Looking for a group tutoring business plan? You're in the right place.
A learning center sells seats in a room, and every lender, landlord or co-investor will ask what those seats are worth. How many students must be enrolled before the center covers its rent and tutors? How full do the classrooms get on a Tuesday evening, and how empty are they in July? What does it cost to win one enrollment, and how long does the family stay? A blank template won't show you what a sensible answer looks like.
In this article we'll walk through a complete sample business plan for a group tutoring center in Baton Rouge, Louisiana, section by section. We'll cover the executive summary, the SWOT analysis and, in particular, all of the financials, down to seat use in each school term.
Here's what you'll take away:
- The executive summary: see how to describe a classroom business on one page, with the funding and the first-year loss stated up front
- The seat-use table: work out how many students fill a room and how much weekday evening time you actually have, before you sign a lease
- The tutor pay and classification section: see how hourly tutors are costed and why the plan treats them as employees, so you can raise the question with your own adviser
- The retention and cost-per-enrollment tables: find out what a new family costs to win and how long the plan expects them to stay
- The first year, month by month: spot the summer months that lose money before you get there, and plan your cash around them
- The five-year profit, cash flow and balance sheet: understand how rent, tutor pay and enrollment each show up in the numbers
- The downside case: have an answer ready for the "what if enrollment is 20% short?" question, along with the steps the owner takes in response
If you're opening a tutoring or learning center, read this before you write your own. The center is fictional, so take what fits and change the rest.
In this plan
To turn this example into your own group tutoring service business plan, use the group tutoring service business plan template.
Executive Summary
TopTutor is a group tutoring center that opens in Baton Rouge, Louisiana, on 1 January 2027. Students in grades 6 to 12 attend two 75-minute sessions a week in cohorts of up to eight, taught in mathematics, reading and writing, and science, with ACT preparation courses and summer intensives on top. Carmen Delaway, a former high-school mathematics teacher, runs the center. She owns 75% and her brother Frank owns 25%.
The center needs $300,000: $150,000 of Carmen's savings, $50,000 from Frank and a $100,000 bank term loan. Of that, $181,100 is held as a cash reserve, $57,500 pays for classroom build-out and equipment, and $61,400 covers legal work, licensing, the launch campaign and two months of pre-opening payroll and rent.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $297,050 | $578,975 | $722,088 |
| Net income after start-up costs | ($172,414) | $45,263 | $69,474 |
| Closing cash | $69,259 | $107,483 | $170,504 |
Twenty-two families return non-binding enrollment forms before opening. Enrollment reaches 58 students in May, falls to 33 over the summer and ends the first year at 99. Year 1 is a loss because rent, three salaried staff and the launch campaign arrive months before enough students do. EBITDA is positive only from September to December, and Year 2 is the first profitable year.
Seats are the unit that drives the model. A cohort of six paying $325 a month each brings in about $180 for every tutor-hour, against a loaded hourly tutor cost of about $32. The constraint is not the tutors. It is weekday evening time, which fills to roughly 79% of prime slots at the Year 3 peak and 86% by Year 5, where the forecast holds enrollment.
The forecast also tests itself. If enrollment runs 20% below forecast and Carmen delays hires, cuts marketing and her own pay and pays no distributions, the center still closes every year with cash.
The Center
Legal name: TopTutor, LLC, a Louisiana limited liability company. Owners: Carmen Delaway (75%) and Frank Delaway (25%). Premises: 3,600 square feet of leased space in a Baton Rouge strip center, with six classroom bays, four fitted at opening. Start date: 1 January 2027, in the middle of the school year, so spring-term families can transfer in. Stage: pre-launch. The five-year lease is agreed in draft, with a personal guarantee from Carmen and a deposit of two months' rent, and 22 families have returned non-binding enrollment forms. The $60 fee and the first month's tuition fall due when the doors open.
What the center sells
Weekly small-group help in core subjects for students who are falling behind, holding steady or aiming at a scholarship score. A student attends two 75-minute sessions a week in a cohort that is capped at eight and planned at four and a half to six.
Where the revenue comes from
| Line | How it is priced | Year 1 share of revenue |
|---|---|---|
| Weekly group tuition | $325 a month for two sessions a week | 83% |
| Exam-prep courses and summer intensives | $510 a seat | 14% |
| Registration and assessment fees | $60 for each new student | 3% |
Aims for the first two years
- 99 students enrolled by December 2027, up from 28 in January.
- Positive monthly EBITDA by September 2027.
- A profit in 2028, with six classroom bays in use by fall.
- Loan repayments on schedule, and no owner distributions before 2030.
Rules the center has to check
A tutoring center is not a school, but three questions need an answer before opening. Whether a drop-off program for minors falls under child-care licensing depends on its hours and structure, and counsel confirms the position with the state agency that licenses child care before the lease is signed. If licensing did apply, the center would change its hours or structure, or budget for licensing costs, which this forecast does not include. Occupancy approval for a group-use space is confirmed with the local fire and building authorities. The center also runs its own criminal-background and sex-offender-registry check on every tutor. Each rule may change, so each is confirmed again at lease signing.
Baton Rouge and the Demand for Tutoring
How a Louisiana family pays for a score
Louisiana's TOPS scholarship is one reason families pay for test preparation. Its awards have depended in part on a test score and a core-curriculum grade average, and the Louisiana Office of Student Financial Assistance publishes the current criteria. That gives families of juniors and seniors a score to aim for, so ACT preparation is sold as a separate product rather than folded into weekly tuition. The criteria change, so none are quoted here.
How many students there are
East Baton Rouge Parish School System describes itself as the second-largest district in Louisiana and lists 38,008 students on its About page, which carries no date. The fall peak of 190 students in Year 5 equals about 0.5% of that figure, before counting private-school and homeschooled students. LSU, Southern University and Baton Rouge Community College are all in the metro area and supply the college-student tutors the center hires.
The school calendar sets the year
Louisiana school years run from August to May, and each parish publishes its own calendar. Demand follows that rhythm: families enroll in the weeks after the first report cards, leave when a term ends and pause over the summer. The forecast follows this directly. Enrollment rises from January to May, falls by about 43% between May and July, and recovers in August.
What the competition looks like
Competitors are not named, because their fees change and most do not publish them. The center competes with five kinds of alternative.
| Alternative | What it offers | Why a family picks it | How TopTutor differs by design |
|---|---|---|---|
| National learning-center chains | Franchised math and reading programs | A known name and a set curriculum | One local owner, subject tutoring tied to the student's own school work |
| One-to-one home or online tutors | Individual attention at the student's pace | Flexibility and focus | A lower monthly price per hour and a room full of peers |
| Online platforms | On-demand video or chat help | Cheap and available at any hour | Scheduled, in-person sessions with a named tutor |
| School and parish after-school help | Free or low-cost homework support | No cost | Smaller groups, set weekly sessions and progress reports |
| Test-prep companies | ACT and SAT courses | Specialist score focus | Weekly tuition and prep from the same center |
The table describes categories and is not a ranking. The center's price is a planning figure, checked against local rates before opening.
SWOT
| Strengths | Weaknesses |
|---|---|
| A founder who taught the grade 9 to 12 mathematics most families ask about | One site, so a bad term cannot be offset elsewhere |
| 22 enrollment forms before the doors open | No brand yet, and no results to show in January |
| A group price per hour set below what one-to-one tutoring usually costs, to be checked against local rates before opening | Revenue depends on a school-year calendar the center does not control |
| Opportunities | Threats |
|---|---|
| Counselors and teachers who refer struggling students | Low barriers to entry, with new tutors appearing every term |
| ACT preparation tied to scholarship targets | Online tutoring that may be priced below an in-person seat |
| Summer intensives that fill otherwise empty rooms | A tutor leaving mid-term, taking families with them |
Who Enrolls and Why
The student and the person paying
The student is in grades 6 to 12, and most of the volume sits in grades 8 to 11. The person paying is a parent or guardian who has seen a report card, a progress letter or a failed test and wants help before the next grading period. The student rarely chooses the center.
What triggers the call
A drop in a math grade, a teacher or counselor suggestion, a looming ACT date, or a student who is capable but disengaged. The first two are expected to be the most common triggers.
What families look for
A room where the student is not the only one struggling. A tutor who knows the school's assignments. A schedule that fits around sport and work. A monthly price that is known in advance. A short progress note every month.
Why group sessions
A cohort of up to eight lets the center charge about $30 an hour per student. Peers working the same unit can explain it to each other, and the tutor has time for each student in a 75-minute block.
Filling the Seats
Rooms, slots and prime time
The center's weekly grid has 15 session slots per room: three each evening from Monday to Thursday and three on Saturday morning. Students arrive after school, so demand bunches into the early evening. The first two evening slots, Monday to Thursday, are prime time: eight slots a room, carrying about 65% of all sessions. Four of the six rooms open in January 2027. The table shows how full the grid gets.
| Period | Average students | Rooms open | Average cohort | Group sessions a week | Weekly grid used | Weekday prime slots used |
|---|---|---|---|---|---|---|
| Spring 2027 (Jan to May) | 44 | 4 | 4.5 | 20 | 33% | 40% |
| Summer 2027 (Jun to Jul) | 36 | 4 | 4.0 | 18 | 30% | 37% |
| Fall 2027 (Aug to Dec) | 93 | 4 | 5.5 | 34 | 56% | 69% |
| Fall peak, Year 2 | 150 | 6 | 6.0 | 50 | 56% | 68% |
| Fall peak, Year 3 | 175 | 6 | 6.0 | 58 | 65% | 79% |
| Fall peak, Year 4 | 185 | 6 | 6.0 | 62 | 69% | 84% |
| Fall peak, Year 5 | 190 | 6 | 6.0 | 63 | 70% | 86% |
Each student takes two sessions a week, and the figures for later years are peak enrollment in a single term, not annual averages. With four rooms, Year 2's fall peak would need more than every prime slot, which is why rooms five and six are furnished in Year 2. By Year 5 prime time is about 86% used, which is close to the practical ceiling, so the forecast holds fall enrollment at 190. Prime-time use is the figure to watch: if it passes about 85%, the third evening slot has to absorb the overflow.
Retention in Year 1
About 7% of enrolled students leave in an ordinary school month. The summer pause is larger.
| Period | Enrolled at start | New | Left or paused | Returned | Enrolled at end |
|---|---|---|---|---|---|
| Spring (Feb to May) | 28 | 43 | 13 | 0 | 58 |
| Summer (Jun to Jul) | 58 | 1 | 26 | 0 | 33 |
| Fall (Aug to Dec) | 33 | 76 | 28 | 18 | 99 |
January adds the first 28 students, 22 of whom signed before opening, so Year 1 has 148 new enrollments in all. Students who pause in June and return in August are counted as returning, not new, and pay no second registration fee. A 7% monthly exit rate implies a stay of a little over a year of billing.
Pricing
Tuition is $325 a month for two sessions a week and rises about 3% a year from Year 2. Exam-prep courses sell at $510 a seat for a group of up to eight. The $60 registration fee covers a diagnostic assessment and a learning plan.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Average students enrolled | 63 | 124 | 150 | 160 | 166 |
| Monthly tuition | $325 | $335 | $345 | $355 | $366 |
Growth slows after Year 2 because weekday prime time fills. Cohorts are planned at six against a cap of eight, and a planned average of seven would add about 17% to capacity, but the forecast does not count on it.
Reaching Parents and Schools
What marketing costs per new student
Year 1 marketing is $45,000: $15,000 of launch spending paid from start-up capital and $30,000 of running costs. That is 15% of Year 1 revenue. By Year 3 the share is 5% and by Year 5 it is 4%, as referrals take over.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Marketing spend | $45,000 | $36,000 | $38,000 | $36,000 | $36,000 |
| New enrollments | 148 | 160 | 170 | 170 | 170 |
| Cost per new enrollment | $304 | $225 | $224 | $212 | $212 |
A new enrollment in Year 1 costs less than one month of tuition. From Year 3, 170 new students a year is what a 7% monthly exit rate and the summer pause require to hold enrollment at 150 to 166, and spending stays between $36,000 and $38,000.
Where the 148 Year 1 students come from
| Channel | Year 1 spend | Expected new students |
|---|---|---|
| Launch: website, brand and signage | $9,500 | – |
| Launch: open houses and school outreach | $5,500 | 22 |
| Parent referral credits ($50 off a month) | $2,000 | 38 |
| School and counselor liaison | $5,000 | 25 |
| Google search and maps | $8,000 | 28 |
| Social media ads | $6,000 | 20 |
| Community events and sponsorships | $4,000 | 15 |
| Free assessment days | $3,000 | – |
| Email and text reminders | $2,000 | – |
The 22 students credited to the launch open houses are the families who signed before opening, and they make up most of January's 28. Free assessment days and reminders support the other channels, so they carry no students of their own in the table.
Enrollment checkpoints for 2027
- January 2027: doors open with 28 students, 22 already signed.
- May 2027: 58 students and the first exam-prep course full.
- August 2027: 70 students, including 18 returning from the summer pause.
- December 2027: 99 students and about $32,200 of monthly tuition.
Running the Center
The Baton Rouge site
The lease is for 3,600 square feet at $19 a square foot a year, all in, which is $68,400 in Year 1. It holds six classroom bays, a reception and waiting area, a staff room and storage. Four bays are fitted at opening. Bays five and six are furnished in summer 2028.
A week at the center
Sessions run Monday to Thursday from 4:00 pm to 8:15 pm in three 75-minute slots, and on Saturday morning. A short written note goes to the parent after every four weeks, and each student is re-assessed at the start of each term. Cohorts are grouped by grade and unit, not by age alone.
Who teaches
Carmen teaches mathematics in the early evening slots and the lead tutor teaches the rest. In fall 2027 the center needs one further hourly tutor on a busy weekday evening, and at the Year 3 peak about two per evening slot, drawn from a roster of 8 to 10. Hourly tutors are college students, retired teachers and graduate students, paid an average of $24 for each hour taught, plus paid preparation and training time.
Hourly tutors: employees or contractors
TopTutor treats hourly tutors as W-2 employees. The IRS looks at three kinds of evidence: how much behavioral control the payer has, how much financial control it has, and the nature of the relationship, including written contracts and whether the work is central to the business. TopTutor sets the schedule, the curriculum, the room, the pay and the reporting format, and the work is the core of what it sells, so the evidence points to employment. The Department of Labor applies its own test under the Fair Labor Standards Act, and the standard has been revised more than once, so counsel confirms the current rule before the first hire.
Louisiana's unemployment-insurance agency may apply a test of its own, which counsel also checks. 1099 contractors are used only for guest specialists, such as a visiting writing coach who runs a one-off clinic using her own methods and serves other clients. That line is $3,000 in Year 1. Employer payroll taxes, unemployment insurance and workers' compensation add about 12% to hourly pay in the model. Treating tutors as contractors would lower that cost on paper and raise the risk of back taxes and penalties, so TopTutor does not do it.
Software and data
A student-management and billing system with card payments, a learning platform for practice sets and progress notes, e-signature for enrollment forms, and a parent app. Software costs $11,000 in Year 1 and $17,500 by Year 5. Student records are kept in the cloud system and not on paper.
Insurance and safeguards
General liability, professional liability, abuse-and-molestation cover, cyber and workers' compensation, budgeted together at $9,000 in Year 1. A written child-safety policy: no tutor is alone in a room with one student, rooms have windows or glass panels, and pick-up is by named adult. The center also keeps a registry check on file for every employee.
Vendors and outside help
Software vendors, a curriculum and practice-material publisher, a local employment lawyer, and a payroll provider that files employer taxes. None is hard to replace.
Founders and Staff
Carmen Delaway, owner and center director
Carmen taught high-school mathematics for eleven years and ran her school's after-school tutoring program for five of them. She holds a Louisiana teaching certificate and a mathematics degree. Her $150,000 is the savings she put aside over those years. She draws a $68,000 salary, which is already in the payroll lines.
Frank Delaway, investor
Frank has no day-to-day role. He owns 25% for $50,000 and sits on a quarterly review call with Carmen and the bank's relationship manager.
Skills Carmen has yet to build
Carmen has taught, but has not run a payroll, hired a team or managed a lease. A part-time coordinator handles billing and scheduling from day one, a payroll provider files employer taxes, and a lawyer is on call for hiring.
If Carmen is away
The lead tutor can cover the early-evening mathematics slots for a short absence and the center holds key-person life and disability cover on Carmen. For a long absence, the lead tutor and coordinator keep operations running while the owners hire a director.
Hiring plan
| Role | Starts | Why then |
|---|---|---|
| Lead tutor and curriculum manager | Month 1 | Needed to run the first evening cohorts |
| Front-desk and enrollment coordinator (part time) | Month 1 | Covers reception, billing and parent calls |
| Enrollment and family liaison | Month 17 | Added before the second fall term |
| Lead tutor, sciences and exam prep | Month 26 | Prime time is already 68% used at Year 2's fall peak |
| Second senior lead tutor, mathematics | Month 52 | Prime time is 84% used at the Year 4 fall peak |
What the bank holds
The $100,000 loan is secured by a lien on the equipment and build-out and by Carmen's personal guarantee, which also covers the lease. The bank asks for quarterly accounts and a minimum cash balance of $40,000, tested each quarter. Base-case cash stays well above that level, and the downside case stays above it with about $4,700 to spare at its lowest point.
Finances for the First Five Years
The statements below come from one five-year model that runs month by month through 2027 and by year afterward. The operating figures come first so each line in the tables has a stated source.
Funding the center
| Use of funds | Amount |
|---|---|
| Build-out of four teaching rooms, reception and storage | $48,000 |
| Tutor and reception laptops, printers, room displays, sign-in tablet | $9,500 |
| Business licenses, occupancy approval and background-check set-up | $2,500 |
| Legal: entity, lease review, enrollment contract, tutor employment papers | $7,500 |
| Launch: website, signage, open houses, school-counselor outreach | $15,000 |
| Pre-opening payroll and rent, November and December 2026 | $36,400 |
| Cash reserve, including the $11,400 lease deposit | $181,100 |
| Total uses | $300,000 |
| Source of funds | Amount |
|---|---|
| Carmen Delaway's savings | $150,000 |
| Frank Delaway's investment | $50,000 |
| Bank term loan | $100,000 |
| Total sources | $300,000 |
Carmen puts in $150,000 of savings and her brother Frank adds $50,000, which gives them 75% and 25% of the company. The remaining $100,000 is a seven-year bank loan at 10.5%, interest-only for six months. The bank takes a lien on the equipment and build-out and a personal guarantee from Carmen, and it asks for quarterly accounts and a minimum cash balance of $40,000, tested each quarter. The rate is a rounded planning figure and not a quoted offer. The $36,400 for pre-opening payroll and rent pays the director and lead tutor from 1 November 2026 and two months of rent during build-out; the model books it at opening. The $181,100 reserve includes the $11,400 lease deposit. The center loses money from January to August of its first year, carries three salaried people before the first full school term and needs the cash to reach September.
Operating figures
- Group tuition is $325 a student a month for two 75-minute sessions a week, about $37.50 a session and $30 an hour. Prices rise about 3% a year from Year 2 and are $335, $345, $355 and $366 in Years 2 to 5.
- Enrollment is counted at month end. It starts at 28 in January, 22 of them from forms signed before opening, climbs to 58 by May, falls to 33 over the summer and reaches 99 by December. Average enrollment is 63 students in Year 1, then 124, 150, 160 and 166. Fall peaks, which set the capacity needs, are 150, 175, 185 and 190 in Years 2 to 5.
- About 7% of enrolled students leave in an ordinary school month. In June 20 of 58 students pause for the summer and 18 return in August. New enrollments are 148 in Year 1, then 160, 170, 170 and 170, and each pays a $60 registration and assessment fee.
- Exam-prep courses and summer intensives sell at $510 a seat in 2027, with 82 seats in Year 1 and 135, 168, 185 and 195 in Years 2 to 5. Groups hold up to 8 and the price rises with tuition.
- Hourly tutors average $24 for each hour taught, with preparation and training time paid on top, and they are W-2 employees. Payroll taxes, unemployment insurance and workers' compensation add about 12%, so a taught hour costs roughly $32 with preparation. Direct costs are set at 20% of tuition and 30% of exam-prep revenue, which includes card fees of about 3%. A bottom-up count for Year 3 comes to about $93,000 (roughly 1,900 paid tutor hours, about $51,000; card fees, about $22,000; exam-prep instructors, about $20,000), against $150,266 in the model. The difference of about $57,000 covers substitute cover, turnover, tutor bonuses and curriculum licenses, and keeps the margins cautious.
- The center leases 3,600 square feet on a five-year lease at $19 a square foot a year, all in, which is $68,400 in Year 1 with 3% annual escalation. Carmen guarantees the lease and the deposit is two months' rent. Four rooms are built out at opening and rooms five and six are furnished in Year 2. The front-desk coordinator works 25 hours a week at about $16 an hour.
- Each weekly grid has 15 session slots a room: three evening slots from Monday to Thursday and three on Saturday morning. The first two evening slots, Monday to Thursday, are the prime time, and 65% of sessions are placed there.
- Salaried pay is held at launch rates and a 3% pay rise is charged as a separate line from Year 2. Payroll on-costs are 27% of wages for salaried staff and 15% for the part-time coordinator.
- Receivables average 5 days. Tuition is billed by card on the first of the month, and only exam-prep invoices to families on installments run later. Tax is charged at the 21% federal corporate rate and the 5.5% Louisiana corporate rate. The model carries forward the Year 1 operating loss of $111,014 and not the $61,400 of start-up costs, which is the cautious choice. A small company would usually be taxed through its owners, so corporate rates are a placeholder.
- Owner distributions of $25,000 and $40,000 are paid in Years 4 and 5, once retained earnings before the payout are positive. The loan runs to term, so the center borrows while holding cash, and the reserve is what protects it against a slow first year.
Revenue by line
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Weekly group tuition | $246,350 | $498,500 | $621,000 | $681,600 | $729,100 |
| Exam-prep courses and summer intensives | $41,820 | $70,875 | $90,888 | $103,045 | $111,930 |
| Registration and assessment fees | $8,880 | $9,600 | $10,200 | $10,200 | $10,200 |
| Total revenue | $297,050 | $578,975 | $722,088 | $794,845 | $851,230 |
| Growth on prior year | – | 95% | 25% | 10% | 7% |
Tuition is 83% of Year 1 revenue and 86% of Year 5. Exam-prep courses fill rooms that sit empty on Saturdays and in summer, and they make up 14% of Year 1 revenue and 13% by Year 5. Registration fees are a small line, 3% of Year 1 revenue and 1% by Year 5, as repeat enrollment replaces new sign-ups.
Month by month in 2027
| Month | Weekly group tuition | Exam-prep courses and summer intensives | Registration and assessment fees | Total revenue | EBITDA |
|---|---|---|---|---|---|
| Jan 2027 | $9,100 | $0 | $1,680 | $10,780 | ($18,722) |
| Feb 2027 | $11,700 | $4,080 | $600 | $16,380 | ($14,288) |
| Mar 2027 | $14,950 | $3,060 | $780 | $18,790 | ($12,379) |
| Apr 2027 | $17,550 | $0 | $720 | $18,270 | ($12,791) |
| May 2027 | $18,850 | $3,060 | $480 | $22,390 | ($9,529) |
| Jun 2027 | $12,350 | $7,140 | $0 | $19,490 | ($11,825) |
| Jul 2027 | $10,725 | $6,120 | $60 | $16,905 | ($13,872) |
| Aug 2027 | $22,750 | $0 | $1,140 | $23,890 | ($8,341) |
| Sep 2027 | $29,250 | $5,100 | $1,440 | $35,790 | $1,083 |
| Oct 2027 | $32,825 | $6,120 | $1,080 | $40,025 | $4,437 |
| Nov 2027 | $34,125 | $3,060 | $720 | $37,905 | $2,758 |
| Dec 2027 | $32,175 | $4,080 | $180 | $36,435 | $1,594 |
Revenue dips in June and July, when 26 students leave for the summer, and recovers in August as returning students and the new school year arrive. EBITDA is negative from January to August. It turns positive in September and stays positive through December, at $1,083, $4,437, $2,758 and $1,594. The lowest month-end cash balance is Sep, at about $64,000, after allowing for the five days families take to pay.
Staff on payroll
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and center director | $68,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Lead tutor and curriculum manager | $50,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Front-desk and enrollment coordinator (part time, 25 hours a week) | $21,000 | Month 1 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Enrollment and family liaison | $40,000 | Month 17 | – | 1 | 1 | 1 | 1 |
| Lead tutor, sciences and exam prep | $48,000 | Month 26 | – | – | 1 | 1 | 1 |
| Second senior lead tutor, mathematics | $50,000 | Month 52 | – | – | – | – | 1 |
| Total payroll incl. on-costs | $174,010 | $207,877 | $280,690 | $285,770 | $333,395 |
Carmen, the lead tutor and a part-time coordinator run the center from January, and Carmen and the lead tutor are on payroll from 1 November 2026. Hourly tutors are not listed because they work set evening shifts and are costed within direct costs. One of them is needed on a busy weekday evening in fall 2027, and about two per evening slot at the Year 3 peak, drawn from a roster of 8 to 10. The enrollment and family liaison joins in month 17, as the second fall term approaches. The sciences and exam-prep lead follows in month 26 and a second senior math lead in month 52. Carmen's $68,000 is in payroll already, so every profit line is after she has been paid. Revenue per full-time equivalent counts salaried staff only. Adding about 0.9 of a full-time equivalent for hourly tutors (1,900 paid hours) brings the Year 3 figure to roughly $134,000, against $160,464 in the table.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $297,050 | $578,975 | $722,088 | $794,845 | $851,230 |
| Direct costs (hourly tutors, payroll taxes, card fees) | ($61,816) | ($120,484) | ($150,266) | ($165,407) | ($177,141) |
| Gross profit | $235,234 | $458,491 | $571,822 | $629,438 | $674,089 |
| Payroll incl. on-costs | ($174,010) | ($207,877) | ($280,690) | ($285,770) | ($333,395) |
| Rent | ($68,400) | ($70,500) | ($72,600) | ($74,800) | ($77,000) |
| Utilities | ($9,600) | ($10,200) | ($10,700) | ($11,000) | ($11,400) |
| Marketing | ($30,000) | ($36,000) | ($38,000) | ($36,000) | ($36,000) |
| Insurance | ($9,000) | ($10,200) | ($11,300) | ($12,000) | ($12,600) |
| Professional fees | ($5,500) | ($4,500) | ($4,500) | ($5,000) | ($5,000) |
| Software subscriptions | ($11,000) | ($13,500) | ($15,500) | ($16,500) | ($17,500) |
| License renewals, background checks and tutor training | ($2,400) | ($2,800) | ($3,100) | ($3,300) | ($3,500) |
| Curriculum, printing and classroom materials | ($7,500) | ($8,500) | ($9,500) | ($10,000) | ($10,500) |
| Phones, internet and office supplies | ($5,200) | ($5,800) | ($6,300) | ($6,600) | ($6,900) |
| Guest specialist fees (1099 contractors) | ($3,000) | ($4,500) | ($5,500) | ($6,000) | ($6,500) |
| Room furniture, devices and replacement | $0 | ($12,000) | ($6,000) | ($6,000) | ($6,000) |
| Bad debt allowance | ($1,500) | ($2,500) | ($3,500) | ($4,000) | ($4,500) |
| Annual pay raises (3% a year) | $0 | ($6,236) | ($17,094) | ($26,499) | ($41,844) |
| EBITDA | ($91,876) | $63,378 | $87,538 | $125,969 | $101,450 |
| Depreciation | ($8,757) | ($8,757) | ($8,757) | ($8,757) | ($8,757) |
| Interest | ($10,381) | ($9,357) | ($8,042) | ($6,582) | ($4,961) |
| Income tax | $0 | $0 | ($1,264) | ($28,039) | ($22,236) |
| Net income before start-up costs | ($111,014) | $45,263 | $69,474 | $82,591 | $65,497 |
| Start-up costs expensed at opening (legal, licensing, launch marketing, pre-opening payroll and rent) | ($61,400) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($172,414) | $45,263 | $69,474 | $82,591 | $65,497 |
Year 1 loses $111,014 before start-up costs and $172,414 after them. Year 2 is the first profit, at $45,263, with an EBITDA margin of 10.9% against negative 30.9% in Year 1. Margin peaks at 15.8% in Year 4 and falls to 11.9% in Year 5 when the second senior math lead joins and pay raises accumulate, while enrollment is held by prime-time capacity. Income tax is small in Year 3, at $1,264, because the Year 1 operating loss is carried forward.
Cash movements
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($167,726) | $50,158 | $76,271 | $90,351 | $73,481 |
| Equipment and fit-out | ($57,500) | $0 | $0 | $0 | $0 |
| Funding received | $300,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | ($5,515) | ($11,935) | ($13,250) | ($14,710) | ($16,331) |
| Owner distributions | $0 | $0 | $0 | ($25,000) | ($40,000) |
| Net change in cash | $69,259 | $38,224 | $63,021 | $50,641 | $17,150 |
| Closing cash | $69,259 | $107,483 | $170,504 | $221,145 | $238,296 |
Cash is positive at every year end and rises from $69,259 to $238,296. The two largest drains are the Year 1 loss and the loan: principal repayment is $5,515 in Year 1 and $11,935 in Year 2. Distributions begin in Year 4, after retained earnings before the payout turn positive. Cash stays well above the bank's $40,000 minimum throughout.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $69,259 | $107,483 | $170,504 | $221,145 | $238,296 |
| Accounts receivable | $4,069 | $7,931 | $9,892 | $10,888 | $11,661 |
| Equipment and fit-out (net) | $48,743 | $39,986 | $31,229 | $22,471 | $13,714 |
| Total assets | $122,071 | $155,400 | $211,624 | $254,505 | $263,671 |
| Bank loan | $94,485 | $82,550 | $69,300 | $54,590 | $38,260 |
| Paid-in capital | $200,000 | $200,000 | $200,000 | $200,000 | $200,000 |
| Retained earnings | ($172,414) | ($127,150) | ($57,676) | ($85) | $25,411 |
| Total liabilities and equity | $122,071 | $155,400 | $211,624 | $254,505 | $263,671 |
Margins and break-even
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -30.9% | 10.9% | 12.1% | 15.8% | 11.9% |
| Net margin (before start-up costs) | -37.4% | 7.8% | 9.6% | 10.4% | 7.7% |
| Payroll incl. pay raises as share of revenue | 59% | 37% | 41% | 39% | 44% |
| Revenue per full-time equivalent at year end | $118,820 | $165,421 | $160,464 | $176,632 | $154,769 |
| Average monthly revenue | $24,754 | $48,248 | $60,174 | $66,237 | $70,936 |
| Monthly revenue needed to cover operating costs | $34,422 | $41,579 | $50,962 | $52,981 | $60,260 |
| Debt service cover (EBITDA / interest + principal) | -5.8x | 3.0x | 4.1x | 5.9x | 4.8x |
Break-even is easiest to read in students. Revenue per enrolled student-month, counting exam prep and fees, is about $392 in Year 1 and $389 in Year 2. Dividing the monthly revenue needed by that figure gives about 88 students in Year 1, 107 in Year 2, 127 in Year 3, 128 in Year 4 and 141 in Year 5, set against average enrollment of 63, 124, 150, 160 and 166. Year 1 averages $24,754 a month against $34,422 needed, which is why it loses money. Year 2 averages $48,248 against $41,579. Debt service cover is negative in Year 1 and 3.0x or better from Year 2.
Enrollment 20% below forecast
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $237,640 | $463,180 | $577,670 | $635,876 | $680,984 |
| Net income before start-up costs | ($134,789) | $16,717 | $2,634 | $10,838 | $33,135 |
| Net income after start-up costs | ($196,189) | $16,717 | $2,634 | $10,838 | $33,135 |
| Closing cash | $46,298 | $56,748 | $53,321 | $57,410 | $82,353 |
This case cuts every revenue line by 20% in every year. The response: the enrollment and family liaison and every later hire start six months later, the second senior math lead is dropped, rooms five and six are furnished a year later, marketing is cut by 20%, Carmen takes a 20% pay cut, and no distributions are paid. Under that response the center closes every year with cash, at no less than $46,298, and stays profitable from Year 2, though Year 3 is close to break-even. Closing equity at the end of Year 1 is $3,811, which is thin. Month-end cash, adjusted for receivables, falls every month of 2027 and bottoms at about $44,700 in December, only $4,700 above the bank's $40,000 minimum. The owners would raise the position with the bank in fall 2027, before the first quarterly test is at risk. Without the response, the same shortfall would leave the center with negative cash at the end of Year 2.
Sources
- Internal Revenue Service, Independent contractor (self-employed) or employee?.
- U.S. Department of Labor, Wage and Hour Division, Misclassification of employees as independent contractors. The page records a 2024 rule that replaced the 2021 rule; the Department's current guidance should be checked before relying on either.
- Louisiana Department of Revenue, Corporate income and franchise tax: a flat 5.5% corporation income tax rate for tax periods beginning on or after 1 January 2025.
- East Baton Rouge Parish School System, About: 38,008 students and second-largest district in Louisiana, both undated on the page.
- The Louisiana Office of Student Financial Assistance publishes the current TOPS criteria. None are quoted here.
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