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How to Start an Online University Business

Do you want to start an online university business from scratch? If YES, here is a complete guide to starting an online university business with NO money and no experience.

It is very important to say that an online University is an academic institute that provides higher education programs through the electronic media, typically the internet. Note that some of them are brick-and-mortar institutions that provide online learning as part of their extended university courses while others solely offer online courses.

Many believe that the sole aim of online universities is to provide access to the part of the population who would not be able to attend a physical campus for reasons such as distance — in which students live too far from a physical campus to attend regular classes; and the need for flexibility — some students need the flexibility to study at home at their own stipulated time.

A lot of these institutions exist only as loosely tied universities, institutes or departments that together provide a number of courses over the internet, television or other media that are separate and distinct from programs offered by the single institution outside of the combine.

While a handful are individual organizations with a legal framework, yet are named “online” because they appear only on the internet, without a physical location aside from their administration units.

But have it in mind that online universities can be organized through specific or multiple physical locations, with or without actual campuses to receive program delivery through technological media that is broadcast from another location where professors give televised lectures to their students.

Starting an online University is not a venture for the faint of heart. There are a lot of challenges in this business, not only in logistics but also in winning over stakeholders and influencers.

Analysis has shown that online universities are becoming popular as people seek to get degrees from their homes. Establishing an accredited online university is a business venture that can be difficult but has the potential to become very profitable.

Steps to Starting an Online University Business

1. Understand the Industry

The world online Learning Market is believed will grow at a CAGR of around 7.2% over the next decade to reach approximately $325 billion by 2025.

Experts have analyzed that the prominent trends that the market is witnessing include learning through gaming which has been popularized in recent years, implementation of IT security and cloud based solutions, rapid growth in online content and digitization, innovations in wearable technologies are flourishing in the industry and learning management systems are switching over to cloud-based systems.

Have it in mind as a new entrant into this industry that based on product, the market is categorized into academic e-learning and corporate e-learning.

While based on technology, market is segmented into Learning Management System (LMS), mobile e-learning, application simulation tool, rapid e-learning, podcasts, learning content management system, online classroom knowledge management system and other technologies.

Also in terms of vendor, it is classified into service providers and content providers. By end user, market is segregated into higher education institutions, K-12 schools and other end users.

Analysis about this industry has stated that increase significance in corporate sectors will drive industry growth over the forecast period. It also stated that as service providers provide these educational services through latest technologies, it enables the user to have graphic-based and rich media learning experience.

Also these services are expected to improve employee productivity owing to the fact that large a number of firms are now opting for e-learning solutions over the traditional learning methods.

Also note that heightened technology obsolescence along with change management are the factors expected to affect industry demand. Vendor-developer partnerships might pose numerous industry challenges from 2016 to 2023. It is also believed that the need of highly developed IT infrastructure is likely to pose a challenge to industry demand for these services.

Growing demand with the rising awareness for distance learning is likely to provide potential growth avenues to the numerous industry participants. Furthermore, the advent of these services on tablets is also believed will fuel the demand for the service over the forecast period.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

It is very necessary to state that online education allows individuals living with physical disabilities, full-time employees, soldiers, those living abroad, and stay-at-home parents, among others to have access to accredited higher education.

Generally, the acceptance of the quality of online degrees compared to on-campus degrees differ, but has been increasing in recent years. While most major online universities are regionally accredited, the public estimation of their quality is in dispute.

Industry analysis has shown that nearly 3.2 million students took at least one online course during 2005 (a significant increase over the 2.3 million reported in 2004). It has also shown that about two-thirds of the largest institutions have online programs.

Also as at 2010, more than 6 million students were taking at least one course online. In this business, note that the students who will be taking online courses are doing real work to get their degrees, and educators preparing and teaching those courses spend real time in doing so.

Which means students meet a comparable level of academic learning outcomes and are evaluated through programs constructed according to standard university-level criteria. But do not think that an online University may be accredited in the same way as traditional universities and operate according to a similar set of academic standards.

3. Decide What Niche to Concentrate On

Starting an online University can be both daunting and exciting. Immediately you decide to start, your daily schedule and lifestyle will have to be altered to suit your business. Also it will require you to invest all your time and wealth of knowledge into getting it accredited.

Starting this business gives you the opportunity to provide an institution that can particularly suit non-traditional students who work full-time and juggle many roles, often including that of parent and spouse.

Non-traditional students often prefer the flexibility of online classes because it offers greater schedule flexibility and allows them to work at a convenient pace. It is very essential that you now that the courses or educational certificate you decide to offer will serve as a niche for you.

You cannot just wake up and decide to offer all courses being taught in a traditional university. That is why you need to decide if your university will be a general University or if it will offer specialized degrees. You will also need to decide on the number of degrees that your university will offer and name these degrees.

Level of competition in the Industry

For a very long time this educational sector has been overlooked, yet individuals or rather entrepreneurs are still inked to take up a substantial part in the sector’s market shares. You will be deceiving yourself if you think this industry is not competitive.

Judging from the regional analysis explicitly explained below, you will sure understand that the sector is very competitive and success in it is based on the quality of services you provide.

Asia Pacific

This region especially the India online learning market size is estimated to show highest growth, more than 17%, and is expected to play a key role in the global industry. Experts believe that this is due to increasing regulatory initiatives such as government funded literacy development projects in small villages and rural areas. All these are expected to drive the industry demand in the region.

Sales were valued at USD 5.2 billion in 2011 and close to USD 10 billion by the end of 2015, with major generation from package content sales. Also it is believed that lack of quality education along with affordability as well as convenience factors in the region might catapult the industry demand over the forecast period.

Western Europe

In this region, the online education market size was valued around USD 6.5 billion in 2015 and is expected to be the second largest industry for online learning solutions, with expected gains of over 5.5% throughout the expected period. Experts believe that the spur in the region can be subjected to growing adoption of these solutions in medium and small sized businesses.

Latin America

This region is expected to witness considerable growth from 2016 to 2023. This region market share was valued around USD 1.4 billion in 2014 and is likely to grow at a CAGR of over 14% over the next seven years.

The reports stated that the positive spike in this region can be dedicated to the advent of governmental programs for handing out the laptops to the school students. Also private schools are now encouraging students to bring tablets and computers in order to improve learning skills among students.

4. Know the Major Competitors in the Industry

  • Penn State World Campus
  • University of Florida Distance Learning
  • UMass Online
  • Boston University
  • North-eastern University
  • Indiana University
  • Arizona State University
  • University of Minnesota–Twin Cities
  • University of Arizona
  • Oregon State University–OSU Campus
Economic Analysis

A lot of school districts are now creating their own online services to avoid paying external providers. This means that students can graduate from their home district without ever leaving home. In most of these cases, students are given computers, books, and even internet service to complete coursework from home.

Also with the internet as a library, and the ease of getting online study materials, there is usually a comparatively small requirement for textbooks. A lot of courses will provide electronic materials free of cost, or included in the course payment.

Textbooks are most often needed for an exam syllabus course.  Note that unlike traditional education delivery methods, students at online schools do not always directly interact with professors, while at other times it is as frequent as in traditional brick and mortar schools and merely takes on a different form.

This is why this form of education is considered by many to be equivalent to a directed-learning program. Due to the fact that students do not interact with their instructors or peers face-to-face, detractors often cite “lack of socialization” as a disadvantage of online learning.

A lot of modern online Universities include online study groups in which students meet with each other online. It is also recommended that students enrolled in online schools be involved in social activities outside school, much like home schooled children.

Also another disadvantage channeled to this form of learning is the added challenge of staying focused while in the home environment, and many students report that staying on task is the most difficult aspect of learning online but it still doesn’t affect the fact that a good percentage of people prefer it.

5. Decide Whether to Buy a Franchise or Start from Scratch

Indeed a lot of educators want to create an online learning program or full-time online school simply because the technology exists to make it possible – while a district sees an online school as a revenue source. Maybe a donation of iPads or an upgrade of a school’s internet connection spurs the desire for an online program.

But the unique question that needs to be asked before plunging into digital learning is the same to be asked before starting a brick-and-mortar charter school or introducing a new category of courses in a district school: do I start from the scratch or buy a franchise?

It is important that you note that buying into a franchise in this industry is better than starting from the scratch because unlike starting from the scratch, buying into a franchise offers you the following benefits,

  • Tasted routes and access
  • Integrated applications
  • Flexible and scalable
  • VOIP Unified Telephony
  • Security

6. Know the Possible Threats and Challenges You Will Face

As long as schools show fairness, transparency and flexibility in pricing out tuition and fees, online universities can successfully make profits while serving the needs of students. But starting this business is not as easy as picking your teeth.

It is advised that you start by writing a business plan, which will serve as a road map for your business. There are many challenges you will encounter on the ladder to building a successful online University. Listed below are the few ones that might hinder you from starting on a good note;

  • Deciding on the type of degrees you want to offer
  • Getting your institution accredited
  • Searching for a partner
  • Creating a marketing plan
  • Purchasing necessary equipment
  • Capital
  • Writing a business plan

7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

When starting your online University, it seems unlikely that you will want to form your business as a sole proprietor.  But again, always do your own research.

It is much better to know why you are running your business the way that you are, rather than relying solely on the advice of others. Note that the legal entity you choose will depend on the number of courses you wish to offer and the number of students you hope to attract, but for the sake of this article the LLC is the best entity for an online University.

The advantages of forming an LLC business structure is well known to the world, but the reason why it is the best structure for this educational business is because it provides security, flexibility and credibility.

8. Choose a Catchy Business Name from the ideas Below

We all know how important it is to choose an attractive name for your business. The name you choose for your online University will dictate the first impression prospective customers have about your institution. Below are things that can help you choose a wonderful name for your online University.

Your name

Indeed you can use your name in the business name. There is nothing wrong with being a proud business owner, and it is your business after all. Names like Newton University, Caleb College, Arthur Martins online college etc.

Course or Subject specialty

If you specialize in a certain subject, you need to state it clearly in your name so that those looking for that kind of institution can easily pick you out of a list. We believe that this will save you time in the long run, and also not having to answer those calls for people looking for a different kind of institution. Names like Eastern business school, online biological and physical sciences College etc.


If you don’t have a specialty, you will still want to use general terms that will let people know what your business is. Like using the word University to express that you are an online University.


Alliterations are catchy and roll off the tongue nicely, there is a few in the list such as College Time, The Tutoring Teacher, and The Total University.

9. Discuss With an Agent to Know the Best Insurance Policies for You

Do not think that because your business will be based online, that you don’t need insurance policies to protect your business.

It is your duty to mitigate your risk by making your site as safe as possible. This is a great thing, because no one wants your students to be safe more than you. Have it in mind that the social media is not a zero sum game when we are talking about frauds and cheating. Your client loses and you lose.

If one person gets hurt, it could be all over. Can your company withstand a multi-million dollar lawsuit? Here are some of the policies you need to get;

  • Internet liability insurance
  • General liability Business insurance
  • Advertising agency insurance
  • Creative insurance
  • Copywriters insurance
  • Business equipment insurance
  • Business interruption insurance
  • Business building insurance
  • Business contents insurance
  • Professional indemnity insurance

10. Protect your Intellectual Property With Trademark, Copyrights, Patents

Note that intellectual property rights are a business asset, and are often the most valuable business asset. It is believed that any business presently trading or considering trading on the internet needs to check what intellectual property rights it owns and ensure that it is fully protected.

Have it in mind that a vast type of ideas can be protected in different ways depending on how they are expressed. This intellectual output and the protection of it is known as intellectual property, a collective term for different types of asset including copyright, trademarks, patents, design rights and others.

These assets are intangible, but can be very valuable since they enjoy legal protection. You should know that there are a number of intellectual property rights which exist in your website. Any logos or branding are likely to be protected by registered trade mark rights or the law of passing off. There will also be database rights in any database underlying your website.

Note that most of your website, including the text, design, graphics, data, website layout and any music, broadcasts, software and images on your website, will be protected by copyright. In other to protect your intellectual property in the dating site business you need to do the following

  • Use Duplicate Content Detection and Monitoring Tools
  • Devise preventive methods
  • Take Action after Finding a Plagiarist

11. Get the Necessary Professional Certification

Certifications measure your knowledge and skills against industry- and vendor-specific benchmarks to prove to customers that you have the right mix of knowledge and organisation to impact into them. This educational sector has no pronounced professional certification, but you can make yourself relevant by acquiring general education industry certifications.

12. Get the Necessary Legal Documents You Need to Operate

The earlier you understand that documents play an essential role in protecting the interests of the business and business owners over the course of a company’s lifetime, the earlier you start getting them together.

  • Social Security number
  • Tax identification number
  • Employer’s identification number
  • Insurance
  • Non-disclosure agreement
  • Online privacy policy
  • Online term of use

13. Raise the Needed Startup Capital

Donations and grants are two ways that districts fund their online institutions, but for full-time online schools, the ability and willingness of the State to fund online learning sets a baseline for the budget. We believe there are two primary ways states are funding online schools: a direct appropriation or through a funding formula.

The appropriation model is most common. But for a private online University, just like the one you are about to start, ways to get funds may include;

  • Personal savings
  • Business loans
  • Crowdfunding
  • Social investment
  • Partners
  • Credit cards

14. Choose a Suitable Location for your Business

An online University doesn’t need a physical office, but if your online University requires a business front, choose an attractive location in your city’s business district. Choose tasteful, conservative furnishings; hire friendly and engaging educators who can set new students at ease. Customers will want quiet, free areas to go about their academics, so include cozy seating areas.

15. Hire Employees for your Technical and Manpower Needs

When starting a online school or an online learning program, the most important piece of technology is a learning management system (LMS) which is the set of tools that houses course content and provides the framework for communication between students, teachers and parents.

Note that through the LMS lectures, students and administrators are able to recreate the brick-and-mortar educational experience online.

We strongly believe that it allows lectures to post announcements, organize course content and give online quizzes and exams. Students can participate in threaded discussion boards and forums, as well as work on group projects. Specific accounts can be set up for administrators and parents, as well as teachers and students.

In this business and when selecting an LMS, we recommend that you select an open source product which is low cost and open to customization.

Alternatively you can also license LMS software from a commercial provider who will be responsible for the installation and insuring the product runs properly. Another administrative tool that should be integrated with the LMS is a student information system (SIS).

Have it in mind that the SIS houses all the basic information about students including their schedule, their academic performance and demographic details.

This tool  is also used for registering students, for creating reports such as progress reports and report cards. When starting your online University, you need to determine the content you will need and whether to develop it yourself or purchase it from a vendor.

Have it in mind that the type of content is connected to the reason why the online learning Institute is being created in the first place. If it is to supplement a small district’s curriculum with courses it doesn’t offer, then specific subjects would be identified.

But if it is to create a place for students who are unable to attend a physical school, then the content could be more general.  Note that it helps you build your own course content and the software to deliver it; it also saves paying a licensing fee to a vendor.

All young individuals in this modern age are practically naturals when it comes to digital technology. They have used it since an early age and easily take to new concepts and devices. But note that online learning isn’t about searching on Facebook or using the latest iPhone app.

We believe that technology is the delivery system and education is still the point. Have it mind that just as a student’s success in a traditional classroom is influenced by the teacher, so too is an online teacher important for students in an online university.

In online instruction, the teacher still uses the instructional skills and expertise in the course topic, as well as relationship skills, that he or she would use in a classroom. But since technology is used to communicate with the students, teachers either enter the job with technology skills or they quickly learn them.

Like other steps involved in creating a full-time online school or online learning program, assembling a teaching staff involves a series of decisions. When it comes to recruitment, the question will be if they will be full-time, part-time or a mix?

The Services Delivery Process of the Business

As a new entrant in this business, note that instructional models differ, starting from distance learning types which provides study materials for independent self-paced study (asynchronous), to live, interactive classes where students work with a teacher in a class group lesson (synchronous).

Note that the class sizes range widely from a small group of 6 students, to hundreds in live lessons with personal interaction (synchronous learning) necessarily run on small groups of 6 – 30, while distance learning (asynchronous learning) can be any number, and may be very large.

A lot of critics of this form of education have always implied that the lack of social communication in an online University is a disadvantage for younger students because of the lack of social skills training.

Indeed the distance learning model where study packages are sent out does fit this assumption, as the only human interaction is the marking of work by a teacher, and even that much may not be part of the service. But note that in a live, interactive online University (synchronous learning) lessons are socially constructed.

The students are in contact with each other and with teachers through software provided by the online University, and by email, both in lessons and outside them. Also in these institutions, students can also communicate by phone. Note that through the various kinds of social contact, personal relationships develop.

A lot of online universities do specifically address personal and welfare support, especially in the case of younger students for social skills training, both in its own right and to underpin effective, orderly lessons.

16. Write a Marketing Plan Packed With ideas & Strategies

So many people do not understand the basis of marketing. It is not something you do just once in a year but a continuous process. When marketing is continuous and targeted, business gets easier. If prospects have a positive view of your products and reputation, you are that much closer to getting a sale.

  • Take steps to make customers feel special
  • Create standard admission requirements
  • Stop servicing break-even customers
  • Develop an electronic mailing list and send old fashioned letters
  • Boost your profile at conferences
  • Combine business with pleasure – charity
  • Create a destination
  • Be an expert
  • Finally, don’t let customers simply slip away

17. Develop Iron-clad Competitive Strategies to Help You Win

In case you don’t know, business is a game of chess and every move counts, and to beat the competition you will require everyone’s collective effort. It is not just a task for the marketing department or top management; it is everyone’s responsibility. 

This is why it is very important you enlist the support of the whole organization once you have agreed on the strategies to adopt in dealing with your competitions.

  • Define your brand and make your site is inspiring
  • Choose a competitive advantage
  • Excite your students
  • Offer something off the board
  • Bring on more courses

18. Brainstorm Possible Ways to Retain Clients & Customers

Have it in mind that to retain a client, you need to provide an experience that blows the client away, keeps you top of their mind, and gets you into discussions with their friends. Regularly, marketers spend all of their attention on the chase and the sale and not enough on how to retain and create remarkable experience. Ways to do that in this business may include;

  • Entice your clients
  • Follow them up
  • Provide some personalization
  • Choose the right tools
  • Make it simple
  • Protect their ideas and interest

19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

Just like we have noted in this article, this sector is a highly competitive one, and while running a web-based venture can be extremely lucrative, it needs a lot of hard work and a helping hand to ensure profitability. Have it in mind that when it comes to finding this success online, the quality of your service can only take you so far, and to really thrive you must get noticed and earn respect.

This involves having a clean and well-performing website, a prominent position in the search engines, a very strong social media backbone and a web-hosting provider that can help your business grow.

  • Fulfill your promises
  • Employ skilled expertise
  • Enter appropriate online chat rooms through Google and Yahoo and announce your courses
  • Initially offer courses and not degree programs
  • Post certain courses on Craigslist class section
  • Go to every free online advertising source and advertise your school
  • Create low cost flyers, and go to your local unemployment and job training centre and post flyers
  • Go to local coffee houses and post Efficient Web hosting flyers
  • Astonishing website
  • Improved Search engine optimisation (SEO)
  • Affiliate marketing
  • Keeping your site safe