Language schools have a significant impact on the economy. Surprised? Don’t be. Language instruction has proven to have impressive financial benefits in the countries where the industry is abloom. In fact, a 2014 BVA study by Campus France for French Language Training in France says that FSL (French as a second language) training provides $2.1 billion in direct economic profit to France. Moreover, the study pointed to a number of additional positive impacts of language instruction on the economy, beyond the net fund. These include:
41% of international students work while in the country, contributing to public health and social security funds as a result. Interestingly, the students themselves rarely benefit from the programs themselves.
85% of survey respondents have the intention to return to France as tourists in the future.
70% indicated their study experience would compel them to purchase French products. Nearly 80% stated it would increase their desire to work with French companies.
This trend is great news for language school owners. Of course, there is the benevolent factor of contributing to your country’s economy. But, it’s also impressive that language schools are a profitable business that may influence an entire economy. Language instruction is a multi-billion dollar industry. There is money in education! Is your language school reaping the full benefits of the fruitful market?
Get Creative with Your Language School’s Business Model
The answer to making money as a language school owner is all about building a school business model that maximizes profit. Most private schools operate under the same simple model — students enroll and pay a fee for a fixed period. They take lessons in a physical classroom with a teacher. The product being sold — classroom learning. But what happens if you push beyond that?
There are other ways to operate a school that optimizes both profit and student learning. If your current plan not working, it is time to look at other options. And there are plenty. Think about the business models for schools below, as described by Terry Phillips in El Gazette, an international ELT newspaper. This may be the change you need to make to produce the business results you desire.
Do you ever walk into the store for a single thing, let’s say toilet paper, and come out an hour later with a full basket? This is how most supermarkets work: the store offers a small, limited amount of staple products for below the market price to get customers in the store. Upon the first step of the customer through the door, the rest of the business scheme is set to persuade the customer to do all of his or her shopping in one place. The prices of other products may usually be higher than at other stores — but, hey, you’re already here.
A language school using this model would offer basic/beginner courses at a low price. Once those students advance their skills, they are more likely to remain with the same supplier for higher-level courses. Those, of course, will be more expensive — but familiarity and customer loyalty play a crucial role here.
Most hotels do not actually gain their main income from renting out rooms. In fact, most hotels aim to get the highest occupancy rate every night to gain a large audience to whom they may sell goods and services. Ever check the price on water bottles in the hotel room mini fridge? That’s where the hotel’s profit comes from! The customer comes for the room, and spends money on easily accessible goods and services. And that’s a lot more profitable.
For a language school, the hotel model would work like this: the language courses at a low rate pull in students, while the joint coffee shop, bookshop, bar or restaurant make the money. You may also make money on immersive language trips, which your students will invest in if they feel like they are saving money on the courses themselves.
Voyage accounting is the model all airlines use. What does it mean? It means that each trip, from start to finish, is one transaction, a single product. Once a plane takes off, the product may no longer be sold — so any empty seat is lost money. The key concept is to sell every last product before a set deadline.
A language school of this type would offer incentives in a form of discounts or other benefits for enrolling in courses very early or very close to the deadline. To really get into the spirit of the model, you may also offer sandwiches and refreshments in the classroom.
The Leisure Club
What happens if you do the exact opposite of what is a typical language school model? Whereas a typical school has a specific time when it provides its service to its students en masse, the leisure club model provides the service during the time that the customer chooses.
To apply this model to a language school, one could implement a self-access center with staff available to guide and set learning objectives. It also has levels of membership, including a membership with the advantage of a one-to-one trainer.
The Fast Food Restaurant
There is a reason the fast food restaurant business model is so effective — it offers a limited range of products of equal quality at various franchises for a low price. Anything additional, such as condiments, is an extra charge. The key that attracts customers is consistency of quality and service. A language school following this model would offer a limited number of short-term, low-cost courses. The content of the courses would be exactly delineated across various sites. Create a consistent, high-quality language instruction model in various locations, and you will create a trustworthy brand that appeals to students all over the world.
The Fashion Boutique
Do you ever wonder how those haute culture stores with $2,000 sweaters make their money? Who would buy such a thing? What makes boutiques work is only a handful of patrons. Sure, the majority of people walking in or window shopping will not purchase a thing. But, once a single highbrow customer enters and buys the sweater, the purchase not only covers the cost of goods but the total cost of design and production. Multiply that occasion to a handful times a month, and the store has made a profit. That’s why most boutiques have a very healthy profit margin.
A boutique model applied to a language school would sell a limited number of seats to very expensive courses each year. The course would most likely be a highly specialized ESP (English for Specific Purpose) that would attract a niche audience that may pay the price tag.
Know the Metrics of School Business Growth
In order to increase profit, schools need to focus on the metrics that influence those numbers. There are eight key areas identified by school business experts that play a role in the financial success of the business:
1. Retention rate
To increase your retention rate, focus on communicating with the parents. The efficiency of the system of communication between the school and parents will control how the parent perceives the school their child attends. If a parents dislikes how a school handles communication, he or she will not only pull the student, but compel other families to leave, as well. On the other hand, happy parents make the best ambassadors for your brand!
What is the number of prospects that see your advertisement or hear about your school through word-of-mouth? That is your company’s traffic. How do you increase that number? Social media advertising is key here — some of the most accessible and high-traffic platforms available.
Your website is the determining factor in how your school handles enrollment inquiries. It will either turn prospects into applicants or give your school a bad name and turn them away. Make your school’s website user-friendly, clean and interesting with a good layout and quality content. This is the platform that parents will use for all types of inquiry — from basic information about the school to filling out application forms.
With proper marketing, solid branding, and happy parents, your enrollment rates will climb. While this is your ultimate goal, keep in mind that it takes all eight to keep your school successful.
5. Children per Family
How many children a family has may seem like a strange metric for a business. However, imagine this — you have a family who is a perfect fit with your program, who trust your school enough to enroll all three of their children. The parents are more involved in volunteering and you get to know the children on a better level that enhance both their education and interpersonal skills. That’s a solid relationship to have on a community level as well as a great factor for your retention rate and word-of-the-mouth marketing.
6. Average Program Tuition
As the rate of your inquiries increases, you may be more selective with who you enroll. This also means that you may increase the tuition rate, as more demand and limited supply equals a product of a higher market value. Your tuition should be increasing every year, at minimum to keep up with inflation.
7. Programs per Child
Being able to offer a selection range is good for any type of business. A language school should have a selection of programs that will appeal not only to students of various levels of language skills, but to those interested in specialized programs (think Business English or English for Technology). Constantly test and develop new programs, while also marketing these programs to your current and prospective parents.
8. Profit Margin
Do you know the profit margin per child? Most schools get stuck at ten percent. How do you get yours higher? Focus on better business management. With the right focus (and by applying the tips below!) your school should and will do better.
Tips on Maximizing Profit when Starting an ESL School
Approach Sponsors in Intelligently
Have a smart plan for how you approach sponsors and how you utilize their business that benefit you both. Take the example of Jean Joachim, author of Beyond the Bake Sale, who held successful fundraisers for schools in New York City for years. He often used the tactic of partnering up with local stores that gave a percentage of sales during certain hours to the school. He says that people love shopping while feeling good about the money they have spent. “One night at Barnes & Noble we handed out fliers to other, non parent customers, explaining that they could help the neighborhood school just by checking out at a designated register. People were thrilled to help,” he says in his fundraising for schools book. Consider collaborating on such events with local stores and restaurants. When you meet with the businesses, mention that an event like this brings in more customers, acts as advertisement to the establishment, and is a great way to give back to the community.
When potential donors see the face of the child who will directly benefit from their funds, they are more likely to give more. Plus, getting the students involved makes for great community-building activity. Ask for donations from both parents and local businesses! Schools often ask for and receive glue sticks, coloring pencils, handwriting pens, tissues, whiteboard pens and paper.
Optimize Staffing and School Site
According to school business manager Nazli Hussein, schools need to be resourceful with their staff. He also suggested that schools could allow the school itself to generate income. To generate and save funds, Hussein suggests that schools:
- Share services such as site, finance and human resources teams with other schools
- Outsource staff with specialized skills to schools that need the support but cannot afford full-time staff
- Employ a procurement consultant
- Hire a timetabling consultant to improve efficiency of staff
- Hire volunteers and employ parents
- Rent out school spaces. Consider hiring out car parks, IT equipment and catering facilities
- Offer a varied timetable of evening and weekend adult education classes
- Set up an on-site cafe to generate income from pupils, staff and visitors
Offer Virtual Classes and Online Platforms
Classes going online, either partially or fully, may be the easiest method for increasing profitability. Online teaching and learning is extremely efficient in allowing schools to increase the enrollment volume while saving costs. With the right classroom software, schools may offer courses to more students, without having to spend on expanding the physical infrastructure. Live or recorded virtual classes may be watched from the comfort of home. Students also save time and resources, not having transportation costs and getting a quality education for a lower price. Meanwhile, language schools may focus on delivering the best quality language training available.
That’s why we created Your Agora - an ESL teaching platform that will optimize language instruction while saving you money. Your teachers and students will love the grading tools, the easy scheduling, and a library full of teaching material that has been collaborated by experienced ESL instructors all over the world. Be a smart business owner and a caring instructor. Make the switch now!