From: alexhormozi
Starting a test prep or tutoring business is highlighted as one of the best ventures for students, offering significant earning potential with low startup costs and flexible hours [00:00:00]. A key strategy to maximize profitability and effectiveness in this field is adopting a semiprivate tutoring model, rather than traditional one-on-one sessions [00:01:04].
Why Semiprivate Tutoring?
The core principle of effective tutoring is to sell the outcome, such as improved test scores leading to better job prospects or admission to prestigious schools, rather than just the tutoring time itself [00:00:28]. Standardized tests are particularly valuable targets for preparation, as higher scores can lead to enrollment in better colleges or business schools, significantly impacting an individual’s network, career opportunities, and future earning capacity [00:00:37].
Enhanced Profitability
Semiprivate models are among the most profitable service models [00:01:11]. While you might charge two-thirds of the rate of a one-on-one session, you can accommodate eight times as many people, leading to a substantial increase in hourly earnings [00:01:15].
For example:
- One-on-One Model: Charging 240 [00:01:27].
- Semiprivate (1-on-8) Model: Charging 1,100 [00:01:35]. This represents an opportunity to earn four and a half times more money per unit of time [00:01:41]. With a group of eight students paying 280 [00:01:54]. Four hours of this work can yield 1,150 per day [00:01:58].
This business model allows individuals to make more money than even a doctor, without the need for extensive schooling, loans, or sacrificing their entire day [00:02:05]. Sessions can even be conducted in free locations like libraries, keeping costs minimal [00:02:15].
Personalized Attention and Cost-Effectiveness
Even with a group of eight students, the setting remains small enough to provide personalized attention [00:01:20]. Students can take turns solving problems, which can be an effective teaching method [00:01:24]. From the student’s perspective, paying 60 for one-on-one tutoring [00:01:50]. This price point is attractive, especially when framed by the potential for students to earn $100,000 more per year by gaining entry to better schools [00:02:30].
Scaling a Tutoring Business
To reach a daily earning goal of 1,100, one would need approximately 50 students, each paying $35 for three sessions a week [00:02:24]. The business can start with minimal capital, no rental space, and no build-out [00:04:15].
Achieving “Super Saiyan” Growth
For exponential growth, you can transition from personally teaching to hiring other teachers to conduct the sessions [00:06:39]. By establishing a clear process and curriculum—such as a three-day teaching curriculum with a makeup day [00:03:07]—you can templatize the teaching method, focusing on the predictable outcome of increased scores through problem-solving [00:06:45].
- Hiring Tutors: You can pay teachers around 280 hourly revenue from an 8-student group, this leaves a significant profit margin (e.g., $230 per hour) [00:06:53]. Many teachers are willing to work for this rate, which is often more than their regular job, while students still pay less than for one-on-one sessions [00:07:10].
- Focus on Acquisition: With teachers handling the instruction, your time is freed up to focus on promotion, marketing, and sales to acquire more students and find additional teachers [00:07:21]. This creates a pipeline for both student acquisition and teacher recruitment [00:07:28].
- Exponential Earnings: By leveraging four teachers running semiprivate groups concurrently, your daily income can reach 200 (for four hours), the net profit is 3,300 per day) is sufficient to achieve a million dollars a year, exceeding the top one percent of earners [00:08:05].