I am planning on starting of business as a sole trader, partnership or joint venture. I do not have a great amount of resources available to me to start up a business, meaning I am going to have to seek funding from other sources. Due to lack in resources, it is sensible to start business off at a local level. As I am currently situated within Nottingham, I plan to begin or open up shop in Nottingham and then expand on to other Cities.
• Select a feasible concept
• Conduct sufficient and relevant market research
• Find ideal location
• Device business strategy
• Analyse competition
• Select ideal price for product
• Begin marketing a promoting
• Begin labour selection process
• Purchase/rent a premises
• Design premises appropriately
• Open up for business
• Survive first year of trading by breaking even
• Make a profit after at least the first five years of trading
It is most likely my target audience will be students, mainly due to the large amount of students Nottingham has. Plus the ability to entice students to purchase a product through student discounts. Students are also an easy audience to market towards as they are mostly all situated within the same place. I am also relying on the assumption, that students will direct business to my venture through the power of word of mouth and recommending the business to other fellow students.
Nottingham as a city has a large contingency of students, which could be used to my advantage, whether it be targeting students, or using them as a semi skilled yet cheap labour.
Resources available to me are;
• £2000 cash in the bank
• £8,000 cash donation from parents
• £10000 bank loan, repayment begins after the first year with interest rates of 1% of initial loan
I shall be seeking further funding in the form of grants, bank loans and other sources of cash if Business qualifies.
From my brain storm I have thought of the following concepts as the idea to create the business with;
• Healthy Fast food outlet
• After school tuition classes
• Club/ bar
• Five a side football pitches (for example Goals)
• Educational website
• Events organising
• Clothing retailer
• Taxi cab company
• Property development
• Driving school
The following were rejected for the following reasons, either it was in a saturated market, where new firms could not make a significant impact for example the Taxi market in Nottingham is very saturated with 3 main taxi firms Lentton, Nottingham cabs and DG cabs owning mass market share, with a further 8 smaller firms fighting over a small portion of the market. The club bar market is also highly saturated with fierce competition and little room for differentiation. The high costs of setting up a gym resulted in that concept being rejected.
Selected business Venture
After careful consideration and critical analysis, I have decided to go with after school tuition and support as the venture to go with. Here is a breakdown of how this venture will operate and what will be needed for business to run.
The after school Tuition and support Classes will be aimed at pupils studying for their GCSE’s, pupils will not need to be of a particular academic standard to apply for tuition. Pupils from all learning capabilities are welcome to apply for these classes’ and one to one sessions.
The second product/ service which this firm will also provide is a one to one Tuition service, in which a staff member will visit pupils at home to offer a more personal tuition. For this service the tuition fee will be substantially higher than standard classes, but will more likely improve the quality of teaching thus warranting a higher price.
Also on offer will be an interactive online service, in an attempt to improve the quality of service which is one offer and to add value on to the service being provided. On this website parents can monitor their children’s progress, an interactive learning room will available for pupils; pupils can check for homework, potential customers can find out more about the business and sign up for the tuition services, staff will be recruited and much more.
Reasons for selection
The business will be called Result, our aim is to motivate pupils, build self esteem, help pupils realise their future, help pupils recognise and reach their potential, provide a safe, relaxed, fun and interactive environment in which pupils no longer view education as a laborious task and to ultimately help students pass their GCSE’s and improve students grades.
Nottingham as a City are poor performers when it comes to GCSE’s The city has slipped five places in a year to 144th out of 150 local authorities for the percentage of pupils who achieved five or more A* to C grades, including English and maths. This means there is a need for a service such as this, which will help improve the GCSE grades in Nottingham.
Nottingham City Council is committed to improving the city’s national standing. As a result this venture could seek support and funding from the city council, due to our similar interests and goals.
The location of Nottingham also gives access to other potential customers from neighbouring cities and towns such as Derby, Market Harborough, Loughborough and Leicester. This could be advantageous for business purposes, as there is a greater market to appeal to. What this means potential for greater business and future expansion in to neighbouring cities.
In this industry there is a great scope for expansion, product enhancement and the ability to increase the portfolio of products in which more revenue can be generated. As a new small business which aims to survive the first year of trading by breaking even, revenue is very important because it is needed to keep business running, this revenue is call working capital and is very important to keep a business running.
To prove the overall feasibility of investing on to this venture, I have conducted comprehensive market research both primary and secondary. Market research is a continuing exercise to collect and analyze environmental, consumer, competitor and industry information to make marketing decisions less risky.
Households Spend £455 per week
Here we have a graph from the national statistics website showing a UK households average expenditure as of 2009. This data shows that UK households as of 2009 spent £455 per week; £8 pounds of that expenditure was on education. What this means is that within a month UK households are spending on average £24 on education, within the year £288 on education. What this means is there is not reluctance in the UK to spend money on education, £288 may seem as a low figure but we must remember and apply critical thinking. In the UK education state education is provide as a free service, in the sense parents do not have to pay schools directly for the child’s schooling, therefore it can be anticipated for the weekly spending on education to be low. Further information on this graph has been included in the appendix labelled under extract A.
Further secondary research has unveiled more valuable information on the manor and habits of parents. As parents will most likely be the customers of Result, the ones paying for the service for their children to consume and benefit from. It is important to spend time researching there habits, attitudes and behaviour towards their children’s welfare, future and of course education. This research will give an advantage in developing strategy and the best marketing strategy to use.
Other research and reports state Nottingham as a City are poor performers when it comes to GCSE’s The city has slipped five places in a year to 144th out of 150 local authorities for the percentage of pupils who achieved five or more A* to C grades, including English and maths. A total of 43.9 per cent of pupils achieved the standard in 2009/10, with the percentage increasing for the fifth year in a row. Just 28.5 per cent of pupils made the grade in 2005/06. Standards are, therefore, improving, but it would appear not at the same rate as those at schools across the country. This data shows that there is a market for this venture, however we will not target only underachievers or market towards underachievers, services will be aimed at all abilities in order to have an influx of as many students as possible and revenue. As a result of Nottingham’s current standings, parents and pupils alike will be more inclined to sign up for tuition.
Evidence of these reports can be found in the appendix
Figure 4 bellow shows the location of both direct and indirect competitors within Nottingham, according to the map there are 22 competitors within Central Nottingham. Not all these tutors are direct, or offer the same service as Result will. Many of these firms offer training and teaching in other areas such as accounting, French, health care, and other area’s.
One of our main rivals are Magi Katz; they are a franchise one of which is located in Nottingham. Of all competitors Magi Katz service is most similar to the service Result plans to offer. Magi Katz is located in West Bridgford. They target 5-15 year olds and teach only maths and English, and attempt to stay relevant to national curriculum.
Direct rivals Indirect rivals .
• Magi Katz* Job Key skills tutor
• Personal Tutors *
• Home tutors directory *
• Midlands tutors *
• Tutor Pages*
Kumon Is one of our most similar rivals, they offer the same class sessions as Result, they operate in over 625 locations in the UK, tutoring 58,000 students.
Kumon is an international firm, with 4.2 million locations worldwide.
Kumon market themselves as using special techniques to gain optimum potential of students.
Kumon have Five study centres situated within a 6 mile radius of Nottingham city centre.
Kumon only offer studies in Maths and English, this could be used to results advantage by offering tutoring in more than just maths and English.
Bellow I have included a map with Kumon centre’s situated in Nottingham.
Kumon fees vary; initial registration and the monthly single subject fee are around £25 and £50 per child, respectively. Dual subject fees for students on both the maths and English programmes are around £90 per month, per child, provided both subjects are studied at the same study centre. Kumon charge substantially high prices compared to other private tutoring institutions however can do so due to the differentiation of their service based on a unique teaching method. Kumon also boast a high success rate, however Kumon does not stick strictly to the national curriculum which could vary their results. Primary research results and findings
Questionnaire results from 50 secondary school children
The main points to take from this questionnaire are, many of the students questioned did not have faith in the education system and thought that they were not being taught to a high enough standard. In question seven 64% of students replied no to being taught well at school, what this means is there is a favourable environment for this venture and potential customers in need of this service, which only strengthens the case of setting up this business in this market. Question 8 shows that the majority of students rate the quality of education at schools very low, again reinforcing the need for the business venture in Nottingham. To add to this 76% of students questioned are not currently being tutored, whether this is down to a lack in availability of a tutoring service or the reluctance to enrol on a tutoring scheme is yet to be known. However this shows the majority of students are not being tutored, which again strengthens the case to set up Result as this data suggests this type of service is under provided in Nottingham, where there is a blatant market for this service.
Price and marketing strategy
Result will offer 3 main products;
• One2One tuition (premium service)
• Weekly Class sessions (Standard service)
• Online interactive learning room (Free to paying customers) Added value
To add further value to the service and deliver a great quality service, Result will give each pupil access to interactive learning room on the website. Also Free stationary, books and folders will be given to pupils to not only add value but add a tangible product to the service. Staff will also offer moral support to all pupils and snacks and drinks will be available at class sessions. Monthly and weekly reports of pupils progress will be emailed to their parents to add further value. This should add value to our service, making customers more willing to pay premium prices.
Customers will enrol for the year, and will pay on a monthly basis, whether it be for one2one sessions or classes. By doing so, this will limit the amount of revenue lost to cancelations or delayed payment. Which will improve the cash flow of Result, making finances more stable and predictable decreasing the likelihood of a lack of working capital.
Competitors are charging a range of prices, private tutors charge from £8 – £22 per hour depending on tutor.
Competitors MagiKats also charge a monthly fee, of £30 per month.
Our main competitors Kumon, charge a £25 – £50 per month for one subject and £90 per month for a combination of maths and English sessions.
In the first opening stages of business, Result will under cut its competitors to gain some of their market share and establish itself in the market.
One2one classes will be charged at £16 per hour
Class sessions will be charged at £5 per class, on average generating £20 per month per student
Strategic positioning – result will attempt to sustain a position in the market by using cost leader ship as its strategy, charging lower prices than consumers will attract direct customers away from competitors towards Result. Enabling Result to gain market share and establish itself as a key player in this market.
It is important to only employ one method of strategy, as using more than one can lead to strategy failure because the different strategies will compromise each other, resulting in strategy not being fulfilled appropriately.
The target market of result will be Students taking GCSE’ s in Maths, English and Combined Science. Result must acknowledge that there will be a difference with their customers and consumers. The customers of Result will be parents/Guardians, who will be paying for the service. The consumers will be the parents/Guardian’s Children who will consume the service. As a result of this I must make sure the marketing appeals to both parents and Children. The main target audience of Result will be 15-18 year olds taking GCSE’s from middle class or higher families and well of parents with children earning a combined income of £50,000 a year or more. This differs to main rival’s Magi Kats target audience, which is children aged 5-15.
Result will not invest too heavily in advertising, but will rely on word of moth as a means to increase awareness of firm. As a means to encourage and exploit word of moth as advertising, a discount will be given to customers that successfully recommend Result services to friends.
To create anticipation of Result before we open for business, Leaflets will be handed out at secondary schools. Adverts will be placed in Local Nottingham newspapers and local radio stations.
Cost of running business
Bellow, table 1 gives a break down of all the approximate costs for starting up business. These costs include approximate costs for fitting out premises with appropriate equipment such as chairs, computers, telephones, fax machines and much more.
Item of expenditure |Cost | |Spending on specialist equipment: |£15225 | |Spending on general business equipment: |£3360 | |Spending on office fittings: |£1040 | |Spending on security measures: |£600 | |Spending on signs: |£460 | |Spending on staff facilities: |£360 | |Spending on vehicles: |£9200 | |Other costs: |£9360 | |Total expenditure: |£39605 |
2 reception staff will be hired fulltime, each will work 42 hours each week. Paid £6.50 per hour.
Yearly expenditure on 2 receptionists will cost £28,392
In the initial stages of business Result will higher many Volunteers from Nottingham Universities to do some of the teaching.
4 Qualified teachers will also be employed on a part time basis; tutors will be paid £7 per hour or £7 per class/one to one session.
There will be 26 hours of class sessions per week costing £182 per week on a yearly basis this will equal £9464 per year.
There will be 21 hours of one to one sessions per week costing £147 per week on a yearly basis this will equal £7644 per year.
In total the cost of labour per year will equal £45500
The cost of Premises
The premises in which class sessions will take place will cost £300 per week on a yearly basis this premises will cost £15600 per year to rent out. The cost of premises has been included in the approximate cost above.
Result plans to hold 26 hours of classes per week, each class lasting an hour each hour representing 1 unit of output. Result premises can hold up to 15 students per class; each student is charged £5 per class meaning potentially each class generates £75 if at full capacity, therefore 26 classes or units (which is the maximum possible output within a week) of output can potentially generate £1950. Within a year Result will plan to produce an out put of 1352 units, potentially generating a yearly income of £101,400 from classes alone. However in the first year of trading, actual income is predicted to be 50% lower than potential income. Therefore meaning Result will generate £50700 from classes.