The appetite for investment in schools worldwide seems unabated.
There are five key elements that should be used to gauge the viability of a school purchase. Financial Position, Management, Market Growth Potential, Facilities and Valuation. We will share our key criteria and measures over the following series of 5 blog posts to help you narrow down the field.
When we advise investors on school acquisitions we are looking for schools with significant market growth potential. It is great to find a school that already has built in imperfections. You just need to find them and know how to fix them.
Market Growth Potential
Should you buy that school based on market growth potential? In order to grow your school, it is imperative that you understand both who the existing market is, as well as who the new expanded market will be. It needs to be clear where the new growth can come from. If you don’t know who your customers are, how will you be able to assess whether you are sharing the right messages and meeting their needs? What do they want? Where do they live? What can they afford?
Meetings with existing school leadership and the marketing team should very easily determine a clear picture of existing and potential markets. They should be able to articulate this almost as an “elevator speech.” Should you buy that school based on growth potential, is a question that should have the answer to.
What Will These Questions Look Like?
The school should tailor their marketing and sales efforts to specifically reach the segment of population that will most likely join the school. It is critical that they first determine or clearly identify the primary market but they must also understand different market segments. Energies and funds can then be spent more efficiently. The school should have documented research as well as data that tracks market leads. They should be able to share conversion rates on leads and be able to justify current strategies.
Who is the Primary Market?
- Why did existing parents choose this school?
- Why would a new parent choose this school?
When parents are highly satisfied we know what the effects are:
- Retention rates are high.
- Satisfied parents who tell everyone about your school.
The overwhelming, most powerful marketing strategy in schools is word of mouth. You cant hide either good or bad practice. School management, teacher quality, safety, public relations all contribute to a strong marketing voice, delivered by reputation; your current parents.
Describe the Market Segments
Market or consumer segmentation is the process of breaking down a larger target market into smaller segments with specific characteristics. We typically divide into smaller target market segments on the basis of geographic, demographic, psychographic and behaviouristic characteristics.
Geographic – Describe the market potential within 4km of the school, 8km from the school or even further. How big is the market in those locations and what are their unique characteristics?
Demographic – Potential customers are identified by criteria such as age, race, religion, gender, income level, family size, occupation, education level and marital status. Choose those characteristics of your demographic target market that relates to the interest, need and ability of the customer to join your school.
Pyschographic – Schools offer a product/service based very strongly a set of attitudes, beliefs and emotions of their target market. The desire for status, enhanced opportunities, career pathway, character and values are examples of psychographic variables. They are the factors that influence your parents decision to join the school.
Behaviourist – Schools are chosen for a variety of reasons. School management must determine what those reasons are, such as: location, brand, curriculum, loyalty, cost, university destination. It’s important to understand the buying habits and patterns of your customers. Families do not rush and enrol their child in the first school they find.
Review Current Market Research
Comprehensive data should exist that drives current marketing plans. In addition to this, all leads should be tracked so that you can determine 1. Effectiveness of current campaigns or return of investment (ROI), and 2. you can refine your understanding of the market audience. This data is invaluable because it accurately describes the process that led existing parents to join the school, and others not to. What are the new and emerging geographical areas? Demographics, location and price can change. An intentional marketing and enrollment plan is driven by market research which consequently drives specific strategies that will impact your school’s growth. We also highly recommend a comprehensive competitive analysis.
A good Competitive Analysis allows us to not only identify competition but it allows us find the gaps in the market and also understand what other schools do well. Done properly, Competitive Analysis will give you plenty of quantitative and qualitative data to back up your own business decisions. Namely, it can help you:
- Develop and/or validate your identified Unique Selling Points.
- Ensure your school also focusses on the aspects of competitors’ that their parents value the most.
- Capitalise on competitors’ weaknesses parents complain about.
- Get benchmarks to measure your future growth against.
- Uncover market segments that aren’t fully served by other schools but is needed by students and parents.
Should you buy that school based on growth potential?
To be honest if you are looking to acquire and then improve a school you are looking for key areas that you can influence. Poor marketing strategies or decisions that are not based on hard evidence show a school not maximising potential. If management can be improved then the market will be satisfied by changes you make. Quality of teachers. Better marketing materials. Facilities. What you are looking for are things that can most easily be changed for the most positive effect. Some schools are better than others and to be honest the reasons are no huge secret.
When we advise investors on school acquisitions we are looking for “perfect imperfections”. School turn arounds are not always easy but sometimes the small things can deliver very quick wins and help you make a quick start. Should you buy that school based on growth potential might also equate to “Does the school have enough challenges to fix and do I have the skills to do it?”
*GSE provides comprehensive services and support for schools including market research, competitive analysis, business planning, accreditation and school improvement plans.
Should You Buy That School Based on Market Growth Potential?
There are five key elements that should be used to gauge the viability of a school purchase. We will share our key criteria and measures over the following series of blog posts to help you narrow down the field.
Who is Global Services in Education (GSE)
Global Services in Education is a full service education management company led by education experts. They are proven education and business leaders who know how to set up and manage international schools in unique cultural contexts. GSE lead education projects from the initial idea to set up and full management. Kindergarten, Primary, Middle and High School, Universities and Adult education.
School Acquisition: GSE represents investors looking to acquire schools or evaluate potential of school group expansion.