Crafting the Perfect Tutoring Business Plan: All the Whats, Whens, and Hows
Starting a business with no plan is like walking into a classroom with no lesson plan. As a tutoring business owner, you need to have a clear action plan and understanding of what will impact major decisions – which is exactly what a well-written tutoring business plan can help you with.
Not just that, having a business plan can also help you get financing. A study at the University of Oregon says that “businesses intending to secure a loan and those intending to secure investment capital using a business plan are positively correlated with the chance of succeeding at them”.
While some decisions are based on risk, you cannot depend on a stroke of luck for the success of your business. This is why you need a business plan.
In this blog, we have put together a comprehensive guide on how you can create a business plan for your tutoring business from scratch. Here’s what we are going to discuss:
- What is a business plan and when do you use it?
- How to make a business plan for your tutoring service?
- What are some common mistakes and best practices?
You can jump to any section directly by clicking on the links. Plus, we also have a handy checklist for you towards the end!
What is a business plan and when do you use it?
The definition of a business plan will depend on what you need for your tutoring business. Generally, a business plan is a document that clearly defines your milestones and how you plan to achieve them.
We all plan. If you have a gathering with your friends in the evening, you set time aside for them, prepare some food, maybe even choose your outfit for it. It is human nature to plan.
We need to document these plans so there is a hard copy of all important details and goals, making it easier to keep track of these details and improve upon them, which is exactly what a business plan will help you with!
A business plan is a good tool to:
- organize your thoughts.
- make sound decisions with solid projections to reach your targets.
- communicate your plans to banks, your partners, and even your employees.
We now know what a business plan is. Now it’s time to understand its utility. In the next section, we cover a few scenarios in which businesses often need a business plan and how the format of the plan changes according to its utility.
4 situations where having a business plan will help you grow your business
Situation 1: When you are just starting:
- While starting, a business plan can serve as a plan of action. It is unlikely that you immediately want to secure loans or funding when starting, but creating a business plan can significantly clarify your next steps.
- Having guesstimates in your forecast can be risky in the long run, which means having experience in predicting your financial future might make forecasting more dependable. To get that experience, you can start with a business plan.
Situation 2: When bringing in partners:
- Asking someone to commit to your tutoring business and sharing your passion before knowing the ins and outs is like asking them to buy a house without checking it out in person first.
- The spontaneity might seem fun at first but it is a huge commitment that needs a thorough evaluation. Using a business plan will help you convey your vision succinctly and show every relevant point to a potential partner.
Situation 3: When you are embarking on joint ventures:
- A joint venture is an agreement between two companies to share the work and the profit and have the same or similar goals. As a tutoring business, you could have this agreement with non-profit organizations, or aided educational institutions.
- A business plan would be a handy tool to relay not just the vision of your business, but also all required information, like your projected profit and loss, your sales tactics, and anything else you might feel are relevant.
Situation 4: When you need to secure financing:
- A good and well-written business plan will summarize your business’s history and background, which you will need to successfully communicate to banks and investors and secure financing.
- Lenders will want to see the actual potential in your business. Every detail from your marketing strategy to financial projection has to be presented to them to showcase that potential. This will be best done with a business plan.
As the owner of your business, you know what situation your business is in. Knowing that we can now move forward to define the ways you can create your business plan.
What are the approaches to creating a business plan for your tutoring service?
Creating a business plan may seem like a daunting task, but we are here to help you through the process. The following are 3 different approaches to go about making your tutoring business plan. You can read and decide which approach is most suitable for you:
Use easy-to-download functionality:
You can use templates available at your disposal if you like to fill-in-the-blanks:
- BPlans also offer different types of business plans, traditional, lean, even particular sections, like investor pitch templates, SWOT templates, Sales forecast templates.
- They require a free sign-up for download.
You can also make your business plan from scratch:
- This might seem labor heavy but it is the most cost-effective way of creating a business plan.
- It is also the way which might even give you the most satisfaction with the result. After all, no one knows your business better than you do.
- You can jump ahead to find an in-depth explanation of how to make your business plan.
Use online tools and resources:
There are multiple resources available on the internet that can help you make a business plan.
You could hire someone online to make the business plan for you. Freelancing platforms like Fiverr or Upwork are available where they charge anywhere from 20$ to 500$ depending on how much you need in your business plan.
There are also services like LivePlan, Enloop, and StratPad that help businesses with planning and writing tutor business plans. Both LivePlan and Enloop offer free trials whereas StratPad does not. The pricing for each service ranges from $8 – $19 for their first-tier paid versions.
Consult a professional business plan consultant:
If you think this is the path you want to take then make sure to check the following metrics:
- Do they have a credible website?
- Are they getting good reviews?
- Do they truly understand your business?
- Do you feel comfortable asking them questions?
If the answer to all these questions is yes, then you can go ahead and pick them as your business plan consultant.
A business plan consultant will charge anywhere between $5000 to $20,000. Sometimes they might also charge up to up $50,000.
How to create your business plan from scratch?
Things from here might get a little bit confusing, but we are here to guide you through this. We will start with the two different types of business plans:
- Traditional business plan:
This is a long-form business plan. This contains every small detail of your business, from the business description to the financial projection.
If your business is in Situation 3 or 4, you need a traditional business plan
- Lean business plan:
This is a brief and clear way of writing a business plan and is much shorter than the traditional plan.
If your business is in Situation 1 or 2, you need a lean business plan.
All the common points in the Venn diagram are explained in the traditional business plan section.
How to create a traditional business plan for tutors?
Akin to detailed notes that you want to share with your students after class, a traditional plan is usually needed when you share it with your investors to secure financing. A traditional plan is usually long-form and very detailed. The following are the components of a traditional business plan:
While the executive summary is usually mentioned at the beginning of the business plan, it is prepared last. This section is usually a make-or-break. It should ideally summarize how your tutoring business is solving students’ problems in one or two pages.
Do not try to use hyperboles and oversell your business. Focus on the problem that you are solving and giving the reader the right feel for your business.
- Start with an overview of the document.
- You can take a small summary section from each section that you will be covering.
- Keep it concise.
- Keep on polishing it. Read it every so often. Read it out loud.
This section of your tutoring service business plan is where you combine the key details of your business, like what you do, what is your unique selling proposition, etc. This section can be tricky, especially if you’re still in your planning stages.
An important decision to make for a tutoring business will be choosing the mode of teaching – either online or in-person.
If you decide to go the online teaching route, there are a lot of services that can help make scheduling and conducting classes easier.
Craft your problem statement, identify your target market, and explain your concept and strategy.
Some best practices are:
- Start with an elevator pitch: Give a short description of your business in a way that the investor will immediately understand in a short time. Identify your goal, explain what it is that you do, explain your USP, and put it together in a concise short paragraph.
- Use specifics: Always use specifics to create understanding. High-level information does not persuade, it creates a superficial comprehension. Conceptual understanding can only take you so far.
- Keep it concise: Explaining in specifics does not mean long drawn explanations of every point. Checking the length is key.
A market analysis is a completely exhaustive assessment of the tutoring market. The main purpose of this section is to understand what factors influence industry behavior and business performance of tutoring services.
Start high-level and then slowly ease into specific research. Once you understand your market in general terms, you can dig deeper into segments more relevant to you.
A few tips to carry out market research are:
- Conduct interviews and face-to-face discussions.
- Research the tutoring community and what are the current pain points that they are targeting.
- Check the pricing that the tutor services or private tutors in your area are charging.
- Create your buyer persona. Who is your target demographic?
- List out your primary competitors. If you’re an offline tuition service, it could be other tutors in your area. You can do this by searching on social media, or downloading a market report using Forrester or Gartner.
- Here is a guide on how to conduct market research properly.
Partners, organization, and resources:
This section highlights the key employees or even ideal staff members that you want to hire.
- Who are your critical partners? Who are your staff members?
- What is the hiring procedure like?
- What are the key resources such as licenses and intellectual properties?
The reason behind putting this section in your tutor business plan is two-fold. One is for the investors and lenders. More often than not in service businesses like yours, lenders feel the quality and experience of the management team is important.
The second reason is for you, as a business owner, to be able to evaluate your team’s skills and decide what resources might be needed.
Include details about what your team is offering in terms of the intended results. For example:
Joe Collins, 47, Assistant Professor
- Joe has 19 years of experience in teaching college students and has a doctorate in so and so. They have an undergraduate degree from Oxford University and got their MBA from the University of Pennsylvania. – full resume in the appendix.
Most importantly, when creating this section, make sure to pay attention to skills and what they bring to the table.
Sales and marketing:
Customers knowing that your services exist is paramount. This is where your marketing plans come into play. It seems obvious when you think about it, but this area is where a lot of businesses miss the mark.
Marketing is not just having pamphlets to share or advertising on a local billboard. It’s public relations, promotional activity. This is where you implement your unique selling proposition (USP) to drive students and teachers to your door.
This section will cover your sales channels and marketing activities.
- How will you sell your services? Will it be online? Will it be through a website? How will you advertise your tutoring business?
- A few tips :
- Take guest lectures, seminars, and webinars, and reach out to your audience via these channels.
- Harness the power of online forums and social media. You should be where your customers are. Your aim should be to build a brand presence with your audience. Respond to comments and queries on your posts to increase engagement and build a rapport.
- Here is a complete guide to help with advertising and expanding your tutoring business cost-effectively.
Just hearing the word “budget” might make you feel like it’s such a big task. Don’t worry. We’re here to help.
This section will help you evaluate where your business finances currently stand and what you need to do to hit your financial goals.
The basic process is to list your business’s fixed and variable costs monthly and then decide where to use your funds optimally.
Budgeting for new businesses, especially service businesses can be difficult. Since a budget is decided by your business’s return, make sure to implement your market research with due diligence. You will be offering your services as a product, focusing on your sales forecast and income-expenditure forecast will be a good metric.
Bench promises that “Budgeting + Book-keeping = a match made in heaven”. Making a budget is mostly fiction, just like most projections are. But they are based on realistic data.
The longer your business has been operating, the more solid groundwork you will have to make that fictional budget a functional budget. But to do that, you have to make sure that all your financial data is being recorded through bookkeeping.
Here is a handy template that you can use to record all of your existing finances.
Financial planning and projections:
If the first thing that comes to your head after reading the heading is “but we don’t have enough sales to project accurately”, don’t worry. It is completely normal for the first few forecasts to be based on rough guesses since initial sales are hard to predict.
This section should ideally forecast your future finances and how you intend to maximise revenue for your tutoring business. Most businesses will include the following in this section:
Depending on how long your business has been around, you can have short-term sales forecasts and long-term sales forecasts.
If you are a new business that has not been in the market for more than a couple of months, you do not have enough historical results, which might make forecasting challenging. But if you have a good understanding of the market you are entering, then it can be done.
Your forecast should be broken down by monthly sales. If you have been taking sessions for a couple of months, how many sessions you took, and the fee for every session.
This is also called the cash-flow projection.
It will outline how much revenue is coming in – which basically going to be how much you charge for your services and how much is going out, monthly, and based on that project the expected inflow and outflow.
Using your sales forecast and your budget forecast, you can estimate approximately what your cash-flow statement will look like.
Every business should strive to achieve its break-even point, which is simpler than it sounds. Break-even is when you are neither losing money nor gaining profits. This means that your profits and expenses are balanced and you have broken even.
If you have predicted your sales and cash flow accurately, then it should be feasible to find the break-even point of your business.
The information that you will need at hand is your costs and expenses. Your variable costs and fixed costs, the costs of paying your employees, etc.
Make a spreadsheet. This spreadsheet should ideally be turned into a graph to plot break-even.
Calculating break-even can be difficult for a service business like tutoring. To say it simply, break-even is:
Fixed Cost per unit / (Sales fees per unit – Variable Cost per unit)
Here, unit could mean students/hours/courses depending on how you have set your fees.
Balance sheet projection
If you are new to accounting, creating a balance sheet may make you nervous, but it is quite easy to understand.
What is a balance sheet? A balance sheet keeps track of certain elements of your business to determine where you stand financially in your tutoring business.
You can use your current balance sheet to predict your future balance sheet more accurately. Your balance sheet should ideally have:
- Assets: Anything tangible owned by your business that has some value is an asset. An asset can typically be liquidated and be turned into cash. Separate your assets into current and noncurrent assets.
- Current assets are what your business can expect to convert into cash within a year.
- Noncurrent assets are long-term investments that you do not expect to convert into cash in the near future.
- Liabilities: This would be anything that your business owes to a debtor. It may include utilities, rent, taxes, etc. Just like your assets, your liabilities should also be separated into current and non-current liabilities.
- Equity: This is the difference between your assets and liabilities, what remains when the business sells all its assets and pays off all its debts.
Assets = Liabilities + Equity
Thinking of the balance sheet as a report, you have to decide on the period of reporting. Is it going to be monthly? Quarterly? Annually?
Once you’re done listing everything in your balance sheet, mention a brief of each of these three components.
A more in-depth explanation of how to make a balance sheet can be found here.
Here is an example of a balance sheet.
This section is usually the last thing to appear in the traditional business plan. Although not absolutely necessary, a well-structured appendix can go a long way to convince any plan-reader that the planning is great and well thought out.
Generally, an appendix will include:
- Charts, graphs, or tables that supplement information from other sections.
- Any agreements, contracts, and supporting documents.
- Marketing materials.
- Resumes for each of your staff members.
- Credit history.
- Building permit and equipment lease documentation (for offline tutoring).
How to create a lean business plan for tutors?
Now that we’ve seen what a traditional business plan is, it is time we understand the components of a lean plan and how to go about building each section.
One thing to keep in mind is that the lean plan can always be updated into a traditional plan. Just because you are making a lean plan does not mean you are completely forgoing the traditional business plan.
It is similar to when you make short notes to teach in class and improve as you go, based on requirements. The lean business plan is usually used to manage strategy, tactics, milestones, and activities.
The components of a lean plan are:
Your business strategy should ideally outline who you are and what you are going to do in simple and understandable statements.
- Business identity: Who are you and what is your business? Your identity adds brand value. Especially as a tutor, your identity is your most important asset.
You can create a tagline for your tutoring business. For example:
Smart and indulgent tutoring, for smart and inquisitive students.
Mention the ways you will be defining your business identity. Like “We have created our business logo. -insert picture of the logo-”
- Problem: What problem are you solving for your students? You should have the ability to define what the problem is in a few points. Eg: It could be that you will be tutoring and helping people with dyslexia.
- Solution: How are you solving the problem that you have identified? This should be a brief description of your service and how your service might benefit your students. Eg: What are the steps you are taking to teach your dyslexic students?
- Market Research and Competition: This section is synonymous with the section “Market research” in the traditional business plan.
The tactics section is an outline of how you will make your strategy happen. All parts of tactics are common with other points in the traditional business plan:
- Sales channels and marketing ideas: This section is the same as the “Sales and marketing” section in the traditional business plan.
- Partners and resources: As the name suggests, this section is the same as the “Partners, organizations and resources” section in the traditional business plan.
You may need to add some additional tactics, such as details of services, locations, and other key aspects.
The schedule is basically a list of tasks, milestones, with dates, responsibilities, and budgets. It’s the promise of commitment, that you will need to have to build your tutoring business successfully.
- Seeing as the lean plan is based on customer needs and iteration, it is paramount to create a plan and schedule tasks to test yourself with some students before launching into your tutoring business journey.
- Make a list of all the steps and tasks that you will need to complete to get your business up and running. This could include getting permits and licenses, dates for registering your business, or even choosing and setting up your tutor scheduling software.
- Finally and most importantly, you need to create a schedule to constantly review and revise your plan. If your plan is not regularly updated and checked, you could easily go off track.
This is your plan to make a profit. A business model will generally include information about your service, your target market, and anticipated expenses in brief.
- For most businesses, this is a straightforward concept. But this section avoids the hassle of financial forecasts as those can be hard to predict accurately.
- Listing out your primary revenue streams and major expenses as a bulleted list is easier and more dependable.
5 common mistakes to avoid while making your business plan
Now that you have some in-depth knowledge about crafting a tutoring business plan, here are 5 mistakes you should avoid making to make your business plan foolproof:
- Every statistic and detail in your plan should be based on realistic data. Your plan should not have unrealistic financial projections.
- Do not be inconsistent, your plan should quote consistent stats and have solid, unidirectional strategies.
- Be clear of what your business plan is. A business plan is not a detailed and defined budget. While a budget is part of it, the business plan is more than just your income and expenses.
- Do not include too much information. The purpose of your plan is to be concise and to focus on the key elements of your tutoring business.
- Make sure your plan is proofread multiple times. Include your team in the process.
Choosing the right tutoring business plan is like choosing whether you want to write detailed lesson notes or short-hand notes which can be expanded upon. Both have their own merits and times where they want to be used.
While having a business plan does not guarantee the success of your business, it does reduce the likelihood of failure.
If you’re wondering how you’re supposed to remember all of that, don’t worry! We made a checklist for you, mentioning both the traditional business plan and the lean one, so you don’t have to scavenge through the entire article to find the relevant points. Here’s a sneak peek of the checklist:
Having a plan is not just about being 2 pages or 40 pages long but more about setting the right goals regularly and tracking progress, making changes as you gain more feedback from your students and their parents. Tutor scheduling software, like Appointy, is being used for exactly this reason.
Crafting a business plan is all about knowing what your business is and figuring out how to understand your students and their needs. It can seem intimidating at first, but the one thing you should always keep in mind is that there is no single “right” way.
Do let us know if we succeeded in answering your questions in the comment section below!
We at Appointy, help business owners grow and run their businesses with our online scheduling software. This blog was a part of our ‘Manage your Business’ category, where we provide expert tips, resources, or simply talk about the challenges that small and medium businesses face every day.
If you have any thoughts on this blog, or would like to chat about your business struggles and achievements, let us know in the comments below.
We love a good talk!