More than 45,000 companies and 300,000 self-employed individuals post revenues of about $30 billion per year in the U.S. education and training services industry, according to Hoover’s. The research firm estimates that the 50 largest companies in this labor-intensive and super competitive field garner 15 percent to 40 percent of the total revenue.While there are ample opportunities to carve a niche for yourself, like with any business, you must plan, strategize, and execute with an obsession for perfection.
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Conduct a feasibility study to evaluate the viability of your idea—is there demand for a prep school (online or brick-and-mortar), tutorial service, private school, branded kindergarten franchise, e-learning institute, language school, or vocational training institute? The study must contain the following: your business model; target market in terms of student enrollment; input cost per student, including tutors and study materials; education software and secure connectivity tools; information on competitors; and estimated fee, revenue, and profit per student.
Expand your feasibility study and develop a business plan. If you cannot afford a private consultant, the U.S. Small Business Development Center provides this service free of charge. Filing legal, registration, and tax documents The sale of services, such as education, is taxable in some states. Contact your local secretary of state’s office for details and regional application forms. A complete list of forms required to start a small business is available online for a fee from such providers as Hoover’s.
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Register with the U.S. Department of Labor if your firm has employees and obtain an employer identification number from the Internal Revenue Service. If you are the sole provider, your Social Security number should suffice. Occupational licences are required for teachers and child-care operators. For details, contact the U.S. Department of Education. Refer to the “Guides for Private Vocational and Distance Education Schools” from the Federal Trade Commission Web site about accreditation and approval criteria for your educational service.
Obtain compliance under the Children’s Online Privacy Protection Act if you operate a commercial Web site or online service targeting children under 13 that collects personal information from them or about them.
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Pitch your business plan to venture capitalists or private-equity investors that specialise in funding education businesses. These include Sequoia Capital, Matrix Partners, Intel Capital, and Benchmark Capital. Your education startup is exempt from registration with the Securities and Exchange Commission if you privately raise funds. You are also exempt if you intend to raise public funds not exceeding $5 million in a one-year period.
Lease/purchase office space. Enter into contracts with vendors. Recruit a high-performance team that includes a lawyer, an accountant, IT and marketing professionals, and administrative staff. Hire curriculum developers and tutors with a proven track record of success. Develop solid evaluation techniques to measure teaching effectiveness on a regular basis. If you do not own the tutorial content, you must enter into a licencing agreement for the transfer of intellectual property from an educational institution.