How to Start Your Own Tutoring Business

Do you enjoy teaching and helping kids become successful? Opening up a tutoring business is one opportunity to fulfill this passion as well as make money from the multi-billion dollar tutoring industry. Additionally, the tutoring business is a relatively inexpensive endeavor compared to most business ventures because of its low start-up costs.


Before quitting your job and fully investing into starting your own tutoring business, you should take the time to create a business plan. This will help you strategize and be well-prepared for the task at hand. The following content is designed to assist those planning to offer tutoring services at a physical business location.

Types of Tutoring Services

As you promote your business, it is important to be clear on what type of tutoring services you are offering at your location.


  • Are you planning to help prepare students for specific exams, such as ACT or SAT?

  • Are you tutoring in specific subjects like math, writing or a foreign language?

  • Are you targeting a specific age group?


Each of these categories attract different crowds and demands. Therefore, it is an essential element to design your business plan around and to create your financial projections. For example, the broader topics will attract larger crowds than topics specifically catered to a niche, such as computer programming.


Ideally, your tutoring services should cover subjects where you are highly knowledgeable and have experience teaching. If you plan to expand your offerings to subjects outside your comfort zone, you will need to hire additional staff members with educational background and experience suitable to work at your place.





Business Structure

You need to determine the type of business structure that fits your situation best. A common choice for tutoring businesses is to create a Limited Liability Corporation (LLC). LegalZoom will assist you through the process of creating a LLC or any other business structures you choose.


Business License and Permit

Once you have settled on a location fitting for your tutoring business, proceed to find out what relevant licenses, permits and zoning requirements are needed from the local authority. U.S. Small Business Administration’s website is a helpful resource to get you started. Below are examples that may apply: 


  • Business license

  • Sign permit - If you plan to post signs that promote your business and is visible to the general public.

  • Seller permit - Required if you plan to sell any items.

  • Health department permit - Required if you sell snacks and drinks at your location.

Federal Employer Identification Number (EIN)

Apply for an EIN at the IRS website to obtain information needed for tax purposes.

Insurance

Professional and general liability insurance is critical in protecting you and your business.


  • Professional liability insurance - Covers costs associated with lawsuits, such as settlements, the attorney’s pay and other defense-related items.

  • General liability insurance - Protects you from incidents occurring on your property that results in property damage or bodily injuries.


Educator Protect is a company that developed insurance specifically to protect private practice educators and is worth checking out. 

Business Location

Finding a good location to situate your business is critical to your success. This spot should be within large school districts and highly-populated residential areas. It should be convenient for students and/or their parents to travel to the chosen place with different transportation options. Additionally, a location with an abundance of parking spots is also desirable.

Facility Features

Before you start searching for commercial spaces, you should make a list of desirable amenities and features. The following are examples of components that should be acknowledged in your business plan.


Facility and Class Structure

  • Is your place going to be a large open room where only one class session are taught at a time?

  • Should the facility be segmented and have separate rooms to allow for multiple class sessions to run simultaneously?


Amenities

  • Bathrooms

  • Storage space and shelves - for students to put their belongings, which will help reduce the amount of items that may clog walking pathways.

  • If you are running multiple classes, are the walls well-insulated enough to limit the sounds coming from another room?

  • Front-desk reception and waiting area

  • Heating and air conditioning systems


The listed items above will dictate your facility’s layout and size, how many tutors could work at the same time and the max size of group class sessions.

Equipment

Equipment and supplies needed for the tutoring business are simple and relatively inexpensive. Below is a list of items that may be useful for having at your facility.


Room Setup

  • Tables

  • Chairs

  • Study carrels

  • Dry erase board and markers

  • Projector and projector screen

  • Computers


Teaching Supplies

  • Pens

  • Pencils

  • Paper

  • Study guides

  • Lesson plan worksheets


Optional Amenities

  • WiFi internet connection

  • Vending machines - for the students to buy snacks and drinks.

Pricing

Having competitive pricing is vital to your financial success. You will need to analyze the market price for the tutoring services you offer as well as the rates implemented by local competitors.

Questions

The rates and pricing structure should be based on how you choose to run your business as well as the targeted subjects and age group. Answers to the subsequent questions will aid you in developing how you plan to run and charge your business.


  • Do you plan to charge single class sessions or do you offer class bundles?

  • Would you offer discounts to those signing up for class bundles? Discounts would give customers incentives to sign up for multiple sessions.

  • Are there private tutoring options available for those who want more personalized attention?

  • Do you offer large group sessions?

Goldilocks Pricing Dilemma

Do not try to hike your rates much higher than local tutoring businesses, unless you have additional services that they do not offer. Alternatively, outpricing your competitors might mean bringing in more students, but it may not always be represented positively in your profits. The downside of offering your service at too low of a cost is the need to maintain a higher number of students and possibly needing to cut back on other expenses, such as marketing and pay available for the staff members. Furthermore, a potential stigma may exist that low prices mean low quality instructions, which is also detrimental to your business. You will need to determine the fine balance that maximizes the number of students and your profits.

Projections

You should have a section of your business plan dedicated to a listing or spreadsheet on projected revenues or expenses. This section should consist of expected costs associated with the initial start-up and the recurring monthly bills. Below are examples of these costs.

Start-Up Costs

  • License

  • Permits

  • Down payments

  • Any necessary remodeling of the commercial space

  • Items and equipment needed

  • Promotional material

Recurring Monthly Costs

  • Commercial space rent

  • Utility bills

  • Online ads

  • Staff wages

  • Software

  • Website


Based on your projections, you should know the total expense required monthly and how many students must be signed up before your business becomes profitable.

Separate Bank Account

It is imperative that you have a separate bank account for your business. Doing this will make it easier to manage your finances. In addition, you should leave no doubt about any unlawful bookkeeping, especially if the IRS decides to audit your business.

Marketing

Promoting your business is a must to obtain new customers. Word-of-mouth advertisement by satisfied students and their parent would greatly help spread news about your business. However, you should not be dependent on it and should invest time and money into other promotional methods. You should have marketing materials that consistently attract new customers while your excellent tutoring services retain current members.

Online Business Profile

Create a business profile on review websites to make it easier for others to find you in their search results. Popular websites with a lot of traffic are Yelp, Facebook and Google.


Your Own Website

Having a professional looking website that gives people a glimpse of your business and the services you offer is paramount to drawing people’s attention and influential in them stepping foot in your building.


The website should have sections dedicated to the following content:

  • Introduction to your business

  • Staff page that list each member's credentials, education background and previous experience

  • What subjects and services are offered

  • Contact information, such as address, business hours, phone number, etc.

  • Posting testimonials from students and/or their parents will be helpful once you start becoming successful.


If you do not have experience creating a website from scratch, then try using either GoDaddy or Squarespace. Both are good at simplifying this process for their customers.


Additional Visibility

Online ads and search engine optimization (SEO) are supplementary items for increasing the visibility of your business. SEO is commonly used to improve a company’s search result rankings. You could contact an agency to take on these tasks for you and increase the number of people visiting your website.

Physical Marketing Material

Promotional tactics utilizing physical materials are still a viable option. These methods may consist of posting flyers or handing out brochures at various locations that are frequented by your targeted audience. Vistaprint offers great customization options and pricing.


Software

Administrative tasks such as payment processing, accounting, and keeping track of students are common time-consuming activities associated with running a tutoring business. Therefore, it is definitely worth exploring for options that simplifies this process.

Tutoring Business Software

LearnSpeed is an all-encompassing software with features that is great for managing the previously mentioned tasks. Additionally, the software will also help you maintain well-organized calendars and share session reports with the students and their parents.

Staff Payroll

Gusto is a web-based software that automates the payroll and tax filing process.

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