Starting a tutoring business does not need to be an overly complicated process and it doesn’t require large amounts of money to be spent on advertising or start-up costs. Tutoring is a business that allows you to start small and expand over time. Despite the relative simplicity of the business, it is important to do some research and put a plan in writing to guide you through the process and maximize the success of your business.
The following list covers six essential steps you need to take in order to build a successful and profitable tutoring business.
1. Determine the geographic area you will cover
If you are not starting an online tutoring business you will need to select a geographic area to market your services to.
The geographic area your tutoring business will cover is dependent on a few variables. First, if you are operating from a single location or your own home you need to consider how far students will realistically be willing to drive. In most cases students won’t want to drive more than 30 minutes so you should calculate an approximate radius around your tutoring center and focus your marketing in this area.
If you will be providing tutoring services in student homes you have a bit more flexibility and can probably cover a larger territory, but you must factor in the amount of time that will be spent commuting and the cost of transportation.
2. Determine what subjects and age groups you will teach.
There are a couple factors you need to consider when determining what kind of subjects your business will cover.
First, you will want to teach subjects where there is enough total demand to generate enough revenue for your business. For instance, a subject like math or English will have high demand in most markets whereas tutoring in a computer programming like Python will have much less total demand.
Second, you will want to teach subjects for which you specifically have the necessary knowledge and education to teach or you have access to tutors with this knowledge and education who can teach for you. Again, it is typically easier to find teachers for subjects that are more common such as Math, English, Reading, Science, etc.
3. Set the prices for your services.
The pricing decision is an important one when starting a tutoring business and it requires a bit of market research. Tutoring rates vary widely depending on who you’re teaching, which subjects you’re teaching and where your business is located. Some independent tutors charge as low as $15 per hour and some tutors in big cities can charge as high as $200 per hour. Of course these are extremes, but it just proves the point that there is an enormous range of prices in the tutoring market.
If you have already determined the geographic area your business will service and you’ve decided on the subjects and students you will be teaching, it’s pretty easy to gauge the market price for your tutoring services. Simply find out the rates of other tutoring services in your area targeting the same types of students. You might be able to find their rates on their website, in advertisements or you might need to call them and ask what their hourly rates are.
Once you have gotten the rates from a handful of tutoring services you will have a much better idea of how you should price your own.
The price you set will not only impact the profitability of your company, it will also communicate the value of your services. If you price too low you may attract a lot of students, but your profitability will be hurt and you will have difficulty financing further advertising and attracting high quality tutors. Pricing too low can also cause some people to think your tutoring services are of low quality.
Pricing too high without evidence of why your services deserve such a high price and you will generate very little interest. After you have established an impressive track record you can begin raising your prices.
The ideal starting price is probably slightly above the average rate in your market for your target students. This pricing is competitive and will generate a large response from potential students that are not overly price sensitive. It will also allow you to generate a reasonable profit which will cover your marketing expenses and enable you to pay high enough wages to hire quality tutors.
4. Promote your business
Promotion is probably one of the most important elements of operating a successful tutoring organization. Providing excellent tutoring services are very important, but without effective promotion you will be requiring on word-of-mouth to promote your business which builds slowly over time. This may be fine if you are an independent tutor, but if you are starting a tutoring business with multiple tutors it is important that you adopt a variety of promotion methods.
Typical methods for promoting a new tutoring business include introducing yourself and your tutoring services to people in schools who interact with students looking for tutors such as guidance counselors. You will also want to drop off brochures and put up posters in areas where a large number of students and young families visit. This includes school guidance and student services offices, community centers, public libraries, sports arenas and possibly certain coffee shops if you’re targeting university students.
Online advertising is another effective and affordable method for promoting your business. You should first set up a business website that contains your contact information, information about the area your business services, the subjects you tutor and a sign up form for interested students. Many blogging services offer free website hosting and website themes that are suitable for tutoring businesses.
You will also want to submit your business to online directories such as Google Places which offers free business listings and appear whenever people search for local results matching your business.
Tutor Directories are specifically for independent tutors and tutoring agencies. These sites attract a highly targeted audience of people looking specifically for tutoring services. Some tutor directories require a fee, but others are free.
Google AdWords is an online advertising platform that allows you to place text adds alongside search engine results and on websites with related content. The great thing about AdWords is that you can target people looking for tutoring services as well as target people in a specific geographic area.
Other forms of advertising include newspaper classifieds, direct mail, telephone directories and other forms of print. These methods can be a little more expensive, but sometimes they can produce excellent results if done correctly.
5. Set up the administrative portion of your business.
The four sections above addressed the marketing portion of your business, but you also need to prepare the administrative aspects of your business. The more organized you can keep the administration of your business, the more time you can focus on managing and growing your business.
There are several things you need to keep track of in order for your business to function smoothly.
It’s important to keep records of student contact information, subjects, lesson notes, progress reports, etc. You should keep a file on each student containing all of their information that you can easily access and update. Tracking this information will improve communication and allow you to track and share progress with students and parents.
As you take on more students and if you are managing multiple tutors, keeping track of schedules can become confusing very quickly if you aren’t organized. You should have a dedicated calendar that allows you to keep track of all student lessons and can easily be updated when lessons are cancelled or rescheduled.
You can choose from a variety of billing methods when you operate your tutoring company, but there are a few methods in particular that will simplify the billing process and ensure that you are paid for your services. One method is to have the student pay each lesson either before or after the lesson. This method is good because there is no delay between providing the tutoring and receiving payment so you don’t have to worry about collecting payments for past lessons.
An even better option is for students to pay for 5-10 lessons up front and when they have used up their lessons they can pay for another block. This method allows you to record the payment once and then not have to worry about collecting a fee for each separate lesson.
Tracking Revenue and Expenses
It’s important to keep accurate records of your lesson revenue and your business expenses. You will need this information when you complete your taxes and it’s extremely important information for evaluating your business performance throughout the year. Lesson fees should be recorded as the lessons are completed. Expenses can be recorded as incurred or you can save your receipts and record them once a month.
Depending on how professional you want your business to appear you may want to generate monthly or quarterly invoices for your customers. Invoices should list all lesson fees, additional fees or credits and payments received.
Depending on the size and complexity of your business you may be able to stay organized with a regular calendar and excel spreadsheets. However, if you have a larger tutoring business with multiple tutors you may want to invest in a system specifically designed for tutoring business administration like TutorPanel. TutorPanel integrates many aspects of your business into one easy-to-use system and will save you time and make your business appear more professional.
6. Operate and Improve your business
The final and most important part of starting a tutoring business is actually going out and operating the business. This is the exciting part where you get to finally put your plan into action. As you operate your business you’ll find that many things don’t work out the way you expected them to and that’s fine. The important thing is that you quickly adapt to find a solution to any problems you face. Pay attention to what works well and what problems can be eliminated. Through a process of continuous improvement your business will become more effective and successful.
What tips or ideas do you have for starting a tutoring business? Share them with us in the comments section.
Click Here to Start Your Free 3-Week Trial of TutorPanel