In his 2015 TED talk, Bill Gross, the founder of Idealab, looked at why start-ups succeed or fail. He looked at 200 companies, and concluded that, rather than the idea, the team, the business model or the funding, timing was the most important difference in success and failure.
English schools are hardly start-ups, but timing can play its part in success or failure, and without a crystal ball, can be difficult to do anything about.
In April 2007 we opened two new schools. As mentioned previously, the market had dropped since 2006, but then Nova collapsed in October 2007, the first and only month to date since starting in 1998 when we recruited no new students.
It’s easy to say no one had seen this coming, but I had predicted the fall of one of the big four two years earlier to our then-incredulous web designer. There was no joy in having been proven right.
Gross list the other four factors in this order: team/execution, idea, business model, funding.
Our schools were franchises and by definition, the only difference between them is the owner (usually a teacher-owner-operator) and the location.
That leaves us with team/execution, idea, business model, funding and adds location.
Location we have looked at before. It is extremely important and just because you have success in one place, it does not guarantee it an another. In fact, if what you do does well in one place, but badly in another, it likely doesn’t matter so much what you do, rather where you are.
Team: For us, this is the central admin office and the teacher-owner-operator. Some teachers are better than others, some teacher-owner-operators are better than others. The central admin office is the same for all schools, and therefore can’t be a prime factor in the difference between two different franchises.
It comes down to the person and the place. Get the wrong person in the wrong place at the wrong time, and you’re in trouble. Get the right person in the right place at the wrong time, and it’s a different story.
Of the two schools we opened in April 2007, one is still trading, the other had closed in a year. The unsuccessful owner looked externally to try to find reasons for his failure, but his preference to recruit adult students in a city centre location was badly timed and unfortunately, he couldn’t recruit or convert enough leads.
No one was happy, but the best thing to do was to pull the plug. No matter the sunk costs – the money spent yet to receive a return, it’s very unlikely a business that has been failing for a year will ever be successful. Be wary of the sunk cost fallacy whereby past expenditure influences current or future decisions.
The best thing to do is learn from the experience and cut your losses.
When considering your new school – your first, or subsequent branches, hope to get your timing right, execute well in a good location and know when to pull the plug if it goes badly.
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