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How to Start an Online Courses Business
Do you have some expertise to share with the world? Millions of people are ready to learn online, which is why global e-learning is expected to be worth a trillion dollars by 2027. You can start an online courses business, spread some quality knowledge and grab a sliver of this vast market. To start your online course business, you could hop on a platform like Udemy, SkillShare, or MasterClass and start bringing in revenue right away.
The knowledge that you have to share is worth more, however, when combined with business smarts. Fortunately, all the insights and tips you need are detailed in this step-by-step guide, which can put you on the fast-track to online success.
$2,800 - $6,900
Time to build
1 – 3 months
$30,000 - $150,000 p.a.
$19,500 - $97,500 p.a.
Step 1: Decide if the Business Is Right for You
Pros and cons
Starting an online courses business has pros and cons to consider before deciding if it’s right for you.
- Easy Income – Create self-study courses and watch the money roll in
- Flexibility – Work from home on your time
- Low Startup Costs – Knowledge is all that’s required
- Competitive Market – Countless online courses compete for students
- Expertise Needed – Subject matter expertise is a must
Online Courses Industry trends
The global online courses market exceeded $250 billion in 2020 and that’s just the tip of the iceberg.https://www.gminsights.com/industry-analysis/elearning-market-size By 2027, the industry is expected to expand four-fold and reach $1 trillion in revenue.
Trends in the online courses industry include:
- Mastery-based learning is becoming popular. Mastery-based learning means that learners have to demonstrate a high degree of mastery of a topic before they move on to the next one. It’s designed to create maximum results, particularly in terms of skills upgrades to advance career paths.
- Artificial intelligence (AI) and virtual reality (VR) are increasingly becoming a part of e-learning. AI is used to spot weaknesses in the learner’s progress and to direct them to additional learning resources in those weak areas. VR is used to provide hands-on experiences, also known as experiential learning.
Challenges in the online courses industry include:
- The saturated online learning market is making it necessary to create extremely engaging content that makes the online course a memorable experience.
- The popularity of online courses across generations is creating a need for generation-targeted content.
How much does it cost to start an online courses business?
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|
|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|
How much can you earn from an online courses business?
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 2000 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.
What barriers to entry are there?
There are a few barriers to entry for an online courses business. Your biggest challenges will be:
- Having extensive subject matter expertise
- Making your courses stand out from the competition
Step 2: Hone Your Idea
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.
Why? Identify an opportunity
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.
What? Determine your products or services
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.
How much should you charge for online courses?
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.
Who? Identify your target 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.
Where? Choose your business premises
When choosing a commercial space, you may want to follow these rules of thumb:
- Central location accessible via public transport
- Ventilated and spacious, with good natural light
- Flexible lease that can be extended as your business grows
- Ready-to-use space with no major renovations or repairs needed
Step 3: Brainstorm a Business Name
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
- Short, unique, and catchy names tend to stand out
- Names that are easy to say and spell tend to do better
- Name should be relevant to your product or service offerings
- Ask around — family, friends, colleagues, social media — for suggestions
- Including keywords related to your subject, such as “history courses,” boosts SEO
- Name should allow for expansion, for ex: “Jim’s Bakery” over “Jim’s Cookies”
- Avoid location-based names that might hinder future expansion
- Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
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 sets 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.
Step 4: Create a Business Plan
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
- Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
- Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
- Product and Services: Describe your offerings in detail.
- Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
- Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
- Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
- Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
- Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
- Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
- Appendix: Include any additional financial or business-related documents.
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.
Step 5: Register Your Business
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!
Choose where to register your company
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.
Choose your business structure
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:
- Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
- General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
- Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
- C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
- S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.
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 ZenBusiness’s 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.
Step 6: Register for Taxes
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.
Step 7: Fund your Business
Securing financing is your next step and there are plenty of ways to raise capital:
- Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
- SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
- Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
- Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
- Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities.
- Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
- Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
- Personal: Self-fund your business via your savings or the sale of property or other assets.
Bank and SBA loans are probably the best option, 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.
Step 8: Apply for Licenses/Permits
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.
Step 9: Open a Business Bank Account
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.
Step 10: Get Business Insurance
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:
- General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
- Business Property: Provides coverage for your equipment and supplies.
- Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
- Worker’s compensation: Provides compensation to employees injured on the job.
- Property: Covers your physical space, whether it is a cart, storefront, or office.
- Commercial auto: Protection for your company-owned vehicle.
- Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
- Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.
Step 11: Prepare to Launch
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Develop your website
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. 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.
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.
Essential software and tools
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.
Some of your business will come from the casual online visitors, but you should still invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.
Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:
- Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area.
- Instagram: Same benefits as Facebook but with different target audiences.
- Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now”. This can sharply increase purchases.
- Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.
Focus on USPs
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:
- Sharpen your skills with our online Excel courses
- Advance your career by learning web design
- Turn your hobby into a business with our online photography courses
Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:
- Post a video – Post a video about your online courses. Use humor and maybe it will go viral!
- Limited edition – Offer a one-time version of your online course.
- Start a blog – Start a blog and post regularly. Change up your content and share on multiple sites.
- Press releases – Do press releases about new courses.
- Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
- Pay–per-click marketing – Use Google AdWords to perform better in searches. Research your keywords first.
- Influencer marketing – Pay people with large social media followings to promote your online courses. You can find micro-influencers with smaller followings and lower rates.
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.
- Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
- If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.
Step 12: Build Your Team
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.
Step 13: Start Making Money!
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, and you can ride the wave by creating your own online courses 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.
Online Courses Business FAQs
You can start an online courses business for about $3,000. Costs include a website and a marketing budget. You can use an existing e-learning platform to sell your courses, and many of those platforms allow you to create courses for free and then take a percentage of your revenue.
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.
You may need various business licenses and permits at the state and local levels. Check with your local governments for requirements or visit MyCorporation’s Business License Compliance page.
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.