The initial investment for opening a private tuition centre ranges from RM 15,000 to RM 50,000 depending on the location and business model. The business model is also a significant factor in determining the startup cost.
The traditional tuition centre business model involves receiving fees from students for tuition services. This is the commission-based model.
The commission-based model usually involves a teacher who does not own the tuition centre. But, they dependent on the management for payment of fees and commission based on number of students. The commission can be between 20% to 50% depending on the course and location of the students.
The other business model is one where teachers are responsible for operating their centre. They will pay all expenses and collect fees from students directly.
This type of tuition centre is known as the proprietorship model or self-owned tuition centre (SOCC). This kind of centres have high start-up costs ranging from RM 15,000 to RM 50,000. It depends on your location and the technology advancement level you will use.
What are my options for financing my tuition centre?
Tuition centres require substantial capital investment. But this investment could required either through personal funds or through financing facilities. Such as, bank loans and financing from private investors.
Self-owned centres that have adequate collateral can get bank loans ranging from RM 100,000 to RM 1 million.
To find out more about the different financing options available, you can get in touch with the National Credit Bureau at http://www.nkb.org.my/ or with potential investors or financial institutions.
How much do I need to earn in order to start a tuition centre?
Profits from tuition centres are usually based on commission from students’ tuition fees. In addition, there are other factors that determine your profit:
- Location of your tuition centre (local vs international schools).
- Number of students you teach per session Level of qualification.
- Teachers experience.
- Revenue management strategy
Your teaching methodologies Whether you are a franchisee or an independent owner What school calendar you follow
Do I need a teaching qualification to start a private tuition centre?
Not necessarily! You can teach without a qualification if you have vast experience and good knowledge of the subject.
However, it highly recommended that you pursue professional development courses. Also, gain relevant qualifications. Such as, the Matriculation Certificate (MC) and/or Diploma in Education (DipEd).
This will help you market yourself better by demonstrating that you are committed to constantly improving yourself professionally. It is also easier for you to recruit students. At the moment when they see that your qualifications are relevant to the course you teach.
How do I advertise my tuition centre?
As tuition centres are mostly commission-based, advertising is not an effective marketing tool to attract students to your centre. Instead, it also recommended that you network with potential investors. Moreover, you could advertise in the media, your community, and promote yourself at community events.
Are there any laws governing tuition centres in Malaysia?
Yes and no. There are policies that govern tuition centres but they are guidelines rather than mandatory regulations.
However, the policies are still very useful as they provide details on how to run your tuition centre. These policies include:
What do these guidelines say about tuition centres?
The guidelines state that:
- The registration at the Ministry of Education (MOE) and adhere to the Code of Practice for Private Tuition Centres.
- Prohibited from charging more than 10% in commission from students’ tuition fees.
- There are no any form of compensation or inducement to parents or students to enroll in their tuition centre.
- Tuition centres are prohibited from enrolling students without their parents’ knowledge and consent.
Parents should receive a copy of their child’s tuition fee receipt. The receipt should specify the tuition fees and any other charges payable by the student, including the amount paid to the tutor/teacher, if any.
The receipt should also specify if there is a commission payable to the tuition centre, how much it is and who will pay it, as well as indicate that this is not part of the fees payable by the student.
Teachers who are receiving commissions must declare them to their employers. Also, it should be able to substantiate expenses incurred on behalf of their employer.
This will allow your employer to verify whether you have declared your income correctly on your tax returns. In summary, the costs to run a tuition centre vary based on your business model, location and whether or not you’re self-owned.
If you take out a loan to start your tuition centre, make sure to keep detailed records of your expenses and capital investments. This will help you prepare for tax filings at the end of the year.
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