How to Start Online Tutoring — Checklist Download
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Online Tutoring Business Plan — Free Template
Download our free business plan template in MS Word format for online tutoring businesses.
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There is a relatively low start-up cost. The basic equipment needed is a laptop and a fast internet connection. This service is also an ongoing one, with most tutees paying for multiple classes rather than a one-off lesson.
No prior experience is needed. Whether you are a student, graduate, or qualified teacher, you can tutor subjects that you are adequately competent at.
Here is a step-by-step guide on how to set up an online tutoring business.
Choose a subject.
Think about what is in demand.
The most popular online tutoring subjects are Mathematics, English, and Science. WAHM.com reports that many people are looking to learn English as an additional language, so online English lessons are in high demand.
Decide on class sizes.
Consider your experience and resources.
You may prefer to do one-on-one classes or work with groups of varying sizes. If you have limited teaching experience, it may be best to start with one-on-one lessons while you gain more experience and confidence.
The size of your class affects the price of lessons. If you choose to have a group lesson, you may want to consider lowering your rate so that you compensate for less individual attention. While you may be charging less for group lessons, you will still be able to make a profit due to the number of students.
If you reduce group lesson costs from $25.00 an hour to $10.00 an hour, having 5 students will result in earning $50.00 an hour. This is double the rate of one-on-one lessons.
You will likely need to increase your marketing budget to attract more clients to fill group lessons.
Write a business plan.
Write an executive summary.
Describe your business's aims and identity to give investors a better understanding of your vision. Mention how your online tutoring company stands out from other online tutoring companies.
State your legal structure.
Let investors know which legal structure you will be registering as. Most tutoring businesses register as a sole proprietorship.
Describe your launch plan.
Mention any ideas you have for your launch, such as offering discounts or free lessons.
List your sources of revenue.
Explain how you will earn an income. For example, indicate whether you will host group lessons, individual lessons, or both.
List your essential staff.
You should list the staff members you intend to start with. This may be just you to begin with.
Explain your marketing plan.
Describe your target market, list the promotional outlets you will use to advertise your business, and provide a SWOT analysis.
It may be easier to complete your SWOT analysis after writing the rest of the business plan, as your strengths, weaknesses, opportunities, and threats will be clearer once you have fully described your business.
List your competition.
Describe at least three close competitors and discuss how you are similar as well as how your business is unique.
Describe your finances.
Investors will want to see what your startup expenses are and what you anticipate your business will earn in the next few months.
You should describe your sources of funding and calculate your break-even point as well.
Explain your future plans.
Describe any plans you have for hiring more tutors, offering more subjects, or finding additional ways to earn money.
Form a legal entity.
Choose a legal structure.
There are several options when it comes to choosing a legal structure:
- Sole proprietorship: This makes you the only operator and investor, with no employees.
- Partnership: Two or more individuals share the expenses and income from the business. No income tax is paid, but an annual return must be filed.
- Corporation: A corporation has shareholders but remains as a standalone entity.
- S Corporation: S corporations forward all income and expenses to shareholders for tax purposes.
- LLC: A Limited Liability Company (LLC) is more flexible in how ownership is placed, as it can be owned by an individual, more than one person, and/or a corporation. An LLC can be treated as a corporation or a partnership depending on the state.
Purchase equipment and software.
Ensure that you have a high-quality setup.
You may already have a laptop with a webcam, but you will also need a high-quality headset with a microphone.
Your audio quality must be professional. If your student cannot hear you, they will not benefit from your classes. Buying a noise-canceling headset will help you to hear clear audio regardless of how noisy your environment is.
You may want to invest in a camera. Most laptops come with built-in webcams, but quality can vary vastly depending on the make and age of your machine. Test out your video quality and gauge whether an external camera is needed. This may also be useful as a means to display your writing if the camera is attached to a tripod.
A microphone can help to create better audio. We recommend a lapel mic if you plan to stand in front of a whiteboard and move around. If you plan to be stationary, you can use a mic that connects to your aux port and rests on your desk or attaches to the side of your screen.
Using a backdrop can be functional and professional. You can find a plain sheet to hang behind you while presenting so that your lessons appear more professional. You will be able to mask the fact that you are working from home.
Set up a booking system.
Google Calendar is a cloud-based application that you can use across devices to make a note of lesson times.
If your business begins to grow, it may be a good idea to have a booking system like Appointy so that clients can view your availability and schedule a lesson without having to email you. This will ensure that no human error of double-booking occurs. If you employ more tutors, this will also streamline the booking system for students to choose their preferred tutor.
Software like Appointy allows users to accept prepayments as well as booking information, streamlining the payment process. There is also Google Calendar integration available to sync all of your appointments.
Set up a professional website.
Purchase a domain name.
You can purchase a domain name through Namecheap.
Be sure to check that your business name has not already been registered or trademarked. You can go to the US Patent and Trademark website to search the trademark database.
Choose a website hosting platform.
You will need to build your website on a platform that offers affordable rates and is easy to use. A few popular web hosting platforms include:
- Namecheap.
- WordPress.
- Wix.
- Squarespace.
- GoDaddy.
- Weebly.
Set up online payment services.
Online payment options are important for international clients. Your website should have either a direct or external gateway for payments, depending on what your payment provider offers. A direct gateway allows clients to make a payment without leaving your site, while external gateways redirect clients to another site.
Leading small business payment providers:
- Stripe.
- PayPal.
- Dharma Merchant Services.
- Payline.
- Helcim.
- Fattmerchant.
Compare options before choosing a payment provider. The service provider you choose should meet your needs, but you should not pay for too many additional services that you won't benefit from.
Market your business.
Consider your target market.
Since your target market will be students looking for online tutorship, advertising online will most likely be the best avenue for marketing.
If your target market is high school students, for example, you can ask local schools for ad space in their newsletter. For adults wanting to learn a new language, you can perform market research and find out which industries these individuals work for, and advertise on platforms or forums relevant to these professions.
Create social media accounts.
Do market research to find out which platforms your target market uses most often and create accounts on those platforms.
If your business is aimed at students who are in school, you could post content that relates to their studies or examinations. You could also post useful tips relating to the content you teach, like pneumonic devices or instructional videos.
Respond to questions about your business by commenting on tagged posts, and congratulate successful students on their progress. This boosts your reputation and creates a positive relationship with clients. These clients may share your content, providing free marketing.
Use pay-per-click marketing to appear first in Google searches.
Google Ads allows advertisers to have promoted ads on search results pages. When people search for online tutors, it would be beneficial to have your company come up early on the results page. Pay-per-click (PPC) marketing works by having companies pay Google whenever their promoted website gets clicked from search results.
Write a blog that uses SEO to attract visitors.
Using trending keywords in blog posts on your website will make your site more visible in search results. Google offers analytics tools that can help you track how successful your posts are.
Tips for Advertising on Social Media:
Identify the platforms that your target market uses. You may find that your target market predominantly uses Facebook and X, providing insight into which platforms you should focus your advertising on.
Post useful content. If your business is aimed at students who are in school, you could post content that relates to their studies or examinations. You could also post useful tips relating to the content you teach, like pneumonic devices or instructional videos.
Engage with clients online. Respond to questions about your business by commenting on tagged posts, and congratulate successful students on their progress. This boosts your reputation and creates a positive relationship with clients. These clients may share your content, providing free marketing.
Online Tutoring Metrics — Customer Lifetime Value:
Your tutoring business has a total revenue of $400,000 for the current year. During the same time period, clients made 5,000 lesson purchases. First, let's find the average purchase value:
$400,000/5,000 = $80.00
This means that the average purchase value was $80.00.
During the same year, 800 clients made purchases. To find the purchase frequency rate, we can divide the number of purchases by the number of clients:
5,000/800 = 6.25
Multiply the average purchase value and the purchase frequency rate to find the client value:
$80 x 6.25 = $500.00
The average client value is $500.00.
Now, we will assume for the sake of this example that the average client lifespan is 4.5 years.
Finally, we can find the customer lifetime value by multiplying the average client value by the average client lifespan:
$500 x 4.5 = $2,250.00
Therefore, the customer lifetime value for your company is $2,250.00.
