How to Start an eLearning Business

Start an elearning business by following these 10 steps:

1. Plan your eLearning Business
2. Form your eLearning Business into a Legal Entity
3. Register your eLearning Business for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your eLearning Business
6. Get the Necessary Permits & Licenses for your eLearning Business
7. Get eLearning Business Insurance
8. Define your eLearning Business Brand
9. Create your eLearning Business Website
10. Set up your Business Phone System

We have put together this simple guide to starting your elearning business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Business Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

What are the costs involved in opening an elearning business?

Getting started with an eLearning business doesn’t have to cost a lot. If you create your own courses and build your own platform, you will only need to pay for course production equipment (audio/visual), website hosting, and your platform. On the cheap end, you could record audio/video on your phone, edit in a free video editor, post videos on YouTube, and use WordPress for your site – all of which will cost very little.

If you want to hire others to create your coursework, the estimate for an hour of basic eLearning content in 2017 was around $4,500 at the low end. For more comprehensive content, the estimated cost of an hour of content was $10,054.

What are the ongoing expenses for an elearning business?

The ongoing costs for an eLearning business include platform maintenance and hosting as well as course creation. By far the most expensive cost is course creation. As mentioned before, the cost of an hour of course content can cost thousands of dollars or more. You can mitigate the cost of course creation somewhat by hiring salaried staff to do most of the work, but you will still need to pay experts to oversee the course creation and give final approval.

Who is the target market?

The target market for your eLearning business will vary greatly depending on what kind of courses you are offering. A course like Microsoft Excel Secrets will probably appeal to office workers while Making Homemade Sauerkraut will likely appeal more to hobbyists. There is value in both markets. Corporate clients and their employees are great consumers of online learning products, but you could also attract passionate and committed customers in the hobbyist area as well.

How does an elearning business make money?

An eLearning business usually makes money in one of two ways. The first is known as the night school model. In this model, the business charges a one-time fee for access to a course. The student follows the course outline, takes quizzes and tests to measure progress, and eventually completes the course.

The second business structure is the academy model. In this model, the business charges users a recurring fee for access to all of the courses they offer.

How much can you charge customers?

The amount you can charge customers depends on what courses you are offering and the market you are serving. For example, you can find basic eLearning courses for $9.99 on some platforms. Courses that lead to certification in a high-demand area can cost $10,000. Then you have eLearning platforms that offer Academy-style subscriptions, which may charge $19.99 a month to $49.99 a month.

How much profit can an elearning business make?

According to the eLearning hosting platform UScreen, the most profitable eLearning businesses use the Academy model. While charging hundreds of dollars for a single course can appear to be the most lucrative option at first, over time the subscription model adds up to more profit. UScreen claims that users applying the subscription model earn an average of $5,700 a month.

How can you make your business more profitable?

You can make your business more profitable by creating more courses. Each course you create will earn you some income and continue to earn income for as long as it is desirable to the consumer. As an example, your first course might make you an average of $100 a month. If you created 10 courses over a year, you could make ten times that amount. Another option for making your business more profitable would be to increase the variety of courses you offer. This is particularly useful in the Academy model because the more variety you offer for the monthly fee, the more attractive your subscription service becomes to customers.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your elearning business is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

You may be passionate about a particular subject or subjects and want to share your knowledge using modern technologies. Or, you might be more interested in connecting great instructors with eager students through your own platform. Whether you are approaching this business idea as an instructor, a business person, or both, there is a lot of potential in the eLearning business model.

Some eLearning entrepreneurs are more tech-oriented, while others are more focused on pedagogy and instruction. Both have something to offer potential customers who want to take advantage of online learning.

What happens during a typical day at an elearning business?

Running an eLearning business requires juggling a lot of things, including course design, course implementation, instructor needs, tech issues, and marketing. If you are in charge of the business, you are probably not the only one creating courses. You may not even be involved in building courses. Instead, you might be working with multiple instructors to offer various courses on your platform. That means you need to keep the wheels rolling on different projects to get courses launched on time and ensure that your customers can use your platform as intended.

What are some skills and experiences that will help you build a successful elearning business?

The skills and experience you will need to be successful with an eLearning business depend somewhat on how you plan to structure your business. If you will be the instructor in all of your courses, you need enough authority to attract learners. For instance, if you want to teach journalism, you should have some journalism credentials so people want to learn from you.

If you are looking to create something bigger and more substantial like an eLearning platform with a variety of courses, you will need good management skills. As mentioned earlier, you will be working with various instructors and possibly developers to build courses and deliver those courses through an online platform. You will need to be capable of recognizing quality instruction and desirable platform design.

What is the growth potential for an elearning business?

The growth potential for an eLearning business is significant. While you may start with only a few courses, over time you can develop numerous courses and increase your customer base with each offering. One advantage this business idea has is that once you finish work on a course, that course can keep making you money for as long as it is of interest to the market. Depending on how evergreen the course is, you may have to make few if any changes to the course year after year.