How to Start a School

Written by Dave Lavinsky

how to start a school

Starting Your Own School

Anyone can start a school. All you need is an idea and the drive to make it happen. But there are a few things you need to know before you get started. In this article, we will outline the steps you need to take, the permits and licenses you need, and how to find funding.

Importantly, a critical step in starting a school is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.


14 Steps to Starting a School

  1. Choose the Name for Your School
  2. The first step to starting a new school is to choose your school’s business name.

    This is a very important choice since your business name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your school:

    1. Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
    2. Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
    3. Think about marketing. Come up with a name that reflects the desired brand and/or focus of your school.

  3. Develop Your School Business Plan
  4. One of the most important steps in starting a school is to develop your business plan. The purpose of a business plan is to ensure that you fully understand your market and your strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your school.

    Your business plan should include the following sections:

    1. Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your school.
    2. Company Overview – this section tells the reader about the history of your school and what type of school you operate. For example, are you a private school, religious school, charter school, boarding school, Montessori school, or a type of trade school such as a cosmetology school or welding school? You should also include information about the grade levels of your students.
    3. Industry Analysis – here you will document key information about the education industry. Conduct market research and document how big the industry is and what trends are affecting it.
    4. Customer Analysis – in this section, you will document who your ideal or target students are and their demographics. For example, how old are they? Where do they live? What do they find important when paying for educational services like the ones you will offer?
    5. Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage ({i.e., small class size, new facilities, low tuition fees, unique mission or curriculum, etc.)
    6. Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
      • Product: Determine and document what products/services you will offer
      • Prices: Document the prices of your products/services
      • Place: Where will your school be located and how will that location help you increase sales?
      • Promotions: What promotional methods will you use to attract students to your school? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
    7. Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing and faculty needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
    8. Administrative Team – this section details the background and key qualifications of your school’s administrative team, key staff members and faculty members and their job descriptions.
    9. Financial Plan – finally, the financial plan answers questions including the following:
      • What startup costs will you incur?
      • How will your school make money?
      • What are your projected sales and expenses for the next five years?
      • Do you need to raise funding to launch your school?

  5. Choose the Legal Structure for Your School
  6. Next you need to choose a legal structure for your school and register it and your business name with the Secretary of State in each state where you operate your school.

    Below are the five most common legal structures:

    1) Sole proprietorship

    A sole proprietorship is a business entity in which the owner of the school and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

    2) Partnerships

    A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a school together. The partners share in the profits and losses of the business.

    The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

    3) Limited Liability Company (LLC)

    A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a school include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

    4) C Corporation

    A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a school is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

    5) S Corporation

    An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

    Once you register your school, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

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  7. Secure Startup Funding for Your School (If Needed)
  8. In developing your business plan, you might have determined that you need to raise funding to launch your new school.

    If so, the main sources of funding for a school to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a school that they believe has high potential for growth.

  9. Secure a Location for Your School
  10. Having the right space can be important for your school, particularly if you’d like to meet clients there.

    To find the right physical space, consider:

    • Driving around to find the right areas while looking for “for lease” signs
    • Contacting a commercial real estate agent
    • Doing commercial real estate searches online
    • Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space

    You will need school buildings with the basic facilities to conduct classes, host students and families for events and open houses, and other facilities for extracurricular activities that you plan to offer.

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  11. Register Your School with the IRS
  12. Next, you need to register your school with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

    Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

    Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.

  13. Open a Business Bank Account
  14. It is important to establish a bank account in your school’s name. This process is fairly simple and involves the following steps:

    1. Identify and contact the bank you want to use
    2. Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
    3. Complete the bank’s application form and provide all relevant information
    4. Meet with a banker to discuss your school’s needs and establish a relationship with them

  15. Get a Business Credit Card
  16. You should get a business credit card for your school to help you separate personal and school-related expenses.

    You can either apply for a business credit card through your bank or apply for one through a credit card company.

    When you’re applying for a business credit card, you’ll need to provide some information about your school. This includes the name of your school, the address of your school, and the type of school you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

    Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your school. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your school in the future.

  17. Get the Required Business Licenses and Permits
  18. Every state, county and city has different business license and permit requirements.

    Nearly all states, counties and/or cities have license requirements including:

    • General Business License: getting your Articles of Incorporation as discussed above
    • Sales Tax License or Tax-Exempt Status: for selling products and/or taxable services or to establish if you are a nonprofit organization
    • Zoning Approval: typically at the city or county level, this provides authorization for construction or use of a school building or land for a particular purpose
    • Food Service, Processing and/or Warehouse Licensing: to ensure safe food preparation
    • Health Facility Licensing & Certification: to ensure safe rendering of healthcare services
    • Fire Department Approval: a process by which the local fire department reviews and approves the installation of a fire alarm system.

    Depending on the type of school you launch, you will have to obtain the necessary state, county and/or city licenses.

  19. Get Business Insurance for Your School
  20. Other business insurance policies that you should consider for your school include:

    • General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
    • Commercial auto insurance: If a vehicle is used in your business, this type of insurance will cover if a vehicle is damaged or stolen.
    • Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
    • Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
    • Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
    • Professional liability insurance: This protects your school against claims of professional negligence.

    Find an insurance agent, tell them about your school and its needs, and they will recommend policies that fit those needs.

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  21. Buy or Lease the Right School Equipment
  22. The equipment and tools you need will depend on the type of school you start. In general, you will need to buy or lease:

    • Classroom furniture and equipment, such as desks, chairs, measuring tools and other items that are necessary for your students
    • Lab instruments and equipment, such as microscopes, telescopes, beakers and other supplies that are required to perform experiments in science classes
    • Teaching aids for your elementary school teachers
    • Office equipment, including computers, printers and other tools that are useful for administration
    • Laptop or desktop computers for your students to use in the classroom

    This list of required equipment can vary significantly depending on the grade level and subjects you intend to teach as well as any extracurricular activities you would like to offer.

  23. Develop Your School Marketing Materials
  24. Marketing materials will be required to attract and retain students to your school.

    The key marketing materials you will need are as follows:

    • Logo: Spend some time developing a good logo for your school. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
    • Website: Likewise, a professional school website provides potential students with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how students and families perceive your school.
    • Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help students and others find and interact with your school.

    Other methods of advertising a school include open houses, placing ads in local newspapers or magazines, using direct mail marketing, hosting events and engaging in local community groups to reach new students and families.

  25. Purchase and Setup the Software Needed to Run Your School
  26. Most schools need accounting software and student information systems to manage and track their student enrollment, grades, and schedules.

    For accounting, you will need software that can generate invoices and track inventory and expenses. Your software should also allow you to create purchase orders and track vendor discounts. While there are many different software options available, some of the most popular programs for accounting include QuickBooks and Xero.

    Most schools require their teachers to use a student information system (SIS). An SIS is a centralized database that manages class rosters, attendance records, grades, and more.

    The right SIS will make your job as a school administrator easier, improve the efficiency of record keeping and reporting, and provide valuable insights into your students’ learning experiences.

    Research the software that best suits your needs, purchase it, and set it up.

  27. Open for Learning
  28. You are now ready to open your school. If you followed the steps above, you should be in a great position to build a successful school.


How Much Does It Cost To Start a School?

In general, the costs for starting a new school can range from $200,000 to $1,000,000 depending on the type of school you are starting.

The cost of starting a school will generally include:

  • Inventory and equipment rentals for traditional lab-based classes
  • Curriculum design and books
  • Marketing expenses
  • Licenses and permits
  • Business insurance
  • Administrative overhead (salaries for your administration team, staff and faculty, computers, software licenses)


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