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.