According ibisworld.com (see References) tutoring is a 7.2 billion dollar a year industry that experienced over 20 percent yearly growth in 2008. If you're considering the growing field of tutoring, you must carefully create a plan covering all of the major components of the business.
Writing a business plan is usually a culmination of all the thoughts, the notes on scraps of paper and formal online and other research. Now you need to turn it into a business description, market strategies, competitve analysis, operations and management plan and financial projections.
Use the business description to determine what student segment you'll serve. The tutoring business is highly fragmented. It includes test preparation, driver education, tutoring struggling students (of all ages) at home or in the school.
We're all learners. Consider the age groups of potential students you'd like to tutor. Decide if you will focus on pre-school, elementary, high school, college, adult or maybe all of the those.
Subjects to tutor are endless so consider where you'll focus, You can specialize in test prep, math, languages, reading, or business, adult or college sujects.
In addition to being part of the the overall business plan, market strategies deserves it's own full plan. Some of the things to consider are--will you market to schools, parents or students?
If the federal No Child Left Behind Program is a force in your area, consider it in your market strategies. Tutoring is a major part of that program. Since it's funded by the federal government, you will always get paid (although it may be late).
Consider where your clientele congregates. For example, it may make sense to market college entrance exams (the ACT and SAT) strictly to parents of high school juniors and seniors. Research where they hang out. The school newspapers and game programs sometimes accept advertising so look at that avenue to get students.
Teachers and schools can be receptive to tutors also. Mail out an announcement to your local teachers. They just might refer some of their struggling students.
Developing answers to the 5 W's--who, what, when, where, why, in this section. It's the best way to develop your marketing strategies.
The objective here is to determine how you're different from your competitors. Discover what you competitors are doing and what they are charging. Set up a matrix and check out their websites. Speak with people who have been there. Talk to potential tutors who have worked there.
Pretend to be a parent and call a tutoring company. You can get a lot of competitive information that way.
Operations and Management Plan
This section covers everything from business hours to key personnel to reporting. So, discuss how you will operate the company. Operate your business from home. This means lower expenses. You don't have to pay rent. In fact, deduct the portion of your home you use for your business from your taxes.
This and other operating and management decisions can make the difference between failure and success, between profit and loss.
Include a profile of key personnel. This is important if you need to use the business plan to get a bank loan. Bankers like knowing the company employees have the background and drive to ensure the company becomes a profitable enterprise.
Be brutally honest here. Brutally. In fact, this is a BBP (Before Business Plan) section. The only question here is--How will your business make money? That's it. In tutoring for example, you always have to pay the tutors. No matter what, it will be your largest expense.
Add in the marketing cost to get students plus all the other ancillary expenses. This will include supplies, insurance, tutoring books, etc. Your revenue has got to cover that and then some. If not, you may want to consider if the tutoring venture is a worthwhile endeavor.
Then take your projected revenue minus expenses to get your profit. Keep your eye on that to stay in business.
For tutoring, consider a labor expense of 25 to 30 percent of revenue. Since that's the largest expense, if it's under control and you can manage the other expenses, you might not have just a great tutoring business plan--you'll have a great tutoring business!
Steve Wyrostek's background includes corporate management and small business ownership. He has a Bachelor of Arts in liberal arts from the University of Illinois at Chicago and an Master of Business Administration in management from Amberton University. He has been writing for the Internet since 2005 and has been published in the "Business Ledger" and "Orato."