If you’re a teenager in need of some extra income, and if you excel in a specific subject, offering professional tutoring services to other local students (or through an online presence) could be a good option. These are recession-resistant and constantly in-demand services with reasonably priced start-up costs and low risk, but huge upside potential to make a lot of money in the future. Plus, with a plethora of subjects available and a constant influx of new students in need of study help and an improved GPA, building a tutoring company provides one of the best long-term income opportunities for young people with limited start-up capital. The below guide walks you through step-by-step how to start a tutoring business as a teenager and become an education company CEO.
First Thing’s First
When you start a tutoring business, you should treat it like a real business and set up either an LLC (limited liability company), a corporation (and S-corp or C-corp), or a sole proprietorship. This can usually be done online, and it’s a good idea to peruse the various options before deciding which business structure to utilize, which will have tax implications that impact your personal finances and how much money you can actually take home from the tutoring business. Always keep good records and use programs such as QuickBooks, which is simple and inexpensive but keeps track of all of your bookkeeping. If you keep track of your income and expenses from the very beginning, this is the best way to remain organized from that point forward.
You’ll also need to check your local clerk of court to see if you need some type of business license (this can vary from industry to industry and state to state). In most cases, you will. You’ll want to make sure you have all of the documents ready before you take your first client because if you are ever audited, the government will pour over your records with a fine-tooth comb, and these files will be necessary for proper tax filing. In other words, don’t try to cheat the system or be sloppy, but instead, do everything by the book and remain organized with your corporate, legal, and tax documents. Ideally, you should also be backing up those files to a digital cloud or external hard drive to ensure if ever your computer crashes, you don’t lose those important documents and records. This is a great way to have peace of mind when conducting all your business ventures through the years, not just for tutoring businesses.
Decide Who Your Competitors Are
All business owners have competitors, so before you determine who your potential clients are and how to find them, you’ll need to focus on competitors first. Do some research and figure out who your biggest competitors are. You can even contact them and ask what their rates are so you can determine your own rates. Also, don’t let the fact that you’re a teenage tutor dictate or lower your pricing decisions; your prices should reflect what your client base is willing to pay for the level of competence you’re offering, not your age. In fact, if your prices are too low, people will assume your competence, confidence, and experience are all pretty low, or else you would be pricing your services competitively.
Most tutors charge an hourly rate for their services, and you might want to consider charging one rate for high school students and another rate for older students or test-specific tutoring and preparation. Finding local tutors off of whom to model your pricing, branding, or marketing shouldn’t be difficult because there are numerous online resources that can help you with that, from Yelp to local high school tutoring partner companies. You don’t have to copy your competitors in everything, but you can get ideas about prices, the overall market, and how to market your services by looking at what other tutors in the local community are doing, from their social media presence to their subjects offered, school districts served, and whether they offer online tutoring jobs or only local and in-person. This type of market research can also help you fill gaps and offer services or areas they don’t, so you aren’t merely in competition, but also blazing a trail in your own arena that isn’t already saturated by those companies.
Deciding Who Your Clients Should Be
When deciding on your clients, you should first determine what grade level you want to work with, which can include both high school and college students. Most people stick to either high school or college because it is difficult to do both, as the marketing strategies and subjects covered are different, but it can definitely can be done, particularly if you hire some additional tutors when you exceed your own capacity with in-person tutoring. You also need to stick with the subject matter you know best, whether that is English, math, history, or anything else. Math and English are both subjects that are difficult for tons of people, so if you choose one of these, you’ll never run out of clients. That said, you can build a team and delegate subjects and clients to ensure the best tutor for each subject and client is paired up.
You’ll also need to decide how to conduct your tutoring sessions, meaning do you wish to tutor people online or in person? Each option has its advantages and disadvantages, so you can always offer both options to students and let them decide. These lessons are usually around 50 minutes in length, and you need to let your clients know that upfront. If you live out in the middle of nowhere, you might want to consider tutoring online because this is the most practical choice. Furthermore, offering online tutoring allows a much greater business opportunity, since you can reach clients all over the world via social media platforms, as well as offer group tutoring sessions or online courses to help students master studying for different subjects and tests (whether college entrance exams or AP tests to gain college credit from their high school classes).
Decide How to Create and Organize Your Business Model
When running your own tutoring business, you’ll need a business model, of which there are various types. These include online tutoring, traveling to schools and learning centers, or tutoring in the student’s home. One of the reasons this is so important is because each type affects what supplies, materials, time, costs, and overall resources you’ll need to conduct business. Naturally, an online tutoring business will be the least expensive for you because there are fewer supplies, such as paper and other items involved, as well as no need for transportation and travel time.
There is also another option when you have a home-based tutoring business: a franchise. There are tutoring franchises you can join, and they allow you to get the assistance you need to set up and run your business, including the benefit of their name recognition and possible company certifications or affiliations (like the American Tutoring Association or National Tutoring Association), as well as a proven method of marketing in the local area and generating new tutoring leads (potential clients). Unfortunately, many franchises are not only expensive, but they also sometimes require that you pay them a percentage of your profits each month. If you’re interested in a tutoring franchise, make sure you learn all of the details of the business first, since establishing a new business will be hard work either way, whether as an individual small business or local franchise.
Let’s Talk about Price
If you’re knowledgeable in a particular subject area, tutoring is a great business, but keep in mind that you’re still in this to make money, which means determining what prices to charge is important. If you determine you’ll be working with a student regularly for several months, you might want to offer a discounted monthly rate instead of an hourly rate to incentivize the longer-term recurring revenue or up-front bundle package. You can even offer the first session free if you like because this is one of the best ways to attract more clients by disarming them with the high-quality services before they’ve committed financially.
Again, check to see what your competitors are doing, which you can do online, through your local Chamber of Commerce, or even through sites such as Yelp and others. Pricing your services too high can eliminate a lot of customers, while pricing them too low is unprofessional and an easy way to make customers question why your services are so discounted. Be fair but competitive in your prices, and don’t be afraid to contact your competitors with pricing inquiries to conduct low-key incognito market research.
Your Finances: Keep Personal and Business Separate
Tutoring others in your local area can be very profitable, and while it might be tempting to deposit your tutoring money into your personal bank account, it’s a much better idea to have a separate account just for your business income, assuming you’ve formally and officially established the business entity. There are a lot of advantages to conducting your business this way, including the fact that you can see exactly what you’re making and what you’re spending each month if the two accounts are completely separate.
If you’re ever audited, it can make the audit a little more difficult if you keep all of your business and personal money in one account. Not only that, but if your business starts to grow and you start making more money than you expected to, it’s easier to pay estimated taxes throughout the year if your business income is kept in a separate account.
Marketing Your Business Is a Consistent Activity
When you have a business, it needs to be promoted and marketed consistently, even once it starts to grow. A Facebook page and/or website should be the first thing you’ll want to create, and you can easily get assistance with both of these if you need it. Make sure you include a lot of information on both of these outlets, including your hours, prices, subjects offered, etc. If you’re able to (or can find effective teaching methods or talented STEM-focused private tutors to hire), you can offer STEM subjects because those are some of the most-needed subjects when it comes to tutoring these days.
On your FB page or website, always consider using video conferencing tools because videos will help you project a more confident and professional image. You can talk to prospective clients with these tools and create videos that help the clients get to know you better. Whatever you do, keep your personal and business social media pages separate, just like you do with your banking accounts. Remember that your online accounts are the first place most clients will go to find out what you can do for them.
Don’t Forget Supplies and Materials
You can’t expect to launch your tutoring business without certain supplies and materials. Some basic office supplies are a must, but you also have to purchase supplies that are specifically related to the subjects you’ll be teaching. You’ll likely need a tablet, pens, paper, copy machine, magnetic boards, and anything else that is designed to help organize your life once you start working. And consider the subject itself—each subject will need different materials and supplies, so determine what those are first and then go and get them.
Also keep in mind that you’ll likely need to replace your supplies on a regular basis, especially if your business starts to grow. Once you start making extra money with the business, you can use that to purchase the extra supplies you’ll need along the way. Again, keeping track of all of your expenses to the letter is one of the most important best practices to keep your financials running smooth. If you do this, you’ll know exactly where you stand at any given point. Running a tutoring business doesn’t have to be difficult, especially if you take one step at a time before you open your doors and remain organized the entire time, but it is crucial that everything is done by the book.