Are you interested in starting a tutorial business online? If YES, here is a complete guide to starting a private tutoring business at home with no money or experience.
Tutoring is a craft that is as old as man, from when man passed on the knowledge acquired from making fire, preserving cultures, to modern day classroom learning. Tutoring can be informal (from parents to children) or formal (from an instructor to others) and can happen in any setting, the homes, offices, and schools. This is to say that even though schools might be considered the only place serious tutoring takes place, it isn’t the only place.
Apart from academics, there is skilled based tutoring- this is where an individual or a group is tutored on skills such as dance, singing, and sports and so on. This guide will focus on school-based tutoring. Earlier, the myth had been that only slow learners needed tutoring, but this isn’t true as even bright students still get tutoring that is aimed at helping them further improve on what they know, thereby brightening their grades more.
Why Start a Tutoring Business?
Tutoring has become so popular due to the fact that both parents now work, having little or no time to tutor their children, as against previously where only one worked and the other helped tutor the child. Apart from having no time, parents aren’t equipped to handle new information and knowledge that is the prerogative of a tutor or teacher, to use in teaching their children.
Due to this fact, there has been a tremendous demand for tutors therefore creating a thriving tutoring industry. Most tutors are freelancers, making this industry a good one for entrepreneurs to set up. Entrepreneurs who want to set up a tutorial school do not need to be professional teachers, but have to know where to source for clients in this case students, and how to give them a quality service so much so that they become a source of reference in bringing other clients.
Tutors are people employed to educate others, either individually, in small groups or in a large group. The key attributes needed to be able to start a tutorial school is patience, enthusiasm, passion about the specific subjects to be tutored, and constant positivity.
Also needed are planning, preparation, and certain other organizational skills. Entrepreneurs who want to open or start a tutorial school – either online, private, or a large school – will have to know the requirements needed – either for the school itself, or the tutors that would need to be employed – by the locality, city, state, and association or trade body where they intend to operate from.
Starting a Tutoring Business Online – A Complete Guide
- Tutoring Business Industry Overview
In Hong Kong, the Census and Statistics Department pegs the tutoring industry as worth HK$400 million, $6.4 billion in India, and $12 billion in Japan. In California alone in the United States, there are over 34,000 registered tutors.
- Interesting Statistics About the Tutoring Industry
In fact, an educational market research and consulting firm states that revenue from tutoring, test preparation services, and supplemental content industry for kindergarten through 12th grade grew 6% in 2004 to 2005, rose and reached $21.9 billion.
For high and middle school students, online tutoring had revenue of $115 million. In Pakistan alone, parents spent an average of $3.40 a month in 2011, while in India it was about $2 per month. Whilst in South Korea, 90% of students receive extra tutoring from tutorial schools, in Hong Kong; the rate is 85% of students,
Even though this might seem like a saturated field, it isn’t as there is always a constant demand for tutors – especially as traditional schools keep taking in new students’ intake that might require an upgrade of their grades through taking extra tutoring lessons from tutorial schools. The incentives in venturing into or starting a tutorial school are having an impact on students who are struggling academically, or students who want their grades to remain up. Another thing is the available market for tutors either home based tutors, online tutors, or large tutorial schools.
Starting a Tutoring Business Online – Market Feasibility Research
- Demographics and Psychographics
The demographics and psychographic composition of those who need the services of a tutor range from children in kindergarten, high and middle school students, to college and university students. Working class adults who want to go back to school but find it difficult to fit in to the school’s pace, might also require the services of a tutor.
- List of Niche Ideas Within the Tutoring Industry
There really aren’t any distinguishable niches in the tutoring schools industry, since all tutors offer a uniform service to their students with the little difference being in how they offer the services.
Any niche ideas will be an extension of tutoring – which are educational consulting services, career path services, research services, and other such services. Whilst home tutors might not offer the above services, larger tutorial schools are bound to so as to have an array of services.
- The Level of Competition in the Tutoring Industry
This field is a highly intense one because of the level of quality service offerings by the tutorial schools, who are more pressured to deliver better services, lifting the pressure off traditional schools. Due to this pressure, there is a jostling amongst the different tutorial schools to get more students, thereby increasing their earnings as well.
Hence, schools are besieged by requests to offer tutorials to the students. It is for that reason that tutorial schools have had to step up on advertisements and publicity to retain an edge over competitors. Home tutors aren’t left out of this competition as well.
List of Well-Known Brands in the Tutoring Industry
The list of well-known brands within the industry isn’t limited to a particular country, and shows how well these tutorial academies, schools, and centers have aimed at giving their students quality contents that have seen them improve.
Below is the list of well-known tutorial brands:
- Modern Education (Hong Kong)
- TriBeCa (United States)
- Baruch College (United States)
- Khan Academy
- ABC Tutors In-Home Tutoring (United States)
- King’s Glory (Hong Kong)
- Academic Success Centre (United States)
- Bellerby’s College (United Kingdom)
- Eureka Tutorials, Review, and Learning Center (Singapore)
- Cambridge Tutors College (United Kingdom)
- Ever Learning (Hong Kong)
- Keystone Tutors (United Kingdom)
Whatever business you intend to start, you must ensure that it is located in an appropriate place. For example; a tutorial school wouldn’t do well if close to a market. Entrepreneurs therefore have to ensure that they carry out a thorough research and feasibility study of the industry they intend to go into.
The demand for tutorial schools is driven by the fact that most schools cannot meet the educational criteria for all the students, and also the need to ensure that students meet up with educational standards nationally and internationally as well as get their grades up, this is where the tutorial schools come in.
The economic downturn hasn’t really affected this industry, especially in countries that believe in the efficacy of education. The areas you would need to spend heavily on are in ensuring that your school is up to standard, your advertisements, and insurance.
Is the Tutoring Business Worth Starting from Scratch or is Buying a Franchise Better?
Running a tutoring school business isn’t a piece of cake, but so is running any other business. It takes a determined and focused entrepreneur to start the business from the scratch, and build it to a certain reputable brand or standard. Getting the standard equipment that would be needed to tutor students can be gotten at affordable prices, with some being fairly used. Being a home tutor or online tutor might not require a franchise especially if one has no plans to explain to a large scale.
If you do not want to start from scratch, and want to learn the ropes on someone else’s brand, then you can go the franchise route. There are several tutorial school companies that are selling their system’s franchise. It would be worth it to buy that franchise especially if they have developed a solid operating system, and have a track record of success. Also, entrepreneurs that might not want to fully face the business due to other businesses, or want to learn the ropes first, might see a franchise as being better.
Possible Threats and Challenges You Will Face When Starting a Tutoring Business
Every business faces a threat or challenge at any part of the life cycle of the business. These threats can be external or internal. This shows the importance of a business plan, because most threats or challenges are to be anticipated and plans put in place to cushion what effect they might bring to the tutorial school.
A major threat could be a change in government policies as regards tutorial schools, or there might be an introduction of a strict law and regulation that might adversely affect tutorial school.
Capital is another challenge that a tutorial school might have, especially if there were no well-laid plans before starting the business. Another factor to consider is the quality and unique service that the other competitors might be offering
Starting a Tutoring Business from Home – Legal Matter
- Best Legal Entity to use for the Tutoring Business
Deciding on the best legal entity rests entirely on the visions and objectives of the tutorial school business, its short and long term goals.
After deciding that you want to start a business, and have written out a business plan on the objectives and strategies your business would adopt, the next thing is in deciding what legal entity might be the best for you and your business. It is essential that a tutor gets registered even if he wants to work from home. You would have to decide if you want to incorporate, how to file for incorporation, and the costs that forming a corporate entity would incur.
The nature of tutorial school business is suited for individuals that either want to run it alone – sole proprietorship or go into partnership with either an educational consultant, a tutor, or a business entrepreneur who has no tutoring background but is willing to venture into the tutorial school business.
If you seek to operate on a large scale like a corporate organization that might be a reference source for schools, where they would get paid for every referral, then it’s all up to you, and your business goals.
Catchy Business Name ideas Suitable for Tutoring Business
A business is easily recognized by its catchy name that sets it apart from others. As an entrepreneur, you have to ensure that the name you are looking to choose hasn’t been chosen by someone else, a search on Google would help in knowing if your proposed name has been taken or not. Also, a name has to be chosen before one can get a business license.
A list of catchy business names for a tutoring school is:
- Bookworm Educational Services
- Titan Tutoring School
- The Perfect Tutor Educational Centre
- A+ Tutorial School
- High Grades Education Centre
- Study Tutorial Centre
- Notebook Academy
- Study Tips Academy
The Best Insurance Needed for a Tutorial School
Every business needs insurance that will legally protect them individuals and their businesses too. Even if you are a tutor working from home, you might still need a basic insurance policy that might not be as elaborate as someone who wants to open a tutorial center.
If you are confused on the kind of insurance policy that you will need for your business, then it is best you contact an insurance agent who will guide you on the best policies to undertake. Listed below are the best and basic insurance policies in the United States of America that a tutorial school should have:
- Liability Insurance
- Business and Portable Equipment Insurance
- Professional Indemnity Insurance for Teachers and Tutors
- Business Interruption Insurance
- Business Insurance
- Health Insurance
- Public Liability Insurance for Teachers and Tutors
- General Insurance
- Workers Compensation
- Business Owner’s Policy Group Insurance
Does a Tutoring Business Need Intellectual Property Protection?
Yes, this particular business needs an intellectual property protection. Tutorial schools create and use intellectual property such as photographs, logos, and drawings as part of their activities. Before any intellectual property used or created, the ownership must be clear so as to make sure that the rights vesting in it and owned and can be protected by the correct entity.
The main types of Intellectual Property (IP) are:
- Copyright, that seeks to protect the form of idea expression like written works, scripts, drawings, films, sound recordings and broadcast. This Intellectual Property right becomes automatic immediately the work is created.
- A Trademark is a registered right and is a sign that differentiates an individual’s goods and services from that of another. Trademarks can protect slogans used, jingles, labels, names.
- Design Rights protect the appearance of a functional product especially those which have no aesthetic appeal. Any deign by an employee during the course of employment will in the first instance be owned by the employer.
- Patents protect the ways and methods things work, and the application of patent can only be owned by the owner of the invention. If the patent however, was created during the course of employment by an employee, the employee owns the patent.
Does a Tutoring Business Need Professional Certification?
In the United States of America for example; it isn’t compulsory that a tutor becomes specialized before he can tutor. However, most parents feel more comfortable in entrusting their children’s academic development to someone with tutoring certifications. Apart from the confidence it gives parents, it allows for the certified tutor to charge higher for his or her services.
There are two organizations that offer certifications for tutors; the National Tutoring Association (NTA) and the American Tutoring Association (ATA) and depending on the subjects, and certification course levels, one can hope to spend between $200 and $500.
List of Legal Documents You Need to Run a Tutoring Business
Legal Documents are essential for any entrepreneur that wants to start a business- because they protect the entrepreneur and also the business. The lists of legal documents are the key documents that would be needed to start a tutorial school are:
- A tutoring license
- Certificate of incorporation
- Business Plan
- Contract documents
- Insurance policy
- Employees handbook
- Operating agreement for Limited Liability Corporations (LLCs)
- Non-Disclosure Agreement (NDA)
- Employment Agreement
- Memorandum of Understanding (MOU)
Writing a Business Plan for your Tutoring Business
As an entrepreneur, before writing that business plan for a business idea or an existing business you want to venture into, you’d have to first decide why you want to go into that business, and the tangible and intangible benefits that will be gained by you after venturing into the business, as well as risks and challenges to be faced.
Another thing to decide on is the subjects you the owner will be tutoring, depending on the age and level of the students. It will be worth look at what your competition is into, and the subjects they aren’t offering, providing you with leverage before even starting.
The reason why a business plan is written is because it is a clear road map for the business, the owner, as well as stakeholders – employees, customers, and investors. The business plan influences all decisions that will be undertaken by the entrepreneur, and instills confidence too.
In writing a business plan, it must answer the question of:
- The products or services you intend to offer
- The Location, will it be conducted at home, at the students houses, or in your study center?
- How you will source for customers
- What plans your company has towards growth and expansion
- The strategies that will be used to boost, as well as position yourself ahead of others in the same industry.
The business plan must also cover details on how the entrepreneur intends to effectively run his business, what the budget is, where he intends sourcing for capital for the business, marketing goals, strategies and target markets The business plan also contains executive summary, the vision, mission, and objectives of the business; pricing, marketing and sales analysis, SWOT analysis, who your competitors are and the advantage over them.
All the details of the business plan might seem daunting especially to those with no background in business, in this case one could hire an expert business plan writer, pay them for their services and communicate your plans with them, or download a business plan template online.
Detailed Cost Analysis of Starting a Tutoring Business
In setting up a tutorial school business, the amount or cost will depend on the approach and scale you want to undertake. If you intend to go big by renting a place, then you would need a higher amount of capital as you would need to ensure that your employees are taken care of, and that your tutorial school’s environment is conducive enough for the students to learn.
This means that the start-up can either be low or high depending on your goals, vision and aspirations for your business. The capital for a home based tutor might fall between $500 and $2,000, while that of a medium and large scale would definitely be higher.
The materials and equipment that will be used are nearly the same cost everywhere, and any difference in prices would be minimal and can be overlooked. As for the detailed cost analysis for starting a tutorial school business; it might differ in other countries due to the value of their money. However, this is what it would cost in the United of America;
- Business incorporating fees in the United States of America will cost $750.
- The budget for Liability insurance, permits and license will cost $1,500
- Acquiring an office space or warehouse that will accommodate the number of students that will come to learn for at least 6 months (Re – Construction of the facility inclusive) will cost $10,000.
- Equipping the office (computers, printers, projectors, markers, pens and pencils, furniture, telephones, filing cabinets, and electronics) will cost $4,000
- Launching an official Website will cost $500
- Additional Expenditure such as Business cards, Signage, Adverts and Promotions will cost $1,000
While a home tutor might not have to incur all these expenses but going by the above report, you will need an average of $18,000 to start a small scale tutorial school business in the United States of America.
If you want to start a medium scale tutorial school business in the United States, you might need nothing less than $30,000. And if you intend to start a large tutorial school business in the United States of America, you should look towards raising an average of $50,000 as your start – up capital.
- Financing your Tutoring Business
Regardless of the business you want to venture into, you will need capital that will get the business going. Most of what makes the cost of startup high is the operating equipment that will be used in starting the business, and yet an entrepreneur must go through the hassles of raising funds to fund his business idea.
In financing a business, the entrepreneur has to remember that not all things might be needed to be purchased, and that the aim of the business is to make profit which can only be done after all expenses and tax has been deducted.
Another thing to note in financing a tutorial school business is that, you would need to determine how much of your personal savings can be sunk into the business. Also, the business plan would provide a clear picture of how much your business would need, and that will determine if you can comfortably use your personal money, borrow from family, or go to the bank to get a loan.
Listed below are the options available to you when intending to finance your tutorial school business start-up:
- Personal Savings
- Family and friends
- Business Loans
- Small Business Administration Loans, for those who do not qualify for a business loan
- Credit Cards
- Business Line of Credit
- Venture Capital
Finding a Suitable Location for a Tutorial School
In choosing a location for the tutorial school, it is important to know your goals and vision for the tutorial business. If you are one that works from home and offer services to your clients either in their respective homes or any other comfortable place; there would be no need in getting a location for the business, or if you intend to run an online tutoring school.
However, if you intend to run a tutoring school no matter the scale, where other tutors would be employed or not, then getting a good location is paramount to the success of the tutorial school. The tutorial school has to be located in a populated region that has many children going to school- especially if academic students are your target market.
Even though, the tutorial school has to be cited in a populated region, it should fulfill the criteria of not being close to busy roads, hotels, markets, and entertainment centers, so that students can comfortably learn without being constantly distracted.
Apart from choosing a populated area, you must be careful not to choose an area where the students or their parents are not interested in upping the grades of their children, or polishing off on their grades. Most low income earners or people who live below the poverty line, might not be interested in using the services of your tutorial school if is cited in such an area.
Starting a Tutoring Business Online – Technical and Manpower Details
A tutorial school does not require much technical equipment and most of it can be gotten fairly cheap or fairly used. Furthermore, they can last long for the tutorial school- particularly if properly managed. Most of the equipment can be gotten locally at bookstores, or stores that supply educational materials.
Getting equipment for a tutorial school also depends on the size of the tutorial school, if it is small, medium or large scale. Below is a list of equipment that would be needed:
- White Board
- Pens and Pencils
- Chairs and Desks
- White Board Markers
- Exercise Books
- Text Books
- Business cards
- Computer and software
- Transcription software
- Headset and Microphone
- Internet access for email accounts, and research purposes
- Web camera
Most tutors do not have offices and use the client’s home or any other comfortable place as their places of operation, but these are individual tutors that are limited in the subjects and courses they can take a student.
As an entrepreneur who wants to start a tutorial school, you would need more than tutoring students yourself. This means that you would need other tutors, so that your tutorial school can be taken seriously. Small tutoring schools can have between 2 to 4 tutors, a receptionist, a cashier, and accountant, an administrator. This means that a small scale tutorial center would need a minimum of 8 staff, while those intending to run a medium or large scale tutorial school would need more.
- The Production Process in Tutoring Business
There is no production process involved in a tutorial school, rather there is a delivery of service, since the tutors have to impart of knowledge, an intangible thing to the students. The service processes can range from tutoring students to providing consulting, from recommending schools for further study to helping students find other skills they might be good at.
Starting a Tutoring Business Online – The Marketing Plan
- Marketing ideas and Strategies for a Tutoring Business
Every business needs a degree of exposure to thrive. Exposure comes hand in hand with marketing one’s self, ideas or business. Any entrepreneur that intends to start a tutoring school has to understand that even though the students are his direct clients, the indirect client – the parents or guardians – play a major role in ensuring what tutorial schools their children will attend; and so any marketing idea and strategy has to be marketed with both set of clients in mind.
It is to the entrepreneur’s advantage, if he also realizes that traditional schools also play a huge role in his getting clients for his tutorial school,-especially as they are the buffer between a client and a tutoring center. Also, through them an entrepreneur can get students for his or her tutoring school.
Listed below are marketing ideas and strategies for a tutoring school:
- Print out fliers and business cards and leave with schools, libraries and even student organizations.
- Word of mouth (direct marketing)
- Creating a website, allows parents to be able to look you up, and also allows you to post general study tips, giving you an added advantage.
- Use friends and family to spread word about your tutoring school
- Introduce yourself to learning specialists, school coaches, school administrators, teachers, guidance counselors especially as they are with students everyday
- Call up schools – either private or public – and intimate them of your services as running a tutorial school.
- Post information about your tutoring school on bulletin boards in places like schools, libraries, and local coffee shops.
- Placing a small or classified advertisement in the newspaper, or local publication about your tutoring school
- Using tutorial referral networks such as agencies that will help match students with your tutorial school.
- Joining relevant association or body that will enable you network and meet others in same industry.
- Advertising online by using an advertising platform such as Google Adwords, that will allow you place text advertisements alongside on websites with related contents, and along results from search engines.
Factors That Will Help You Get the Right Product Pricing for your Tutoring Business
In getting the pricing or rates for your tutorial services to be affordable while not putting a dent in your pocket, and still providing quality services; you would need to operate at a minimum cost. If working from home, your operational cost will be less than one who is running a tutorial center no matter how small. This will help in determining how the rates for your services would be set.
Also, the rates of other tutorial centers or tutors will help determine your own pricing. While a low price might bring in more students, it might prove difficult later in the long run especially as you might not make much as you should have.
Those wanting to start a tutorial school should also strive to get equipment like projector and computer at fairly used, and this will drive down overhead and operational cost, leaving room for affordable pricing.
Possible Competitive Strategies for Winning Your Competitors in the Tutoring Industry
Entrepreneurs shouldn’t be afraid to deploy competitive strategies against their competitors even if they feel the market is already saturated. The key to having leverage over your competitors is in defining your business, and its place in the market.
The first thing to do is to find the void in the tutorial industry and see how best it can be filled. Then design your package in such a way, as to fit into the clients’ needs whilst maintaining uniqueness about the package without compromising on price.
Another competitive strategy is in offering free educational consulting services to students, who might be having issues on the future educational paths, they would want to undertake.
Possible Ways to Increase Customer Retention for your Tutoring Business
The top priority of any business that provides either a service or produces a product, there is always a target at finding and obtaining new customers, but this is less of a task than retaining already existing customers for your business.
Retaining customers especially in an industry with competition, employee leverage is the key. Most tutorial schools do not get passionate tutors, and it shows in the delivery of services to their students, because passionate tutors will deliver a personal customer experience that will create customer loyalty in the students.
Another factor that will help at customer retention is providing the students with quality contents, which will not only see them improving but attract others who want their grades improved as well. Also, you can conduct free tutorials for newbies, the first 2 or 3 times that will allow them gain a little knowledge, while allowing the parents .check out your intellectual capabilities.
Tutoring Business Strategies Needed to Boost your Brand Awareness and Create a Corporate identity
Any business that hopes to thrive has to understand the importance of creating and/or adapting the strategies that would be needed to boost the brand of the business, as well as create a corporate identity for the tutorial school business. It doesn’t matter if the business is on a small, medium or large scale, all businesses need strategies albeit on a different scale listed below:
- Developing methods that will help the students especially for challenging subjects. This ensures that your business is unique, because while other tutorial schools might use a uniform approach, yours will be varied.
- Creation of an excellent word of mouth promotion of services, which is that your existing students help advertise your tutorial school business, to other potential students.
- Contact schools by calling them up and informing them of your tutorial school, and the advantage your school has over the others.
- Placing advertisements in relevant local newspapers, or educational magazines
- Using the Search Ads Boost Brand Awareness online so as to ensure your advert is prominently displayed anytime someone uses the search engine
- Sponsoring educational shows or debates
- Continually promoting your tutorial school through your website, blog, or any online social forum you might be on.
- Passing general information via the tutorial school’s social media handles like twitter, Facebook, Google hangouts etc.
Creating a Suppliers/Distribution Network
If you run a medium to large scale tutorial school business, there will naturally be more students, as there would be the need to employ other tutors and support staff, who would definitely need more materials to be able to carry out their task of either tutoring students individually or in mass groups; as an entrepreneur, you would need to source for materials such as board markers, pens and pencils from distributors or suppliers.
Being in a good business relationship with the educational material suppliers ensures you get the best deals as regards durability and price. This also enables you to re-stock on supply once they are low without having to detract from the main task of tutoring.
Tips for Running a Tutoring Business Successfully
In order to run a tutorial school business successfully, you would need to set up an administrative portion of your business, and keep them organized and running smoothly. Also any serious entrepreneur will pay attention to whatever works for his business and improve on it, while discarding the ones that do not work.
Below is a list of what should be kept on track, as not doing so might not allow you run the tutorial school successfully;
- Students Records like their contact information, lesson notes, progress reports, and other vital information about the students should be kept for easy access and update. This will allow you track and share progress with the students and their parents.
- Schedules, no matter how many tutors you employ should be kept organized, so that you can keep track of the lessons that students took, the lessons that were cancelled, and the ones rescheduled.
- Billing is very important, and should be managed effectively. Whilst some tutoring centers prefer to take their payments after each lesson others might prefer a block payment. Each billing system has its pros and cons, and you would have to choose what is more advantageous to your business as a whole.
- Invoicing for lesson fees, additional fees, and payments received should be generated either monthly or quarterly. Depending on the size of your business, you could stick to a spreadsheet, or invest in a system that is specifically designed for tutoring business administration.
- Tracking Revenue and Expenses is vital especially for tax purposes. It also provides information that will help you evaluate the business performance of your tutorial school every year, or end of financial period.