Selling English Students
March 11th, 2008 by MarkI thought I’d seen everything in Taiwan’s English cram school market. Recently, I’ve had an experience that shows how naive I (still) am. I can’t really get into any details online, but here’s the gist: A school owner offered to sell her school’s students.
A school’s financial valuation
In general, when an English buxiban changes hands, the going rate is about the amount of tuition the students can be expected to pay in a single financial quarter. Thus, if a school is charging 3000NT per month and it has 200 students, then it would be worth 3000NT * 3 * 200 = 1.8 million NT. Location, curriculum and reputation obviously factor in as well, but these things are generally reflected in the school’s student numbers.
I can understand this. A school’s value is definitely dependent on the amount of tuition money it brings in, and while most schools lose some students as the result of replacing any teachers or making any other large changes, most students usually stay. Especially if the teachers stay, and the curriculum is left intact, it makes sense for students to continue. Why bother looking for another place to study if there’s a good chance that things will be fine?
Selling the students
I just can’t wrap my brain around this one. Say one owner decides to “sell” the kids studying at his or her school to some random other school owner who can’t attract students through conventional means. I suppose it’s possible to get them to go initially, if the first owner is pushy enough about it. If the first owner tells the children’s parents, “Sorry, we’re going out of business, but my buddy at another school will teach them for the rest of their semesters,” the parents would be justifiably upset, but they’ll probably take what they can get since they’ve already paid. The problem is, their kids will almost definitely get shortchanged educationally, and they’ll resent it. I can’t see that many staying long enough to ever pay tuition to the school owner who “bought” them.
I know education, even public education, is a business. But this is out there.
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March 11th, 2008 at 8:34 pm
I’ve been sold before, it was weird. The boss of the Chinese school I was enrolled in decided she couldn’t be arsed either buying the office or renting a new one, so she sold the school and students to a competitor. I still had two lessons left, and tried the new school, but it sucked. First up, even though the new teacher assigned to me knew me from the old school, I still had to “retrain” her- she was far too used to absolute beginners and couldn’t quite get it through her thick head that some of us laowai make it as far as intermediate or higher stages. More importantly, it just sucks being sold off like that. I pleaded a headache and walked out of that lesson, didn’t bother going back for the one lesson I was still owed.
March 12th, 2008 at 2:13 pm
I know in North America business is usually worth 2 or 3 years of it net income. 3 months of gross income (minus expenses for salaries and rent) sounds very cheap.
Mark, why don’t you provide prices in US dollars?
March 12th, 2008 at 4:03 pm
Vitaly, keep in mind that most schools that sell are either losing money or barely profitable. I used Taiwanese prices because I’m in Taiwan and the schools sold here are sold for Taiwanese prices. It really doesn’t matter at all, though. The numbers I used were entirely hypothetical, and the same valuation tends to hold true regardless of school size AFIK.
March 16th, 2008 at 9:15 pm
Students can be stolen too. It happens a lot. Disgruntled teachers sometimes collect contact details of all his/her students and maybe those of other teachers as well, then they call up the parents with some story, or they may be open about it and say they’ve opened a new school with lower fees. And many times the teacher isn’t even disgruntled - he/she will work at a cram school just long enough to steal away a good proportion of the students. My wife told me about a big cram school near our house where three teachers opened their own school and stole about half of the original cram school’s students.
March 16th, 2008 at 11:18 pm
That’s a problem for the school owner, for sure. In many cases, it’s sign of poor management. If they were paid what they were worth, the teachers would have little incentive to do that. One thing is for sure. If parents leave a school to follow a teacher, they must be very satisfied with that teacher.
I guess what bothers me about the idea of “selling” students is that it assumes they (or their parents) have no volition of their own. “Stealing” them, on the other hand is actually a matter of them choosing to follow their teacher. Parents have to be free to make the best choices they can for their children’s education, and they’re justified in being upset if they pay one school, only to be told their kids have been “sold” to another by the management.