What should I check before buying a tutoring business?
Before buying a tutoring business, check who the families are loyal to, whether the tutors are under written agreements, how complete the enrolment records are, who owns the curriculum and materials, and whether the location or online set-up will carry over to you.
A tutoring business looks simple from the outside: a room, some tutors and a list of students. What you are really buying is a set of relationships and a body of records. The checks below follow the money and the people. They sit on top of the general due diligence checklist for any business, which still applies.
Tutors and the families who follow them
Ask who actually teaches each student and who the parents think of as “their” tutor. If the owner does much of the teaching, the families may be loyal to the owner rather than the business. Read every tutor agreement. Find out whether tutors are employees or contractors, what they are paid, and whether anything stops them from taking students elsewhere. Your lawyer can tell you what those agreements allow.
Enrolment records
Ask for enrolment records going back through several school years: when students joined, how long they stayed and why they left. Compare the records with the bank deposits and the session logs so you know they describe the same business. Ask how families are billed, whether packages are paid ahead, and what the business owes families for sessions not yet delivered.
Curriculum, materials and systems
Find out who owns the lesson plans, worksheets, assessments and any software. Ask your lawyer who owns material written by the owner or by tutors. Ask about booking, billing and messaging tools, who holds the accounts, and whether student information is stored safely.
Location or online set-up
If the business runs from rented space, read the lease and ask the landlord about assignment. If sessions run online, ask which platform is used, whose account it sits under and how families find the business. Visit during a busy hour and watch how it runs when the owner is not the centre of attention.
- A list of tutors with their agreements and pay terms
- Enrolment and retention records for each school year
- Proof of who owns the materials and software
- The lease, or the online accounts and domain names
Related reading
14 pages on the same subject, grouped by topic.
Buying
- GuideBuying a driving school in Canada
- Expert answerIs buying out a partner the same paperwork as buying a whole company?
- GuideBuying an e-learning platform in Canada
- Expert answerHow do I find a tutoring business or franchise for sale near me?
- Expert answerWhat does a tutoring franchise cost beyond the purchase price?
Due diligence
- GuideDriving school due diligence
- Expert answerWhat should I check before buying a business?
- Expert answerWhat IT and data-security questions can a buyer ask before acquiring a small business?
- GuideE-learning platform due diligence
- Expert answerWhat happens to temporary foreign workers when you buy a business?
Selling
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
- 03Business Development Bank of CanadaGovernmentBuying a business? How to protect yourself from potential liabilities
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