October 20, 2021

All about building Schools

Start a Preschool / Playschool in India

Start a Preschool in India

Every locality now houses more than one Pre School and with every vacation going by you see the number increasing. A small concept of creche has taken shape of a formidable business called Preschool. There are players who have done brisk business like Zeekids, Roots2Wings, Little Millenium, Bachpan, Treehouse, Hello Kids, Shemrock Feathers, Kangaroo Kids, Birla, Euro Kids, Little Fingers, Globe Toters, Eager Beavers, Jumbo Kids, Makoons, Wonderkids, Blossoms etc. The list in endless and growing.

Off late, there has been a supreme build up about the early childhood education. The sector which was non existent a decade back has become a quintessential part of an essential part of a young child’s life.
Let me try dividing this phase of a child life into different segments;
1) Pre School – Age 2 Yrs + – 3.5 Yrs (Pre-Pre Primary)
2) Post School  – 3 yrs – 5 Yrs (Nursery, Pre Primary 1, Pre Primary 2)
As soon as the student reaches 5 years, he shall be taking admission in Class 1.
There are now close to 15-20 players (nation wide) players in this business. To name a few, Zee Kids, Bachpan, Globe Trotters, Roots to Wings, Shamrock etc. Other than this there are numerous home grown brands. All of this is a very latest phenomenon, now parents are giving a very serious thought about sending their child to one of these establishments. Following are the reasons why has this sector boomed;

  1. No or almost ‘Zero’ Bureaucracy – The education departments or affiliation bodies have hardly anything to do with them.They work more or less independently with no set standards for the quality parameters.
  2. Low Investment  – A franchise is available for anything between 5 – 10 Lacs and being a non-regulated sector there are no set guidelines in terms of land and class rooms requirement. Thus with  a small investment this can be started.
  3. Low expertise – Manpower requirement – All one requires is anybody who can speak workable English and is good with handling young kids. There are no set benchmarks such as TET, BEd etc. This is ideal for a lot of housewives and young females looking to do something in the first half of their day.
  4. Revenue through different sources – Parents spend beyond there means when it comes to their children esp when they are young. This emotion is exploited to the maximum making sure the parents pay by purchasing Photo Albums, School Uniform, Stationery etc for their kids.
  5. A cradle for Senior Schools  – Though no all of them but some of them get tied up or affiliate themselves with other big schools making the students graduate to these schools. This can also act as a source of revenue. If one strikes big, one can venture out and start a full blown school from thereon.

There are many other minor reasons like an ideal opportunity for a house wive looking to start her career, The establishment can work as an activity center during summer vacations and holiday time, need not be under a no-profit society etc.

Looking at the way learning has evolved, it has almost become essential for all the parents to make their child attend PP-I & PP-II, but the nursery and Pre-Pre nursery the decision can vary from parent to parent. One of the objectives these school look to accomplish is making the child social. This can be achieved very easily in a joint family scenario, where a child is any way interacting with many children in a managed environment. Same can be said for a nuclear family with siblings. At the end of the day, its a personal choice and can vary from parent to parent.
As a business, these are the issues one faces with such set ups;
  1. Low Shelf-life of the customer – The customer i.e. the student here disappears after 1-2 years time to bigger establishments. This can be very tiring and expensive to keep generating leads for new admissions.
  2. Low barrier for competition – Being a small set up, there are many who look to start the same model if one establishment succeeds. this can lead to undercutting.
  3. Low Scalability – Most of these establishments work out of rented buildings, flats and apartments making it difficult for the owner to scale up operations beyond a certain strength.
All in all, this phenomenon is here to stay and players will multiply by hordes. I can see many more ideas popping up where none exists in near future. For example, a model like Handwriting without tears, Certification courses etc.

There has been an incredible adoption of the concept at both the levels

  1. Seekers – People wanting to start this business
  2. Users – People wanting to send their kids to PreSchools

The sector can operate as a private enterprise thus clearing it from the issue of starting a Not for profit trust or a society. The business itself comes with very light baggage in terms of investment – Low Franchise fee and Low infrastructure cost encouraging lot of entrepreneurs to start. one doesn’t require people too qualified to operate this business thus make it easy to recruit and run such enterprise. Obviously the catch becomes scalability, customer business life and low cost of entry for rivals.

Now coming to the business plan (sort of Project Report) for such an enterprise, below are my inputs

Project Requirement:
  •  2500 – 3000 sq. ft. of built-up area, preferably on the ground floor in a residential locality.
  • Some open space for play area becomes an added advantage

Project Cost:

  • Franchisee Fee: Rs 2.5 lacs ~ Rs 5 Lacs depending upon the franchise
  • Teaching aids and materials: Rs 3.5 lacs ~ Rs 5 Lacs  for all  4 classes(Play group, Nersury, KG 1 and KG 2).
  • Teachers Training:  Rs 5618 ~ Rs 10,000 (some brands charge it some don’t; most of the established players do)
Support from the company / franchise / Brand:

There are two aspects which really helps inexperienced in this business pick up the ropes one is Content & Curriculum and the other is Designs and Promotion Materials. Because these are the two things which really costs money and for a Small entrepreneur it is difficult to invest in content research and professional designing.

Besides that this is what Company’s representative shall tell you in the sales pitch –

  1. Content and Curriculum
  2. Teaching Aids
  3. Facilitators (Teachers) Training & Orientation
  4. Commercial Training & Counseling Tips
  5. Competitors Analysis & Data
  6. Regular Visits by Academic experts
  7. Branding & Positioning
  8. Providing Operational Inputs & Product Up-gradation
  9. ERP for managing day to day operations of the school
  10. Digitized and license based curriculum and manual
  11. Guidelines -Traffic Building, Marketing and Promotional Material
  12. Required guidelines & assistance in maintaining Hygiene & Safety
  13. Nutritional Inputs
  14. Continuous Value Addition
Revenue Sharing : 15% royalty will be charged by the company on the fees collection rest 85% will be the franchisee share.
SCHOOL FEE COLLECTION@1st Year2nd Year3rd Year4th Year5th Year
No. of Students60100150200250
Student Fee (a)350002100000350000052500007000000 87,50,000
Operational Expenditure (Opex) :
Salary (Chief Learning Officer)8000 96,000 1,05,600 1,16,160 1,27,776 1,40,554
Salary ( 3 Teachers)6000 2,16,000 3,60,000 6,00,000 7,20,000 9,00,000
Salary (3 Aaya)3000 1,08,000 1,44,000 1,80,000 1,80,000 2,16,000
Office Boy3000 36,000 39,600 43,560 72,000 79,200
Rent25000 3,00,000 3,15,000 3,30,750 3,47,288 3,64,652
Utility5000 60,000 1,00,000 1,50,000 2,00,000 2,50,000
Stationery 10,000 20,000 30,000 40,000 50,000
Marketing(as per requirement) 2,00,000 1,00,000 1,00,000 1,00,000 1,00,000
Royalty 3,15,000 5,25,000 7,87,500 10,50,000 13,12,500
Student Kit & Uniform
Total Expenditure (b) 13,41,000 17,09,200 23,37,970 28,37,064 34,12,905
Net Profitability (a-b) 7,59,000 17,90,800 29,12,030 41,62,937 53,37,095
Day care - 12 to 4 pm
DAY CARE@1st Year2nd Year3rd Year4th Year5th Year
Day Care Kids2030405060
Fee Collection (c)20000 4,00,000 6,00,000 8,00,000 10,00,000 12,00,000
Expenditure:
Salary (Teacher-2)5000 1,20,000 1,20,000 1,20,000 1,80,000 1,80,000
Salary (aya-2)2000 48,000 48,000 72,000 72,000 96,000
Food and Milk-----
Total Expenditure (d) 1,68,000 1,68,000 1,92,000 2,52,000 2,76,000
Total Income (c-d) 2,32,000 4,32,000 6,08,000 7,48,000 9,24,000
Activity / Hobby Classes ( 5 - 8 PM)
ACTIVITY CENTRE(Yoga/Music/Dance etc)@1st Year2nd Year3rd Year4th Year5th Year
Evening Activity Kids3040506070
Fee Collection Û monthly1000 3,00,000 4,00,000 5,00,000 6,00,000 7,00,000
Expenditure:
50 % to Partner (f)-total expense50% 1,50,000 2,00,000 2,50,000 3,00,000 3,50,000
Total Income (e-f) 1,50,000 2,00,000 2,50,000 3,00,000 3,50,000
Total Income (a+c+e) 28,00,000 45,00,000 65,50,000 86,00,000 1,06,50,000
Total Expenditure (b+d+f) 16,59,000 20,77,200 27,79,970 33,89,064 40,38,905
EBITDA 11,41,000 24,22,800 37,70,030 52,10,937 66,11,095
EBITDA Margin41%54%58%61%62%
CAPITAL EXPENDITURE (CAPEX)
Franchisee Fee250000
Teaching Aids Materials (TAM)350000
Interior - Exterior and marketing200000
Total Capex-800000

Doesn’t matter what business you start, till the time you can manage your expectation from it, you will stay happy. For this business also, one has to realise their are issues with scalability, sharing of royalty, low shelf life of customer, low intellect workforce requirement, costs always under stress due to low entry barrier by the competition  etc.

If you can make peace with all the above, this business is here to stay and growing.

Abhiney Singh
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