Pros & Cons

Start A Test Prep Business

Pros & Cons

Trying to understand the pros and cons of starting a test prep business?

Here are all of the pros and cons of selling test prep online:

Pros Description
Flexibility You can put as much time into the business as you'd like. If you like the work and have some initial experience, you can start small and manage all aspects of the business on your own.
Ability to start your business from home It's not necessary to have a physical storefront or office space to get your business started. You can do everything from the comfort of your own home, at least in the beginning!
Rewarding work Starting a test prep business can be really rewarding work. After all, you are solving an immediate issue for your customer and you're working on something you truly care about.
Traffic to your website A test prep business gives people a reason to visit your website and to keep coming back to you!
Meaningful business connections You never know who you will meet as a test prep business. This could be the start of an incredible business opportunity!
High customer retention rates Once a customer invests in your product, they've invested their time and energy to utilize your product/service which is highly valuable to them. Typically, your product or service becomes indispensable to your customer.
Control of workload With starting a test prep business, you have the unique ability to choose how little or how much you want to work. You also have the freedom to decide which projects you want to work on, and can turn down the ones that do not interest you.
Gain exposure and experience This career allows you to gain experience working for multiple different businesses - which will benefit your resume and also keep things interesting for you!
Unlimited income potential With starting a test prep business there is no cap as to how much income you can make. The stronger your business skills and the more energy/time you put into your career, the more you'll make.
Predictable income stream Your businesses income stream tends to be predictable based on the number of customers you have signed up. This makes financial planning and outlooks much more seamless!
Higher likelihood of getting referrals This business is all about referrals, which can be a a very impactful way to attract and retain customers. It's critical that you have a great referral program in place that incentivizes your customers to tell their friends about your product.
Simple business model A test prep business has the advantage of a simple business model, which makes launching and building the business more seamless.
Control your own destiny Starting A Test Prep Business allows you to control every aspect of your life and make your own dreams come true every day.
Greater Income Potential With this business, the sky is the limit in regards to your income potential.
You can work from anywhere! Not only can you start your test prep business from home, you can also run your business from anywhere in the world. This is the entrepreneur dream.
Strong Demand & Relatively Recession Proof The demand for test prep business is increasing year over year and the business is known to be relatively recession proof.
You get to inspire others Your business is one that encourages and inspires others, which in itself, can be very fulfilling.
You establish yourself as an expert With starting a test prep business, you establish yourself as an expert in your niche, which builds your credibility. In return, customers are more likely to trust you and refer you to other friends and family.
Can build solid foundation of clients It's unlikely you will have one-off customers as a test prep business. Typically, you have a solid foundation of clients that use your product and services regularly.
Low maintenance customers In this industry, customers are known to be very appreciative and low maintenance. This can help with your stress levels and allow you to focus on growing your business.
Results and revenue happen quickly! Unlike other businesses, it can be relatively quick to start seeing results and revenue. As long as you follow [all the steps](https://www.starterstory.com/validate-business-idea) to validate your idea before launch, you are likely to see quick results and ROI.
Cons Description
Low margins The gross margins for your test prep business are typically around 20%, which can make it more challenging to incur new expenses and maintain profitability.
Stressful work This line of work can be stressful for both you and your clients. This type of transaction is a significant financial decision for your client, so expectations are very high for you. Although this career path can be very rewarding, it also comes with its challenges and stressful moments.
Churn In this business, customers can cancel their membership or subscription for your services - which can make revenue forecasting challenging and unpredictable. It's important to focus on your churn rates and trends so that you can prevent this as much as possible.
Time commitment With starting a test prep business, all responsibilities and decisions are in your hands. Although this is not necessarily a negative thing, work life can take over at times. This can place a strain on friends and family and add to the pressure of launching a new business.
Difficult to build trust with your customer With starting a test prep business, there can be minimal face-to-face interaction, which means it can be a lot more difficult to establish trust with your customers. You'll need to go the extra mile with your customer to grab their attention and business.
Strict regulations With any test prep business, there are strict rules and regulations as it relates to processing your product. You must follow these regulations specifically, or significant legal issues could occur.
Impatient customers You may offer an engaging user experience for your customer, but customers expect a lot and may be impatient if they aren't pleased with your product or service.
Difficult to scale With a test prep business, it can be challenging to find ways to scale. Check out [this article](https://www.inc.com/jeff-bussgang/scaling-a-business-is-hard.html) that discusses scaling your business and the challenges that come with it.
Learning Curve When you start your own business, you no longer have upper management to provide you with a playbook for your roles and responsibilities. You should know the ins and outs of every aspect of your business, as every decision will come down to you.
Equipment Breakdowns Over the years, your equipment can get damaged, break down, and may need repairs which can be expensive. It's important you prepare for these expenses and try to avoid damages/wear & tear as much as possible.
Answering Phones The test prep business is still considered a traditional business, which means answering phones is a big part of the job. If you or your team miss phone calls, you could be missing out on potential revenue opportunities. If you are unable to attend to your phone throughout the day, it would be in your best interest to hire a call center or an employee dedicated to this.
Technical issues can be frustrating Technical issues are common in this business. If you struggle with the technical side of things, you may want to consider outsourcing this responsibility to save yourself the time and frustration.
More challenging to earn passive income It can be more of a challenge to make passive income in this business. Often times, the amount of revenue you bring in is limited by the amount of time you have in the day.