Start an online courses business by following these 9 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 online courses business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
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 long it will take you to break even?
- 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 online courses business?
For level one self-directed online courses the costs are to create the course materials, build a website, and create an online marketing campaign with enough funds to attract students.
A typical budget for a sophisticated course offering would be about $21,000 consisting of these expenses:
- Creation of Course Materials - $10,000
- Website - $5,000
- Internet Marketing - $500 per month ($6,000 per year)
For level two self-directed online courses with live chat help, this would be the $21,000 above plus live chat support for a total budget of around $24,000. Live chat support can be outsourced for prices starting at $199 per month for 24/7 monitoring and response. There are many companies providing these services. Here is one example from 365chatsupport.
For level three online courses guided by instructors, you will need video conferencing capabilities, good lighting, and a good quality webcam. Also, the instructors will earn US$30 per hour on average. Your small startup budget would be about $25,000 and depend on the hours of instruction you plan to offer at inception.
What are the ongoing expenses for an online courses business?
The ongoing expenses are:
- A high-quality Internet connection that allows for a fast response and large bandwidth for web hosting. Allow $1,000 per month for an average operation that is successful.
- For Internet marketing, allow a minimum of $500 per month for the most basic advertising. Successful online courses businesses spend $5,000 per month on marketing or more.
- To pay instructors, allow $30 per hour for their class teaching time.
- For course content creation, allow a minimum of $1,000 to $2,000 per new course created.
Who is the target market?
Contracting with an organization(s) to create online training courses for new employees, and continuing educational courses for existing employees, is an excellent way to achieve continual business.
For online courses taken by individuals, the best customers are those who have a need or desire to complete a course and prefer the convenience of taking such a course online.
How does an online courses business make money?
There are two ways to make money with online course offerings. They are, charge each student a participation fee or contract with an organization to provide these services for a fee.
How much can you charge customers?
Level one and level two self-directed courses start at around $9.99 and go up to about $499 if certification is the goal. Video conferencing courses may be charged per hour and students pay $10 per hour up to $30 per hour depending on the number of other students participating at the same time. One-on-one tutoring is usually around $30 per hour. Specialty courses by industry experts can sell for thousands of dollars.
How much profit can an online courses business make?
Some people are comfortable making a few hundred dollars profit per month. Others make hundreds of thousands of profit per year. The largest companies in this industry sector make many millions in profit annually.
Here are some resources to use to generate ideas for online courses that are likely to be profitable:
- Jeanne Blackwell’s system and free webinar
- Fementrepreneur’s system that encourages women to try this business
- Take this course that is offered on Udemy about creating a profitable online course
How can you make your business more profitable?
Continue to offer new and exciting courses to past customers. Sell materials related to the course content. Expand from teaching individuals to getting contracts to provide training for the entire workforce of major organizations.
Set up an affiliate program that gives commissions to those who find new customers for your online courses. Expand operations to include multiple languages and market your courses in other countries.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your online courses business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
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?.
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
- 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: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
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 online courses business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
In addition, certain local licensing or regulatory requirements may apply.
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 more 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
The nature of legal requirements in distance education is ever changing, especially in regards to copyright laws. Here is a frequently updated resource, which can help keep you aware of the legal requirements.
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.
How to promote & market an online courses business
It is important to use the best practices for search engine optimization (SEO) to make sure you have the highest ranking possible on the search engine results page (SERP). This will increase the organic (non-paid) search engine traffic to your website.
It is easier to market a course that offers very special content that is highly valuable and not available elsewhere.
Experts attract high-paying students when they share specialized information that they know with a select group. The most effective way of attracting these students is to give free introductory webinars to discuss the course content in such a way that motivates the participants to sign up for the online courses.
Social media is an excellent way to attract customers by interacting with others who have similar interests. Distributing free introductory e-books helps create interest in taking the full, online courses.
How to keep customers coming back
The quality of the course materials and the good experience of past students, who give positive course ratings and testimonials, will help attract customers. Adding new course content that is of interest to past students helps make them into repeat customers.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start An Online Courses Business 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?
Online courses are created by people with a considerable amount of expertise and experience in the field they wish to teach. As such, having a niche skill makes it easier to offer desirable courses. These businesses require a considerable amount of time when they are the live video-conference style.
Online courses can be more difficult to teach than standard classes as students typically need lots of interaction with the teacher. A high-quality computer and speedy internet connection are essential when teaching online courses if you intend to offer live, video-conference style courses.
What happens during a typical day at an online courses business?
The activities differ, depending on the type of online courses offered.
For level one self-directed courses, most of the processes are automated. As the business owner, you will be highly focused on marketing efforts to find students who will take the courses. You will spend most of your time creating online marketing campaigns and/or supervising those who you hire to help you do this marketing effort. You will spend some of your time creating or supervising the creation of materials for new courses in order to expand your online course offerings. A smaller part of your time will be checking the existing course materials to make sure they are up-to-date with current information.
For level two self-directed courses with live online chat, you will have similar responsibilities as for level one, with the addition that you will participate in the live text chatting with students and/or oversee the live text chats for quality control purposes.
For level three live real-time video conferencing online courses, in addition to the responsibilities of level one and level two, you will spend part of the day preparing for your online lectures and part of the day giving the lectures to students on a regular schedule.
What are some skills and experiences that will help you build a successful online courses business?
It helps if you have expert knowledge in a specific niche or if you can hire those who have this expertise to help you.
For level one self-directed courses, you will need to prepare the course materials and then market them on the Internet. The course materials may come from your professional efforts and be an extension of them. For example, if you are a great chef, you can create an online cooking course to teach some of your best techniques in preparing recipes.
Some courses require a teaching certification. For example, if you want to teach English as a second language using the video conference method, you should have a teaching certification of TEFL or TESOL. There are many choices for how to get these certifications. One company, ESL Certified, offers both courses online.
Another example is the extensive certification process offered by Microsoft for software programmers and developers.
What is the growth potential for an online courses business?
Depending on the market niche, the potential for growth is excellent. Examples of very successful businesses that offer online courses include these top-ten selected by the eLearning Industry for 2016:
- EI Design
- Allen Interactions
- Allen Comm
- Pulse Learning
- Designing Digitally
- CommLab India
BusinessWire reports that TutorGroup is worth $1 billion. TutorGroup is the largest English language online education platform in the world.
The Training Industry provides an annual top twenty list for various types of corporate online training companies.
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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.
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 online courses business?
Take advantage of the easy-to-use software tools and templates like those offered by eLearning Brothers to more easily create your online courses. A great resource for online teachers is the Online Learning Consortium.
Starting a brand new, independent website may not be the best option because the classes will be much harder to market. Udemy and Teachable offer course-hosting websites with lots of existing web traffic of people looking for courses to take. Udemy and Teachable offer a great opportunity to reach a large group of customers, though these companies take a percentage of profits.
One way to start a business of this type might be starting with a class hosted through Udemy or Teachable, and then, if your course develops enough of a following and a good reputation you can create your own website to expand the business, thereby capturing all the profits.
How and when to build a team
This is the type of business where it is possible to start as a sole owner/operator. However, if you get enough traction and have enough students you will want to add staff for administrative support, staff (either in-house or freelance) to help increase marketing efforts, and additional instructors if you offer video conferencing courses that have sufficient student demand.