How Do Online Tutoring Programs Get Funding?

Tutoring programs are business ventures. They are, however, a specialized type of business that can involve minor children as well as the hopes, dreams, and expectations of your customers. All businesses have both moral and legal obligations to fulfill contracts with their customers, but perhaps a tutoring business has a slightly larger moral obligation. 

Funding a tutoring business can therefore be challenging. One of the best ways to get funding is to have a solid business plan set up and ready to show prospective clients or investors. Your business plan should cover items that include necessary licensing, certification of teachers, where and how the tutoring will be delivered, and how you expect to continue funding your business as it goes on. Since you are an educational facility, however large or small, you have an obligation to provide your services ethically and reliably.

Online tutoring programs can get funding in a variety of ways, some of which depend upon their location, affiliation, and target audience, including:  Association with an existing educational institution, investment of personal funds, utilization of income from business activities, funds from a parent company franchise, grants, loans, advertising on site, merchandise sales, angel investors, sales of stocks or shares.

Teaching online might seem easy, but it has a lot of bumps in the road. Teaching or tutoring online might seem easy. In fact, there are a lot of people who are currently making money by saying how easy it is. From funding to actual hands-on teaching, it isn’t a simple business, so it is a good idea to get your business plan together and even get in some practice before you discuss your plans with investors or lenders. 

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How to Get Funding for Your Online Tutoring Business

Here are a variety of ways and ideas for getting funding for your online tutoring program. Depending upon your topic and target audience, some of these will be more effective than others.

• Associate with an existing educational institution. This approach can range from asking a local school if they would like to incorporate your services into their overall school setup to signing on with one of the many online tutorial companies. The hosting company is likely to provide software, possibly even hardware and perhaps even a physical location for your operation. This cuts your personal investment down to minor items such as a PC and your own Internet connection. 
• Invest personal funds. If you are hosting tutorials in a specialized skill or area, you might already have some equipment and software on hand. If you are retiring from active participation in certain business areas such as computer programming, recordkeeping, artworks, or even communication, your investment might be a minor one that you can pull out of your personal savings. There is a lot to recommend this approach. It means that you can operate as a single proprietorship – the very easiest business model, and that you will have minimal reporting requirements – mostly associated with yearly tax payments, or perhaps keeping up your credentials.
• Utilize income from business activities. Regardless of what other sources of funding you might have, you will need to charge for your services. Unless you are volunteering as a charity, your pay could come from an established company with which you are associated, or it could be collected from individuals who sign up for instruction.
  • You will need a financial platform with which to collect your income. If you are collecting from individuals, you will need the means to receive pay. There are several online financial entities who will be glad to help you with this, including PayPal. 
• Purchase a Franchise. Doesn’t sound like financial support? In many ways, this approach is not, and could involve spending some personal funds or getting a loan. However, purchasing a franchise can mean that financial systems are already built into the system, leaving you free to focus on tutoring. 
• Get a Grant. Getting a grant isn’t easy, and you will have to have something super spiffy to offer prospective customers and investors to get one. This is one of the places where an excellent financial plan pays off because you can show that you have your ducks in a row. Grants are not numerous, and each one has specific expectations and requirements. Grant writing is such a specialized skill that some people make a fulltime living out of writing them. Once you have a grant, you need to fulfill the specific conditions associated with it to keep it. With that said, the big advantage of a grant is that you don’t have to pay it back.
• Obtain a Loan. Talking a bank or other financial institution into giving you a business loan isn’t necessarily easy. This is another place where having an excellent financial plan is a real asset. Banks and other lending institutions are in the business of making money. They want to know that you will be able to pay back the loan, plus interest. They might be happy to be able to show that they are supporting a good cause that will have value for the community, but they still need to show a profit. 
• Allow advertising. No one loves clickbait or other kinds of advertising, but it has become a staple in our current economy. Get enough sponsors to display on a page (without overwhelming it with too much activity) or have a special advertising section of your business website. 
• Associated Merchandise Sales. Sell books, school supplies, helpful apps, t-shirts, and other kinds of merchandise through your tutoring website. Keep it tasteful and targeted to cut down on irritation. Build up a feeling of camaraderie among your students and your t-shirt sales just might pay your server storage space. 
• Angel Investors. Depending on the type of tutoring you are doing, you might be able to attract angel investors. These are companies that are putting money into activities that will give back to the community. There is usually some bookkeeping involved, but these folks are not looking to make a monetary return on their investment, other than perhaps a tax deduction. 
• Individual sponsorship. Run a Kickstarter, Indiegogo, or even a Gofundme to gain small amounts  of funding for individual needs, such as a good video cam or microphone. 

In summary:

The easiest way to get your feet wet with tutoring is to sign on with one of the big tutoring websites online. Yes, they will charge a portion of you income for their services, but they will take over a lot of the record keeping you would otherwise have to do on your own. 

Saving up the money and using personal funds to buy necessary licenses and equipment is the easiest method in the long run – even though it might not seem like it in the beginning. You can use income from your business to help keep it going. When you are the CEO, tutor, janitor, and bookkeeper, your business operations can be both cost effective and simple until you have enough clients that you need to expand.

Grants don’t need paid back, but they often have conditions that need to be met. Loans might not have the conditions, but they do have to be paid back.

Small needs can be funded through small sources ranging from weekly income, online small donation programs, advertising on your website, and even sales of merchandise associated with your business.

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Frequently Asked Questions

• Do I need a degree or certificate to be a tutor? 

It really depends upon your topic. If you are teaching how to fold origami, then probably not. If you are advertising that you are teaching fiber arts and offering college certification, then yes, absolutely. 

• Should my teachers pass a background check?

Again, this is circumstantial. If you are teaching a fun craft or skill to adults, then it is probably not necessary. However, if your teachers will in any way be associating with minor children, then a background check could be a good idea. 

• What kinds of hardware or software would my tutoring business need? Record keeping, text communication, video/audio for lessons, whiteboard capability for sharing things like math problems, a good PC for teachers, Internet connection, helpful small apps to recommend to your students…the list could go on and on. It really depends on what you are teaching.

• Why would a Business Plan be helpful when applying for loans or grants?

A well thought out business plan shows that you have a good idea of what you are going to do, when you are going to do it, and how you are going to go about it. It shows your expected outlay and income. This is information that anyone who plans to back your efforts will want. 

• What is a good way to get experience teaching online?

Sign up with one of the established companies that are offering tutoring online. This will give you a good idea of the kind of schedule you need to keep, how much you should charge, and whether you have what it takes to be an online instructor. Even if you have been a classroom teacher and have regular teaching credentials, online instruction is a completely different world from face-to-face instruction.

To learn more on how to plan your own tutoring business click here!

Please note that the contents of this blog are for informational and entertainment purposes only and should not be construed as legal advice. Any action taken based on the information provided in this blog is solely at your own risk. Additionally, all images used in this blog are generated under the CC0 license of Creative Commons, which means they are free to use for any purpose without attribution.