Why SHOULDN’T I open an SAT/ACT prep center?

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JacobTeach
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Why SHOULDN’T I open an SAT/ACT prep center?

Post by JacobTeach » Thu Oct 31, 2019 5:01 am

A while ago I was considering moving into teaching, but after some thought, I think opening up my own test prep business might be worth considering too. The initial start up costs are low and I can fund it with cash. Worst case, I lose my initial investment.

My projections include actively teaching perhaps 3-6 hours a day except Sundays while allocating maybe 5-10 hours on miscellaneous (billing, marketing, ??).

The risks I see that it’s a competitive and saturated market, but I think I have the connections and real results from past tutoring (think scores improving by 10-40%) may give me a good chance to succeed.

What are other factors and risks I should contemplate? Thanks in advance.

BlueCable
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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by BlueCable » Thu Oct 31, 2019 6:08 am

Will ACT/SAT still be important for students in 5 years? Recall recent article reporting colleges are souring on them.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by JoeRetire » Thu Oct 31, 2019 6:17 am

If you have no other source of income, it sounds like a good idea.

If you are already working, then the opportunity costs may be important.

Lots of established competition in that field. Maybe an individual shop could succeed. Maybe not.
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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by RickBoglehead » Thu Oct 31, 2019 6:21 am

BlueCable wrote:
Thu Oct 31, 2019 6:08 am
Will ACT/SAT still be important for students in 5 years? Recall recent article reporting colleges are souring on them.
Great point.

In addition, before going into any business, where's your written business plan? Have you shown that plan to qualified professionals and gotten their input?

You may be able to find a Small Business Development Center in your area, perhaps at a community college. They are often setup to provide free advice to people considering opening a small business. They are usually run by a state, connected with the federal Small Business Administration.
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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by Phineas J. Whoopee » Thu Oct 31, 2019 2:40 pm

How old are you? You don't have to give us a number. My point is most such instructors are fairly young, probably in their twenties. How many high school students are likely to trust somebody in their forties, for example, to help them with college test prep?

You asked about risks. I think that is one. It may or may not sway your decision. Maybe you're in your twenties.

PJW

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by SevenBridgesRoad » Thu Oct 31, 2019 3:25 pm

Running any small business is mostly about acquiring customers (and more importantly, the cost of acquiring customers). The previously mentioned business plan will include details about how you will acquire customers. Don't skip the plan. Have others challenge it.
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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by Indexfan89 » Thu Oct 31, 2019 3:37 pm

I can tell my experience. My daughter attended one of these classes an year ago. The instructor is a high school teacher earlier, quit his job and started this business. He charges $200 per subject and I think he takes 5 classes (an hour each) per subject. He rented a room/hall in a local university and that's where he teach his classes. From the outside it looks simple to me. There is not much initial investment here except renting the space.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by mighty72 » Thu Oct 31, 2019 3:41 pm

At one point, I looked into similar opportunity as an additional source of revenue. To understand the business, I contacted several franchise model based companies. I quickly learned that you need volume to make decent money and it means hiring a lot of teachers and then filling up the classes. Also, one location wasn't enough for me and model was not scalable due to time it requires
If this a side hustle, consider doing it from home or going to the kids home.
Business plan and an analysis of the break even point is a must. You need to understand the market size and the cost that your community will accept. Also, how do you differentiate from the many existing options?
Good luck

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by boogiehead » Thu Oct 31, 2019 3:51 pm

JacobTeach wrote:
Thu Oct 31, 2019 5:01 am
A while ago I was considering moving into teaching, but after some thought, I think opening up my own test prep business might be worth considering too. The initial start up costs are low and I can fund it with cash. Worst case, I lose my initial investment.

My projections include actively teaching perhaps 3-6 hours a day except Sundays while allocating maybe 5-10 hours on miscellaneous (billing, marketing, ??).

The risks I see that it’s a competitive and saturated market, but I think I have the connections and real results from past tutoring (think scores improving by 10-40%) may give me a good chance to succeed.

What are other factors and risks I should contemplate? Thanks in advance.
What you are describing is just tutoring..... if you really want to open a test center it its much more complicated, i.e. location,staffing, prep material, etc.....

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by nisiprius » Thu Oct 31, 2019 4:11 pm

I don't know the answer, but there is a question you should ask and research before making your decision: what about job satisfaction, compared to other teaching-related work?

What are the students who enroll in test-prep programs like? Are the motivated, or unhappy?

What do you need to learn yourself? Test prep seems like the ultimate extreme of "teaching to the test" with the minimum of opportunities to be creative, to inspire, and to individualize instruction. And you probably need to have a very detailed and specific knowledge of the SAT test itself, not just the general subject areas.

Just as an example--again, I don't know the answer, although Google probably would find it--nowadays, as of 2019, what is the strategy for when you should guess at an answer? Does the test itself say something like "it is to your advantage to guess if you can eliminate more than one answer" or not? If it does, is that the best advice? Stuff like that.
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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by supalong52 » Thu Oct 31, 2019 7:48 pm

What did you get on the SAT/ACT yourself? Did you go to a top school? Those are likely to be selling points to parents. That said if you did go to a top school, you probably have opportunities other than test prep.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by Watty » Thu Oct 31, 2019 8:03 pm

JacobTeach wrote:
Thu Oct 31, 2019 5:01 am
What are other factors and risks I should contemplate?
One thing to consider is that you will likely have to work a lot of evenings and weekends.

That can be hard on your family and social life. If you have kids that that could really impact the time you get to spend with them.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by moshe » Thu Oct 31, 2019 8:33 pm

Some additional risks to consider:

1) Government regulation and/or license requirements, present and/or future. The news is very hot at the moment about people trying to game the admissions process. Publicized abuses often leads to additional regulation. Something to think about.

2) How easy is it for your clients to get this same test prep via electronic means, think online? MCAS/LSAT via Kaplan for example. They ship you material and classes meet online and often on demand. How will you value add?

As stated above it sounds like you might want to offer specialized tutoring rather than mass test prep. What is the LTV (Life Time Value) of each client? It is most likely a once and done relationship so your marketing expense may be higher than you realize to keep your schedule full. Also, are there times of the year when your typical client is not around? Summer perhaps? Also, how will you scale if there is just one of you?

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JacobTeach
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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by JacobTeach » Thu Oct 31, 2019 9:05 pm

mighty72 wrote:
Thu Oct 31, 2019 3:41 pm
At one point, I looked into similar opportunity as an additional source of revenue. To understand the business, I contacted several franchise model based companies. I quickly learned that you need volume to make decent money and it means hiring a lot of teachers and then filling up the classes. Also, one location wasn't enough for me and model was not scalable due to time it requires
If this a side hustle, consider doing it from home or going to the kids home.
Business plan and an analysis of the break even point is a must. You need to understand the market size and the cost that your community will accept. Also, how do you differentiate from the many existing options?
Good luck
Out of curiosity, how much was “decent money” to you? My estimates give me pretty decent money and only working 10-20 hours per week once everything is set up.

My situation is a bit interesting, as I would definitely be taking on more risk and the opportunity cost would be large to leave my current profession, but life isn’t always about $. At least that’s what I’m grappling with now.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by JacobTeach » Thu Oct 31, 2019 9:08 pm

nisiprius wrote:
Thu Oct 31, 2019 4:11 pm
I don't know the answer, but there is a question you should ask and research before making your decision: what about job satisfaction, compared to other teaching-related work?

What are the students who enroll in test-prep programs like? Are the motivated, or unhappy?

What do you need to learn yourself? Test prep seems like the ultimate extreme of "teaching to the test" with the minimum of opportunities to be creative, to inspire, and to individualize instruction. And you probably need to have a very detailed and specific knowledge of the SAT test itself, not just the general subject areas.

Just as an example--again, I don't know the answer, although Google probably would find it--nowadays, as of 2019, what is the strategy for when you should guess at an answer? Does the test itself say something like "it is to your advantage to guess if you can eliminate more than one answer" or not? If it does, is that the best advice? Stuff like that.
This also topped my concern list. My current job is stimulating, challenging, and stressful. Tutoring would be less stimulating but still enjoyable and significantly less stressful.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by JacobTeach » Thu Oct 31, 2019 9:11 pm

moshe wrote:
Thu Oct 31, 2019 8:33 pm
Some additional risks to consider:

1) Government regulation and/or license requirements, present and/or future. The news is very hot at the moment about people trying to game the admissions process. Publicized abuses often leads to additional regulation. Something to think about.

2) How easy is it for your clients to get this same test prep via electronic means, think online? MCAS/LSAT via Kaplan for example. They ship you material and classes meet online and often on demand. How will you value add?

As stated above it sounds like you might want to offer specialized tutoring rather than mass test prep. What is the LTV (Life Time Value) of each client? It is most likely a once and done relationship so your marketing expense may be higher than you realize to keep your schedule full. Also, are there times of the year when your typical client is not around? Summer perhaps? Also, how will you scale if there is just one of you?

~Moshe
1) I’ll look into it but I don’t foresee much red tape.

2) There are a number of great providers, and I hope to be one of them. There will be something that hopefully differentiates me, but I don’t want to reveal too much. Competition and a saturated market is definitely the largest risk though, which is why I’ll do my best to keep costs down.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by DarthSage » Fri Nov 01, 2019 6:05 am

Something else to consider: by definition, your clients will cease to need your services in just a couple years. So, you would need to be constantly hustling for clients. Granted, if you do a good job, you might the younger siblings of your initial clients, but you still have to constantly be getting butts in seats. Hopefully, if you're successful, you'll get word-of-mouth.

Also consider that you'd likely need to hire help. The ACT has a science component. There are SAT subject tests. Eventually, you might want to expand into graduate tests (MCAT, LSAT). Even if you're smart, you're not going to be equally good at teaching all the different subjects. These might not be issues you need to address at the outset--focus on vocabulary and Algebra 2 materials for the basics, but might be part of an expansion plan.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by RickBoglehead » Fri Nov 01, 2019 7:13 am

JacobTeach wrote:
Thu Oct 31, 2019 9:05 pm
mighty72 wrote:
Thu Oct 31, 2019 3:41 pm
At one point, I looked into similar opportunity as an additional source of revenue. To understand the business, I contacted several franchise model based companies. I quickly learned that you need volume to make decent money and it means hiring a lot of teachers and then filling up the classes. Also, one location wasn't enough for me and model was not scalable due to time it requires
If this a side hustle, consider doing it from home or going to the kids home.
Business plan and an analysis of the break even point is a must. You need to understand the market size and the cost that your community will accept. Also, how do you differentiate from the many existing options?
Good luck
Out of curiosity, how much was “decent money” to you? My estimates give me pretty decent money and only working 10-20 hours per week once everything is set up.

My situation is a bit interesting, as I would definitely be taking on more risk and the opportunity cost would be large to leave my current profession, but life isn’t always about $. At least that’s what I’m grappling with now.
What's decent money to you? :D
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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by setancre » Fri Nov 01, 2019 7:19 am

JacobTeach wrote:
Thu Oct 31, 2019 5:01 am
A while ago I was considering moving into teaching, but after some thought, I think opening up my own test prep business might be worth considering too. The initial start up costs are low and I can fund it with cash. Worst case, I lose my initial investment.

My projections include actively teaching perhaps 3-6 hours a day except Sundays while allocating maybe 5-10 hours on miscellaneous (billing, marketing, ??).

The risks I see that it’s a competitive and saturated market, but I think I have the connections and real results from past tutoring (think scores improving by 10-40%) may give me a good chance to succeed.

What are other factors and risks I should contemplate? Thanks in advance.
It sounds like you are not planning to offer Sunday hours, which is likely a mistake. Most high school students who are pursuing college have very busy schedules with practice (band, sports, theater, etc) after school and weekends, travel games, meets, volunteering, etc, in addition to needing to study for their normal coursework and AP tests. Eliminating a full weekend day means that you are limiting your client pool by quite a bit, at least in my town. It wouldn't be competitive with the other test prep centers in our market.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by setancre » Fri Nov 01, 2019 7:30 am

JacobTeach wrote:
Thu Oct 31, 2019 9:08 pm
nisiprius wrote:
Thu Oct 31, 2019 4:11 pm
I don't know the answer, but there is a question you should ask and research before making your decision: what about job satisfaction, compared to other teaching-related work?

What are the students who enroll in test-prep programs like? Are the motivated, or unhappy?

What do you need to learn yourself? Test prep seems like the ultimate extreme of "teaching to the test" with the minimum of opportunities to be creative, to inspire, and to individualize instruction. And you probably need to have a very detailed and specific knowledge of the SAT test itself, not just the general subject areas.

Just as an example--again, I don't know the answer, although Google probably would find it--nowadays, as of 2019, what is the strategy for when you should guess at an answer? Does the test itself say something like "it is to your advantage to guess if you can eliminate more than one answer" or not? If it does, is that the best advice? Stuff like that.
This also topped my concern list. My current job is stimulating, challenging, and stressful. Tutoring would be less stimulating but still enjoyable and significantly less stressful.
Why do you think tutoring would be less stressful? You will likely have disappointed parents no matter how strong of a tutor you are, because some kids will not excel on test day. Will you have a refund policy? Are you prepared to deal with all the social media bashing that happens nowadays? Seems like it would be very stressful to me, but I guess that is personality-dependent.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by Freetime76 » Fri Nov 01, 2019 10:13 am

Many US schools are doing away with the requirement for the SAT and/or ACT tests.

Edit to add: https://www.washingtonpost.com/educatio ... zed-tests/ - Washington Post article example.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by nisiprius » Fri Nov 01, 2019 10:32 am

I don't think test prep will go away any time soon, but there is an intrinsic contradiction at the heart of it all that poses difficulties.

I haven't followed the nuances and changes since my kids took the test years ago, but the original premise of the test was that it measured scholastic aptitude and scores didn't respond to coaching. That was always a myth, of course.

But, basically, the college board "sells" the test to schools on the basis that it will be useful in admissions decisions. And no college wants to base admissions on "how much test prep" a kid has had. So the college board's job is to try to design the test so that test prep doesn't work. It seems to me that the college board has always been and continues to be hostile to commercial test prep. Their party line continues to be
The best way to prepare for the SAT is to work hard both inside and outside the classroom. Take challenging courses, study hard, and read and write as much as you can.
Beyond that, they say the only steps you need to take are
  • Know what to expect...
  • Take preliminary tests... [PSAT etc.]
  • Use our free, personalized practice tools...
  • Take practice tests — for free.
So you and the College Board are opponents.
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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by mighty72 » Fri Nov 01, 2019 10:38 am

JacobTeach wrote:
Thu Oct 31, 2019 9:05 pm
mighty72 wrote:
Thu Oct 31, 2019 3:41 pm
At one point, I looked into similar opportunity as an additional source of revenue. To understand the business, I contacted several franchise model based companies. I quickly learned that you need volume to make decent money and it means hiring a lot of teachers and then filling up the classes. Also, one location wasn't enough for me and model was not scalable due to time it requires
If this a side hustle, consider doing it from home or going to the kids home.
Business plan and an analysis of the break even point is a must. You need to understand the market size and the cost that your community will accept. Also, how do you differentiate from the many existing options?
Good luck
Out of curiosity, how much was “decent money” to you? My estimates give me pretty decent money and only working 10-20 hours per week once everything is set up.

My situation is a bit interesting, as I would definitely be taking on more risk and the opportunity cost would be large to leave my current profession, but life isn’t always about $. At least that’s what I’m grappling with now.
Decent amount of money for me to start a new venture is potential of reaching 75% of my current hourly rate. Anything below that and I would rather spend time with family and friends. My situation might be different, my day job pays well and we have young kids. 25% less to account for that the new venture is something I would love to do.
Probably the 75% number will change as we become on smaller portion of the paycheck and have more income from investment

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by SchruteB&B » Fri Nov 01, 2019 11:03 am

setancre wrote:
Fri Nov 01, 2019 7:19 am
JacobTeach wrote:
Thu Oct 31, 2019 5:01 am
A while ago I was considering moving into teaching, but after some thought, I think opening up my own test prep business might be worth considering too. The initial start up costs are low and I can fund it with cash. Worst case, I lose my initial investment.

My projections include actively teaching perhaps 3-6 hours a day except Sundays while allocating maybe 5-10 hours on miscellaneous (billing, marketing, ??).

The risks I see that it’s a competitive and saturated market, but I think I have the connections and real results from past tutoring (think scores improving by 10-40%) may give me a good chance to succeed.

What are other factors and risks I should contemplate? Thanks in advance.
It sounds like you are not planning to offer Sunday hours, which is likely a mistake. Most high school students who are pursuing college have very busy schedules with practice (band, sports, theater, etc) after school and weekends, travel games, meets, volunteering, etc, in addition to needing to study for their normal coursework and AP tests. Eliminating a full weekend day means that you are limiting your client pool by quite a bit, at least in my town. It wouldn't be competitive with the other test prep centers in our market.
I wondered about that too. To be successful around here, you MUST offer full Sunday hours. My child who will be test prepping soon has sport events that can take up every evening AND most of Saturday. Sunday has to be available for us to even consider the center.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by Artful Dodger » Fri Nov 01, 2019 12:15 pm

Just curious. Isn't most test prep pretty seasonal. As I recall when I and then kids did their ACTs, the tests were in the spring, so most of the advertised test prep courses were run January to March. Some kids didn't do as well, so they prepped again, and then retook the test, maybe a few months later, so there were some additional training opportunities.

Also, as some have noted, online training is becoming more available, more effective, and more cost effective. In my profession, almost all CE and licensing training has gone online.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by downshiftme » Fri Nov 01, 2019 12:34 pm

Test prep is somewhat seasonal, but there are numerous test dates during the year so you should be able to smooth out demand somewhat. Weekend hours and access outside of school hours are essential to allow students to attend. High school students often have very busy schedules.

In my limited experience with test prep, I have noticed that testing centers make a point to hire teachers with very high test scores themselves, especially those who attended top universities. While their experience may be relevant to other top students who are striving for similar achievements, the actual students in the classes come from a wider range of backgrounds and may have very different aspirations. Innately bright people who have a history of doing well on standardized tests may have little or no idea how to help ordinary people improve their test scores. A test tutor who only knows that the answers to basic questions "are obvious" and typically scores well without study may have few good strategies to offer students who are struggling.

As a business, touting top scores may attract more business. Being an effective test prep service is a longer term investment in learning how to be effective at improving student's scores.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by Tyler Aspect » Fri Nov 01, 2019 12:43 pm

College prep centers are popular in our area.

They offer services using long term contracts and pay-as-you-go fees.

The services include:

college selection and student interest matching

SAT and ACT assessment tests (free)

Initial consultation (free)

informational seminars (free)

SAT and ACT preparation classes

Essay writing classes

private tutoring on high school courses and SAT / ACT tests

periodic consultant meetings on progress tracking and college application
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by SchruteB&B » Fri Nov 01, 2019 12:44 pm

downshiftme wrote:
Fri Nov 01, 2019 12:34 pm
Test prep is somewhat seasonal, but there are numerous test dates during the year so you should be able to smooth out demand somewhat.
It’s year round around here. Both the ACT and SAT just recently (two years ago??) added summer testing dates. Many seniors take last test in Aug, Sep or Oct after a summer of prep. Then juniors begin prep for PSAT testing in fall and taking ACT and SAT in fall and winter. All of our juniors are required to take SAT in April at school, so lots of prep in winter and spring for that.

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by RetiredCSProf » Fri Nov 01, 2019 4:00 pm

Freetime76 wrote:
Fri Nov 01, 2019 10:13 am
Many US schools are doing away with the requirement for the SAT and/or ACT tests.

Edit to add: https://www.washingtonpost.com/educatio ... zed-tests/ - Washington Post article example.
Exactly! All University of California schools are considering dropping standardized testing for admission to undergraduates. Also, students who attend a community college for the first two years are not required to submit SAT/ACT scores in their transfer applications.

Studies have shown that there is an economic bias on these tests. Students who can afford prep (and students who cheat) score higher. I think the college admissions scandal has added "fuel to the fire," so to speak.

From personal experience, my son benefited more from tutoring to help him learn how to write a college essay than with SAT prep.

See LA Times article, published 2 Oct 2019, https://www.latimes.com/california/stor ... t-optional

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Re: Why SHOULDN’T I open an SAT/ACT prep center?

Post by texasdiver » Sat Nov 02, 2019 10:39 am

Teacher here.

I've had colleagues do what you suggest. None of them have stuck with it. Competition for test prep is pretty intense in every affluent suburban area of the country where you have a big market for this sort of thing. Especially from the big national chains. Couple of comments:

1. No way to do this full time. It's mostly going to be evenings and weekends

2. Your competition is going to be hiring bright college students and grad students who are going to be working for cheap on the side

3. Your competition has well developed curriculum and materials ready to do. This stuff is incredibly difficult and time consuming to produce yourself, or expensive to buy if you are going to use off-the-shelf material

4. Probably the only way to make a decent full-time living is to go big and hire a bunch of instructors. But then you are running a business and you can kiss the 10-20 hour a week thing good bye.

5. Advertising is going to be your biggest challenge, and you'll need a really good informational web site with search optimization so that people can find you. Also schedule and pay online so you'll need to accept online payments and such.

6. You are going to have to rent venues. The teachers I knew who did this mostly rented space from local churches. It's yet another cost to deal with.

7. The teachers I know who have made this sort of thing work have turned it into a more general college counseling sort of business where they help with all aspects of the college admissions process, not just the SAT. So editing college essays, help with applications, scholarship applications, guidance with which schools to apply to, etc.

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