10 May 2007

The loneliness of the business owner!

Running your own business is a lonely business. Once upon a time you opened your wings to fly towards contributing something more to the field you had been working in, anyway, as an employee. Your motivation possibly came out of your frustration for the amateurism that your profession was dealt with by your employer, your disappointment in what some people consider to be “teaching and learning”, the bedazzlement of who, actually, can become a teacher in this country! Where had the talent of identifying with the students and transferring knowledge effectively gone? How dare some school owners blind the parents who trust their school with their little children? And how, on earth, dare some other school owners pay so little to the teachers who support the whole language school, since they barely know half what their teachers know about teaching?

So, you opened your own language school. The truth is that, indeed, you did a different job, you provided a different level of service. Socrates said that a good teacher is the one who produces a student who has exceeded his teacher’s prospects. The employer that stole your time, ideas and money was replaced by a tax authority, a social security service, an ungrateful parent, an undisciplined student, and, worst of all, a bossy employee, who constantly tries to prove his/her prevalence in teaching practices, communicative and organisational skills. In the worst case scenario, this employee will use your school as a pool for private lessons or open a competitive school across the road.

In 18 years I have come across two different types of school owners. The Visionary Leaders and the Kinaesthetic Processors. The first type consists of a distinct minority, while the second type refers to the vast majority of each field. The former create trends, are innovative, introduce methodologies and ideas in teaching, advertising and servicing, and the latter take this material from scratch and adapt it to their own reality. Both types are necessary and invaluable for every professional field, as the former take the field one step ahead, and the latter make these steps mature in practice. However, both types are equally vulnerable and exposed to the same risks. Both types fail in being aware of the bigger scheme of their operation.

Running a business, either as a Leader or as a Processor, is a lonely business. It takes all your energy and it makes you exceptionally introvert, especially if apart from the owner you are also the service provider. As a Leader you fail to follow what the idea you have introduced as a pioneer will become, first in the hands of another member of the field, and then in the hands of many of them. As a Processor you can never be sure that the idea you adopted is right for you, for your market, for your pocket. Like you, so many other processors will turn the same idea into something completely unrelated to the original idea. Everything’s subject to interpretation. There will only be one common result for everybody. Each version is going to backfire in the same way. The clients (parents) will still want more for less and will display a lower level of satisfaction each time.

Greeks will never learn to work for somebody else without the prospect of overtaking their employer at some point, unless of course the employer is the State. Whether it is a matter of insecurity, lack of faith in collaboration, or just excessive faith in ourselves, we will always be the nation that “knows better”. In contrast to this, other nations, like western ones, take it for granted that they will shape their career working for someone else, usually an impersonal employer. In practice, that is what encouraged all those major corporations to flourish internationally. The fact that Greeks prefer to run their own small business is not bad, as small businesses promote innovation, invention, variety, technology in every aspect, and most of all they allow space for free, creative and growing minds.

Running a business is a lonely business, but loneliness, sometimes, can be turned into a blessing. Once upon a time you realized that your reasons to open your business were fair and sound. Along the way you got disappointed, realizing that you were missing specific data and knowledge, while most of your decisions were based on youthful assumptions. Since then, all you have managed is to keep the boat afloat in a rocking sea, but without using a compass. You have done well so far, but uncertainty kills you more than poverty does.

This is the right time to face up to reality. The use of any compass requires a set destination. You have to decide what land you want to reach. Confirming that you are doing business because it happened to you, or because you want to do it, or because there is nothing else you know how to do, is not a good enough answer to help you deal with uncertainty. It is like saying that you are sailing a lifelong trip because somebody dropped you in the sea, or that you like sailing or because sailing is all you have learnt to do. Let your target, even if that is just a wonderful retirement, guide your practices. To get there, you are going to lose too. Stay, however, focused on your target. Be realistic, get trained, keep in touch with things that happen around you, which you have neglected so far, mainly because you had lost faith in progress. Accept that your employees are there for the reasons you were in someone else’s business at some other time. Also, accept that ethics and prospects have changed.

The loneliness of running a business can make you a better person. It can make you more creative when you organize your financial plan and decide to stick to it. Then, when budget is restricted, you’ll find that innovation is the effect of need. It can make you more self-confident when you realize that nothing is impossible and that sticking to the old and familiar can sometimes eat up your savings and resources, rather than generate new ones. It can boost your self-esteem when you trespass that difficult threshold of saying no to the irrational customer or supplier. It will empower you to prove that negotiations can have only winners and not losers. It can improve your quality of life and income, as you once upon a time hoped for, when you dare to admit that you have to invest in order to earn, and delegate in order to have time to think. As in teaching English, so in business, nobody pays any attention to the most important of all skills. Thinking! As a businessman or a businesswoman you have to be the captain of the boat. Not the cook!

Allow your aspirations to breed and create something better for the field you belong to. Learn, learn and learn and put all this knowledge into practice. Be tough but fair, look ahead but avoid the rocks in front of you. Increase the SQ (spiritual quotient) in your business and inspire your staff, but most of all your students. English is only the vehicle towards creating a better generation of young Greek people in the next decades. This is what education should be about!

Running your own business is a lonely business! Though I personally fear loneliness the most, I was relieved to realize that decisions taken in the loneliness of self-reflection have never failed me.

Pride and prejudice!

Why numbers alone is not all you need for the development of your educational business and how the CAN DO statements of the business owner reflect on it!

Closing 2006 I proceeded with the review of 18 of my co-operations, the first phase of which was completed in the last year. Reviewing results, the first thing one would look into would be numbers, of course, and that’s exactly what I did. Having had an overview of each educational business’s state of being, it was still a bit shocking to see numbers, even though pretty justifying of the philosophy and attitude we have been breeding over the past 3 years.

The most outstanding issue was the lack of proportion among specific results. Analysing the increase in the number of students, against increase in turnover and then against increase in profit that were achieved over the first period of co-operation, the three respective rates had nothing to do with each other whatsoever. To be more specific, an overall 38% increase in number of students (4244 / 5873) reflected an 85% increase in turnover (€ 2.07 million / € 3.84 million), which in its turn gave a 219% increase in profit (€ 0.43 million / € 1.37 million) for these 18 educational businesses. The geographical distribution of these businesses, from Thrace to Crete and half of them in Athens and Thessaloniki, only showed that whatever the reasons were for these striking differences, they were rather universal.

What was though the chain reaction that contributed to this discrepancy? When we see such differences between increase rates it is more than obvious that it is not the number of students that determines the health or suffocation of an educational business. It is rather lack of controls, monitoring and most of all awareness of basic principles.

In the overall scheme of the above figures, the average tuition fees per student were € 485 in 2005, while in 2006 the same figure climbed up to € 650. That would definitely contribute to an outstanding increase in the turnover against number of students and would be based on effective marketing and communication techniques, imposing the need of such increases. However, this doesn’t excuse how the average profit spread was 20% in 2005, climbing up to 36% in 2006, which at the end of the day is what concerns every business owner. It would also be a mistake not to mention that none of these business owners were receiving a regular monthly advance of their entrepreneurial fee in 2005, whereas in 2006, arranged monthly advances for each owner, ranging from € 1,100 for a school of 70 students, to € 9,000 for a school of 950 students were being received. Of course, those entrepreneurial fees were arranged after catering for a floating investment capital for the business itself and the tax of the current year.

The above achievements of these co-operations were not only due to effective business planning (or re-planning); they were due to major initiatives of the owners to restructure their work philosophy and reeducate their market.
The first principle everyone had to realize was that their work time costs. So many times small owners that feel that their business is suffocating take on inflated numbers of teaching hours per week, so as not to pay extra wages. However, this is suicide, as they lose in personal quality of time and life, while they deprive themselves of the ability to monitor their operation, as well as their market. When either starts to collapse they look out for bad competition to blame.
The second principle everyone had to realize was that profit itself requires investment. Money can buy precious time to organize, monitor, correct and most of all communicate with your market. Also, time will facilitate the creation of an outstanding learning experience in your school, which is the only thing that can break the vicious circle of the standardized product as perceived throughout the country in terms of shaping up your own competitive advantage.
The third principle everyone had to realize was that bad management of variable costs leads to profound energy and financial leaks. Breaking healthy numbered classes, adding free teaching hours, giving out spontaneous discounts, etc. should be dealt with as important and measurable marketing tools and clients should be given the right to appreciate them rather than take them for granted. An immense difference in turnover was presented when in some of my co-operations, owners started charging their fees per class and not per student. Also, in three of the aforementioned co-operations I had to plan a temporary strategic decrease in the number of students in order to reset cost centre controls and increase profit by at least 12% that would give space for further strategic investment.
The fourth principle everyone had to realize was that pride in what you offer is something that no client is going to acknowledge without a respective claim and documentation. Treat your clients as partners and prove that what they pay is what they get. Value for money is a universal sine-qua-non. Treat your employees as your suppliers and prove that what they get paid is what they offer. Encourage everyone to contribute to the exceptional learning experience in your educational business.
The fifth and maybe most important principle was that of “I need / They want / We will”. During “zeroing” (the reset button of each business) I always encourage my clients to start from what and how much they need to earn on a personal monthly basis, in order for them to feel they live decently, if not profitably, out of their educational business. Then an analysis of the purchase capacity and value clients feel they receive, will determine how much they want to spend. A figurative manipulation of the above relation will, in its turn, determine not only the turnover of the educational business, but most importantly the trends and habits of the client in responding to their obligations, as well as the policy of the educational business itself. Mutual respect is based on self respect.
Last but not least was the vision. In international professional analyses, along with indexes like the Intelligence Quotient (IQ) and the Emotional Quotient (EQ), what has started appearing more and more is the Spiritual Quotient (SQ). In heavily competitive industries, like Greek ELT, the vision will determine the success of the owner and his/her business as well. The successful owner will synchronise his/her business and educational practices with an overall vision of how the industry he/she is in will evolve. The need for change and vast improvements should contribute to the elevation of the qualities served and with the adequate nerve, dare to even change educational practices, perceptions and prejudices in the whole educational system. Besides, in our world if there’s any space for change it will come from the private sector and the state sector will follow in time.
Education, like health and other fundamental systems for social and individual existence, requires leaders.