Opening a new branch of a school with low financial risk

The methods I am suggesting work best for somebody who already has a school and would like to open a new branch without taking much of a financial risk.

I started my first school in an apartment and opened about ten schools over the following ten years using a high risk model. To give an idea of the risk, for the main school, we were paying rent of over 2 million yen a month! It was all a big gamble because I started with no money and one misjudgment would have put everything at risk. Luckily, the gamble paid off, sometimes by the skin of our teeth. We grew very fast, and,  also had a lot of outside contracts, especially at schools and universities, which helped give us more stability.

Why we changed to a low-risk model
About 15 years after starting my schools, the bubble economy in Japan burst. This had two major consequences for us. One was that at the beginning of the following school year, a lot of private students asked to join group lessons. This led to a drop in income and meant we had too many teachers. Of course I honored contracts for the year, which meant we had to borrow a lot of money. Then later in the year, there was a sudden shift in the exchange rates, and we also lost a lot of money on distance learning. We were paying back the loans for the next 12 years, so we needed to be very careful with money.

The second big consequence was that the the number of adults studying English declined. Fortunately, the number of children learning English was increasing quite fast and our outside contracts were also increasing quickly.

To focus more on teaching children, I realized that we needed to have branches nearer where children were living. Adults may prefer classes in the city center, but classes for children needed to be in the children’s neighborhood and need to be part of the local community. So we gradually reduced or closed our schools in prime locations and opened up lots of schools on housing estates or in other areas where children were living. This worked very well for us.

12 years later, we went under, but it was not because of the schools.

How to open new schools with low risk
This is how we opened new branches without taking much of a risk.

Step 1
Around September/October each year, I would study the demographics of Hiroshima city and some other parts of the prefecture, and make a short list of about six or seven locations where I thought it would be good to have a new branch. I would also look at which of our current branches need to be reduced or closed.

Step 2
We would send personal letters to any students, ex-students or people we know living in the areas where we were hoping to have a new branch, and ask if they could help us find a location. We said we would pay 20% of tuition fees. This sometimes led to being offered an empty building or a room in a house. This was an ideal way of opening a school because it normally meant there was somebody in the local community encouraging others to join classes.

Step 3
If Step 2 didn’t lead to anything, we would telephone jukus in the area and ask them if they had spare classrooms. At that time, there were a lot of jukus that had suffered when the bubble burst and were often keen to find new sources of income and thought that being connected with our school would help give them a more international image. We also offered 20% of tuition. I suspect there may also be jukes in trouble now because of the pandemic.

Step 4
If that didn’t work, we would try community centers often with the help of somebody in the area that we had contacted at Step 2.

I think this approach worked well for us because we were known in the community. By this time, our schools were reasonably established. We also took part in festivals, had a successful soccer team etc. . . . If we had tried to do things this way in a new city, it would have been more difficult, though not impossible. I think it is matter of thinking carefully about what might appeal to a juku owner about your school. There will also be local juku associations that may be willing to help you, and an introduction through an association like that would normally make things easier.

If you do something like this, you need to be prepared for many people to say they can’t help. It only requires one person in an area to help you to make things possible

Another thing to consider is that it is best if the new branches are possible to get to from where one of your teachers is living. If the new branch doesn’t go as well as you hoped, you need to be able to switch the teacher to teaching at your existing school or at an outside project.

Your situation will not be the same as mine, but I hope this blog post helps stimulate ideas that help you.

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