The Business Side of Tutoring
After my last article you can now get your first clients. And once you have a client the question becomes how to expand, develop, and move your business forward.
One of the first things I want to touch on is the importance of getting into a weekly schedule with your clients. You should be meeting each client at consistent times each week. Generally, as a tutor, you’re going to be busy in the afternoon after school, and in the evening. Middle school and high school kids get out of school, come home, unwind, maybe have sports practice, and are ready for tutoring around four or five pm. It can be hectic as a tutor if your schedule is always changing every week. That can make it difficult to build consistency in your life. I encourage people to establish a set time for meeting with each client. You might work with Johnny every Tuesday at six, for instance. So then for the next person who wants to book a time, you can say, “Hey, I have a slot open at 7:30 on Tuesday evening. I could fit you in there. Would that work?” This way your schedule will fill up. It’s much better than having to email your clients and find different times every time they need help with something. This brings consistency to your life and helps you grow your business.
Another thing to look at once you have a couple steady clients going is developing a web presence. That can be making a website or doing some social media. It’s easy to set up a website today on Weebly, Wix, or Squarespace. You can do some research into those. I think Wix is on the cheaper end. Squarespace might be a bit more expensive, look more sleek, and have a few more bells and whistles. Spend a few days setting up your website and get some writing on there.
Write about your philosophy and what sets you apart as a tutor. Why should they hire you? It’s important to not just write about math, but also about how you teach math. What is your teaching philosophy? Maybe you cater to the whole person. Maybe you think it’s important to spend time talking to people about how their day was. Even small things can help set you apart and make you likeable. You want a parent to read this and say, “Oh, yeah, this is someone who I’d like to hire, bring into my home, and introduce to my child.” So set that philosophy up. If you get a decent website it could start to rank on Google and people might start finding you organically.
During the early stages of establishing your tutoring business, you’ll have to go out and do some work. You set the fliers up, do outreach, make profiles, and build the website. But eventually people start coming into your business through referrals and your website, and you can get a good business going.
It’s probably prudent to get a Twitter going, a Facebook page, and maybe an Instagram. Think about who’s going to be hiring you; it’s probably going to be moms. Personally, 99% of the people contacting me in my tutoring businesses are moms. Sometimes it’s the dad but that’s rare. Think about where moms hang out online. Where can you find them? Well, there are a lot on Facebook, Instagram, and Twitter. So you can try to find your niche and your audience by posting helpful content. Maybe make a video about your tutoring philosophy!
If you have a client who really loves you, have them record a short video about how much they’ve loved your service, and post (if that’s ok with them, of course). Pin that on top of your Facebook, Instagram, and Twitter pages. Link those all to your website. Make it easy to book a consultation on your website. So if someone comes across your Facebook page, they could end up seeing the video, going to your website, and signing up.
You want to build out a presence and some credibility. Once you do, people are going to see you as an expert and perceive you as more credible. Maybe you’ll be able to charge a higher rate. Because now you are not just some guy. You have legitimacy. You have a Facebook and Instagram and you’re writing helpful things there. People are making videos about how great you are. And parents see that and think, Wow, this person knows their stuff! They’re writing about algebra and geometry, exactly what my daughter needs help with right now. And they’re writing about employing educational strategies. This is someone worth hiring.
Another great approach to grow your tutoring business is to get on some lists. Local community centers and neighborhood organizations will often have lists to help parents who are looking for tutors. Sometimes schools will even have these lists. So you can contact some local schools and say, “Hey, is there a tutoring list? If there is, can I put my name on there?” A lot of times, you’ll have to write down what subjects you do, whether you do in-home, and how your charging works. Then you can start to get inbound leads that way from people wanting your service. Parents are inquiring at the school about where to find a tutor and the school refers them to this list. So it’s a great referral.
Reaching out and connecting with schools and making some partnerships is always a great idea. That can be through the front office to get on the tutoring list, as we just saw, or it can be with the counselors. Parents will often bring up with their counselor that their child is not doing well in school. If you have some connections there, and you’ve done the hard work of building relationships, you can get some leads coming in that way too, and your schedule will start filling up.
Once your schedule fills up to 90% capacity, you can aise those rates again, depending on the city you’re in. You can also think about charging a bit more if you’re doing in-home sessions and offering a discount for online tutoring. Some people might want online and that’s not a bad gig. You can book sessions back-to-back and you could even be doing it from Hawaii. You could be sitting on the beach doing tutoring sessions and make money that way. So think about whether you want to offer online, and how you want the pricing to work.
One of the big keys is just getting your clients on a steady schedule, where they’re coming back each week at a certain time. This way you’ll have more predictable revenue and can retain clients more easily over longer timelines.
Those are the main ideas on how to grow your business after getting your first clients. By now you have the tools to get a legitimate business going. Let’s continue with the next topic.
If you’re working for a company like varsitytutors.com, tutordoctor.com, or a local tutoring company, you can think of it like Uber driving. Uber uses contractors. The difference between a contractor and an employee is that for a contractor, you can choose to open your Uber app and select a trip. You don’t have a manager telling you to go pick a ride up, right away. If that happened, you would be an employee and they would be withholding some taxes for you.
As a 1099 contractor, you are essentially your own business. Many people prefer to be contractors because you can work whenever you want. You can decide Wednesday nights are when you’ll practice your guitar. Whereas for an employee the company could say, “Put down the guitar, you have to go get this guy.”
The way a 1099 works is that if someone pays you over $600 in a given year they are supposed to report that to the IRS. If you make less than $600, they probably won’t even report it. But when you reach that point the company will report your earnings to the IRS. So you’ll want to claim those earnings on your tax return as well. Otherwise, the government is going to see that things aren’t adding up.
If you’re also working another job, like maybe you also work 15 hours a week for Amazon, and you have a W4 from them, you could do the maximum withholding for that job. That means they’re going to take the highest possible amount of money out of your paycheck. Usually this would get you a tax refund at the end of the year. But if you’re also doing some self-employed work, you won’t necessarily get a refund but you won’t owe a bunch of taxes all at once, which is nice.
Consider starting an LLC for your tutoring business. There are many benefits to doing this. First, it’s going to give you some protection, because of what’s known as the corporate veil. If you have an LLC, that entity is doing the tutoring and the business, not you personally. You want to create a separate bank account for the LLC to make it seem as separate from your personal life as possible and draw that distinction. You could even pay for things through that account, like if you’re driving to a tutoring session, you could pay for gas with that debit card. Or if you have to buy a textbook or something, you could do it with that debit card. And the nice thing is that you’re going to be able to write that off on your taxes come tax day. For example, let’s say you earned $1,000 so you owe 20% to Uncle Sam: $200. If you’ve also been investing this year, and you spent $500 getting a website going, now at the end of the year instead of owing $200 to Uncle Sam, you only owe $100. So you just saved $100.
The W9 is going to be a simple form that your employer will send you. Just fill in your name, social security number, and address. They’re supposed to have that on file for you.
If you get advice from an attorney or other business professional, they’re going to want you spending money setting things up. But we want to do this for $30 in startup costs. So keep things cheap initially, see what’s working, then invest money later.
To get started with your marketing plan, do some work thinking about your target customer. What does that person look like? When I started my first tutoring company, I made three profiles for exactly who I was going to target: what they do, where they live, where they shop, things like that. You want to narrow in on who your clientele is.
Maybe you’re just a calculus expert, and you want to help college students. You’re probably going to be doing a little bit more Craigslist marketing, and you’ll want to put up flyers all around campus saying, “$30 an hour calculus tutor.” Go to the STEM hall or anywhere there are science classes, and post those up with pull tabs at the bottom. You’re going to get some college students who want to pay you for help.
When you create these profiles, write about your customers in more detail. Maybe they go to Starbucks or Subway. Those places often have bulletin boards where you can post things for free. Once you drill down into who your client is, and the type of routines they have, that’s going to help your marketing strategy.
We want to act with some foresight, before we go out and start marketing too heavily. I think it was Abraham Lincoln who said that if you have six hours to cut down a tree you should spend the first four sharpening the ax. We want to spend time planning for our marketing too, we want to spend 80% of our time planning what we’re going to do, and then we can do it quickly.
Anything that won’t take much time and will cost less than $20 is something that might be worth giving a shot. Whereas something that’s going to be expensive and take a lot of your time is probably not worth it. I’ve made newspaper ads and magazine ads, and it’s not really worth it for tutors in my experience. Maybe in some businesses, you might be able to make money using those, or if you’re good at writing advertising copy and have a big budget. But even small magazines charge $700 for a tiny square ad. And you’re hoping you get a couple clients out of that. But people might not even contact you.
I’ve even sent out over 30,000 postcards all over Oregon. Actually I ended up getting some clients from that. But in the end it’s not really worth it. I also went door-to-door and dropped off postcards and brochures. And you might be able to get a few people that way. But I would stick with those flyers with the tabs at the bottom. Focus on places where you know your target customer from that profile hangs out. Putting those up is going to be more effective than most other advertising methods.
The world is moving toward digital digital marketing, social media, and having an online presence. Some people are really savvy social media marketers. If you’re great at Instagram, you can be making clips about factoring or mathematics and posting those. The same idea applies online, of going to places where your target clientele is going to be hanging out. There are many moms on Instagram and Facebook these days. Those are fair places to market. Google AdWords can be really good too. If you’re savvy at creating websites, you could create a website or even just a blog and start writing your thoughts about mathematics. Test things out and learn from that and be able to keep growing and move forward.
Some people enjoy tutoring and aren’t interested in growing a company and hiring employees, which I understand. You might like driving around to people’s houses and doing in-home sessions. But eventually, like when you’re 80 or 85, you’re going to want to stop tutoring. You’re going to want some retirement funds, and planning on Social Security might not be a good bet.
It’s a good idea to save 5% to 10% of your earnings and reinvest that back into your business, if you want to grow your business. Or if you don’t want to hire anyone, you can still invest 5% to 10% of your earnings into a Fidelity account or Vanguard fund. Set up an IRA or Roth IRA. Do some research on those. They can end up generating tax free earnings. I would recommend looking into a Roth IRA, that seems like a pretty good option for most people.
What you do with the money you save depends on how active you want to be. A good place to start is buying some index funds. The Total S&P 500 Vanguard index fund is good. Stick some money into there every month. Eventually you’ll be surprised at compound interest. It’s the eighth wonder of the world, as Einstein said. You start with some income from your tutoring, and then eventually your investment income might be greater. At that point you can still keep doing the tutoring, because you enjoy it. Or not.
Most of us get into tutoring because we like helping others and want to make a difference. And that’s great. But it’s also good to think about ourselves and our families. Putting some money away in case a catastrophe happens is a very good idea.
If you want to be more active, you could buy some shares of companies, like Facebook, Microsoft, and Berkshire Hathaway as long term holdings. Buy some and hold it for 50 or 60 years. It’s probably going to be worth a lot more at that point than it is now. Especially some of those strong companies with a moat that aren’t going anywhere. There are thousands of people right now working at Microsoft, trying to make a better company. And if you own some shares, they are literally working for you. Even the CEO.