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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on February 9, 2022
Investment range
$2,800 - $6,900
Revenue potential
$30,000 - $150,000 p.a.
Time to build
1 – 3 months
Profit potential
$20,000 - $100,000 p.a.
Industry trend
Growing
Commitment
Flexible
Important reminders for launching your online courses business:
Read our interview with Laura to explore how her travel blogging course on ‘Mike & Laura Travel’ is shaping the future of travel blogging.
You May Also Wonder:
How can I make money with an online courses business?
A plethora of e-learning platforms allow you to create your online courses and sell them. They generally take a small percentage of revenue, but you can set up the courses for free.
What’s the best platform to sell my online courses on?
You have many choices when it comes to e-learning platforms. Udemy is probably the most well-known, and Teachable has also become popular. It’s best to shop around to see which one best meets your needs.
Can I start an online courses business on the side?
Many online course creators begin by offering their courses as a side business while maintaining their regular employment or commitments. However, it’s important to carefully manage your time and resources, ensure that you can dedicate sufficient effort to create high-quality courses, and develop a realistic plan for marketing and student support.
How do I determine what topics or subjects to offer in my online courses?
Start by identifying your expertise and passion areas. Leverage your own experiences, skills, and knowledge to develop unique and valuable courses that align with market demand and cater to the needs of your target audience.
Starting an online courses business has pros and cons to consider before deciding if it’s right for you.
The e-learning market surged as the COVID-19 pandemic compelled companies to adopt work-from-home arrangements and schools to implement online learning programs.
Trends in the online courses industry include:
Challenges in the online courses industry include:
Startup costs for an online courses business range from $3,000 to $7,000. Costs include a website, a computer with a quality video camera, a marketing budget, and, on the high end, a subscription to be an instructor on an e-learning platform.
There are, however, platforms like Udemy that allow you to create courses for free. You should do some research to choose the best online course platform for you. You don’t really need a website, but having one could help you market your courses and earn a higher percentage of course revenue.
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150 - $200 | $175 |
| Business licenses and permits | $100 - $300 | $200 |
| Insurance | $100-$300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Computer with camera | $750 - $1,500 | $1,125 |
| Learning platfrom subscription | $0 - $300 | $150 |
| Initial marketing budget | $500 - $1,000 | $750 |
| Total | $2,800 - $6,900 | $4,850 |
Using Udemy pricing, an hour-long course usually costs about $15 per student. If the purchasing student comes from your coupon code or from a referral link, such as from your website or social media, you earn 97% of that total. If they don’t come from a referral link and just find your course online, you earn 37% of the revenue. These calculations will assume that on average you’ll receive about 65% of the class price.
In your first year or two, if you have 2,000 course sales in a year, you’ll bring in $30,000 in annual revenue. This would mean nearly $20,000 in profit, assuming that 65% margin. As your courses become more popular, sales could climb to 10,000 courses in a year. With annual revenue of $150,000, you would make an impressive $100,000.
There are a few barriers to entry for an online courses business. Your biggest challenges will be:
Now that you know what’s involved in starting an online courses business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research online course businesses to examine their products and services, price points, customer reviews, and what sells best. You’re looking for a market gap to fill. For instance, maybe the market is missing a course that covers a particular aspect of your subject matter, such as Vietnamese cooking or Greek history.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as skill upgrades for career advancement within your subject matter area.
This could jumpstart your word-of-mouth marketing and attract clients right away.
You’ll need to determine how many courses you want to create and their subjects. You can also upgrade your courses on some platforms to include periodic video calls or other direct communication tools.
Some platforms set a price for you, while others let you set your own price. You need to make sure that your prices are competitive with similar courses. Course prices can range from $12 to $200, but most courses on Udemy are around $15. Your ongoing costs will be for marketing, and the commission you pay to the platform. You should aim for a profit margin of at least 60%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price point. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will depend on the types of courses that you offer. You may be offering your topics with generation-specific content as well. If you are targeting Generation Z, you’ll most likely find them on TikTok and Instagram.
You should never have a need for an office, but if at some point you do, you can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to online course businesses.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your online course business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding an online courses business. You might also try crowdfunding if you have an innovative concept. If you have big aspirations to eventually build your own e-learning platform, venture capital and angel investors could be an option when you get to that stage.
Starting an online courses business requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your online courses business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use project management software, such as ClickUp, asengana, or Notion, to manage your course creation, projects, tasks, and workflows.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your online courses business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your online courses business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running an online courses business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in e-learning for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in online courses. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
It’s unlikely that you will need employees for your online courses business unless you want to hire someone to assist you with course creation.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Sharing your knowledge is rewarding in and of itself, but making some money makes it even better! E-learning will soon be a trillion-dollar industry worldwide, and you can ride the wave by creating your own online courses and making these available to anyone in the world.
It’s the perfect work-at-home business and it takes very little to get started. You’re off to an auspicious beginning, having done your own e-learning right here, so put your teacher’s cap on and get on your way to launching your new online courses business. With brilliant marketing, you’re well on your way to success!
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