Coaching vs. Mentoring for Entrepreneurs

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Tamara Franklin

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When Sebastian Schaeffer, CTO and co-founder of dofollow.io, got his first business off the ground, he was totally unprepared for many of the obstacles that came his way. One of the biggest challenges he faced was managing cash flow.

Coaching vs. Mentoring

“I had no idea how to keep track of what money was coming in and going out,” Schaeffer confesses. Luckily, he had a coach who had been through the ups and downs of running a business, and she was able to guide him through the tough times.

The coach helped him develop a system that worked for his business. “She also taught me how to forecast income and expenses so that I could plan for lean times and know when it was time to invest in growth,” Schaeffer shares.

Whether you’re a budding founder or an established business owner, there will likely be some humbling moments where you realize that you don’t have all the answers

When that time comes, having someone experienced that you can turn to for guidance can be a game-changer. But when looking for someone to teach you their ways, should you opt for a coach or a mentor? What you end up deciding will depend on your personal and business needs.

Coaching vs. Mentoring Definitions 

There’s a fine line between coaching and mentoring. While many people use the terms interchangeably, the two roles are different, albeit with a lot of overlap. 

According to the Society for Human Resource Management (SHRM), “Coaching in a business environment is a training method in which a more experienced or skilled individual provides an employee with advice and guidance intended to help develop the individual’s skills, performance, and career.” 

SHRM also notes that coaching is personalized, typically done one-on-one over a period of time, and with a specific business objective in mind.

Mentoring, on the other hand, is a career development method where a more junior professional is matched with a more senior colleague through a formal or informal program. Mentors guide mentees by sharing their own experiences, knowledge, and expertise.

Mentoring vs. Coaching — What’s the Difference?

Focus

Mentoring and coaching differ mainly because of the type of support or focus they provide to entrepreneurs.

Coaches help their clients by guiding them through specific points on their journeys. For example, when you need help improving your communication skills, or formulating a strategy to hit revenue goals. The main aim is to improve your on-the-job performance.

Mentoring, on the other hand, is more driven by holistic development. Perhaps you’ve met another business owner who has been in the game a lot longer, and you admire what they’ve built. Their mentorship allows you to use them as inspiration for your own path. 

Mentors can provide expertise and experience in your industry, or share their knowledge as fellow entrepreneurs. Internalizing lessons from a trusted mentor can lead to optimized decision-making and a quicker path to success. 

Time frame

You may hire a coach for a few months (though some coaching relationships can last longer) to help you through a specific challenge. For instance, if you’re an early-stage startup founder, you could hire a business coach specializing in launching new businesses. 

Then when you’re a few years in and looking to upgrade your marketing strategy, you could bring on another business coach to help you achieve that goal.

Mentors, in comparison, tend to be open-ended relationships lasting years or even decades. A mentor’s advice can help you navigate through several stages of your career, from reaching profitability to developing an exit strategy. 

Goals

Business coaches are typically more task-driven — helping their clients achieve goals like boosting sales, improving employee morale, or increasing brand awareness. A coach can create a checklist to ensure you follow their recommendations and stay on the right track. 

Mentors are trying to help you become a better business leader. They offer personal insights — such as how they achieved their success or overcame obstacles — but they don’t provide you with a step-by-­step plan.

Structure

Business coaches often assign homework to their clients, and set up regular meetings to discuss your progress weekly, biweekly, or monthly.

Mentors usually dish out advice informally. Their guidance will be more conversational versus instructional. Generally, meetings tend to happen on an as-needed basis when the mentee has a question or issue they want to resolve. 

Expertise

Coaches may not specialize in your industry, but many focus on specific business functions, such as leadership, marketing, or financing. They have knowledge that can be customized for improving various aspects of your company.

With a mentorship, you’re learning by drawing upon someone else’s experiences, successes, and failures. Mentors are there to help you focus on the big picture — for example, how to be an innovative founder — instead of meeting specific goals.

Outcome

The outcome from a coaching engagement is specific and measurable, showing signs of improvement or positive change in the desired performance area.

Alternatively, the outcome of a mentoring relationship can shift and change over time, as the mentee continues their overall development as an entrepreneur.

Compensation

In most cases, you will need to pay for a coach, whereas mentorship is typically for free. However, a successful mentor/mentee relationship can be beneficial for both parties

If someone invests their time to mentor you, consider offering yourself as a resource for them as well, whether it be making introductions to a contact they want to meet or giving them complimentary products or services from your business. 

When To Use a Coach vs. a Mentor

Both mentors and coaches can help you make progress in your personal and professional life. But how do you decide which one to work with?

When to hire a coach

If you need to acquire a specific skill: Say you are the face of your company and you want to become a better public speaker. A coach can work with you to increase your confidence and improve your body language, projection, and the content of your talks. 

Other instances where coaching could be beneficial include when you are trying to raise funding, going through a merger or acquisition, or expanding your operations internationally.

If you don’t know what you don’t know: Knowing that you need help is one thing, but knowing exactly what you lack is another. A coach can help identify areas where you need improvement, set goals, and create action plans.

If you need help with accountability: A coach will check in regularly to discuss the progress made on your goals, and help you overcome what may be tripping you up to ensure you keep moving.

For serial entrepreneur Marc Mason, a coach gave him an objective view of his company’s operations and helped him come up with a better organizational structure. 

“One of my coaches came in to see the day-to-day operations at one of my businesses. After observing, he told me I was wearing too many hats. He suggested I split up the responsibilities and hire more people,” says Mason. 

“However, after meeting and interviewing current employees, he saw compatible people within the company that could step in and take the lead. An outside perspective from a coach helped me see something that was right in front of me the whole time.”

When to use a mentor

If you’re just starting out: A mentor can provide advice and connect you with resources and contacts as you launch your business. According to MicroMentor, entrepreneurs were “56% more likely to improve their access to business development resources with the guidance of a mentor.”

If you’re trying to scale: Maybe you just hit $1m in revenue, and now you’d like to grow to $10m. A mentor can provide inspiration by sharing how they took their business to the next level.

If you need a sounding board: Perhaps you and your co-founder don’t seem to agree on anything. Or you can’t decide which product line to focus on. Your mentor can be a listening ear and share insight on how they navigate difficult business situations.

A mentor is also a great person to turn to when you have a big idea that comes with some risk. For example, if you’re considering acquiring another company, a mentor can tell you about their acquisition experiences and potential challenges or opportunities you may not have considered.

If you’re facing a specific challenge: Either a coach or mentor can be helpful, depending on the nature of the challenge and what kind of support you need. If it’s something that can be addressed with guidance from someone who’s done it before, like deciding whether you should seek funding, a mentor may be a better option.

If it’s something that requires hands-on help and accountability, like refining your pitch before a big meeting with VCs, a coach may be a better fit.

Coaching vs. Mentoring Techniques

Coaches often use formal assessments like 360 review, CliftonStrengths, or Enneagram personality tests to better understand how you think and behave. They may also use the results to help improve your own self-awareness or communication and relationship skills. 

A coach can help you find your next steps through listening, questioning, and challenging your views in a respectful way. They’re skilled in asking thought-provoking questions and pushing the client to go further and spread their wings. 

“I've had an incredible coach who’s allowed me to understand the principles of SEO. I then added my own twist with AI tools which have helped us increase our inbound leads by over 400% in the last year,” says Carl Pihl, founder of ticketing platform TicketingHub. “The most valuable thing about a coach is that he holds you responsible for progress and gives you deadlines.”

A mentor, on the other hand, provides support to — and feedback on — the individual and shares their knowledge and skills to help them develop and overcome obstacles.

In the mentoring relationship, the mentee is likely to ask more questions, tapping into the mentor’s expertise.

“A mentor focuses on transferring their experience in a more informal way. It’s more about showing you the way without providing deadlines and progress reports. A particularly valuable mentor for me is a lawyer who taught me the art of negotiation and patience, which are very important skills as a founder and CEO,” Pihl shared.

Coaching and Mentoring in the Workplace

Business owners looking to increase retention should consider implementing a mentorship program in their company. Per CNBC/SurveyMonkey, 90% of employees with a career mentor reported being happy at work. 

To implement mentoring successfully, both mentors and mentees must be genuinely excited about the prospect. Start by identifying people with deep experience and knowledge and gauge their interest in getting involved in. And don’t forget to tell them what’s in it for them, aside from the good karma. 

Increase the impact by developing the initiative into a long-term program with regularly scheduled meetings and guidelines for agreed-upon outcomes. Allow employees to participate in the process by recommending the types of things they could discuss. 

Examples of Coaching vs. Mentoring

Examples of coaching

Goal setting: A coach can teach you and your team how to effectively set goals using methods like SMART, HARD, and WOOP.

Adjusting behaviors: Do you have an employee who has tons of potential but whose projects are consistently behind schedule? A coach can help them develop time-management skills and increase their productivity. 

Switching careers: If a beloved team member wants to explore a function within your company but doesn’t have much experience, a coach can help increase their skill level and support them in their new roles. 

Developing skills: Perhaps you just implemented a new technology platform that comes with a learning curve. A coach can help your employees adapt to the change, teaching them the ropes and best practices for using the software. 

Problem-solving: A coach can train your staff on brainstorming, mind mapping, storyboarding, questioning assumptions, and other ways to solve business problems. 

Returning to work: Whether a worker is returning from parental leave, a sabbatical, or a long period of unemployment, a coach can help manage the transition by shifting their mindset, refreshing their knowledge, or updating their skills.

Examples of mentoring

Accelerating growth: By having regular chats with a mentor, mentees can learn valuable lessons and avoid their mentor’s mistakes. It’s a shortcut to growing your business and yourself as a leader. 

Uncovering knowledge: One only has so much time to read through the plethora of business advice in books, podcasts, and online communities. A mentor helps you cut through the noise, giving you the information most relevant to your situation.

Building connections: Whether you are trying to get your business’s finances in check, find a new CRM system, or define your brand voice, a veteran mentor may be able to point you to someone who can help. 

Receiving feedback: When you are making important business decisions, such as whether to launch a new product or hire a CMO, it’s critical to have someone who’s been around the block before to give you some constructive feedback. 

Career guidance: A mentor can provide industry-specific knowledge to help you plan your career trajectory. This insider knowledge could prevent you from making major career mistakes and assist you in developing a more concrete career path.

Avoiding mistakes: A mentor can help you think of scenarios that haven’t crossed your mind and avoid problems before they start. 

Ryan Hetrick, CEO of Epiphany Wellness, prefers to use a coach and a mentor simultaneously. “I’ve used both coaches and mentors as growth tools in my life, but I’ve found that when I use them together, I get much better results than when I use just one or the other.”

According to Hetrick, a coach is great for providing practical advice on how to reach your goals and overcome obstacles, but a mentor can inspire you with their own story and give you confidence that you can accomplish what you set out to do.

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