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Running a School: What business are you in? Part 4

I meet hundreds of school owners each year here in Japan. There seems to be an overwhelming concern with the teaching of English to children.

 

I’ve been collecting data on my schools for over 20 years.

 

As I showed at a recent conference, the highest performing students in all those years, in terms of gross income, are adults. They stay almost twice as as long as children do, and they earn us more than three times as much.

 

Even if children were your main source of students and income, why would they come to you and not go somewhere else?

 

How many of children are there, and how many will continue to go to English schools?

 

The graph above, based on figures from The Ministry of Economy, Trade and Industry or METI, shows the size and earnings of the English language school market. As everybody can see, it fell off a cliff in between 2006 and 2008. This is due to several factors: a drop in popularity, the Nova crash and the Lehman shock.

 

There has since been year-on-year approximately 3 to 5% growth, but the earnings include learning materials. The B2C market for children’s English materials in Japan is 90% of the total market.

 

The number of children is declining every year. Last year saw a new record low of 921,000 live births. This is predicted to continue falling.

 

A large number of institutions is competing for a smaller number of children. Of course, there are the chain English schools, but there are also chain English schools affiliated to cram schools, and there are also daycare, healthcare and after-school programs; sport schools, nutrition schools, dance groups, music schools and after-school provision of care for double working families, all competing for a dwindling market.

 

Many of those businesses are now adding English to their services. In September 2017, Global Kids in Kanagawa, an after-school care provider, added English lessons to their basic after-school packages for several extra thousand yen a month.

 

I’ve often compared setting up an English school to setting up a hair salon. The market is saturated and there are a fixed number of heads that have hair. To open a new salon, you effectively have to close an existing one.

 

Hair salons, though, don’t have to compete with, say, tailors. Even if you buy a new suit, you still need a haircut.

 

If you are a parent in a double income family, would you prefer to send your child to just one place, or to several for after-school activities? One would surely be easier to organise.

 

It may be that as native English-speaking foreign owners of English-only schools, we are in a smaller and smaller niche market.

 

Next, in the finale of this short series, we look at the reasons why the demand for native English-speaking teachers may disappear altogether.

 

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