When you are first starting up, you will feel that you need to do anything you can to accommodate your students' needs. If you are not careful, you will end up with one student on Monday morning, another on Friday night, and another on Sunday afternoon. After just a few weeks, you will hate your business, complain about how it is controlling your life, and fret about how you are not making any money.
After 6 years in business, I can count on one hand the number of students I have lost due to scheduling conflicts. The point is that it simply doesn't happen that often. Your students see you once a week. They can usually adjust their schedule to match yours, but they can't do this if you don't set your boundaries and stick to them. My advice is to set these three boundaries now: Time, Money, and Location.
First is time. Get a calendar or a daily planner. I use Google Calendar - more on that in a future post. Cross off any days you don't want to work. For us, it was Saturday and Sunday. If you think you really don't mind working every day, you are kidding yourself. Cross off a day anyway. Next, mark your morning and evening boundaries. What is the latest time you will meet clients? The earliest? Take a big black marker and cross off all of the times before your earliest and after your latest available time. Finally, find a block of four hours when you really want to work. Highlight it with a yellow highlighter. Make it your goal to fill these four hours first.
Occasionally business reality will set in. All of our clients are business professionals. They want to meet us after work. We were reluctant at first, but eventually took evening clients. We accommodated by refusing requests for morning lessons. I'll work mornings or evenings, but not both.
Next, decide your self-worth. What is the absolute minimum hourly wage you are willing to work for? Write it down, but don't show it to anyone. It may be different from the hourly price you advertise to your students. Whenever you accept new business, make sure you never accept work that pays you less than this number. If you offer a discount, never discount to a price lower than this number. As your business matures, I recommend adjusting this number up.
Finally, set your location boundary. What is the maximum distance you are willing to travel? Will you teach at your students' homes? At your home? At a coffee shop? We only meet students at offices--our office or theirs. Period. That's our location boundary.
Good fences mean good finances and a happier you. If you don't contain your business early on, it will consume you.
The secret to making money teaching for yourself is to have lots of students to teach. Everyone knows that. What most people don't know is how to find those students.
Almost every teacher I meet who is interested in teaching or tutoring as a business asks me how we find our students. It's a fair question; however, I think it is the wrong question. Here is my best advice: Stop looking for "students" and start looking for "a student."
For our first 2 years in business, we could trace almost every one of our students back to one individual. He was our first student. He liked our teaching style. He told his friends. His friends told their friends, and so on. Today, we still have students we can trace back to him. More importantly, however, we have learned that this is the rule, not the exception. A very large percentage of our business still comes from referrals from other customers. This is word-of-mouth marketing. It is the best -- and the cheapest -- way to grow your business.
There are ways to improve your word-of-mouth marketing. There are ways to encourage your students to refer their friends. Down the road, I will give you some suggestions for doing this. When you are starting out, however, your focus should be on finding just one student. This is easier than you think. Tell everyone you know what you are teaching and what kind of students you are looking for. Don't push. Don't talk too much. Just mention it. Let all of your friends, family, and other contacts know what you are doing. If they ask you questions, answer them. Be polite. Be helpful. Be visible. You will be surprised how quickly you find your first student.
Students want to know what they are buying and what they will get for their money. If you tell them that you charge $25/hour, they will understand what they must pay you but nothing else. How many hours will they need? How often will they meet you? What happens after the first hour?
If sell your services for $25/hour, you will get $25. If you want another $25, you will need to sell your services again, either to the same student or to a new student. That's a lot of work for $25.
You can turn your service into a product by creating a package. Instead of charging $25/hour for "tutoring," charge $200 for an "eight-week learning program that includes eight 60-minute, one-to-one, weekly tutoring sessions."
If you make your service into a product, you will make more money, spend less time on planning, and grow your business more quickly. More importantly, your students will know exactly what they are getting for their money. They will be willing to pay you more because you are offering something of value that they can clearly understand. They will also be more willing to pay you in advance, which will keep them committed to learning and attending sessions.
What do I do first to start my teaching business? I get this question more than any other. It's a good question. What do you do? Do you open a bank account? Do you buy an advertisement in the local paper? Do you build a Website? Do you get a business license?
The answer is simple. The first step to starting a teaching business is to decide to start. You need to make a commitment to working hard until you are making money. Without this upfront commitment, nothing else you do will matter. You will second-guess yourself each step of the way. Second-guessing your decision to start your business in the first 12 months is the fastest way to fail. Don't do it. Make the decision now and stick to it.
Once you have made your decision, take $200 from your personal bank account and put it into an envelope labeled "my business." There, you have started your business. This money is for your business, not for your groceries or a new shirt or for paying your Netflix bill. You will eventually use this money to fund your business bank account and to pay for your business license, business cards, and other small expenses, but for now, put the money into an envelope and don't spend it. You are not allowed to spend it until you get your first paying student.
Stay tuned for step two.
Determining pricing is never easy, and determining pricing for small groups can be especially challenging. There can be hidden costs with small groups, including printing/copying costs for materials, additional planning time, additional time spent grading student assignments, and time spent on classroom management. I have found that the following pricing strategy works well for both me and my students.
When you are considering how to price your small-group lessons, do not just divide your hourly price for individuals by the number of people in the small group. If you do this, you will leave money on the table. That is, you will be making less money than you could, and you will likely not cover all of your costs.
Instead of splitting your price, multiply it. Find the sweet spot between your hourly price for individuals (one-to-one lessons) and what the group members will consider to be a valuable discount on that price. In other words, if your hourly charge for an individual is $10/hour, $5 per person for a 2-person group/hour is not enough. Instead, try charging $7 or $8 per person/hour. Your income will increase to be $14-$15 per hour for the group. This is a 40-50% increase in revenue for you! Meanwhile, each individual will be paying only $7-$8/hour, which is 20-30% less than they would pay for an individual lesson. Everyone wins.