The instructors at my studio compete with their students (Pro-AM) mostly. They don't have to compete as professionals if they don't want to. They all have had extensive experience competing as amatuers, though.
The poster below makes some really good points. You have a tough road ahead of you since you're starting from scratch. The first year is going to be your toughest, and if you can afford it, it wouldn't hurt to even take some additional training outside the studio. Milk every opportunity you can get. If the studio brings in a top coach for training, make sure you're there. The comments below about many in-training instructors not making it is true. I have seen several come and go, but I think only one was fired. The rest just couldn't afford to go so long without a real paycheck.
Best of luck as you pursue this as a career, and don't let yourself be easily discouraged. There are many aspects of good dancing that require years of work, and can't be learned by cramming tons of lessons into a short period of time. They only happen after years of training.