How To Start A Tutoring Business

You've stumbled upon the idea to build a tutoring business and now you're ready to take the next steps.

There's a lot to think about when building a business, so we put together a guide on how to get started, launch, grow and run your tutoring business.

We also provide you with real-life case studies and examples of founders running successful tutoring business businesses (and how much💰 they're making today).

💡 Idea

Considerations for starting a tutoring business

It's important to first identify if starting your own tutoring business is the right choice for you.

Starting a tutoring business can be very rewarding, but it's important to first understand where you can provide the most value (prior to getting started).

When considering what type of tutoring business to start, ask yourself these questions:

  • Will I need to familiarize myself with one (or many) different curriculums?
  • What knowledge/skills do I have that I can provide the most value to students?
  • Am I able to adapt to different learning styles of students?
  • What age groups and grade levels do you want to tutor?
  • What subject am I passionate about? That I'm willing to be most patient with?
  • Will my expertise and services be sustainable year round, or only certain times of the year?
  • Will I offer online or in-person services (or both)?

Although establishing yourself in the space and creating a solid reputation may take some time, tutoring can be a very lucrative business opportunity for you.

Deciding what type of tutoring business to start:

Tutoring is a very diverse business, so it's important to consider focusing on a niche market, that way you can become a true expert in the subject you teach and build your client base through referrals.

There are hundreds of different types of tutoring businesses you can start, for example:

  • ACT/SAT prep
  • K-12 subject specific
  • Students with disabilities
  • Language tutoring
  • Industry specific tutoring (ie. construction)
  • University level subjects
  • ... the list goes on and on

Here are a few things to think about when deciding what subject to teach:

  • Consider the classes you were most successful in as a student (and enjoyed the most!)
  • Try to think of an experience you had (either recently or earlier in life) in the education system that you felt could've been improved upon
  • Identify what type of demand there is in the market (you can do this through researching competition and creating a landing page for your "services" to validate your concept)
  • Think about what age groups you're most comfortable with and feel you could connect most with.

Adam Shlomi, founder of SoFlo SAT Tutoring explains why he decided to pursue test-prep specific tutoring:

I thought about what my SAT tutoring experience was like as a student and how that experience could have been improved.

I asked and answered how to onboard students, how long sessions should be, what the right amount of homework was, and what curriculum would work best.

This process was all about using various past experiences and critical thinking to brainstorm how I could create the best tutoring experience for my students. I made templates for text messages to send to parents and students for initial outreach and began to operationalize my variables. I came up with a homework schedule based on students’ current weaknesses and time remaining until test their official test date and tried out a series of different curriculums to find out which one was most effective.

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Adam Shlomi, on starting SoFlo SAT Tutoring ($15,000 revenue/mo) full story

Players

Big Players

Small Players

How to name your tutoring business

It's important to find a catchy name for your tutoring business so that you can stand out in your space.

Here are some general tips to consider when naming your tutoring business

  • Avoid hard to spell names: you want something easy to remember and easy to spell for your customers
  • Conduct a search to see if others in the space have the same name
  • Try not to pick a name that limits growth opportunities for your business (ie. if you decide to expand into other product lines)
  • As soon as you have an idea (or ideas) of a few names that you love, register the domain name(s) as soon as possible!

Here's some inspiration for naming your tutoring business:

Market Opportunity

Search volume for the term "online tutoring" had a big spike the past few months.

This is partially due to school closures (COVID-19) and parents needing extra educational support at home.

However, we're seeing that as of late, there is an increase in searches for this type of service.

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🎬 Start

Certifications

Typically, one of the only requirements for becoming a tutor is graduating from high school.

However, there are many certifications you can get in order to stand out in the space + learn new teaching techniques and skillsets.

Here are some of the main tutor-specific certifications (approx $500 to get certified):

There are, of course, specific certifications you may want to consider depending on the type of tutoring you plan to start.

Here is a great resource to learn more about certifications specific to your niche.

Write a Business Plan

Writing a business plan from the start is critical for the success of your tutoring business.

Why?

Because this allows you to roadmap exactly what you do, what your overall structure will look like, and where you want to be in the future.

For many entrepreneurs, writing out the business plan helps validate their idea and decide whether or not they should move forward with starting the business.

You may want to consider expanding upon these sections in your business plan:

  • Executive Summary: Brief outline of your product, the market, and growth opportunities
  • Overviews and Objectives: Overview of your business, target customers, and what you need to run your business
  • Products and Services: Specifics on the products and services your business will provide
  • Market Opportunities: Analysis of customer demographics, buyer habits and if your product is in demand
  • Marketing: Outline of your marketing plan and how you plan to differentiate yourself from other customers
  • Competitive analysis: Analysis of your competition and the strengths and weaknesses therein
  • Operations: Hierarchal structure of the company and what it will take to run the business on the day-to-day
  • Leadership Team: Detailing roles and responsibilities of each manager based on their specific skill-set
  • Financial Analysis Understanding of all expenses, operating budgets, and projections for the future.

Startup Costs

If you are planning to start a tutoring business, the costs are relatively low. This of course, depends on if you decide to start the business on your own or bring on a big team at first.

We’ve outlined two common scenarios for “pre-opening” costs of a tutoring business and outline the costs you should expect for each:

  • The estimated minimum starting cost = $550
  • The estimated maximum starting cost = $13,300
Startup ExpensesThese numbers are based off the average expenses incurred when starting a tutoring business. Min Startup CostsDefined as an tutoring business you have started and plan to execute on your own. You’re able to work from home with minimal costs. Max Startup CostsDefined as an tutoring business you have started with one other full-time planner. You decided to rent out an office space to set up the business.
Licenses and Business FormationThis refers to setting up your business license and establishing any legal contracts. $250 $1,000
PayrollThis number depends on if you decide to pay yourself a salary up front and the amount of employees you hire. The average salary for a full-time tutoring business individual is $0 $4,000
Advertising/PromotionThis includes (but not limited to): paid ads, public relations, networking events etc. $200 $2,000
Website and Email HostingCosts to host website, domain names and email $100 $300
Website Design (Outsourced)Hiring an outside contractor to assist with design elements of your website $0 $5,000
*Tutor-Specific Certification *This is typically an optional cost. Becoming certified can help with credibility and acquiring new clients $0 $1,000
Total Starting Costs $550 (min) $13,300 (max)

Raising Money

Since the startup costs to start tutoring business range between $550 - $13,300, there are ways you can raise money to cover these costs.

Here are a few ways you can secure additional funding:

When it comes to setting up your business, you may find yourself in a place where you have to make some financial and legal decisions.

The first thing you'll want to decide on is whether you want to be an LLC, S-Corp, or C-Corp.

These three options are found to be the most common when starting a small business, and all serve to protect your personal assets and also provide you with certain tax benefits.

  • LLC: All income and expenses from the business are reported on the LLC personal income tax return.
  • S corp: Owners pay themselves salaries + receive dividends from profits.
  • C Corp: C Corps are separately taxable entities that file a corporate tax return (Form 1120). No income tax is paid at the corporate level and any tax due is paid at the owners individual expense.

Depending on where you're conducting business, you'll also want to consider securing the proper permits, licenses and liability insurance.

Learn more about securing the right permits and licenses ➜

🚀 Launch

Build A Website

Building a website is imperative when launching your business, and with the right tools in place, this can be a simple task to check off the list (without having to hire someone).

  1. Pick a domain name that's easy to remember and easy to type
  2. Choose a Web Hosting Plan (ie. Shopify, Squarespace)
  3. Make sure you choose the right theme and design
  4. Implement the proper page structure (ie. about page, contact page, pricing etc)

To learn more about how to build a stellar website with little stress, we give you all the details on this step-by-step guide.

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Adam Shlomi, founder of SoFlo SAT tutoring designed his website based off of the "mom-test":

I knew a lot about my potential customers. I’ve been watching my mother make purchase decisions on the internet her whole life. So I designed a website that would be easy for my mom to use.

That meant simple big fonts, not too much moving visually, and a clean, modern look.

I also decided to direct website traffic into a phone call with me. I don’t think my mother would hire an SAT Tutor without speaking to them first and feeling comfortable. So I made it a goal to get a customer’s number as fast as possible and then call them up. This sales model was inspired by the bank I had been working at. They send out tons of direct mail pieces and the moment they get a lead, a sales rep is on the phone to establish a relationship.

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Adam Shlomi, on starting SoFlo SAT Tutoring ($15,000 revenue/mo) full story

How To Price Your Services

The amount of money you can charge depends entirely on the type of tutoring you teach.

Tutors are typically paid based on a few different factors:

  • Experience in that subject
  • Subject matter
  • Length of session
  • Credibility in the space

The average hourly rate for tutoring in a single subject typically ranges from $18 per hour to $40 per hour.

However, for test prep subjects (such as the ACT/SAT), the price point per hour is much higher as there is perceived value in students passing this exam.

ACT/SAT tutors typically charge anywhere from $70-$100 per hour.

Profitibility

Fortunately, there is not much overhead for tutoring businesses, so margins tend to be high.

However, the cost of acquisition for new clients is something to consider as it's important to find new marketing channels (ie. yelp) that will generate a positive return.

Adam Shlomi states that their current client acquisition cost is ~$60 and that cost is recovered in the first session.

Revenue Numbers

We've interviewed several founders in the space and asked them how much they're making today. Here's what we discovered:

Lingoci - a platform for online language tutoring

  • $60K/month
  • Zero employees
  • Started in January 2017
  • Invested only $300 into the business

SoFlo SAT Tutoring - SAT tutoring

  • $15K/month at 22 years old
  • 1 employee
  • Started the business with very little upfront cost

SI Certs - Online test prep courses to construction inspectors

  • $85K/month
  • 4 founders + 1 employee
  • Founded in 2011
  • Price point has grown from $99 to $449 over the years

📈 Grow

Where to promote your tutoring business

There are several effective places to advertise your tutoring business, both online and traditionally:

Let's take a look at the most common places to promote your tutoring business:

Word of mouth

Referrals are one of the best ways to acquire new clients.

The process can be slow at first, but can build rapidly. Plus, these customers are much more qualified as they've been recommended to you by a friend or family member.

Remember, the cost to acquire a new client through word of mouth is close to zero, so it's important to establish a great referral program that will incentivize your customers to refer you to their friends/family.

For example, you can offer 50% off their tutoring session and a discounted rate to the new customer.

List your business to the top tutor-searched platforms:

Schools

A great place to start is by talking to guidance counselors that can refer students to you.

Public Libraries

Most libraries have bulletin boards where you can promote your tutoring service.

Improve your SEO

SEO is not just about driving traffic to your site, it's about driving the RIGHT traffic to your site, and ultimately, converting leads into customers.

One of the most important aspects of SEO is understanding what your customers are searching for, otherwise known as "keyword research."

Here are some tools that can help you choose the right keywords for your tutoring business.

Learn more about the fundamentals of SEO ➜ here

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Alex Redfern, founder of Lingoci explains how they were able to target specific keywords and rank #1 on google:

Recently, we’ve started investing in content marketing and search engine optimization.

The language industry has many big, established players, so returns from these channels don’t come overnight. But we have had some success, for example, two articles I wrote on language learning went viral on Medium and now rank at the top of Google.

One advantage we have is that our data from Google Ads can inform what we prioritize for SEO. We know for example that terms containing the word ‘Skype’ convert well. So we have targeted landing pages for terms like: Spanish lessons on Skype, Learn German on Skype, French Skype lessons, Skype Italian classes, etc. And since Zoom has grown in popularity, we've started replicating the process for Zoom, targeting phrases like Spanish lessons on Zoom and French tutors on Zoom. It’s simple, but it works. Just remember that if you create landing pages to increase your chances of ranking, the user experience must still come first.

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Alex Redfern, on starting Lingoci ($60,000 revenue/mo) full story

Social Media Advertising is one of the leading ways to get the word out when it comes to tutoring business.

There are various different Social Media platforms available to you. Some may be more critical for your marketing efforts than others, however, it's important to have an understanding of what's out there and available to you.

Let's talk about a few of the main platforms and what makes them unique:

  • Facebook Advertising - more than 2 billion monthly users. Facebook is the best for lead generation + capturing email addresses for e-commerce businesses.
  • Instagram Advertising - approximately 500 million monthly users and has a higher audience engagement rate than any other platform. Instagram ads are best for linking to a product page or landing page and reaches the 18-29 age group most effectively.
  • Twitter Advertising- Small businesses typically use twitter ads to drive brand awareness, but the platform is meant more for organic engagement (and is not as heavily used for paid advertising)
  • Pinterest Advertising - 175 million monthly users and most effectively reaches the female audience. Pinterest is great for promoting products without "promoted". The promoted pins have a way of blending right in.
  • LinkedIn Advertising - 227 million monthly users and is geared towards the B2B market and generates the highest quality leads. Great platform for recruiters, high-end products and services that will help businesses

It's important to first define your goal/objective so that you don't waste time and money into the wrong platform:

Here are some different questions to ask yourself as it relates to your goals:

  • Do I want to simply drive brand awareness?
  • Do I want to drive users to my website to gather information?
  • Do I want to increase sales and get my customer to take action?

From there, choose the platform that targets your audience best and start experimenting!

Learn more about social media advertising ➜ here.

Attracting New Customers

One of the best ways to attract new customers in the tutoring industry is to have amazing reviews from customers published online.

At the end of the day, new customers want to see that your services provided value to somebody else, whether they know them or not.

Adam Shlomi, founder of SoFlo SAT tutoring states that reviews and word of mouth are the most effective way to get new customers:

With the refined system, students were showing better score improvements and good reviews started rolling in on various platforms like Google Business and Facebook. The timing was great because as that system crystallized, our client demand started increasing.

At the end of the day, we have to make sure students improve on the SAT. If we do a great job and scores improve, customers tell their friends and the SoFlo family continues to grow.

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Adam Shlomi, on starting SoFlo SAT Tutoring ($15,000 revenue/mo) full story

🏃🏼‍♀️ Run

How To Retain Customers

Retaining customers is one of the most effective ways to grow your tutoring business.

Often times, it's easy to find yourself focusing on generating new customers, vs retaining your current ones.

Look at it this way - you are 60-70% more likely to sell a new product to an existing customer, than you are a new customer.

That's not to say that finding new customers and revenue streams is not important, however, the easiest (and most inexpensive) source of new revenue is right there in front of you.

Here are some ways you can retain customers for your tutoring business:

  • Responding to comments on social media
  • Send discounts (or freebies) to loyal customers
  • Provide valuable content, for free
  • Write hand written thank you notes
  • Provide awesome customer service and build relationships with customers

To find out more tips and tricks on retaining customers, check out this article ➜ here

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Gabirel Kramer, founder of SI Certs explains the #1 method of retaining customers:

The most important thing we did to attract and retain customers was create more courses. We got great reviews for the Reinforced Concrete course. Many of our students wanted help passing other special inspection exams.

Another effective thing we did was create videos for YouTube and embed them on our site. In the first year, we shot seven videos to help people pass a small exam. This exam is smaller than the Reinforced Concrete exam and it’s required to earn the Reinforced Concrete certification. Those videos have gotten many views of the years. Even today, they account for over 20% of our organic traffic of new site visitors.

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Gabriel Kramer, on starting SI Certs ($85,000 revenue/mo) full story

Outsourcing

If you can afford to hire someone to help support your tutoring business, outsourcing is a great way to save you time and energy.

Most importantly, outsourcing can help you focus on the core growth of your business, versus spending your time on day to day tasks that other people can do just as well!

If you do plan to outsource your work, it's important to be hyper-familiar with the actual work involved.

Why is it important to be hyper-familiar with the work?

  • So you can understand how long it takes
  • So you understand the full process, edge cases, things that can go wrong.
  • So you can explain it in detail to your employee.
  • So you can make sure it actually works (for example - how do you know cold email works for your business if you’re not on the ground floor trying it out?)
  • Understanding the tasks at a deep level will save you a lot of time and money.

Tools to get started:

As a tutoring business, there are some tools and platforms you may want to consider when getting started:

Resources

Books

Websites

Case Studies

Conclusion

Personal Experience I had

I remember one very specific tutoring experience I had in college.

The reason I mention this business is because there are so many things that they did right, in my eyes. It was also incredibly profitable.

It was a group tutoring session in a giant classroom off campus, and it was only offered the night before the midterm or final exam. It was essentially there for students to cram for their exam.

This is not to say this is the proper way to start a tutoring business, but here are the main takeaways as to why his business was so successful:

  • The tutoring session went from 6pm-11pm and cost $95 per person. There was always anywhere from 100-500 people in the audience (depending on the class and exam). That means that one guy made anywhere from $9,500-$47,500 in just 5 hours.
  • He had prior experience teaching the class and was able to provide us with the knowledge and materials we needed to succeed on that exam, guaranteed.
  • He was a total nut. People loved him because he truly had the most crazy energy that kept you engaged for the entire course.
  • He was able to create a community, and get people to keep coming back several times throughout the semester.. It was almost like the "thing to do" with your friends in order to prep for an exam. He got all the sororities, fraternities, associations from campus to invest in his service.

The point is: if you can identify and fill the gap for a specific need in the tutoring world, the chances of building a successful tutoring business is very high.

Hope you enjoyed this guide!

Conclusion

Personal Experience I had

I remember one very specific tutoring experience I had in college.

The reason I mention this business is because there are so many things that they did right, in my eyes. It was also incredibly profitable.

It was a group tutoring session in a giant classroom off campus, and it was only offered the night before the midterm or final exam. It was essentially there for students to cram for their exam.

This is not to say this is the proper way to start a tutoring business, but here are the main takeaways as to why his business was so successful:

  • The tutoring session went from 6pm-11pm and cost $95 per person. There was always anywhere from 100-500 people in the audience (depending on the class and exam). That means that one guy made anywhere from $9,500-$47,500 in just 5 hours.
  • He had prior experience teaching the class and was able to provide us with the knowledge and materials we needed to succeed on that exam, guaranteed.
  • He was a total nut. People loved him because he truly had the most crazy energy that kept you engaged for the entire course.
  • He was able to create a community, and get people to keep coming back several times throughout the semester.. It was almost like the "thing to do" with your friends in order to prep for an exam. He got all the sororities, fraternities, associations from campus to invest in his service.

The point is: if you can identify and fill the gap for a specific need in the tutoring world, the chances of building a successful tutoring business is very high.

Hope you enjoyed this guide!

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Samantha Walls,   Founder of Starter Story Blog

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