Start an ESL School by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your ESL School. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
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 are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening an ESL School?
In the beginning, you can offer classes out of your own home, out of a public place like a library, park, or coffee shop, or even visit students in their own homes. However, once you have accumulated enough students to actually open a school, you will need to have enough money set aside to cover certain expenses.
One of the highest costs is rent. The amount you must pay depends on your market. In the case of an ESL school, most schools are located in large metro areas because that is where the potential students live. These are the same places where rent can be higher than normal.
Labor is also a large cost. Instructors are usually paid based on the number of hours they teach each week. This allows schools to more easily control the cost for instructors. Instructors are usually paid between $25 to $50 per hour.
Office staff typically receive a lower wage than teachers, but still earn above minimum wage. Most of the office staff involved with sales earn the bulk of their salary through commissions.
Another large expense is purchasing the curriculum and extracurricular activities like games, toys, and teaching materials. Supplies costs will vary according to the number of students you have enrolled at each course level.
What are the ongoing expenses for an ESL School?
Rent and labor are two of the biggest ongoing expenses. Smaller monthly expenses include utilities and maintenance costs.
Who is the target market?
Most students who enroll in ESL schools in the US are out of school and working. Students are more likely to be male than female, and they typically have at least some experience with learning English in the past.
How does an ESL School make money?
An ESL school makes money by charging students for classes. Some schools charge students for each lesson they attend and students at other schools pay for a set time period. Most ESL schools have multiple pricing tiers based on the number of students in a class, the level of instruction, or the time when the students attend classes.
How much can you charge customers?
According to Thumbtack, students pay an average of $40 an hour for ESL instruction. That rate can vary based on location of the school and other factors like the number of students in a class or the level of instruction.
How much profit can an ESL School make?
Experts predict revenues for educational services will grow 2.4% over the next five years. An English language school which keeps a tight control of its expenses can expect to see a good return.
How can you make your business more profitable?
ESL schools can easily add new classes and events to increase their bottom line. English schools can supplement their income by selling a variety of educational tools like dictionaries, CDs, language-learning games, and other literary and digital learning materials.
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 ESL School Name Generator
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.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your ESL School is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment 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.
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.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate an ESL school. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a ESL school:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a ESL school business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a ESL school:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your ESL school business will be in compliance and able to obtain a CO.
An English language school should require clients to sign a services agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership.
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.
Learn more about General Liability Insurance.
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.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
How to promote & market an ESL School
It is a good idea to market an ESL school to potential students in their native languages. Schools should create brochures advertising your school in the languages of a few of the most popular groups of immigrants in your area. Then make contact with organizations which serve these communities, such as churches, social clubs, and associations.
How to keep customers coming back
Offering potential students free trial lessons to give them a taste of your school is pretty standard. It is also important to keep the quality of education high enough to prevent students from feeling like they are wasting their time and money. Instructors should focus their classes on presenting useful skills in a fun and interesting way.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start An ESL School In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
A person who is passionate about education and loves languages makes a great ESL instructor, but a successful owner of an ESL school needs to also possess the skill set required to run a business. In addition, an owner needs to have the desire to work with individuals from a wide range of cultural and sociological backgrounds. Due to the nature of the business, most schools are open until late at night seven days a week, as this allows students to work or attend school during the day. Therefore, being able to keep a flexible schedule is a must.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at an ESL School?
At the typical ESL school, the office staff arrives a few hours before the first class to prepare for the day. The first class at many ESL schools begins in the late afternoon, and many schools don't open until after lunch. After handling administrative work, like bookkeeping and marketing, the office staff usually spends the rest of the day dealing with the concerns of students and parents. Instructors typically arrive an hour before their first class to plan and attend a short meeting. After teaching classes, instructors usually write reports and meet with students or their parents. The owner needs to ensure everything runs smoothly.
What are some skills and experiences that will help you build a successful ESL School?
Many successful ESL school owners have experience teaching English to non-native student. Many owners have taught abroad or worked at private English language schools in their home country and have a clear understanding of the business. Quite often owners of ESL schools have a certificate or degree in TESOL (Teaching English to Speakers of Other Languages). Owners should be capable of recognizing good teaching when you see it and have the ability to help instructors improve their teaching. Due to the high level of marketing and sales involved in this business, ideally an owner has experience running a company.
What is the growth potential for an ESL School?
An ESL school can start with a single owner who is also the instructor. Many small, independent schools start off this way. As a school builds up its student base, the owner can hire more instructors and staff members. In an English-speaking country with lots of new immigrants, ESL schools have a great growth potential.
ESL schools which are able to enroll foreign students directly are very popular these days. Unfortunately, it takes up to two years to become qualified as one of these "I-20" schools, and a school must be certified by the Student and Exchange Visitor Program (SEVP) in the US.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting an ESL School?
Schools must start small and build slowly. Over expansion can easily force a school to close. Schools should not offer extremely low-cost, long-term classes as a way to attract students. This marketing technique can easily find schools filling their classrooms, but losing money in the end. Schools shouldn't make guarantees about academic improvements or minimum test scores. Most importantly, schools need to do all they can to keep students happy. One unhappy student can ruin a class and cause other students not to sign up for additional classes.
How and when to build a team
Build your team depending upon your needs. Ideally, your teachers should be able to focus one hundred percent on preparing and delivering classes, while other staff members handle advertising the school and registering new students. In addition, it is often necessary to hire staff members who are able to speak the native languages of your students.