My small business works! How to make CENTS from my experience?

[Alxf]

Hello Supportive Forum Members!

First off, I'd like to thank MJ for creating and nurturing this community. I heard about the forum from a stray reddit post, checked it out, and immediately bought and started reading Unscripted . Before I get into my story, I want to give 'mad props' to MJ for managing to get this extremely red-pilled book past the bureaucrats at Amazon and Audible as well as putting together such an immense amount of varied life and business wisdom into one book instead of milking it and turning it into 4-10 books like other authors do. Thank you!

Back to me:

I am 39 years old and I currently own and operate a tutoring agency in a major city. It's not big, and it took me nearly 10 years to go from being a reluctant, socially inept freelance tutor(I didn't want to have a boss), to a clueless business owner, to finally organizing my company (and myself) into something that actually works, and works reasonably well.

I now make around $100k/ yr, and due to the work I've put into optimizing systems, automating everything that could be automated, training a fantastic manager, and more or less "solving" how to hire exceptional tutors who are easy to manage, I work on this business about 2 hours a week max. I was also extremely lucky to not be significantly effected by corona since the service we provide meets the commandment of "Need" - even when the world is locked down, people with means *need* their kids to do well in school.

We provide an extremely good service and customer support, and my business is slowly growing on it's own with zero spent for advertising. And it is at this point that I have a dilemma as to how to move forward.

The first option and obvious option is to invest my time and effort into growing this business. My gut, however, tells me that this is a bad idea for two reasons:

1) Control.

My business has many points of failure. Some known (below), and some unknown.

* I rely heavily on SEO for customer acquisition. Google has liked my website for the last many years.. but that could change.
* I have one manager who handles everything while working just a few hours a day. She's amazing - a perfect fit - and gets paid well, but if for some reason she quits it would be quite hard to replace her.
* The govt could always impose some kind of restriction or undue burden on this type of service. Not likely, since upper-crust people are the ones who use it, but it could happen.

2) Scale.

My business is hard to scale.

We offer a 'white glove' service, but that means that we need to source 'white glove' people in a highly competitive market, and this sourcing takes time.

To add to that, we are limited by the geographic area and have a lot of competition. We do stand out, and offer good value, but perhaps not so much that it's clear to some people why they should pick us over some of our competitors. I can focus on this but I cannot see more than an incremental improvement coming from this effort. Furthermore, it would not reduce the issues with Control, above.

So, instead of scaling my current business, my current thinking is that I would like to help other people start and operate this same kind business all over the (English speaking) world. I believe MJ calls it 'entryfication' in Unscripted .

I'm not exactly sure what form this would take, or if it's even a good idea, so I'd love to ask you folks for any feedback - positive or negative - based on my current thinking.

At the moment, there are 100,000+ (perhaps a few million) tutors in the world. The vast, vast majority work as freelancers, for brick and mortar agencies, or for online marketplaces like WyzAnt.

Although they are all freelancers, 99.9% don't know the first thing about running a business. Marketing, customer service, operations, even building a simple website - nothing. Most are good, kind people who do a great job of actually helping students but they are not entrepreneurs in spirit. At the same time, agencies take a large cut of tutor pay (I know I do!), and online marketplaces commodify and drive down the prices for most tutors even though the service and each service provider is unique. Worse yet, most of these tutors have minimal control of their clients - if WyzAnt or an agencies fires you, well, that's it for all the reputation you've built through them.

Of those 100k+ tutors, *some* would like to start their own business - or least make more money and have their own brand - but just don't have the will or self determination to take the risk and time to learn all the skills necessary to do it. On the other hand, once this kind of business is set up, it's not hard to keep it humming along smoothly.

Given all that, and given that I know how to start and run this business ( and have proof to show ), can anyone here give me some suggestions on how to help these folks in a way that makes CENTS?

* What do I do for them?
* Should I sell them an ebook? a $997 course ?
* Create websites for them? Do everything to get them set up and take a percentage of their revenue? (Isn't that kind of a franchise?)
* How should I reach them? I'm thinking youtube + blog with useful content.
* How do I create ongoing value that justifies recurring revenue? Provide ongoing operations support? Provide some other service?

So far, the best idea I have come up with would be to find motivated individuals, help them get basic operations off the ground for some nominal fee to make sure they are invested, and provide training and operations support for some amount of time in exchange for a stake of their company.

Each company would look more or less the same on the inside, so it could be scalable. On the other hand, I could see business owners getting annoyed 5 years down the line when I'm doing essentially nothing and collecting %x percent of their revenue or profits.

Too all of you who have read this far - thank you so much for your attention. I look forward to your feedback.

Questions are also welcome!

 

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[MJ DeMarco]

A high level, big picture approach would be to sell franchises. Or, some type of SAAS service that supports the industry.

A lower level, smaller picture approach would be to sell information, "how to" courses on how to succeed doing what you do --- six figures for a a few hours of work is something a lot of people would take in a heartbeat.

Welcome to the forum.

 

[becks22]

Franchises with systems in place would be your best bet. I assume demand is growing because more people are homeschooling their children and outsourcing parts that don't know enough about?
Most franchises are about 100K to buy into > The Top 10 Tutoring Franchise Businesses in USA for 2020

 

[Ronak]

More of a side note, but if you're offering white glove service, how is your pricing and have you tested higher pricing?

 

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[Alxf]

A high level, big picture approach would be to sell franchises. Or, some type of SAAS service that supports the industry.

A lower level, smaller picture approach would be to sell information, "how to" courses on how to succeed doing what you do --- six figures for a a few hours of work is something a lot of people would take in a heartbeat.

Welcome to the forum.

Thanks for the welcome!

I'm currently at the "Unit Scaling" chapter in in Unscripted , which is giving me some insight on this.

Selling information vs. selling franchises (or something of the sort) falls into the scale for quantity or scale for mass question, so I'll be looking at both options.

I actually researched franchising some time ago, but felt it was "too big" and risky to get into given the legal and financial requirements. I see now that I should just focus on creating *something* of value for other people, help just one customer, and see what the market wants going forward.

 

[Alxf]

Franchises with systems in place would be your best bet. I assume demand is growing because more people are homeschooling their children and outsourcing parts that don't know enough about?
Most franchises are about 100K to buy into > The Top 10 Tutoring Franchise Businesses in USA for 2020

Oddly enough, these are the kinds of businesses that made not want to deal with franchises. I dislike this kind of mass market stuff because I feel that it doesn't provide much real value to customers but instead is heavy on marketing and hype. Maybe this is just my ego speaking, but I don't want to be associated with products or services that have low value.

My business is also, functionally, quite different than these. We don't have an office or a location and focus exclusively on one-on-one in-home tutoring.

The plus is that there is no overhead and scaling up and down is easy since we use contractors and have no employees.

The minus is that the system has a lower bar of entry, and is more "abstract". It *feels* like anyone can do this, although in practice I have spent years developing operational systems, software, and standard operating procedures that makes my company significantly more efficient and pleasant to deal for customers than others.

I know other biz owners in the same field and they spend much more time, effort, and $$ on the same tasks, even people who have been operating for much longer. I feel that there is a huge amount to someone who wants to start from the beginning since they won't have to spend years trying to figure all these things out, but at the same time it's hard to explain the benefits of doing it right until you've spent blood, sweat, and tears doing it wrong yourself.

 

[Alxf]

More of a side note, but if you're offering white glove service, how is your pricing and have you tested higher pricing?

For pricing, I've aimed at the middle of the market. In my city, that's between $100 - $160/hr. Regardless of the price, we pay our tutors ~60% of the hourly fee, and I give our very nice general manager 25% of the gross profit to give her skin in the game, leaving me with ~30% margin and minimal expenses.

I know *some* customers can pay more, but the number of people who can / want to pay higher than this starts declining rapidly.

More so, I've found that the customers with the highest budgets are much more likely to be be:

a) very demanding, and
b) kind of callous and unpleasant to deal with

Ironically, customers who are at the *low* end of the market are *also* likely to be very demanding and unpleasant to deal with, while the middle range clients can afford to pay for our service, but treat us and our business with respect.

A guy I know runs a very high-priced service, and he says that he doesn't care how the customers treat him because the money is good. I personally prefer to have my dignity.

 

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[Johnny boy]

Why can't you just grow it more by getting more customers, tutors, and then getting more locations when you feel that you've dominated the market you're currently in?

 

[Alxf]

Why can't you just grow it more by getting more customers, tutors, and then getting more locations when you feel that you've dominated the market you're currently in?

To be honest, I'm pretty bored with that part of it. The nature of this business is that it's local, and whatever I do won't have that much leverage. If I, instead, help 1000 .. or even 100 people start a similar business for the price of 10% of revenue like a franchise.. that would have much, much larger returns.

 

[Johnny boy]

To be honest, I'm pretty bored with that part of it. The nature of this business is that it's local, and whatever I do won't have that much leverage. If I, instead, help 1000 .. or even 100 people start a similar business for the price of 10% of revenue like a franchise.. that would have much, much larger returns.

Then don't be local anymore. Open up another location and hire a manager. If you want to franchise you'll still have to manage them and they'll essentially just be a more motivated employee.

I think you need more infrastructure around your business before you are big enough to support other franchises.

Opening a second location that you can't always be at will show you if there are problems with your current model, and where things bottleneck.

The list of rules for franchising your business in specific states are as long as a goddamn harry potter book. You have to do A LOT OF STUFF.

Franchising is great for expanding if you have a capital problem and can't go and add a ton of locations yourself. But it's a whole new can of worms that should have a somewhat larger infrastructure to support and train people. It's not just YOUR time. You'll need 5+ more people who are only working for you to support the franchising operations. If you are bringing in 100k a year I don't think you are able to support that yet.

I want to franchise my own business too, but I know there's so much that goes into it that I'll be waiting until we're clearing a million or so in profit (whether it's from 1 or 2 locations) before I even think about it.

 

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[Johnny boy]

Now, if you just start something on the side where you're not really a franchise but you're selling courses remotely and making content, that would be a decent idea on a small scale. It depends on how large you want to build this thing.

 

[becks22]

There are companies that specialize in franchises that literally help you franchise > Franchise Opportunities & Franchises for Sale | FranchiseHelp

 

[Mareli]

Hello Supportive Forum Members!

First off, I'd like to thank MJ for creating and nurturing this community. I heard about the forum from a stray reddit post, checked it out, and immediately bought and started reading Unscripted . Before I get into my story, I want to give 'mad props' to MJ for managing to get this extremely red-pilled book past the bureaucrats at Amazon and Audible as well as putting together such an immense amount of varied life and business wisdom into one book instead of milking it and turning it into 4-10 books like other authors do. Thank you!

Back to me:

I am 39 years old and I currently own and operate a tutoring agency in a major city. It's not big, and it took me nearly 10 years to go from being a reluctant, socially inept freelance tutor(I didn't want to have a boss), to a clueless business owner, to finally organizing my company (and myself) into something that actually works, and works reasonably well.

I now make around $100k/ yr, and due to the work I've put into optimizing systems, automating everything that could be automated, training a fantastic manager, and more or less "solving" how to hire exceptional tutors who are easy to manage, I work on this business about 2 hours a week max. I was also extremely lucky to not be significantly effected by corona since the service we provide meets the commandment of "Need" - even when the world is locked down, people with means *need* their kids to do well in school.

We provide an extremely good service and customer support, and my business is slowly growing on it's own with zero spent for advertising. And it is at this point that I have a dilemma as to how to move forward.

The first option and obvious option is to invest my time and effort into growing this business. My gut, however, tells me that this is a bad idea for two reasons:

1) Control.

My business has many points of failure. Some known (below), and some unknown.

* I rely heavily on SEO for customer acquisition. Google has liked my website for the last many years.. but that could change.
* I have one manager who handles everything while working just a few hours a day. She's amazing - a perfect fit - and gets paid well, but if for some reason she quits it would be quite hard to replace her.
* The govt could always impose some kind of restriction or undue burden on this type of service. Not likely, since upper-crust people are the ones who use it, but it could happen.

2) Scale.

My business is hard to scale.

We offer a 'white glove' service, but that means that we need to source 'white glove' people in a highly competitive market, and this sourcing takes time.

To add to that, we are limited by the geographic area and have a lot of competition. We do stand out, and offer good value, but perhaps not so much that it's clear to some people why they should pick us over some of our competitors. I can focus on this but I cannot see more than an incremental improvement coming from this effort. Furthermore, it would not reduce the issues with Control, above.

So, instead of scaling my current business, my current thinking is that I would like to help other people start and operate this same kind business all over the (English speaking) world. I believe MJ calls it 'entryfication' in Unscripted .

I'm not exactly sure what form this would take, or if it's even a good idea, so I'd love to ask you folks for any feedback - positive or negative - based on my current thinking.

At the moment, there are 100,000+ (perhaps a few million) tutors in the world. The vast, vast majority work as freelancers, for brick and mortar agencies, or for online marketplaces like WyzAnt.

Although they are all freelancers, 99.9% don't know the first thing about running a business. Marketing, customer service, operations, even building a simple website - nothing. Most are good, kind people who do a great job of actually helping students but they are not entrepreneurs in spirit. At the same time, agencies take a large cut of tutor pay (I know I do!), and online marketplaces commodify and drive down the prices for most tutors even though the service and each service provider is unique. Worse yet, most of these tutors have minimal control of their clients - if WyzAnt or an agencies fires you, well, that's it for all the reputation you've built through them.

Of those 100k+ tutors, *some* would like to start their own business - or least make more money and have their own brand - but just don't have the will or self determination to take the risk and time to learn all the skills necessary to do it. On the other hand, once this kind of business is set up, it's not hard to keep it humming along smoothly.

Given all that, and given that I know how to start and run this business ( and have proof to show ), can anyone here give me some suggestions on how to help these folks in a way that makes CENTS?

* What do I do for them?
* Should I sell them an ebook? a $997 course ?
* Create websites for them? Do everything to get them set up and take a percentage of their revenue? (Isn't that kind of a franchise?)
* How should I reach them? I'm thinking youtube + blog with useful content.
* How do I create ongoing value that justifies recurring revenue? Provide ongoing operations support? Provide some other service?

So far, the best idea I have come up with would be to find motivated individuals, help them get basic operations off the ground for some nominal fee to make sure they are invested, and provide training and operations support for some amount of time in exchange for a stake of their company.

Each company would look more or less the same on the inside, so it could be scalable. On the other hand, I could see business owners getting annoyed 5 years down the line when I'm doing essentially nothing and collecting %x percent of their revenue or profits.

Too all of you who have read this far - thank you so much for your attention. I look forward to your feedback.

Questions are also welcome!

You say: with zero spent for advertising?

 

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[Alxf]

You say: with zero spent for advertising?

That was hyperbole. I do pay for web hosting, a WordPress theme etc.

And I did, in the past, try to spend money on ads (facebook, google, etc). All told I spent probably less than $500 on ads, and received essentially $0 return. Our leads are entirely from SEO and referrals.

 

[Alxf]

Now, if you just start something on the side where you're not really a franchise but you're selling courses remotely and making content, that would be a decent idea on a small scale. It depends on how large you want to build this thing.

Your post above is essentially the reason I didn't pursue franchising some time back. Expensive, regulatory nightmare, and my business isn't big enough to warrant it.

And yes, the other motivating (demotivating) factor is that I don't have a need to build this business to be very large. My life is good and while it would be marginally improved by raising my yearly profits to $200-$400k, I'm not a 'spendy' person, so anything beyond that would have minimal marginal utility at the price of real stress and time.

Still, I really enjoy helping others, so creating courses and content would be fulfilling and useful. I'm just trying to find a way to monetize it in a profitable, scalable way.

 

[Johnny boy]

Then best thing to do would be make youtube content for growing a tutoring business and build an audience, send them to a funnel with an ebook, course, etc.

 

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