associate degrees, certificates and diplomas below the baccalaureate level.

61144 - Business Certification & IT Schools in the US

This industry offers certification courses in office procedures and secretarial and stenographic skills.

61131a - Colleges & Universities in the US

This industry prepares individuals for careers and offers degrees at the baccalaureate or graduate levels.

61131b - For-Profit Universities in the US

This industry prepares individuals for careers and offers degrees at the baccalaureate or graduate levels.

Related International Industries

P8210 - Art and Non-Vocational Education in Australia

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Industry firms offer a range of education and training services. Industry operators include tutoring services, English Language Intensive Courses for Overseas Students (ELICOS) providers, driving schools and performing arts colleges. The industry excludes pre-schools, kindergartens, schools, higher education institutions, technical and further education (TAFE) colleges and sports instructors.

61143CA - Business Coaching in Canada

Operators in this industry provide courses and seminars on management and professional development. Training can be provided through employers’ training programs or through public courses. This industry also includes trade, technical and vocational training sessions.

P8200NZ - Art and Non-Vocational Education in New Zealand

Industry operators primarily provide non-school and non-tertiary education services, including arts education, language schools, driving and flying schools, tutoring and a range of community education services as part of the Adult and Community Education sector. The industry excludes pre-schools, kindergartens, schools, higher education institutions, technical and further education colleges, and sports instructors.

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At a Glance Key Statistics Snapshot

Total Revenue 2019

$15.0bn

Annual Growth 2014-2019

5.6%

Annual Growth 2019-2024

3.0% Profit Margin

2019

8.1%

Wages as a share of Revenue 2019

27.8%

Number of Businesses 2014-2019

1.8%

Key Trends Overall, the number of business is forecast to have increased

The lull in demand particularly affected nonemploying sole proprietors

The industry has benefited from businesses outsourcing their training

The consumer market for professional skills and performance training is expected to grow

Distance education tools are expected to expand

Distance education tools are expected to expand over the next five years

SWOT in the Industry

Strengths

Growth Life Cycle Stage

Low Volatility

Low Imports

High Profit vs. Sector Average

Low Customer Class Concentration

Low Product/Service Concentration

High Revenue per Employee

Low Capital Requirements

Weaknesses

Low & Increasing Barriers to Entry

None & Steady Level of Assistance

Opportunities

High Revenue Growth (2014-2019)

High Revenue Growth (2019-2024)

Number of employees

Threats

Low Revenue Growth (2005-2019)

Low Outlier Growth

Low Performance Drivers

Corporate profit

Executive Summary

Operators in the Business Coaching industry offer leadership and management training courses, including courses to enhance knowledge in particular areas, such as information technology and change management.

The industry is heavily reliant on demand from its largest market, which is the middle and senior management staff of US corporations. Furthermore, favorable economic conditions enabled not only new companies to enter the market, but also existing companies to expand their operations, boosting demand for industry services. IBISWorld estimates that revenue increased at an annualized rate of 5.6% to $15.0 billion over the five years to 2019. This includes expected growth of 4.9% in 2019 alone, driven particularly by strong growth in corporate profit.

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Over the five years to 2019, the industry has benefited from growing acknowledgment among large corporations and training seminars. In response to globalization, businesses have increased their use of training and more individuals have attended programs to learn about finance and real estate. Over the past five years, rising corporate profit levels have spurred an increase in demand, particularly from nonemploying business owners seeking to strengthen their skillsets to become more competitive in the current economic climate. Additionally, job seekers with prior experience have increasingly sought out business coaches to make them more-competitive candidates in a tightening job market. Over the past five years, business have continued allocating funds toward industry services due to the growing acceptance of the benefits associated with business coaching, causing industry profit (measured as earnings before interest and taxes) to remain stable at 8.1% of revenue over the past five years.

Over the five years to 2024, the Business Coaching industry is anticipated to experience strong but slower growth. Although some companies will use internal resources for training, industry revenue is forecast to increase at an annualized rate of 3.0% to $17.4 billion over the five years to 2024. Moving forward, the adoption of online training is expected further boost industry revenue. This alternative is a more affordable and flexible option for clients and offers lower operating costs for training providers, protecting the average industry profit margin from any significant declines over the next five years. However, it will also act as a double-edged sword as online operators will enter the industry to compete with traditional brick- and-mortar companies.

Industry Structure Level Trend

Life Cycle Growth

Revenue Volatility Low

Capital Intensity Low

Industry Assistance None Steady

Concentration Level Low

Level Trend

Regulation Level Light Steady

Technology Change Medium

Barriers to Entry Low Increasing

Industry Globalization Low Increasing

Competition Level Medium Increasing

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Key Industry Data

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Products & Services Segmentation

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Industry Performance Key External Drivers

o Corporate profit

Corporations comprise a large proportion of the industry's customers, so changes in business sentiment typically influence industry demand. When corporate profit is low, companies are less likely to spend money on nonessential training for their staff. Corporate profit is expected to increase in 2019, representing a potential opportunity for the industry.

o Per capita disposable income

Disposable income levels influence individuals that take courses for self-fulfillment. Customers are sensitive to price, so an increase in disposable income often leads to increased spending on education and training courses. Per capita disposable income is expected to increase in 2019.

o Households earning more than $100,000

Demand for the educational services provided by this industry mainly comes from middle and senior managers. An increase in the number of people in these positions increases demand for services. A proxy for the number of middle and senior managers is the number of households in high-income groups. Therefore, an increase in the number of wealthy households is projected to raise demand for industry services. The number of households earning more than $100,000 is expected to increase in 2019.

o Business sentiment index

The business sentiment index gages the overall health of the business environment by reviewing production levels, inventory levels, supply deliveries and employment levels. Business sentiment index is expected to decrease significantly in 2019, posing a potential threat to industry operators.

o Number of employees

Any rise in the number of employees in the United States expands the industry's potential market base. Therefore, an increase in the number of employees typically boosts demand for industry services. The number of employees is expected to increase in 2019.

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Industry Performance The Business Coaching industry includes companies that offer professional development and management training through a variety of programs.

The rapid pace of technological change and the shortening of product life cycles have altered the skills required to be an effective businessperson. To keep up with these changes and develop the skills of senior employees, many companies use business coaching trainings and seminars offered by the Business Coaching industry. Large corporations have placed an increased emphasis on seminars and workshops over the five years to 2019, boosting industry demand. Courses related to new skills, such as information technology and change management, have been growing areas for the industry. Rising acceptance of the value of professional development and continuing education has benefited this industry immensely. Overall, industry revenue has grown an annualized 5.6% to $15.0 billion over the five years to 2019, including expected growth of 4.9% in 2019 alone.

Income levels and corporate profit

The broader macroeconomic landscape has boded well for Business Coaching industry growth, as the market for professional skills and performance training includes both individuals and corporations. Although the industry's greatest share of revenue comes from large corporations, increased per capita disposable income has considerably boosted demand from individuals. Greater income levels have enabled nonemploying business owners to contract industry services to develop their business skills and enhance their competitiveness in their markets. Additionally, job seekers trying to become more competitive in the labor market have increasingly chosen to take courses with industry operators. Over the past five years, per capita disposable income has increased at an annualized rate of 2.2%, directly boosting demand for business coaching services.

Starting in 2018, sustained improvements in the broader economy and the private investment landscape have correlated with a rising number of domestic companies; consequently, the number of businesses is forecast to rise 1.3% in 2019. Overall, the number of business is forecast to have increased at an annualized rate of 1.3% over the five years to 2019, successfully expanding industry's prime customer base. Additionally, like income levels, corporate profit levels have a prominent effect on the industry's performance during the current period. Corporate profit is a particularly important driver because businesses (the bulk of industry clients) tend to spend more on employee development when funds are readily available. Corporate profit grew at an annualized rate of 2.5% during the five-year period, enabling businesses to invest in educating senior and midlevel employees.

Industry structure

Though the economy has performed strongly over the past five years, industry profit (measured as earnings before interest and taxes) has remained unchanged at 8.1% of industry revenue during the same period. Depressed demand and profit during the middle of the period forced industry players to pursue leaner operations and cut back on operational costs associated with business operations. In 2016, profit margins declined to 6.1% of industry revenue and gradually recovered when corporate profit started to improve in the same year.

The lull in demand particularly affected nonemploying sole proprietors, which account for more than 85.0% of companies operating in this industry, but less than 20.0% of total industry revenue. Operators of nonemployer businesses are primarily former management consultants or management-level employees. These operators often work on a part-time basis, leaving the industry during periods of low demand. However, low barriers to entry and renewed growth in demand later during the period spurred former operators and new players to enter the market. Over the five years to 2019, the number of enterprises is expected to grow at an annualized rate of 1.8% to 53,662 operators.

New enterprises and establishments have also led to higher employment. The increasing usage of virtual training sessions has enticed companies to hire employees with technical expertise, along with more consultants and trainers in the field. The number of employees is forecast to increase at an annualized rate of 3.4% to 104,136 workers over the five years to 2019.

Technology

The rapidly changing business environment has supported long-term industry growth. Technological advances have not only expanded the knowledge required for employees and managers, but also increased the volume and diversity of work that most employees have to undertake. Moreover,

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globalization has pushed many businesses to expand their operations overseas, further changing demands and requirements of employees. These business conditions have led to an overall increase in expenditures on employee and management training and development.

Professional and management development education providers have increased the flexibility of their courses through the use of the internet and other technologies. Greater flexibility has helped increase demand for professional skills training by broadening its accessibility. New software programs have enabled individuals to attend training courses from home or out of town. The development of online education resources has also enabled some establishments to cut labor and rent costs as percentages of revenue. These video conferencing programs have helped industry operators reach more clients with less travel requirements. As operators have been able to take on more clients and minimize relative fixed costs, their margins have grown.

The industry has also benefited from a trend of businesses outsourcing their training and development. The majority of corporate training is still internal, but companies are increasingly outsourcing trainings that can be standardized. This market has yet to peak, and industry operators regard internal training programs as one of their main competitors. With this knowledge, many operators have changed course styles and flexibility to encourage businesses to favor their services over internal training.

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Industry Data Timeseries

Revenue ($m)

IVA ($m)

Estab. (Units)

Enterprises (Units)

Employment (Units)

Exports ($m)

Imports ($m)

Wages ($m)

Domestic Demand

($m)

Number of employees

(Million) 2002 6,298 1,904 22,115 21,980 41,475 N/A N/A 1,690 N/A 131

2003 7,262 2,498 25,769 25,585 51,591 N/A N/A 2,128 N/A 130

2004 7,881 2,371 27,691 27,503 55,270 N/A N/A 2,182 N/A 132

2005 8,255 3,177 29,482 29,309 54,865 N/A N/A 2,326 N/A 134

2006 8,739 3,237 30,353 30,155 60,195 N/A N/A 2,826 N/A 136

2007 10,162 3,382 35,769 35,477 66,581 N/A N/A 2,661 N/A 138

2008 10,228 3,981 40,173 39,880 77,943 N/A N/A 3,388 N/A 137

2009 9,215 3,756 39,068 38,795 73,081 N/A N/A 2,946 N/A 131

2010 9,635 3,757 38,635 38,357 71,110 N/A N/A 2,948 N/A 130

2011 10,122 4,435 40,782 40,500 75,497 N/A N/A 3,088 N/A 132

2012 10,043 4,826 49,171 48,849 94,386 N/A N/A 3,892 N/A 134

2013 10,770 5,106 47,887 47,560 91,340 N/A N/A 3,770 N/A 136

2014 11,470 4,757 49,446 49,191 87,968 N/A N/A 3,553 N/A 139

2015 12,264 4,766 49,062 48,792 85,782 N/A N/A 3,490 N/A 142

2016 12,931 4,788 49,143 49,021 91,110 N/A N/A 3,715 N/A 144

2017 13,538 4,950 49,429 49,282 94,441 N/A N/A 3,785 N/A 147

2018 14,338 5,415 51,730 51,539 99,522 N/A N/A 3,993 N/A 149

2019 15,036 5,699 53,884 53,662 104,136 N/A N/A 4,180 N/A 151

2020 15,595 5,905 55,119 54,844 107,245 N/A N/A 4,311 N/A 152

2021 16,022 6,083 56,401 56,106 110,019 N/A N/A 4,424 N/A 153

2022 16,443 6,256 57,641 57,323 112,958 N/A N/A 4,541 N/A 153

2023 16,932 6,480 59,136 58,796 116,467 N/A N/A 4,681 N/A 153

2024 17,440 6,696 60,800 60,440 120,053 N/A N/A 4,825 N/A 154

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Industry Outlook The Business Coaching industry is expected to continue experiencing

growth over the five years to 2024 as the US economy expands, albeit at a slower rate than during the current period.

Corporate profit is forecast to grow moderately over the next five years, sustaining the funds companies have to invest in industry services. However, business sentiment is anticipated to decline as investor uncertainty increases. Overall, industry revenue is forecast to increase at an annualized rate of 3.0% to $17.4 billion over the five years to 2024.

Demand for industry services has largely been supported by long-term trends that will ultimately sustain the recent growth in industry revenue. Increasing competition among corporations, which has been propelled by globalization and the entry of new domestic competitors, will likely encourage companies to spend on professional training. Midsize businesses are expected to represent a growth segment for the industry, as they experience increasing pressure to move into international markets to remain competitive.

Economic effects

Just as the number of businesses has increased in stride with broader economic performance, it is expected to continue in lockstep with the economy at large. US GDP is expected to maintain at a moderate pace of growth over the next five years. Growth in the number of businesses is forecast to follow this same trend as rising disposable income levels are expected to spur consumer spending, igniting demand for new products and services. However, this outlook is susceptible to drags resulting from higher interest rates. Additionally, pressure from political forces is likely to continue to drive up minimum wages in certain areas, pushing the cost of doing business up for some businesses. Overall, the number of businesses is expected to increase marginally at an annualized rate of 0.7% over the next five years, providing a platform for industry growth. However, companies that reduced spending on training programs over the past five years will be hesitant to take on such costs again. Additionally, increased investor uncertainty is expected to make companies cautious to invest in industry services, and more likely to use internal resources for employee training. Consequently, growth is expected to slow compared with its rate during the current period.

Although the corporate market will not provide as much opportunity for growth over the next five years, the consumer market for professional skills and performance training is expected to grow, as demand from individuals is generally linked to disposable income. Therefore, the industry will benefit from rising per capita disposable income, which is measured to increase at an annualized rate of 1.5% over the five years to 2024. Some individuals that have been unemployed for an extended period will likely use services from this industry to update their skills as the labor market continues to grow. Additionally, many professional skills courses undertaken by individuals are related to real estate. Over the next five years, improving growth in the real estate market is anticipated to spur demand for related training.

New technology, rising competition

Distance education tools are expected to expand over the next five years, as they can be used to increase the flexibility of delivering courses. Distance education courses are unaffected by location and increasingly affordable to provide. These internet-based programs can lower the cost of delivering education by reducing operators' wage costs. Distance education also makes training programs available to a wider potential audience, including out-of-town individuals. Virtual presence technologies such as Skype have made it possible for players to provide coaching services to users that prefer remote courses.

Over the five years to 2024, industry profit, measured as earnings before interest and taxes, is expected to improve from 8.1% of revenue in 2019 to 9.0% of revenue in 2024 as a result of increasing adoption of technology in coaching processes. In particular, technological advances such as virtual training sessions enable employees to attend seminars and classes remotely. As a result, operators can cut down on travel time and coach more clients each day, maximizing their revenue and minimizing relative fixed costs. As industry operators use the internet as a coaching medium, they are able to reach a larger group of students at lower fixed costs, thus improving profitability.

Sustained demand and growing profitability will likely attract more operators and employees to the industry. Historically, economic downturns have reduced the number of sole proprietors and nonemployers in this industry. Many of these companies operate on a part-time basis, making it relatively

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easy for them to exit during periods of low demand. Conversely, when demand for industry services is strong, these companies can easily re-enter the industry. Over the next five years, many small players, particularly nonemploying operators, will continue to re-enter the industry. This factor is the primary reason for a forecast of strong employment and enterprise growth over the next five years. Over the five years to 2024, the number of enterprises operating in the industry is expected to increase at an annualized rate of 2.4% to 60,440 companies. Likewise, employment is projected to increase at an annualized rate of 2.9% to 120,053 workers.

Industry competition is therefore forecast to increase over the next five years. As a result, new entrants may seek to specialize in particular niche markets, such as quality assurance training for specific sectors. A survey by the Association for Talent Development found that when searching for a management and professional training development provider, corporate clients value businesses with strong knowledge of the company's industry. This means there are potentially lucrative niche markets for smaller training providers to exploit.

Revenue Outlook

Revenue ($m)

IVA ($m)

Estab. (Units)

Enterprises (Units)

Employment (Units)

Exports ($m)

Imports ($m)

Wages ($m)

Domestic Demand

($m)

Number of employees

(Million) 2019 15,036 5,699 53,884 53,662 104,136 N/A N/A 4,180 N/A 151

2020 15,595 5,905 55,119 54,844 107,245 N/A N/A 4,311 N/A 152

2021 16,022 6,083 56,401 56,106 110,019 N/A N/A 4,424 N/A 153

2022 16,443 6,256 57,641 57,323 112,958 N/A N/A 4,541 N/A 153

2023 16,932 6,480 59,136 58,796 116,467 N/A N/A 4,681 N/A 153

2024 17,440 6,696 60,800 60,440 120,053 N/A N/A 4,825 N/A 154

Industry Life Cycle The life cycle stage of this industry is Growth

NOTE

Key Considerations: An industry's life cycle stage is determined by multiple factors, such as IVA vs. GDP performance and establishment growth. Other qualitative factors must also be considered, which mean that the indicative life cycle stage shown above may not reflect the industry's actual life cycle stage as determined by the analyst. Please refer to the below analysis for more information.

Life Cycle Reasons

o The industry is growing faster than the overall economy

o The number of operators is increasing

o The type of training offered is adapting to changes in the business environment

The Business Coaching industry is expected to grow at a faster rate than the overall economy over the 10 years to 2024. Industry value added (IVA), which measures an industry's contribution to the overall economy, is expected to increase at an annualized rate of 3.5% over the 10 years to 2024, while the US economy is expected to grow at an annualized rate of 2.0% during the same period. Besides IVA growth that is faster than GDP growth, which is typical of a growing industry, other factors also characterize this industry as growing. During the 10-year period, the number of operators steadily increased, and there has been consistent technological change and a growing number of new products. Therefore, the industry is currently in the growth phase of its life cycle. Additionally, more companies have embraced professional skills programs as an important method of training key management personnel, which is indicative of the industry's growing life cycle stage. Senior managers are leading organizations in an increasingly competitive and global economy, so businesses use this industry's services to teach managers to navigate these problems.

The type of training provided by this industry is adapting to the changing needs of businesses. Newer training courses include those related to information technology, security management, information management and change management. These moves have supported long-term growth for players offering these courses. The number of enterprises operating in this industry is expected to increase an

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annualized 1.8% during the 10-year period, including the return of many operators that previously exited the industry.

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Products & Services Segmentation Supply Chain

Products & Services

The product segmentation of the Business Coaching industry has undergone changes over the past decade.

The advent of business coaching and ongoing changes to the business environment have affected the content of training courses. Increasing globalization, widespread use of technology and an aging workforce have all contributed to these changing services. In general, these factors have increased demand for services provided by this industry. Courses in this industry relate to professional development, management development, quality assurance training and business coaching.

Professional development training

The most common service provided by this industry is in the field of professional development, which includes seminars and courses on topics such as finance and accounting, communication and interpersonal skills, marketing and time management. These courses appeal to a broad group of people with a wide range of skills and are more likely to include individuals than programs in the management

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development training segment. Many providers of these services have experienced a surge in demand with the recovery and subsequent growth of the economy during the five-year period. This segment is expected to account for 32.8% of industry revenue in 2019.

Management development training

Management development training is generally targeted at middle- and senior-level management. Courses in this segment include seminars on topics such as strategic business management, leadership, management and supervisory skills, sales management and IT management. The primary market for this segment is made up of corporations that are trying to develop their managers. Over the past five years, this segment experienced growth as a result of improvements in corporate profit, which enabled many of these companies to increase training expenses. In 2019, management development training is projected to make up 18.5% of industry revenue.

Quality assurance training

Quality assurance training is a growing segment of this industry and is expected to increase over time, accounting for an expected 9.6% of revenue in 2019. This segment is primarily focused on improving production processes as well as the end result of the processes. Increasing requirements for the formal quality certification of products and business systems are expected to spur demand for quality assurance training over the next five years. Furthermore, this segment has received a boost following several high- profile cases, such as dangerous levels of lead paint found in children's toys.

Business coaching

The business coaching segment has experienced rapid growth as demand for more personal executive training has increased over the past five years. Management training experts believe that this is due to the flattening out of businesses, which is leaving management more isolated than before. Due to the isolation, managers often employ coaches to share ideas with, learn from and help develop their leadership skills. Employment trends toward higher instances of job transition, self-employment and changing management styles are also cited as reasons for the increased demand for business coaches. Furthermore, some managers feel that traditional management styles no longer work and they need to learn new techniques to achieve what is required of them. This segment accounts for an estimated 9.7% of industry revenue in 2019.

Other

Other industry services include basic education programs, including literacy programs, GED, second- language programs and special educational programs, higher academic courses and technical programs, as well as specialized training programs focused on a particular subject matter, such as physical, life, computer and information sciences. This segment also includes revenue generated through licensing fees and support services. This segment is anticipated to account for 29.4% of revenue in 2019 and has declined as a share of industry revenue over the past five years.

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Demand DeterminantsDemand for services from the Business Coaching industry is influenced by business sentiment, corporate training budgets, course quality and employer perception of course value, change within corporations and the price of training courses.

Demand from individuals is influenced by growth in household disposable income, price and perceptions of quality and value.

Corporations comprise the largest market segment for this industry. Therefore, demand for industry services is largely influenced by corporate training budgets. These budgets, in turn, are affected by business sentiment, overall economic growth and the perceived value of training programs to company performance. Periods of high business sentiment often spur investment in employee training programs, while difficult economic times cause companies to reduce spending on nonessential training. Corporations often cut training budgets when profit falls, leading to lower demand for the services provided by this industry.

Employer perceptions of the value of management and development training strongly influence demand for performance skills training. There is likely to be a higher level of demand for training programs that are highly respected and valued by corporations. Training programs have generally become more widely accepted, a driving factor in industry growth over the past five years.

Change within a company can also spur demand for industry services. An increase in the pace of technological improvements or a reduction in product or process life cycles can translate to an increase in demand for professional skills and performance training. Similarly, companies may choose to invest in training programs during restructuring campaigns.

The price of training is an important factor of demand. Seminars and short-duration courses are not essential services and, therefore, must be affordable for both individuals and corporations, depending on the target market of the training program. The level of disposable income influences demand for self- fulfillment courses that are taken by individuals. More flexible course arrangements have boosted demand because they permit individuals to take classes remotely and on their own schedules.

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Major Markets

The Business Coaching industry provides training to individuals through public open-enrollment programs and to corporations and government departments through custom-designed programs.

Services provided by this industry to the private, public and nonprofit sectors are most often aimed at middle management and above. Individuals also comprise a significant downstream market, especially given increases in per capita disposable income, which enables individuals to purchase industry services.

Managers and team leaders

In 2019, clients in managerial and team leadership positions comprise the largest market segment at an estimated 35.6% of industry revenue. Business coaches often draw from their own corporate experience to help improve work performance for their clients. Management development training is of particular importance for corporations as effective training can improve managers' personal and leadership skills, which, in turn, may improve organizational effectiveness, conflict resolution and strategic planning. The same goes for team leaders, which must effectively organize and motivate their team members. Strong middle management leadership has the positive externality of improving the workplace atmosphere for all employees as good managers can assist lower level employees in career development and job satisfaction. Managers may also use industry services to expand their skill sets or diversify their knowledge so that they can be more competitive in their respective industries.

Executives

Clients in executive positions such as CEOs, CFOs and COOs make up the second-largest market segment at an estimated 18.2% of revenue in 2019. Due to the flattening trend in corporate hierarchy in recent years, executives are expected to take up extra responsibilities, thus increasing their demand for business coaching services. Similar to managers, executives can benefit from industry services through improved interpersonal and leadership skills. Coaches for executives often use positive psychology concepts and focus on improving emotional intelligence to help executives maximize both their own personal strengths, and the strengths of each of their employees. This also helps executives effectively organize their businesses and improve employee performance and job satisfaction. Job fulfilment has grown increasingly important among workers. To increase job fulfilment, many business coaches assist executives in identifying the strengths of individuals and promoting employees accordingly.

Entrepreneurs

At an estimated 17.0% of industry revenue, entrepreneurs and business owners make up a significant downstream market for industry operators. These clients can benefit from industry services by receiving

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customized insights on how to improve their business operations. Business coaches can ask business owners insightful questions to help cover information gaps that the client was not previously aware of. Entrepreneurs can benefit from a range of industry services as each business has unique needs and growth opportunities. As personal income has increased over the past five years, this segment's share of industry revenue has also improved accordingly.

Other

The remaining 29.2% of industry revenue comprises general staff members and other individuals. Business coaches in this market may provide training on quality assurance, compliance within specific industries, continuing education, second language programs, higher academic courses and other specialized training programs focused on a particular skill or subject.

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International Trade Exports in this industry are Low and Steady

Imports in this industry are Low and Steady

Given that the Business Coaching industry offers only seminars and courses of short duration, international participants are unlikely to attend courses offered in the United States. Therefore, trade levels within this industry are relatively small. However, an increasing number of establishments in this industry are offering their courses over the internet, enabling overseas residents to participate.

Additionally, several of the larger enterprises in this industry also operate outside the United States, either through establishing overseas branches, the sale of a franchise to an overseas operator or through licensing an overseas enterprise to deliver training courses. For instance, the Center for Creative Leadership operates campuses in Singapore and Brussels and also has network associates in several other countries. These network associates are licensed to offer one or more of the center's programs and assessments to the public or the managerial staff of organizations.

Business Locations

The distribution of industry establishments in the Business Coaching industry closely follows the US population. The most populated region of the United States, the Southeast, accounts for 23.4% of establishments, followed by the West region with 18.0% and the Mid-Atlantic region with 15.9%. Moreover, California accounts for the largest share of both industry establishments and the US population, with an estimated 11.5% of business coaching establishments serving 12.1% of the population.

Highly populated regions, particularly those with centers of major business activity, benefit from higher demand for professional skills training. Regions with a large number of corporate headquarters will have higher demand for professional and management development training because a large proportion of the market for this industry is made up of corporations. Larger establishments are therefore more likely to be located in these regions. The distribution of businesses in this industry has not changed much over the past five years.

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Competitive Landscape Market Share Concentration

Concentration in this industry is Low

In 2019, IBISWorld estimates that the two largest companies account for less than 5.0% of industry revenue. As a result, the Business Coaching industry is highly fragmented, with a large number of small enterprises operating across the United States. The vast majority of operators are nonemployers that service only their local area. Nonemploying businesses represent more than 85.0% of all companies operating in this industry. Similarly, there is also a large number of operators that have a relatively small number of employees. The low barriers to entry in this industry and growing demand have helped nonemploying companies carve out a niche and a space for success in this industry. Additionally, the wide range of client industries has led to specialization that has discouraged any one company from gaining significant market share in this industry. As a result, most competition occurs on a regional basis. While larger companies operate in several locations, the dominance of smaller companies is emblematic of an industry with low market share concentration. Additionally, concentration has fallen over the past five years, as technological advances have made it easier for nonemployers to enter the industry. Teleconferencing technologies, such as Skype, have enabled individual operators to bolster flexibility in their offerings and availability, cutting into barriers for entry and success. This has offered a lower-priced option for many businesses that may have otherwise been priced out of service by the larger companies, bolstering already high levels of fragmentation.

Key Success Factors IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:

 Ability to alter goods and services produced in favor of market conditions: Establishments in this industry must be able to change or adapt the courses offered to suit the needs of attendees. For instance, recently there has been increased demand for IT management training and quality assurance training.

 Provision of superior after sales service: Establishments that provide a higher level of after-sales service have a competitive advantage over those that do not in cementing client relationships.

 Having a good reputation: The perceived value of a company is important for the recruitment of new clients for seminars and workshops.

 Being part of a franchising chain: New establishments in this industry can benefit from offering courses under license from a larger organization. This reduces the costs associated with establishing new courses and maximizes economies of scale.

 Access to highly skilled workforce: Trainers in this industry must have an appropriately high level of skills and experience.

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Cost Structure Benchmarks

Profit

Average profit margins for the Business Coaching industry, measured as earnings before interest and taxes, represent an estimated 8.1% of revenue in 2019. Profit has remained stable since 2014. Despite increasing investment in technology by industry operators, business coaches have implemented VoIP and video conferencing technologies, which have enabled them to reach more clients in a given day. Instead of traveling to different locations to coach disparate clients, coaches can maximize time and video conference with more clients because of the lack of travel time. Thus, the implementation of technology in coaching process has enabled industry operators to offset increases in investments and purchases.

Wages

Wages and salaries account for the largest portion of industry revenue because most teaching is conducted on a face-to-face basis. Wages account for an expected 27.8% of industry revenue in 2019, which includes wages for teaching, administration and management staff. The wages category also includes an allowance for the wages of self-employed operators in the industry, which are typically lower than the average for the overall industry. Over the five years to 2019, wages have declined as a share of revenue due to an increase in online-based trainings. In particular, nonemployers have taken advantage of technological advancements in voice over Internet Protocol (VoIP) software and teleconferencing equipment. This flexibility has enabled more part-time work, which has cut into wage outlays.

Purchases

Purchases account for an estimated 3.1% of industry revenue in 2019. Purchases include materials, equipment and property and leasehold improvements. Course development costs, which are associated with developing and refreshing courses, are also considerable. Since it is important for providers to offer courses that are current, they must frequently invest in updating course material. Over the past five years, this segment has increased as a share of industry revenue, due to the higher costs materials and equipment.

Marketing

Advertising and marketing expenses make up a relatively notable cost for industry operators because business coaching is still gaining acceptance and competition is strong. The larger companies in the industry have emphasized the importance of marketing and advertising in their operations. Marketing is expected to account for 2.5% of industry revenue in 2019. Marketing expenses have increased over the past five years as operators incorporate new products into their portfolios.

Depreciation

Depreciation represents only a small share of total revenue for this industry because seminars and training courses are generally of a short duration, and facilities are rented on an as-needed basis. Other capital requirements for operators are minimal. Therefore, depreciation is estimated to account for 2.0% of

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industry revenue in 2019 and has declined as a share of industry revenue during the five-year period.

Rent

The cost of rent varies among operators as some own their training facilities and others rent them. Operators that serve business clients may use the business' facilities to reduce costs. This move reduces capital and also rent expenses, which are estimated to represent 4.5% of industry revenue in 2019. Rent costs have remained flat over the past five years.

Utilities

Utility expenses are expected to comprise 0.4% of revenue in 2019. Utilities comprise phone and computer expenses, rent and building maintenance costs and electric costs. Utilities' share of industry revenue has slightly declined over the past five years.

Other Costs

Industry operators also incur a variety of other expenses, such as fees for legal and accounting work. Operators must also pay for other day-to-day costs of running a business, such as administrative expenses and travel to and from clients. Continuing education and training fees also contribute to these costs. For those that are self-employed, self-employment taxes account for a significant amount of profit earned. In 2019, these miscellaneous costs collectively account for an estimated 51.6% of industry revenue.

Basis of Competition Competition in this industry is Medium and the trend is Increasing

Operators in the Business Coaching industry experience both internal and external competition.

Since the industry is fairly fragmented with a large number of owner operators, competition occurs mainly at a regional level.

Internal competition

Businesses within the industry compete on the basis of quality, reputation, industry-specific knowledge, price, flexibility and marketing ability. Since most clients of this industry are in higher-level positions in their organizations, they are typically seeking a high-quality educational service with a short duration. This fact is influenced not only by the standard of course content, but also by the quality of trainers. Trainers need to be highly knowledgeable and respected in their teaching fields.

Reputation is an important factor and can include both the reputation of the training provider and of the content of the course. Well-known training courses (e.g. courses based on Stephen Covey's 7 Habits of Highly Effective People and seminars presented by well-respected trainers) or courses offered by organizations such as the American Management Association can benefit considerably from a good reputation. Specific industry knowledge creates another basis of competition between providers. For instance, a good understanding of a client's particular industry may give an education provider a competitive advantage over others.

Establishments within this industry also compete on the basis of price. Although prices may be difficult to compare because of the range of different courses offered in terms of the topics covered, the length of the training course and the level of course support before and after training. Effective marketing strategies can be a point of competition; therefore, businesses undertake a range of marketing and advertising activities to attract both corporate and individual clients.

Flexibility in terms of course design and scheduling will give establishments within this industry a competitive advantage. Industry operators provide set courses and customize their training to suit the needs of the client. Flexibility in the scheduling of courses is important because the vast majority of participants in training offered by this industry are full-time employees, often in senior-level positions. As a result, several establishments in this industry offer self-paced programs or online courses.

External competition

Industry participants are experiencing increasing external competition from other education operators involved in the Colleges and Universities industry (IBISWorld report 61131a) and the For-Profit Universities industry (61131b). This competition is evident in the large increases in Masters of Business Administration degrees, which involve similar content to some of the courses delivered through the Business Coaching industry. Industry operators also experience competition from internal training and development

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departments of larger corporations. Internal training providers benefit from higher knowledge of the workings of the company.

Barriers to Entry Barriers to Entry in this industry are Low and the trend is Increasing

Overall, there are few barriers to entry into the Business Coaching industry.

Investment requirements are low, and there is minimal regulation of the industry. As a result, the industry has a low concentration with a large number of owner-operated businesses. The ease of entry enables these nonemploying businesses to enter and exit the industry in line with changing conditions. Business coaches are good examples because they have minimal fixed costs and can set up or leave the industry with little expense incurred.

The major cost of entering this industry relates to the development costs of creating suitable training programs and the promotion of new courses. The initial costs of establishing an enterprise in this industry are relatively low. Most classes are of a short duration, and training facilities and equipment can be hired on an as-needed basis to minimize capital costs. Businesses providing corporate training may also use the client's facilities, lowering expenditures by reducing the need to rent out sizable training facilities.

Reputation is important; therefore, new establishments in this industry may initially experience difficulties attracting students. Establishments generally need to have a quality training reputation to attract both individual students to public seminars and courses and corporations seeking customized training for their professional and management staff. Obtaining accreditation from an organization such as the International Association for Continuing Education and Training (IACET) or the International Coach Federation (ICF) is one way that an establishment in this industry can develop a good reputation. The IACET Authorized Provider Program assesses programs based on a series of criteria that measure all aspects of an educational provider's program development. The ICF has an accreditation program that costs $1,000 (for a renewable three-year approval) and includes over 176 hours of training. The cost and time required to gain accreditation may, however, represent a barrier to entry for some potential operators.

Over the next five years, it is likely that barriers to entry will increase as more operators attempt to enter the industry. As a result, IBISWorld expects that more stringent certifications will be imposed on existing and prospective business coaches. The increasing enterprise figures will give prospective clients more choices when choosing a business coach and being certified is likely to become more of a necessity in this industry.

Barriers to Entry Checklist

Competition Medium

Concentration Low

Life Cycle Stage Growth

Technology Change Medium

Regulation & Policy Light

Industry Assistance None

Industry Globalization Globalization in this industry is Low and the trend is Increasing

The Business Coaching industry has a low level of globalization, with all of the larger enterprises being domestically owned. The international reach of these enterprises is growing. However, through the establishment of branches overseas, there is an increasing use of distance education methods. Industry leader Franklin Covey Co. earned more than 25.0% of its total sales outside of North America in fiscal 2018.

Despite this expansion, the vast majority of people served by this industry are located in the United States, and companies with operations overseas account for only a small percentage of total industry revenue. Given the highly fragmented nature of this industry, with more than 85.0% of establishments being nonemployers, the level of domestic ownership of certain establishments is likely to remain low.

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Major Companies Major Players There are no major players in this industry

Other Companies Center for Creative Leadership

The Center for Creative Leadership (CCL) is a nonprofit organization founded in 1970 in Greensboro, NC. The CCL now operates at five campuses, including one in Brussels and one in Singapore. In addition to operations at its own campuses, the company provides courses online and through a network of associates. Each of its more than 500 associates, which are located in seven regions across the world, are licensed to offer one or more of the CCL's programs. The CCL undertakes research and educational training programs on modern leadership issues. For more than a decade, the company has been ranked among the top providers of nondegree executive education programs by publications including the Financial Times and Businessweek.

CCL offers a range of leadership development courses designed for middle and senior managers. It provides 15 different open enrollment courses and tailored courses for corporate training. The company provides customized programs for more than 2,000 client organizations each year. The majority of its program participants are from the private sector. IBISWorld estimates that the CCL has a market share of less than 1% and will generate $39.9 million in US industry-specific revenue in fiscal 2020.

Franklin Covey Co.

Franklin Covey Co. (Franklin Covey) is a learning and performance solutions company that provides management training and assessment services for organizations and individuals. The company was formed in 1997 when Franklin Quest acquired the business created by Stephen Covey, author of the 7 Habits of Highly Effective People. The company offers courses on a wide range of topics, including leadership, productivity and customer loyalty. It is based in Salt Lake City, UT. Consultants provide on-site training for organizations and schools, and the company offers a measurement methodology along with its courses to quantify the results of the training. Franklin Covey employs 890 associates across three operating segments based on the company's target markets, which include direct offices, education practice and international licensees. The domestic operations of the first two of these segments are industry relevant. The company employs 940 associates and claims rights for over 630 trademarks. IBISWorld estimates that Franklin Covey will generate $231.5 million in industry-specific revenue in fiscal 2020 (year-end August) to gain a market share of 1.7% of the business coaching industry.

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Operating Conditions Capital Intensity

The level of capital intensity is Low

The Business Coaching industry has a low level of capital intensity. IBISWorld estimates that for every dollar spent on wages, industry operators will spend $0.07 in capital investment. As is the case for most industries in the education sector, wages and salaries account for a high proportion of industry revenue, resulting in high labor intensity. Business coaches are often skilled and accredited workers with experience in the fields in which they coach. This type of worker often commands a high salary, which pushes up labor expenditures. Capital investment is mainly in equipment, such as computers, and technology, such as voice over Internet Protocol software. Over the past five years, some operators have invested in capital so that they can coach and remain in communication with clients online. However, these technologies are rather inexpensive and has not significantly increased capital spending.

This industry generally provides training on a face-to-face basis. However, alternative training delivery methods, primarily via the internet, has grown in popularity in recent years. Currently, the internet is primarily used in blended learning, which uses online elements to complement classroom training. Online learning is expected to develop further over the coming years.

As training courses in this industry are predominantly short in duration, many establishments are able to rent premises and equipment on an as-needed basis, rather than purchasing them outright. In addition, training programs provided to corporations can be held at the client's training facilities or workplace. This ability results in lower capital costs than would otherwise be the case.

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Technology & Systems Level Factor Disruption Description

Medium Rate of Innovation

Potential A ranked measure for the number of patents assigned to an industry. A faster rate of new patent additions to the industry increases the likelihood of a disruptive innovation occurring.

Low Innovation Concentration

Unlikely A measure for the mix of patent classes assigned to the industry. A greater concentration of patents in one area increases the likelihood of technological disruption of incumbent operators.

High Ease of Entry Likely A qualitative measure of barriers to entry. Fewer barriers to entry increases the likelihood that new entrants can disrupt incumbents by putting new technologies to use.

High Rate of Entry Likely Annualized growth in the number of enterprises in the industry, ranked against all other industries. A greater intensity of companies entering an industry increases the pool of

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potential disruptors.

Low Market Concentration

Unlikely A ranked measure of the largest core market for the industry. Concentrated core markets present a low-end market or new market entry point for disruptive technologies to capture market share.

Technology & Systems

The level of technology change is Medium

Operators in the Business Coaching industry need to keep pace with the rate of technological change in major corporations to ensure that the training provided is up-to-date and relevant, which includes updating existing courses and providing new training courses as client industries evolve.

For instance, training courses are now available for project management, software design and other IT- related management topics.

Technology developments are changing the way courses are delivered. An increasing number of operators in this industry now offer training via the internet. The use of the internet as a communication device is also enabling better pre- and post-training support and networking, which enables companies in this industry to establish an ongoing relationship with their clients. For instance, the Center for Creative Leadership holds webinars, online seminars that often include online discussion forums. Similarly, the American Management Association provides pre- and post-blended learning support for its instructor-led courses. Online materials prepare students with subject matter before their courses and enable better revision of the course contents after it has been completed.

Advancing technology has also enabled operators to improve administrative efficiency. Management software can incorporate human resources and financial and client information, enabling operators to have a better understanding of their customers, resulting more accurate and timely monitoring of outcomes. These improvements will enable companies to direct their marketing more effectively to potential students. The monitoring of student outcomes also ensures the expectations of students and client corporations are met, leading to better client feedback and a clearer demonstration of past results.

Revenue Volatility The level of volatility is Low

The Business Coaching industry has a low level of revenue volatility. Many of the services offered by this industry fall under the discretionary spending category. Therefore, revenue is subject to changes in the level of disposable income and corporate profit. Nonemploying entrepreneurs looking to boost their skills and expand their business and job seekers looking to become more competitive in the hiring market often seek out business coaches and pay for them out of pocket. Per capita disposable income growth has been steady during the period, which has contributed to low volatility. Corporate profit has grown overall, but experienced some volatility. However, changes to the business environment have encouraged companies to provide professional training to senior employees, increasing demand for business coaching services, regardless of corporate profit fluctuations. Increasing acceptance of the benefits of business coaching has consistently benefited the industry, resulting in steady revenue growth. Additionally, the industry has clients in a wide variety of different industries. As a result, a decline in revenue in one market can be offset by an increase in another segment, thus reducing the industry's volatility.

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Regulation & Policy The level of regulation is Light and the trend is Steady

There is little regulatory control of establishments operating in the Business Coaching industry, as there is no centralized government authority and states assume varying degrees of responsibility. In general, establishments in this industry are able to operate with considerable independence and autonomy.

Industry operators are not required to have specific accreditation to operate seminars, short duration courses or self-study programs. However, some establishments have gained recognition for their courses from key institutes, such as the Project Management Institute and the International Association for Continuing Education and Training (IACET). The IACET is a nonprofit association that was commissioned by the Bureau of Education in 1968. It authorizes education providers that meet strict guidelines in relation to the quality and standard of education provided. The association's authorization gives an assurance to prospective students that the company's processes and procedures are of a high quality and standard.

For the business coach segment, there is the International Coach Federation (ICF), a nonprofit organization that has devised an industry code of ethics and professional standards for business coaches. By providing credentials, it aims to improve the profession's reputation. More than 9,000 people have been certified as coaches by the ICF, and its membership count exceeds 20,000 people in 100 different countries over the world.

Taxation

An estimated one-fifth of employing establishments in this industry are exempt from federal income taxation, according to US Census data. These are educational organizations and establishments operated by nonprofit organizations that are recognized as exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code. Nonprofit organizations are also authorized to receive tax-deductible charitable contributions. Educational organizations may include establishments that conduct public discussion groups, forums, panels or other similar programs. A qualifying organization may also present a course of instruction by correspondence or through the TV or radio. The proportion of industry revenue generated by tax exempt establishments has stayed relatively flat over the past five years.

Industry Assistance The level of industry assistance is None and the trend is Steady

The Business Coaching industry receives no direct government assistance, with establishments generally operating quite autonomously. Industry establishments are not required to comply with onerous regulations. However, some businesses may benefit from the Workforce Innovation and Opportunity Act of 2014. This act focused on public-sector job training and employment systems to ensure a certain level of employee training within the employment market in the United States. The level of assistance that this legislation gives to the whole industry, however, is limited because it is aimed at providing training to unemployed individuals, whereas this industry predominantly targets management and professionals.

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Key Statistics Industry Data

Revenue

($m) IVA

($m) Establishments

(Units) Enterprises

(Units) Employment

(Units) Exports

($m) Imports

($m) Wages

($m)

Domestic Demand

($m)

Number of employees

(Million) 2010 9,635 3,757 38,635 38,357 71,110 N/A N/A 2,948 N/A 130