Elgazette Logo newtrans  The magazine for English language teaching and English medium education

A model business


Terry Phillips explains how to find the right business model for your language school

There are tens of thousands of successful language schools around the world applying a tried and tested model for meeting customers’ wants and needs. But the traditional model is not the only one possible. If you own or manage a language school which is not performing as well as it might be, perhaps you should consider changing the business model you are using.

Most language schools have what we could call the ‘language school model’. Students are enrolled for a fixed period of time at a standard fee. All lessons take place in a classroom with a teacher physically present. At the end of the period of tuition, the students go home. The saleable product is the classroom learning.

But there are other ways to operate. I have identified eight common models that could work and help you produce your desired business. Once you have chosen your set-up, look for examples of where it has been successfully implemented in your market to get more ideas on getting and keeping customers and making a profit.

1 The supermarket

Supermarkets have, from their earliest inception, used loss-leaders to get people into the store and then persuade them to do all their shopping in one place – without comparing the price of every other individual item with the competitor. Some supermarkets focus on milk, some on bread, but the loss-leader must be a high-profile staple food. The language school modeled on a supermarket would offer courses at a very low price to children and/or beginners on the principle that once they are hooked they will stay and consume more expensive courses from the same supplier.

2 The hotel

It may surprise you to know that many hotels have stopped trying to make money from selling their rooms at a profit. These hotels aim to get the highest possible occupancy every night in order to ensure that they have a large captive audience to whom they can sell goods and other services which are more profitable. In the language school version of this model, the joint venture coffee shop, bookshop, bar and restaurant make money, while the language courses pull in the students. The whole thing is probably located in a mall.

3 The no-frills airlines

All airlines use what is called voyage accounting. It literally means that each trip is one product. Once the plane has taken off, that ‘product’ cannot be sold any more, so the key concept is to sell every seat, even if you have to offer discounts below the cost of goods. A language school of this type would offer discounted pricing for booking early or very late (and sandwiches and soft drinks for sale in the classroom).

4 The leisure club

A leisure club has a business model which is almost the antithesis of the normal language school model. With a language school, customers are brought together at a specific time to receive the services of the business. With a leisure club, the services of the business are available whenever the customer chooses to turn up. A language school in this vein has a self-access centre with staff available to guide and set learning objectives. It also has levels of membership, including Gold Level with a one-to-one trainer.

5 The fast food restaurant

This type of business offers a very limited range of products with strict rules on production and delivery, and a low retail price. Additional goods, such as tomato ketchup, may be separately charged for. A school would offer a small number of short low-cost courses with exactly delineated content, so every student gets exactly what they expect. It is across the country or the world with no variation in the product.

6 The fashion boutique

Ninety-five per cent of people who enter a fashion boutique with haute couture leave without buying anything. The 5 per cent who do buy, however, ensure that most high-fashion boutiques have a very healthy profit margin, since the selling price covers not only the cost of goods but the total cost of design and production. A school sells a small number of very expensive courses each year – almost certainly one-off ESP courses which exactly match the needs of a multinational, which pays for the writing of the course as well as the delivery.

7 The publishing company

Publishers are constantly making new products for the same market – and any published author will tell you this obsession is extremely annoying when a course is remaindered after only a few years’ shelf life, even though it is still selling well. Why do they do it? Because they believe, rightly or wrongly, that their market loves innovation – or even just change for the sake of change. If you think your market of language students is the same, keep introducing new variations on the theme, each with a very clear ‘innovative’ element. Schools might have over the last few years run courses which trumpeted The Silent Way, Suggestopedia, Community Language Learning, Total Physical Response, Functional English, Communicative Methodology, Self Access, Blended Learning and Clil.

8 The front business

This sounds like a mafia model, but it’s not. The Front Language School trades on the name it has made in one area to make its real money in another. My own language school in Oman turned into a front business. Once we had established a reputation as a high-quality government-recognised provider of language training, we were able to offer that imprimatur for other organisations that wanted to provide non-language training but were unknown in the market or unregistered with the government.

See www.elgazette.com for more!