Though starting a business is not simple, tutoring is one of the less challenging ventures. Some people are hesitant to start a tutoring business because they believe it won’t be successful. However, there is a sizable potential for recurring income as well as a fairly steady demand for tutors.
The majority of the profits earned by tutors can be retained by them to fund the expansion of their business model because they can start out small with little to no overhead.
Why Starting a Tutoring Business is Worth It
It’s probably the right move for you if you enjoy tutoring and teaching others and feel that making it into a scalable business is the next logical step. Making your passion into a business is a great way to guarantee its success. Why not get paid for what you love doing—you already have a passion for supporting students?
Another benefit is that tutoring businesses don’t require high startup or overhead costs, especially if you don’t intend to work out of an office. The cost of monthly rent can be avoided by having clients meet with travelling tutors in their homes, libraries, schools, or cafes. Additionally, most of the books and materials students might require for a tutoring session will already be in their possession. If you stick with online tutoring, your costs might even be lower.
Since COVID-19 forced many schools to adopt a remote learning model, which is not suitable for all students, modern education has been moving in a new direction. Tutoring has become a common addition to help families make the adjustments necessary to get their children’s education back on track. Additionally, there was a need for knowledgeable tutors at all grade levels prior to the pandemic, and that need is likely to persist for the foreseeable future.
Finally, running a tutoring business presents a wealth of chances to build your professional contacts and resume. You can network with other education professionals and acquire useful skills to help you achieve your objectives, whether you intend to pursue higher education to become an educator or you’re interested in growing your business in the future.
The Investment Needed to Start a Tutoring Business
A tutoring business is one of the best to grow for business-minded individuals looking to launch a low-cost venture with significant profit potential. Tutoring businesses can start in a variety of ways, including as a one-person operation with low startup costs and no overhead.
It won’t take much time or money to get a small tutoring business with just you as the tutor up and running. Just make sure to establish a legitimate business to take care of all the legal matters first. For quick business formation that takes only ten minutes to complete, we advise ZenBusiness.
Accounting software, such as QuickBooks, can help you keep track of everything once you start making money for about $25 per month.
You might only tutor for a few hours per week at first. But let’s say starting a full-time business is your ultimate goal. If so, you should budget 30+ hours a week for tutoring and 5–10 hours per week for administrative work like handling finances, booking clients, organising tutoring sessions, and marketing.
The books your clients need to study from will typically be provided by them, but you may also require supplies like pencils, paper, a calculator, and a dry-erase board. Having a laptop and printer allows tutors to conduct client-related research and print materials that they can use with them. If you don’t already have them, plan to spend anywhere from $500 to $1000 on them.
Consider creating a website as a central location for your online marketing efforts so that clients can find you. If you choose to go in this direction, we advise Wix due to its ease of setup and reasonably priced plans.
For just $23 per month, you can launch a simple business website that accepts payments online, complete with PCI DSS compliance to secure your payment gateways. To assist you in selecting the best website builder for your company, we’ve put together a buying guide of the top ones.
After discussing time and money, let’s dive into the steps required to launch a tutoring business:
1. Form a legal business
2. Complete competitor research
3. Determine your client base
4. Work out the details of your business model
5. Figure out pricing
6. Get your business finances in order
7. Start marketing your business
7 Steps to Start a Tutoring Business
This manual will walk you through the procedures to start your tutoring business. The steps to launch your tutoring business will be the same whether you want to operate it alone or with other tutors.
Step 1 – Form a Legal Business
You might believe that tutoring a few students on the weekends isn’t sufficient cause to establish a business legally. In the end, however, both your state and Uncle Sam will want to know that you are running a business in order to ensure that you are paying your fair share of taxes. It is best to complete this step first so that you can move on to starting your business.
Since many tutors begin as sole proprietors, you won’t need to take any special steps. You automatically become a sole proprietor as soon as you start carrying out business operations. Your personal and business finances will coexist, and you will file a single tax return to pay taxes on both.
If you decide to scale, though, this might make things more complicated. Most business owners find it wise to keep their personal and business finances separate, mainly because your personal finances may be at risk if your company ever faces legal action.
Establishing a limited liability company, or LLC, is the best way to prevent this. Having an LLC safeguards your personal finances in the event of legal issues and gives you the option of choosing between corporation and sole proprietor taxation. You can submit paperwork to your state on your own behalf, but a number of businesses will do the legwork for you.
For starting a tutoring business, we advise using ZenBusiness. The cost of the service begins at $49. You can access your documents online at any time and it only takes a few minutes.
Simply choose the state you want to file in and follow the instructions to create your LLC using ZenBusiness.
You can use the free tools provided by ZenBusiness to choose a legitimate business name, research your market, and determine the best kind of business entity. Most likely, all you need for a tutoring business is an LLC.
Don’t forget to inquire about business requirements with your city as well. For almost any type of business, some localities require a business licence; others don’t.
Step 2 – Complete Competitor Research
A profitable company stands out from the competition. As a result, you should provide something unique compared to your rivals to entice potential customers to choose you. Find out first which tutoring businesses there are in your neighbourhood that you will essentially compete with. In order to help you, do some research on your rivals before starting your business:
Design your business model
Determine your pricing
Figure out what clients you should serve
Determine pain points that you can solve
Learn what competitors could improve on
Identify gaps in marketing
You can use your local Chamber of Commerce, Google, Yelp, and other local business websites to find local businesses, as well as asking your friends and family for recommendations. You must broaden your research to include other online businesses if you intend to use an online business model.
You can try Crunchbase for free to do this. To find the best tutoring companies, start by searching for the term “tutoring.” Then, click the URLs of their websites to browse through them, see what they have to offer, and determine prices.
Step 3 – Determine Your Client Base
What types of customers are you hoping to attract? A variety of services for various age groups can be provided by tutoring businesses. To identify your ideal clients when you’re just getting started, it’s best to maintain a narrow focus. Consider:
The subject areas you’re most skilled in
The age group you’d like to teach most
Your prior teaching or tutoring experience, if any
What your competitors are already doing
Whether it makes more sense for you to tutor online or offline
What clients are readily available in your area
For instance, if you reside in a town with a university, you might have no trouble attracting students as customers. It might be preferable for someone who lives more than 45 minutes from the nearest college or university to tutor elementary, middle, or high school students. Additionally, families looking for science and math tutoring may view you more favourably than those looking for an English tutor if you have prior experience tutoring STEM subjects.
Additionally, think about where the lucrative clients are. For instance, students who need help studying for the CPA Exam will want someone who is knowledgeable about accounting, preferably someone who is also a CPA. These customers might be more willing to pay for your knowledge than a student looking for a general tutor.
Step 4 – Work Out the Details of Your Business Model
There are various ways that you could choose to run your tutoring business. These companies typically take one of the following forms:
Online tutoring:
Through online video, the tutor meets with students individually or in groups.
Traveling tutor for schools and learning centers:
The tutor makes trips to schools to provide one-on-one or group tutoring sessions.
In-home tutoring:
Students and the tutor meet in the tutor’s home or office or both.
Tutoring franchise:
A tutoring business enables other business-minded people to launch and expand company branches in their region.
Different types of investments are needed depending on the business model. Online tutoring has the cheapest start-up costs. Regardless of the business model you choose, you’ll generally need a website, internet access, a computer, a printer, and video conferencing software like Zoho Meeting. The best candidate for this option is someone who wants to operate a fully home-based business and tutor students from around the globe.
Tutors who travel and provide in-home instruction also have relatively low startup costs. Other than paper, pencils, and dry-erase boards, all you’ll need to get started is your computer set up and website. This choice should work well for you if tutoring is in high demand in your area. If you have a separate home office space for sessions, you can even reduce travel time.
A franchise could yield the highest profit, but it also requires the largest time and financial investment. Franchises, however, have restrictions on how you can run your business, so it’s not the best business model for someone looking for total control.
Step 5 – Figure Out Pricing
The kind of client you draw in and how quickly you can turn a profit for your tutoring business will ultimately depend on your pricing. If you overcharge for your services, you risk turning away clients. If you undercharge for your services, you might not attract the niche clients you’re after. You might also undervalue your ability to make money.
Again, studying your competitors is a useful strategy for pricing. Visit their websites to learn more about the services they provide and the prices they charge. If providing local services, you can contact nearby tutoring services to enquire about their offerings and costs.
Think about whether offering prepaid packages or charging an hourly rate would work better for your business model. Look at what rivals are doing, but also consider your own working style.
Do you have to include travel expenses? Do you spend several hours per week on administrative tasks? The best choice might be to charge regular clients a monthly fee. On the other hand, if you tutor locally or online, charging by the hour might be the best option for you.
Keep your prices competitive while keeping them comparable to what others are asking. If you want to give customers more value than other businesses, you might add something extra to your service, like a free trial tutoring session.
Step 6 – Get Your Business Finances in Order
As we previously stated, it’s generally a good idea for businesses to keep their personal and business finances separate. This is particularly true if you intend to expand your tutoring business beyond a one-person operation in the future.
A business bank account should be opened before you earn your first dollar. Due to its $50 minimum opening deposit and absence of monthly fees, Novo is highly recommended. Not a bank, Novo is a fintech. Middlesex Federal Savings F.A., Member FDIC, offers them banking services. Having said that, Novo’s business checking is superior to any traditional bank’s offerings for small businesses.
You’ll use this to receive payments, cover any necessary supplies, marketing costs, and other business costs. You will then have all of your income and expenses in one bank account for simpler filing when tax time comes around.
Using accounting software can also help you to organise your finances for taxes and track your income and expenses. The monthly cost of QuickBooks for small businesses is just $25, and the first three months are only $12.50 each. When you link your business bank account, the service offers automated tracking and tagging of income and expenses. Additionally, you can invoice clients and accept payments online.
Step 7 – Start Marketing Your Business
It’s time to use marketing to publicise your tutoring service. Depending on the type of business model you select and the demographics of your target market, your marketing strategies may change. Online search engines, social media, and local marketing strategies like mailers and radio ads are some of the best ways to advertise a tutoring business.
Making a website is one step that should be done first. This serves as the central location for your online business, where clients can learn more about you and your offerings before making appointments. Wix is a drag-and-drop website builder that makes expert websites in a matter of minutes, and we suggest it. Wix starts at $14 per month, or $23 if you want to accept payments online, and you can test any plan for 14 days without paying anything.
You can use online advertising to bring visitors to your website once it is operational. To attract clients for your online tutoring business or to reach locals looking for tutoring services, use Google AdWords or social media advertising.
Next Steps
Your next steps should focus on expanding your tutoring business now that it is up and running.
Find out firsthand what customers think of your offerings. Does everyone love it? Do you have any room for improvement?
After you’ve given a session or two, think about requesting their email address so you can send a survey to get their feedback. You can make a free Google Form and ask a few questions about the experience for them to respond to. Ask them if you may use their feedback as testimonials on your website, social media platforms, or other marketing materials.
Once your business expands and you begin receiving online reviews in various places, investing in online reputation management software may be wise.
You might want to expand your team of tutors as your clientele increases if you want to grow your business. Finding the right candidates for your company is made easier with the help of our guide to conducting a job interview.
