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Schooled In The Trade

In this series of articles, Simon Moran looks at the issues involved in starting and running independent ESL schools.

April 02, 2014

Recruitment

Recruitment is defined by BusinessDictionary.com as: The process of finding and hiring the best-qualified candidate for a job opening; it includes analyzing the requirements of a job, attracting employees to that job, screening and selecting applicants, hiring, and integrating the new employee to the organization.

For us, more simply, that means getting the right person in the right job at the right conditions for both them and us, then managing them – and isn’t always easy.

It is important to give someone some sense of ownership or belief in what they do.

I first took on teachers and reception staff within a year of starting Modern English in 1998. I had ideas about what I wanted in my staff, set conditions and asked questions I thought would deliver these. I paid above market rates for teachers, the logic being that good teachers would only work for good money. And I wanted interesting people, so I asked interviewees to tell a funny story, or a joke. Not only could most people not do this, it turned out that those looking for higher rates of pay were in it largely for the money, and if something better turned up, they’d be off.

I spent a lot of my early time recruiting sitting there asking questions to try and find out why I should employ someone. I then went through a stage of asking questions to find out why I shouldn’t employ someone.

These days, we approach things differently. Qualifications and experience are great, but can’t guarantee the person will be right. We look at their background, their interests outside of work and ask them what they like to do as well as teaching. While finding out what they can offer us, we try to see what we can offer them.

Creativity, adaptability, friendliness, reliability, the ability to get along with people of all ages and backgrounds – these are the traits we look for in all our staff.

In our training manuals, we list characteristics students report as being welcome in teachers – we then point out the list mentions nothing about teaching, but is all about the personality and demeanour of the teacher – and this is a benchmark we use in recruiting. It is a given that teachers can teach, know the language, are able to explain it and have patience – but what are they like as people?

Among my teaching staff I have writers, editors, managers, systems designers, illustrators, designers and copywriters who all contribute to the company in ways outside the classroom. It is important to give someone some sense of ownership or belief in what they do. This could be financial, in the form of bonuses, shares or royalties on work they produce, but doesn’t have to be. Salespeople are largely born, not created and schools may fare better finding someone who loves working with people and seeing them reach their goals. Working hard to see students succeed may be sufficient reward.

Without fail, we always ask a teacher to do a short demo lesson. We can train them in our preferred approach, but here we can see how they react to a student, and vice versa. We always follow upon references (and it always amazes me how many people do not), and have a set list of questions to ask referees. Many of these questions have nothing to do with teaching, but are about reliability, congeniality and trust. It is easy to bottom line these questions to the owner of similar type of organisation. ‘If your profit margin was dependent on employing this person again, would you do it?’

Training

Training can be a huge headache for small schools. It is great if the teacher you have just recruited has several years’ classroom experience and a TEFL certificate of some kind, though be sure to check they are actually familiar with everything their course or previous training covered. They should also know their grammar, and to be able to explain it in use, very simply. If they can do all that, half the battle is won. Check they can plan the different types of lesson your school offers to different ages and student types.

Over the years we have developed our own training manuals and approach. We do training sessions and observed practice. We give trainees feedback and areas to work on going forward. They will then be observed again at regular intervals. We follow up with feedback from students and the teacher. Training should be seen as an ongoing process. All teachers should also be learners, and reflective practice should be encouraged to get teachers to continue to train themselves.

Regular meetings are essential, as is an employees’ suggestion box of sorts.
It’s also good idea to close the school and get all staff together. Bring in an outside speaker or trainer to freshen things up and get the ideas flowing.

Managing Staff

Once teachers are employed, they then have to be managed. At Modern English, we provide a structure under which teachers can work, but also give them freedom to implement their own ideas. This comes in the form of a curriculum and admin system that take a lot of the duller tasks – admin, lesson planning, progress tracking – out of the daily work, and allows teachers to be creative. I am great believer in systems; systems that take the drudgery and guesswork out of often repeated tasks, but not systems that overrule what a creative employ would do.

We often use the analogy that the curriculum and our systems are the skeleton, or the framework, and it is the teacher’s job to implement these, then add the colour to the black and white, or the flesh to the bones.

My preference is not to micro-manage – in fact, I want to be as hands-off as possible, though this is both a gradual process and a two-way street as far as trust is concerned. The manager has to trust the employee and the employee has to feel trust in the system, the support and then the freedom the school is giving them to carry out their work. One simple, oft-quoted example of the level of management used is the difference in instructions to solve the same problem:

  1. The manager gives detailed, step-by-step instructions to Employee A, watches him carry them out, checks completion and gives further instruction to ensure the job is done satisfactorily.
  2. The manager instructs Employee B to assess the situation, and propose three solutions. The manager then chooses which action to take and gives any necessary instructions.
  3. The manager calls Employee C into his office and simply asks her to take care of the problem.

The manager knows Employee C can do the job, trusts them to do it and lets them get on with it. With Employee B, the manager is somewhat sure, but also uses this for appraisal and feedback. As for Employee A, the manager knows the employee needs detailed instructions, at least this time.

All employees should know what is expected of them, in terms of job performance and conduct in the workplace, and need to have access to people and systems that will allow them to fulfill these expectations. Company structure charts, job descriptions detailing tasks to be performed and to whom to report, operations manuals, regular meetings, feedback, training and appraisal sessions, not to mention sound employment contracts, are all an essential part of good employee recruitment, training and management.

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October 21, 2013

Start-up or buyout?

One way to get into your own school is to buy an existing one. Given the often-transient nature of school owners, good schools come on the market quite frequently.

When you find one, you’ll need to be sure it will work for you. Could you step in as the owner and the school would not notice, or is the current owner so hands-on that replacing them is a huge risk, and you could expect the students to leave as the owner does?

Ask all the awkward questions, and if you don’t get the answers – walk away.

You’d need to see at least three years’ figures, with actual revenue collected and deposited clearly shown, all receipts for expenses, tax statements and payments and, if the school is a company, the full accounts. These should be viewed by a qualified professional, for a second opinion at the very least. You should then begin true due diligence. Ask all the awkward questions, and if you don’t get the answers – walk away.

If possible it’s a good idea to teach in the school before making an offer to see how things feel on the inside.

When making an offer, be sure to include a clear timetable for handover and be sure any liabilities are disposed of before that handover. Student credit for lessons paid for but not yet taken is an issue here in Japan – and this should be counted as a liability.

Make sure the lease can be transferred easily, without any payment, or deduct this from the offer price. Sellers will often try to claim deposits or ‘key money’ paid as an asset, but in our experience, this can be written off. The only way the seller could reclaim this would be to close the school and move out of the building.

So, is the school making enough money?

Setting pricing is probably the most important decision most businesses make, and yet spend the least time on.

There is an excellent website, www.bizstats.com, that gives statistics from a wide variety of business, including educational services. These may not apply directly to your location, but show the expenses-to-revenue ratios a well set-up school should expect.

From these statistics, rent and salaries combined should be approximately 34% – I’d rather have this closer to 30%, but certainly anything over 40% is way too high. This should help you set your pricing. I’d like to have my staff and rent earning four times their costs, though three times is perhaps more realistic. Set revenue targets for your teachers and monitor their success in hitting them.

The stats show further that other selling and general expenses should add up to approximately 18.5% and costs of sales approximately 11.2%.

The other stats to look at are:

Capacity: How many bums on seats could the school actually get, and what percentage of that is filled? At Modern English we use the term ‘seat’ as a restaurant would use the term ‘cover’ to refer to a customer or potential customer, i.e. a filled or unfilled seat. It’s important to note that a private, or one-to-one class, occupies the same number of seats as a group class does, and this should indicate a much higher price.

We aim to work with a minimum of 75% of capacity filled, though ideally higher. 100% would not give us the room we need to be able to service our students’ needs, and give them make-ups in various classes, nor allow us to do free trial, or demo lessons. Each school will be different.

Churn rate: Calculating your churn rate – the lifetime of your students – will allow you to forecast your revenue and calculate the number of new students you need to recruit to either maintain your size, expand or contract. This can all be planned.

Lifetime Revenue: Number of months expected student lifetime multiplied by your prices will tell you lifetime revenue. You may be surprised how small your cost of acquisition is compared to this. This may make all that advertising seem much cheaper.

Cost of Acquisition: Budget a specific cost of acquisition – how much do you need to spend to get a new student? Calculate the number of seats you require to hit your desired capacity filled (i.e. hit your target revenue).

This is only part of the picture. Apply your churn rate to new and existing students to see how often you will need to replace them to keep growing or stay the same size. You should be able to apply this model over three years to allow financial planning. With a solid business plan, it should be possible to raise finance if you need it.

All of this information should be available, or calculable, for a school on the market. I’d be hesitant to go much further without it. If you are starting from scratch, you’ll have to make some assumptions. Ask around – would three years’ student lifetime be a good place to start, or would 18 months be more realistic? You can adjust your model as you grow.

Going back to the option of buying a school, I’d want it to have monthly revenue of at least $10,000 and, after our staff and systems were put in place, be making at least 30% profit, hopefully more, or it wouldn’t really interest us. (Though there are exceptions so let me know of any you might want to sell.) We’d then make an offer with an initial down payment and further staged payments, preferably based on how much of the student body stayed, encouraging the seller to help ensure the maximum retention.

Your situation may be different and you may be looking to buy out a solo teacher-owner-operator. This is perhaps the easiest and most risky option. The current students may love their current teacher, and in the future, they may just find they don’t love you in quite the same way.

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September 25, 2013

Marketing

Although the title of this article is Marketing it’s not really as simple as that.

To get their message out and then get bums on seats, school owners have to consider the following: branding, marketing, advertising and sales.

So, what's the difference? Well, depending on who you talk to, and who’s trying to sell you what, the definitions will be different, and the edges will blur.

The name and logo should both be simple, memorable and reflect the brand. A brand is not just a logo, but when the logo alone does the job, it’s a job very well done.

Branding is all about creating an impression; it’s the creation of feelings about the brand that are not necessarily related to products and services, but about emotions, identity, purpose and experience. As Don Draper is fond of saying in Mad Men, ‘You drink the label, not the beer.’ Virgin fly planes, but also sell cola and finance. What does Virgin mean to you? A brand is a promise of quality and a certain lifestyle, and sets what you do apart from everyone else. The name and logo should both be simple, memorable and reflect the brand. A brand is not just a logo, but when the logo alone does the job, it’s a job very well done. The Nike swoosh is now a huge stand-alone licensing business. Your brand should be easy to remember, leave a positive feeling and convey a certain image. Brands can outlast a company’s products. Apple sell much more now than computers. The value of good branding? Priceless.

Marketing and advertising are often used interchangeably, but marketing is the larger process of communicating the value of products and services to consumers in order to sell, promote and distribute them. It entails market research and strategy to deliver new products, or more sales of existing ones, to gaps in the market the research shows up. Branding is part of that strategy, as is positioning – getting into a niche. The message is then delivered by promoting the brand, at times without anything specific to sell – think roadside billboards in the Arizona desert, hundreds of miles away from any shops, beaming out: Coke.

Advertising is the public announcement, often via mass media, of service or products, usually making them appear desirable and enticing consumers, and affecting their behaviour i.e. getting them to buy. It has also been defined as: ‘Interrupting what people are interested in with a commercial message about something they are not interested in.’ Once that interruption has been made, there will be a call to action. ‘Buy Now! Save 25%!’

Marketing, branding and advertising should all combine to lead to sales.

Sales, very simply, is the process of selling something – delivering products and services in return for payment, most likely with certain conditions in a certain sector of the marketplace.

So how does all this apply to English schools?

Before starting out you need to look at the market very carefully – what does it have, what is it missing, what gaps can you fill and how can you deliver? It may be as simple as just building it and waiting for them to come. Particularly for the independent school, you need to research the local market very carefully (see Where and How? In this series for more on this topic) and position yourself very carefully. Then stick to your guns or risk diluting your brand. If you brand yourself as a be-suited, bilingual, bicultural specialist tailoring one-to-one tuition, at a premium, to top executives going overseas, people might be surprised to see you in jeans and a t-shirt teaching $15 dollar Skype lessons in your down time.

We chose Modern English and our logo, a bus emerging from a target, as they reflected our outlook – we were teaching modern English in a modern way; the name of the product is in the name of the business, and the symbols are both instantly recognizable as being ‘foreign’ and therefore somewhat glamorous, but also convey meaning and proof of our product delivery. Anyone can ride a bus, and all are welcome; we will guide you though the often-complicated world of English, provide a driver and a map, and show you the targets you need to hit. This extends to slogans on our achievement certificates: Modern Kids Hit the Target! We give these and badges away, and our students, hopefully our raving fans, continue our branding and marketing for us as they leave the classroom.

In 15 years of advertising our products, the following forms of advertising have been our most successful, in order of greatest number of new leads at our head school: magazine ads, others, flyers handed out at the station, word of mouth, signs, regional magazines, web searches.

These figures are very useful, but don’t tell the whole story. Leads from regional and local magazines have gone down to virtually nil, as print media gradually moves online, and will be overtaken in time by flyers and web searches, with SNS also coming into play. Word of mouth – the best kind of adverting there is – can’t really be tracked efficiently. Although we have systems in place to encourage and track it through an official introduction and discount scheme, we actually get far more random recommendations than official ones, as people are happy to recommend our services – and it doesn’t get much better than that.

Perhaps ‘others’ is our greatest success. People are so well aware of us that when they call and are asked how they know about us, they don’t know. They can’t remember where or how they first heard about and know us – but they do. I don’t know where I know Coke from, but all the impressions they have put out have made a very big one on me.

Furthermore, we also do posting flyers, but they hardly register in our leads. That, too, only tells half the story – just because you don’t get any direct hits from a mailing shot, doesn’t mean it doesn’t make an impression, and as the cliché goes, and as any ad exec will tell you, I know that half of my advertising budget is wasted, I just don’t know which half.

There a lots of ways of doing marketing, branding and advertising cheaply. Get the name of your school on t-shirts and jackets and wear them all the time. Your local supermarket wouldn’t like you handing flyers out between the aisles, but probably wouldn’t ask you to remove a branded t-shirt. Similarly being in local parks hosting parties, visiting local shops and tradespeople, will all leave an impression.

The more daring may like to try some guerilla tactics, and there are some great books available on this subject. The main idea is to leave a good impression and get people talking.

Hand out flyers, have them posted, put ads in the local paper, in the Yellow Pages, put signs and flags outside your school and be sure to ask everyone who calls how they heard of you. Advertise a course or a sign-up period at a discount with a deadline – a call to action. ‘Join before October 10th and get one month free.’ This also means you’ll need someone to answer the calls and turn them into customers. This will have to be done in the local language and is a difficult skill.

You also need to make sure your services are not only excellent, but ‘sticky’ and continue to market to both your existing customer base and their friends and families outside. Don’t make it too difficult to leave, or people will resent you for it, but make it easy to stay within the service offering somehow – if all your students’ study records would be deleted on them leaving, they’ll think twice about doing so. Send out newsletters that give away something free, and mention your successes – show a photo of Akiko getting into a university in the US, or Daiki on his working holiday. Keep them all in the family.

We’ll look at how much to spend in more detail next time, in terms of cost of acquisition, expected revenue, etc, but if you’re not spending at least 6% of your gross income on advertising alone, you’re not spending enough. If I had three words of advice for the small school on a low budget? Flyers, flyers, flyers.

Next month: How to cost the business – start-up or buyout?

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August 23, 2013

Sign them up!

Finally, when you are open, and you have a stream of new enquiries, you need to be sure you can sign them up. How will you do that? Up to now you may have been a great teacher. You now also need to be a great salesperson. You need to be able to show prospective students, but often more importantly, their parents, that you know what they need, demonstrate the ability to deliver, and show how this will be monitored and reported. You need to do this quickly and then you need to get them to sign up, so you need a clear, legally sound service agreement.

It’s really important you are clear in your mind why you are doing this. Are you trying to build a school system you can scale up and make profitable? Is your primary concern that students receive the best education possible and your own financial rewards are secondary to that? Or do you want to strike a balance between the two?

You broke away to be independent, but unless you give all teachers and all students total freedom, you are going to need some rules.

I have no doubt that some of the best teachers (educators, facilitators, coaches – call them what you will) are those that strike up close relationships with their students, know each of them intimately (though perhaps not too intimately) and use their skills, experience and creativity to cater exactly to their students’ needs. Any teacher that intends to do this at their new school should be commended. Any new teacher-owner who also thinks they can get others to do this exactly the way they want is probably mistaken. The fact that many independent school owners have, frustrated at the rigidity of employment and an established system, set up stall to do things their way highlights a contradiction: You broke away to be independent, but unless you give all teachers and all students total freedom, you are going to need some rules. That’s right, you need rules. Perhaps the same sort of rules you ran away from in the first place.

You need to be able to tell prospective students what you will teach them and how they will progress. A solid curriculum is a good idea, and it’s probably a good idea not to write it yourself from scratch, no matter how much you want to. There are not many people who can run a business, teach, write a full curriculum all at the same time and find enough time to sleep. At Modern English we have more than 20 years’ of original material, and it has been an enormous undertaking. Off the shelf curricula of all types are legion and can be easily adapted. In a competitive, often unregulated, fragmented market, your local publisher’s agent can be very helpful with free materials, training and advice. Sign up to all the publishers’ newsletters, attend all expos you can, get to know as many materials as possible. There is always help.

Once the curriculum is decided, you will most likely need to give demo or free trial classes. These should give students and parents a taste of your school, teachers and approach. Its also a good idea to have both parents and teachers walk out of the school with something concrete to take away – a giveaway with your contact details on it – and also some new English. We do killer free trials at Modern English, and sign up over 80% of our prospective new students. Some of those have stayed with us since we started and represent a large financial commitment, so the free trial is key. Plan it all the way through and rehearse so you do it the same each time, and can handle anything that comes up unexpectedly.

Business practices here in Japan gave the ELT industry a very bad name for a long time, and this has educated the students – the consumer – in what they can and can’t expect and how they are protected under the law. Long-term, binding contracts and the finance to buy them with are out, and monthly pay as you go is in. As great as this is, it means schools can be hit hard at certain times of year when students leave or take a break, such as summer, year end, and school year end. You need a watertight service agreement that your students - if they are adults, their parents or guardian if not - read through carefully with you or a member of staff and sign. Have a lawyer check your paperwork before you start using it to avoid nasty surprises. The lawyer’s bill will probably be your first nasty surprise, but is essential to keep on the right side of the law. Here in Japan things are straightforward and complaints few, but word will get around quickly if you don’t treat people well.

Your student service agreement should explain exactly what you provide, for what price, at what conditions, and what is expected from the customer to terminate that relationship.

Your employment agreements should state the same, and you should be well versed in local employment law. Unions can be a great help here, as they mostly advise their members to honour employment agreements, and know the relevant laws. Great resources also exist online and most cities offer legal aid. If not, joining the local Chamber of Commerce will most likely help you find what you need.

Once your new school is full, it would be a mistake to think you have done your job. Each student has a ‘study life’ and each month they study they are closer to leaving, so if you are not constantly recruiting new students, you’re actually contracting.

Next month: Marketing

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July 26, 2013

Where and How?

Having made the decision to leave the shackles, or as you may yet come to see it, the safety, of regular, paid employment, new ESL entrepreneurs are faced with a decision to make about how to go forward. It may be too costly to fund the opening of a new school and start with no students – i.e. with bills to pay and no revenue coming in. Until that break-even point can be reached, or instead of taking the plunge into bricks and mortar at all, there are various other options:

Solo teacher
A grammarian gun for hire. It is possible to make a good living from private lessons and private students. It helps if you speak the local native language and can do all scheduling yourself by telephone and email. A Google calendar and documents can keep you organized. A small website and blog are easy to start. Lessons can be taught in your residence, at cafes, at students’ homes or places of business. Networking, word-of-mouth, business cards and flyers can all attract students. Just don’t arrange things so that your gigs are too far apart – always factor in travelling time to your prices and keep a meticulous record of not only who has studied what, but who has or hasn’t paid.

Jobbing teacher
Flitting from part-time gig to gig is the way some prefer to make a living. To this business owner this seems like swapping one unsuitable employer for many, and not so much jumping from the fat into the fire, but into multiple furnaces. However, a teacher with a wide network will always hear of the better jobs going. University jobs pay well and provide decent holidays, but many institutions are cutting back on recruitment, and you could wait around a long time to fill dead men’s shoes only to find they end up on the pyre, too.

A short, snappy name can carry any nationality and will be easier to use in marketing and advertising.

Bricks and mortar
Lets face it, you’re not a school owner until you have a school with a sign, a website, a phone number, and your name on it – though hopefully not literally. Bill’s English, Bob’s English Club, Deron’s DIY English. The names say it all. Bill has his own school, and that’s what he calls it. Bill is from Canada, and we know this because as soon as we walk in the classroom we see a map and a flag of Canada, next to a map of the world. Building a rapport with students and selling English as a cultural experience via your own background and personality can be a good idea, but it can also be limiting. What if Bill needs to go back to Canada for three months and needs cover from Bob, who’s from New Zealand? What if Bill wants to sell the school in the future? Can he find another Bill from Canada to replace him? A short, snappy name can carry any nationality and will be easier to use in marketing and advertising.

Location, location, location

A good location can help a school really take off, a bad one can sink it without trace, very quickly. Not only is the general area important, but the exact location within that area. What is right for your target market? If you are concentrating only on B2B and diplomatic outsourcing contracts, you will most likely not want to be in the suburbs. A downtown office with access to company HQs, embassies and the like would be essential. Conversely, if you are concentrating on the YL market, the suburbs is probably where you want to be, right next to elementary schools, preferably with a lot of expensive, foreign cars parked nearby. Local government offices are great sources of information on demographics, average income and rent. You should do your research carefully, not just open on a whim, and always, always go where the money is.

What is the visible local competition? Internet searches are great, but don’t overlook the local magazine, the phone book, and getting out and about looking around. Doubtless there will also be competition not immediately visible – the guy round the corner that teaches all the local kids free – get out and talk to people – where would you go if you wanted to study English? How would you look? How much would you pay?

The next step is to find a real estate agent who can take you round the premises available. Be sure to look at several and do not make a snap decision. Make sure you revisit your favourites at different times of day. How would a young mother and her children, or a young woman on her own, feel about walking to the premises alone at night? Can parents get easy access with push-chairs? Will singing and screaming children bother the neighbours?

When you get round to signing the lease, you should drive as hard a bargain as you can. Do not make a long-term commitment or agree to renewal fees. Try and get a month’s notice to quit. Be sure there is nothing that could hamper your ability to do business. Have a lawyer look at the lease before you sign and hand over the deposit.

All signed and sealed, you now have empty premises. They may need decorating, or even renovating. Do not scrimp. Your potential new students only get one first look at your new school, and it has to look good. Take all the advice you can about how to configure the school – a good teacher you may be, an interior designer you probably are not. Use your network and visit other schools. Speak to staff and owners – what works and what doesn’t? What mistakes did you make? What would you have done differently? There is also a good chance you know other teachers. Think about your dream team – salary concerns aside, what would the teachers you admire the most want to have in the schools where they worked?

Commitment to paying the deposits on and refurbishing premises can be very expensive and it requires a financial and time commitment. With no students signed up, this then puts you in the red until you can recruit enough to break even. This should be given careful thought. Conversely, local civic halls are often available to rent very cheaply, if not free, and this can be a good way to build your ‘school’ before you actually move it into one.

Next month: Sign them up!

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