How to Start a Business Developing Online Courses
Do Business the Right Way
Starting a business developing online courses can be a great way to capitalize on your unique knowledge and skills.Whether you’re an experienced educator looking for relevant ways to move your career forward during the pandemic or a passionate hobbyist looking to make a little side income while sharing your knowledge with the world, there are many exciting new options available to connect you with students willing to pay for your courses.
Below, we’ve done the legwork for you to provide a free guide to starting a home-based online course development business today.
Not interested in starting an online instructor business? Visit our generic Start A Business Guide.
What Does an Online Course Developer Do?
Online course developers design multimedia instructional content covering topics from computer programming to dog training, which they market to paying customers outside of traditional educational walls.
Online education is gaining mainstream acceptance each day, and customers are increasingly willing to pay for high quality course work. Sure, there is free content available on YouTube, but paid online coursework offers structured courses, progress trackers, resources, practice materials, instructor/ student interactions, and more. These features add real educational value—value customers are willing to pay for.
A number of websites are available to host the content of online course developers. These sites all help, to varying degrees with two things: technology and marketing. Some instructors will be able to build their own website and may already have a built-in audience, but for most people entering this market, sites like Udemy, Skillshare, Ruzuku, LinkedIn Learning and Thinkific offer tremendous value by offering course building software, robust marketing campaigns, and hordes of existing clients.
Steps to Developing an Online Course Business
Create a Business Plan for Your Online Course Development Business
Before you get started, you’ll need an idea of what resources you’ll need—and how to monetize your business in a practical way. We’ve answered the biggest questions about clients, costs, and profits below.
Who is the target audience and which platform should I use?
Using an established platform with built-in marketing is a smart option but even so, finding success requires targeting the right audience. Topics like Java or Python will have swarms of potential clients, but a new course on this topic is unlikely to find them since thousands of courses already exist for those topics. On the other hand, creating a course for peanut farming in Saskatchewan may not have any audience at all. Udemy’s best advice for new developers is to find a topic with 10-20 existing courses, and build a course on that topic, and make it better then anything else already out there.
Finding the right audience also means choosing the right platform. All platforms seek to differentiate themselves in part based on the specific audience they target. Skillshare, for example, caters to creative types, while LinkedIn Learning caters more toward professional development. Udemy boasts over 3,000 unique topics on its platform.
These sites also differentiate themselves based on what type of credentials they require of their course developers and how those developers are compensated. Sites like Edex and Coursera offer university-accredited course work and certificates, requiring credentialed instructors. They also have specific coursework in mind. Other platforms, like Udemy, Skillshare, Ruzuku, and Thinkificare open to anyone willing to create quality content that might find an audience.
How do I get clients?
Working with an existing online platform means tapping into their marketing platform. The fees for the basic components of these marketing services are incorporated into the payout structure, but most sites also have options for targeted ads for your course that you can pay out of pocket for.
In addition to utilizing the platform’s marketing tools, it is highly encouraged to do some marketing for yourself. In addition to these built-in marketing tools, successful developers have their own marketing plans. Below are a few ways to get started:
- Sample videos: Create sample videos with all your best content to use on YouTube, and link it with a coupon to your platform.
- Social media: Try out different approaches to advertise your business on social media.
- Cross-promotion: Reach out to developers with coursework that complements yours. Ask them if they are interested in teaming up by promoting each on other in tweets and posts, you can greatly expand your audience.
- Discounts: Offer discounts to social media followers.
- Facebook ads: Find sub groups that are related to your coursework and advertise to them in a highly targeted way. While ad prices vary widely, you can start out for as little as $10.
- Community outreach: Teaching music lessons? Drop by the local instrument stores and see if you can leave fliers there. Have a web development course? See if you can post on the bulletin boards of your local community college.
How does an online course development business make money?
Years ago, online course developers were mostly limited to YouTube. The amount of instructional content there is incalculable, but it lacks quality control. More importantly, YouTube leaves unanswered the most important question—how to monetize. But thanks to platforms like Udemy, LinkedIn Learning (formerly Lynda), and Skillshare, monetizing an online course instruction business has never been easier. However, the way instructors are paid varies greatly from platform to platform.
Skillshare, for example, uses a royalty system based on the number of minutes watched of each video. Udemy uses a variable revenue sharing model based on enrollment fees per course. The payout on this model varies based on whether customers find your course through their marketing or yours.
How much money will it take to get started?
Start up costs can be very low. All you really need is a phone, a laptop, and preferably an upgraded microphone (about $100). Most platforms offer the software needed to make aesthetically pleasing content.
How much do online course development businesses make each year?
First the short answer: The average income for a course on these platforms across the bell curve is about $15-$30 per course per month. Udemy claims its top earners make $2,000 per month, and some $20,000 per month! Their highest earner, Rob Percival, a web developer, has made $2.8 million dollars so far.
Now the long answer: People design courses on these platforms for all kinds of reasons, and there is a huge variance in quality and time spent, so it’s hard to say exactly how much should be expected by a determined person creating quality content using a focused business plan.
The best advice is to start at a small scale, create solid content, and plan for your business to grow over time along with your content.
How much should I charge?
Generally, platforms compensate course developers on a fixed system based on the number of students enrolled in or viewing their classes. Prices can vary wildly on many platforms that charge per course. Udemy has courses from $9 to $300.
Select a Name for Your Online Course Development Business
If you’re just starting out, creating a course for online platform, you may not need a business name—but if you plan to really ramp up course production, you may want a business name that describes your content—and which students will easily recognize and respond to.
Have a great name idea? Before you start marketing and branding your business, you’ll need to ensure your name is available. Most states prohibit or restrict businesses from adopting names that are already in use. Even if it’s legally allowed, a copycat name puts your business at risk of a lawsuit.
See if your business name is available in your state with our Free Business Name Search.
Trademarks and Domain Names
Plan to trademark your business name? You can see if the trademark is available on a website like Trademarkia. It’s also a good idea to see if the domain name is available, which you can do on websites like Network Solutions and GoDaddy. Even if you don’t plan on putting together a website right away, you can buy the domain name to make sure no one takes it in the meantime.
Choose a Business Structure
Should you form an LLC? A sole proprietorship? Your choice of business structure will affect many aspects of your business, from liability to taxes.
Sole Proprietorships & General Partnerships
If you don’t file any paperwork to legally form a different kind of business—you have a sole proprietorship or general partnership. Essentially, these are “default” business structures. A sole proprietorship has one owner, and a partnership has multiple owners.
These structures have a few initial benefits. They’re easy, fast and cheap to start and maintain. However, the limitations and risks of these business structures quickly become more apparent as your business grows. In both of these business types, you are your business, legally speaking. Your company’s legal business name is YOUR name—so you’ll need a DBA to operate under any other name. Any business debt is YOUR personal debt. If anyone sues your business, they are suing YOU personally.
LLCs & Corporations
Limited liability companies (LLCs) and corporations are business entities formed at the state level. The entity is legally separate from its owners, meaning the owners are not personally liable for the debts and obligations of the business. As a separate entity, the business also has multiple tax election options. For example, both LLCs and corporations can choose to be taxed as S-corps if they meet the requirements.
LLCs and corporations are not quite as simple and inexpensive as default structures. LLCs and corporations come with formal requirements like state reports. They also have more fees than default structures, such as formation and annual report fees. However, the benefits of an LLC or corporation—especially liability protection and tax flexibility—are significant.
Legally Form Your Online Course Development Business
If you opt for a sole proprietorship or general partnership, there’s no formal paperwork to file to legally create your entity—you just start selling your product or service. However, you will not have any liability protections or tax flexibility.
LLCs and corporations are formed by filing paperwork with a state agency, typically the Secretary of State. To start an LLC, you file articles of organization. To start a corporation, you file articles of incorporation. In most states, you can file these forms online or download a paper form from the state’s website.
Whether you’re forming an LLC or corporation, your articles will require certain basic information about your business, such as your company’s:
- business address
- registered agent and office
- business purpose
- members/managers or directors/officers’ names and addresses
- number and type of authorized shares (for stock corporations)
You’ll also need the signature of someone authorized to sign on behalf of the business, along with the state’s filing fee. Fees vary by state but are typically between $100 and $200. If you hire Northwest to form your LLC or corporation, we complete and submit your formation paperwork on your behalf for just $100 plus state fees.
Create Internal Policies and Procedures
It’s important to put your company’s internal policies and procedures in a written document, especially if you’re starting your business with others. Partnerships have partnership agreements. LLCs have operating agreements. Corporations have bylaws.
These documents look a bit different for each kind of business, but they serve the same general purpose. They ensure there’s a clear path forward for any major issue that may arise, from changes in ownership to closing the business. LLCs and corporations also typically need an operating agreement or bylaws in order to open a bank account.
Get an EIN and Register for Taxes
Nearly all LLCs and corporations will need to request a federal employer identification number (EIN) from the IRS. If you file corporate income taxes, have employees, or file certain franchise taxes, you must have an EIN. An EIN is also a common requirement for opening a business bank account. Most businesses can request an EIN by filling out the IRS’s online form.
Your EIN is for federal taxes—but you’ll likely have state and local tax obligations as well. You will most likely need to set up an account with the state’s Department of Revenue, and you may need to apply for a state tax ID or a sales tax license as well.
Learn more about how to Get an EIN for your business.
Open a Bank Account
A business bank account keeps your personal finances separate from your business finances. For LLCs and corporations, keeping separate finances is essential for maintaining liability protection. To open an account, LLCs and corporations typically need to bring to the bank a copy of their articles, their operating agreement or bylaws, and their EIN.
Obtain Required Licenses and Permits
Again, if you’re simply creating a few classes for Udemy or Skillshare, you likely don’t need a business license. But if you’re earning real income or if you’ve formed a legal entity, you may need a business license to operate. Licensing information—as well as any zoning requirements or other permits—can usually be found on the city or county website.
If your home is part of a homeowner’s association, you’ll also be subject to any of their restrictions for home-based businesses. Some areas may also require home-based businesses to obtain a Certificate of Occupancy (a document certifying the property owner has given the business permission to operate).
Next Steps for Your Developing Online Courses
After your business is up and running, there are a few additional steps you may want to take as you grow:
- Get online: If you haven’t already, you can create a business website. You can hire a professional or use a website-builder like Wix or WordPress. You may also want to invest in online ads through a program like Google Ads.
- Hire employees: Is the need for new content more than you can handle alone? It might be time to hire employees. You’ll need to collect W-4s and I-9s from employees, report the new hires to the state, set up withholding, pay for unemployment insurance, distribute any required documents and notices to employees, and display wage and safety info in the workplace. Employer.gov is a good place to start, followed by your state’s tax or labor office.
- Get business insurance: While LLCs and corporations protect you from personal liability, you don’t want your business to go bankrupt in the face of an accident, injury or other disaster. At minimum, it’s a good idea to look into general liability insurance. Home-based businesses can sometimes add insurance onto their homeowner’s policy.
How Do I Know If Starting an Online Course Development Business Is Right for Me?
What’s it really like to work as an online course developer?
As an online course developer, you are an entrepreneur, and as an entrepreneur you face all the same perks and pitfalls all entrepreneurs face. Developing courses online can offer income and lots of freedom, but there are no safety nets, and many people fail. However, because initial overhead investment is modest, typically all you’ve lost is the time you’ve invested. And occasionally, a course that sees no traffic for months or even years can suddenly experience a burst of interest. The bright side here is that there is a high demand for online courses, and the market is not over-saturated. So, if you have the goods and are willing to put in the time to produce desirable, engaging courses using the right platform, then it’s quite feasible you could build a nice income over time.
What does it take to succeed in the world of online course development?
One benefit here is that you can start with very little initial capital investment. Most of the tools you probably have already. With the purchase of a $100 dollar microphone you can be off to the races. The key is to start with a manageable project, a short class, and to spend a lot of time making that class dynamic and engaging. Remember, this is something you build. Ideally, you have another income source that will allow you the time to build a following while you gain skills and prepare yourself to create bigger and bigger projects.
Ready to Form an LLC or Corporation?
Northwest Registered Agent is here to help with all your small business ideas and needs. Answer a few simple questions about your business, and we’ll prepare and submit your formation paperwork to the state. We also provide your new business registered agent service, free business forms and guides, and much more.