Back to school

Teach one, teach all. This industry offers a diverse range of educational services to both individual consumers and corporations. These segments are experiencing different trends and so while some segments are in a growth period, others are declining.

The changing structure of the workforce is driving growth for business colleges, professional development training providers and business coaches. Regulatory changes in some professions have also affected demand for certain segments of the industry.

The tutoring business has grown as its markets have broadened, and its benefits for schooling are recognised in an increasingly competitive environment. IBISWorld forecasts that revenue for the language and other education industry will grow at an average rate of 6.3% per annum over the five years to 2010-11 to reach $7.2 billion.

English Language Courses for Overseas Students (ELICOS) account for the majority of export revenue for this industry. This segment has been another driver of revenue. Enrolment growth has reached double digits in each year from 2004 to 2008. Growth has moderated since 2009 as the economic slowdown and negative press over safety concerns have taken its toll.

The economic slowdown will also challenge industry players that provide discretionary services such as music or driving lessons or short courses taken for leisure. However, other segments will benefit, as people enrol in professional development courses to improve their skills and employability within the context of a globalised workforce.

Key success factors:

• Having a good technical knowledge of the product: A strong knowledge of education provision such as teaching methods and course design and delivery will help industry players to succeed.
• Close to transport: Companies need to be located in an area accessible by public transport as many students do not have their own transport.
• Recommendation/accreditation from authoritative source: For larger operations, accreditation, facilities offered, former student results and employment rates are paramount. Recommendation by industry and other associations is important as well.
• Provision of appropriate facilities: Offering appropriate facilities is necessary for attracting students.
• Having a high prior success rate (including completed prior contracts): Prior success rates will affect future demand levels. Students are more likely to undertake courses with education providers that have a proven track record.
• Having a good reputation: Reputation of the teacher or school is important. In the case of driving schools, approximately 90% of an established instructors’ business is generated through referrals from past or present clients.
• Economies of scope: The range of training courses provided and diversification of provision within an establishment will help to broaden the customer/student base.
• Effective cost controls: This affects profit margins. Operators who are able to control their costs will ensure their financial success.

Robert Bryant is the general manager of business information firm IBISWorld.