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Types of Businesses to Start

Want To Start A School? Your Guide To The Education Sector

The education sector continues to show remarkable growth and opportunity as the private sector fulfils the increasing need for quality education in South Africa.

Nicole Crampton

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“The education sector is interesting as it’s one of the few sectors in South Africa showing very strong fundamental growth, almost independent of general economic growth,” says Rory Ord, head of unlisted investments at 27four Investment Managers.

“Education is highly demanded across all sectors of South African society, and this ties into a global trend of increasingly educated populations.”

Demand creates an opportunity for the private sector

There are two major themes in education that make it interesting from an investment perspective.

“First, it’s clear that government cannot meet the demand for the different levels of education required by South Africans, and neither can it meet the standards required on a very large scale,” says Rory.

He adds that beyond the top performing government schools and universities, the population using these services want better education and many are willing and able to pay for it. This has created an opportunity for the private sector, which has experienced huge growth in private schools, to the benefit of companies like Curro and ADvTECH.

“Both companies have grown strongly in recent years, with Curro achieving higher percentage growth off a lower base. Curro has been highly valued by investors who have been willing to pay for the expected growth. ADvTECH is a bit more mature as a business, but has still delivered growth of 20%+, and on a much lower earnings multiple. Private education is still a small percentage of the whole, so expect more growth, but it does take time to deliver this growth in large numbers,” advises Rory.

The investment opportunity of education technology

investment-opportunity-of-education-technology

“The second theme,” Rory says, “is how technology can increase the penetration of quality education. In essence, the way education is delivered has not changed with the advent of technology, but there are many areas where change is possible.

“The best example of this in South Africa is GetSmarter, which partners with global brand universities to provide high quality online short courses. Founded in Cape Town, this business was acquired by 2U, a US based company doing similar things in 2017, for R1,4 billion.

“Technology also promises more focused learning by tracking the progress of each student and adapting to make sure no child is left behind. We expect plenty of disruption and change in this part of the market.”

Related: How GetSmarter Got Smarter

What’s next for education?

In the unlisted space, Milpark Business School was bought out by private equity buyers several years ago and has recently been purchased by Stadio, Curro’s tertiary education spinout and Brimstone Investment Company. A third theme is consolidation. Scale is important in education and established players with capital are likely to continue purchasing smaller players to achieve this.

What the education sector looks like today

The education sector is divided into three separate investment and business opportunities, namely: High income schools, low income schools and franchises. Before investing in any of these sectors you’ll need to understand them.

Low income schools

Low-fee or independent schools are growing at a rapid rate in South Africa. In its 2015 report, Low-Fee Private Schools: International Experience and South African Realities, the Centre for Development and Enterprise (CDE), reports that low-fee private schools that charge annual school fees of less than R12 000, are educating an estimated 250 000 learners. The schools fill in the education gap left by insufficient or dysfunctional public schools in disadvantaged communities.

“The private education sector is not well researched or understood,” says Jane Hofmeyr, policy and advocacy director at the CDE. “But there is considerable potential with new players, local and international, coming into the market, looking for opportunities in South Africa and Africa.”

The growth in the independent school industry emanates from for-profit and not-for-profit chains of private schools at all fee levels. The main source of income for low-fee independnt schools is school fees, government subsidies and donations.

Investors in this sector face a number of challenges. A convoluted regulatory environment can impede the establishment of new schools. You’ll also face high compliance costs, and more accountability with severe sanctions for non-compliance. Further challenges are acquiring affordable premises, high teacher turnover and late or non-payment of school fees.

High income schools

ADvTECH, a listed private education provider, reported a 22% rise in revenue to R2 billion for the first half of 2017. Operating profits grew by 28% to R344 million, while earnings climbed 6% to 38,6 cents per share, and a dividend of 15 cents per share was declared. ADvTECH’s schools division comprises 90 schools across 47 campuses under the following brands: Abbots College, ADvTECH Academies, Centurus Colleges, Crawford Schools, Junior Colleges, Maravest Group and Trinityhouse.

There are also challenges in this sector: “The difficult economic climate and unsettled socio-political environment had a more significant effect on enrolment numbers than had been anticipated. We have seen a consistent rise in the number of families emigrating and this trend had a negative effect on enrolled numbers as we lose students in grades where it is difficult to replace,” says ADvTECH. “In addition, we have seen an increase in withdrawals and exclusions as a result of financial pressures. Therefore, while actual new enrolments have been in line with expectations, net student numbers have been adversely affected by these two negative influences.”

These factors, along with costs of investments in greenfield projects and school expansions, are constraining profits.

Franchising opportunities

Education franchises continue to grow and spread across South Africa, fulfilling parent’s needs to invest in their children’s early learning and critical skills development through enjoyable, educational programmes.

Related: Enko Education Investments Matches Money With Passion


BIG DEALS IN THE EDUCATION  SPACE IN 2017

GetSmarter

SOLD FOR R1,4 BILLION

2U, a Nasdaq-listed technology education business acquired Cape Town start-up GetSmarter for R1,4 billion. GetSmarter was founded by brothers Sam and Rob Paddock. The education business focuses on developing online short courses in partnership with higher education institutions, including Cambridge University, Harvard University, the Massachusetts Institute of Technology and the Universities of Cape Town, Witwatersrand and Stellenbosch (Business School).

Both companies focus on delivering “high-quality, high-touch digital higher education from world-class colleges and universities,” said 2U in a statement.

Milpark Business School

SOLD FOR R320 MILLION

Milpark Business School was sold to Stadio, in partnership with Brimstone, for R320 million. Brimstone will pay R96 million for a 30% stake, and Stadio will pay R224 million for a 70% stake in Milpark Business School. Stadio, which falls under the Curro umbrella, says this acquisition is just the beginning; it intends to acquire several additional programmes, including degrees, higher certificated and diplomas.

Mancosa

Undisclosed

Yusuf Karadia sold Mancosa to UK private equity firm Actis, two decades after he launched the distance learning school to teach South Africans business skills. Mancosa is now a part of Actis’s expanding African higher education portfolio. Since 2014, it has spent R3.65 billion investing in educational institutes across the continent.


CURRENT OPPORTUNITIES IN THE MARKET

A+ Students

Creative Minds

  • Investment: R200 000 to R300 000
  • Contact: +27 (0)82 785 7763/ +27 (0)21 939 6344
  • Visit: www.minds.co.za

Innovatus FET College

  • Investment: R700 000 to R1 million
  • Contact: +27 (0)32 541 0045/6
  • Visit: innovatus.co.za

Kip McGrath

Kumon Education South Africa

  • Investment: R50 000 to R100 000
  • Contact: 0800 002 775
  • Visit: www.kumon.co.za

MiniChess South Africa

Sherpa Kids

Young Entrepreneurs

  • Investment: R350 000
  • Contact: +27 (0)87 287 4038/ +27 (0)82 442 6267
  • Visit: www.younge.co.za

Nicole Crampton is an online writer for Entrepreneur Magazine. She has studied a BA Journalism at Monash South Africa. Nicole has also completed several courses in writing and online marketing.

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Types of Businesses to Start

A 7-Step Guide To Starting Your Own Trade Business

With that sorted, it is time to get on with the more exciting operational stuff.

Morné Stoltz

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Skilled tradesmen are always in demand. Whether you are a plumber, electrician, cabinetmaker, refrigeration expert, tiler or builder, there is a ton of work out there. For many, the best way to make the most of the opportunity is to open your own business.

Where do you start? The first step is to register your business with the Companies and Intellectual Property Commission (CIPC). Look for a catchy name that is easy to spell and memorable – you do not want customers to struggle. The CIPC will tell you which names are taken. It is also a good idea to do a trademark search before deciding on a name. Register with SARS and make sure that all your tax affairs are in order.

It is a very good idea to get a good accountant right at the early stages of the game. They can also help you set up the legislative requirements for running a business. The National Small Business Chamber is a non-profit organisation that offers a range of services to its members that aim to help them grow faster, save money and receive the support they need.

With that sorted, it is time to get on with the more exciting operational stuff.

1. Finding customers

You want to find customers in order to grow your business beyond the ones you already have. These days, that means a website and some smart online marketing.

This can be as simple as setting up a Facebook page and any one of several other social media sites (like Instagram and LinkedIn). These services are at no-cost to you and allow you to quickly build up a following of loyal customers. You can share ‘jobs well done’, so prospective customers can see what you are capable of, while your contact details are easily accessible. In due course, consider some paid averts on relevant social media platforms and perhaps a website of your own. It is a good way to get potential customers on board.

At the same time, list your services in community newspapers, noticeboards and newsletters so everyone in the area can easily see that you are available and what it is you do. Also, keep your eye on social media community groups – and ask family, friends and existing clients to refer and/or recommend your services when an opportunity arises.

Finally, there are many government initiatives and non-profit organisations whose aim is to help small businesses succeed – with a particular emphasis on black-owned businesses. This help could range from facilitating access to finance, all the way to mentorship. Spend some time finding out what help is on offer. The SME Movement site also has this kind of information.

Related: How To Start Your Own Artisan Business

2. Stay focused

For those just starting out, there might be a temptation to take any job that crosses your path. Rather stick to your area of expertise to build a reputation based on proven skills. If you are an electrician with a little plumbing experience, for example, tackling a piping job could cause more trouble than it is worth. Every trade is different and you are an expert for a reason.

Leave the other work for experts in those fields – but build up relationships with them so that you can refer work to each other.

3. Ride on your qualifications and references

You have spent a lot of time getting certified. Let your customers know about your qualifications and experience by putting it on your Facebook page, your invoices, e-mails and other communications. The same goes for references; these are valuable and provide evidence of your ability to get the job done. Ask for a reference when the job is complete and then on to social media it goes. The good news with social media, by the way, is that these references do not ever go away.

4. Stay on top of the paperwork

The good old days of doing business on a handshake may be behind us. Providing quotes, contracts, invoices and records of payments electronically makes paperwork a whole lot easier by creating a digital archive where physical copies aren’t needed, but it serves the same purpose, when it is formally recorded, it is far easier to see what has been agreed to, done and paid for. Do not skimp here, even the best customer service provider relationships can go awry if verbal agreements are all you have to go on.

5. Register with your trade association (and invest in CPD)

Being a member of a trade association (like Master Builders, the Institute of Plumbing or other professional bodies) lends credibility to what you are doing. It also provides access to new customers should larger contractors need to sub-contract. Your trade association also formalises training and continuous professional development (CPD).

Related: 6 Tips For Launching Your Global Brand

6. Get business insurance

All too often, this crucial coverage is ignored by those starting out on their own. You want to protect tools and equipment on the one hand and you also want broadform public liability to safeguard yourself, your employees and your business against third party claims should something go wrong on the job. It provides cover in connection with your normal business activities and also your liability if any employees are injured in the course of work.

Putting the right insurance in place can mean the difference between staying in business for the long term or folding the minute the tools grow legs and disappear.

7. Deliver good service

Do not forget that every job is a potential reference and, at the very least, is your entry into that client’s network of friends or business associates. Concentrate on giving good service and actively request feedback so you can remedy any shortfalls. A take-it-or-leave it attitude may be relaxing, but it will prevent your business from growing to what it potentially can be.

MiWay is an Authorised Financial Services Provider (Licence no: 33970)

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Types of Businesses to Start

The Ultimate 101 List Of Business Ideas To Start Your Own Business In South Africa

Want to boost your income on a part-time basis? Looking for a new business to start and grow into an empire? You’ve come to the right place. This list of business ideas will help children, adults, men, women and even people in rural areas think about ways to become an entrepreneur.

Diana Albertyn

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the-ultimate-101-list-of-business-ideas-to-start-your-own-business-in-south-africa

Are you looking for that one idea to spark a business that will make you money? We have one hundred and one just for you!

Whether you’re a stay-at-home mom or dad looking to pursue your passion part-time, a nine-to-five employee seeking a side gig, a creative who’s keen on innovative and flexible moneymaking methods or a student at any level in your education, looking to start your entrepreneurial journey early…we’ve got the best ideas for you to choose from to kick-start your very own business, today.

This comprehensive slide show below is just what you’ve been waiting for to take your first step into financial independence. Read on to find your perfect fit and discover more about how to get started.

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Types of Businesses to Start

What You Need To Know When Starting A Tech Business

For the tech entrepreneur, the majority of your intellectual capital will reside in your software, code, databases, websites or mobile applications.

Damian Michael

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Protecting and managing your intellectual capital starts with finding, identifying and classifying your most important human and intellectual assets. Once you know what you are looking for, you can then determine whether you have the rights you need over those assets. If you don’t, you can then go about securing those rights and then select the best methods of protecting them.

Terminology

Intellectual capital, intellectual assets and intellectual property 

In the industrial and manufacturing industries, the conventional forms of capital needed to start and grow a business were real estate, factories, plant and equipment. But in today’s knowledge economy, these physical assets have largely been replaced by ideas, knowledge and creativity as the new drivers of value.

Related: High-Tech Marketing Sample Business Plan

This new type of information and knowledge-based capital is known as intellectual capital. Your intellectual capital is basically all the knowledge, skills, capabilities and work product that you and your team have to offer, together with the relationships, reputation and brand equity that your business is able to attract and maintain in the marketplace.

Intellectual capital is made up of the following:

  • Your ideas, insights, knowledge and creativity (intellectual assets)
  • The talent, skills and capabilities of your team (human capital)
  • Your contractual relationships and connections with investors, customers and other stakeholders (relationship assets)
  • Your unique brand and the reputation and goodwill you have built around it (brand assets)

In the same way as we as individuals have a whole lot of information and knowledge, some useful, some useless and trivial; your business’s intellectual capital can also be categorised according to its uniqueness, usefulness or value.

Where your intellectual capital displays these additional qualities, it may qualify for statutory legal protection. These special assets, commonly referred to as intellectual property, are bestowed with rights and protections which give the owner a period of time (limited) to commercialise or exploit them without any undue or unfair interference from others. The trade-off is that after that period of time expires, the asset becomes part of the public domain for anyone and everyone to use.

Discovering what intellectual capital you have and need

For the tech entrepreneur, the majority of your intellectual capital will reside in your software, code, databases, websites or mobile applications. Copyright law without the need to register rights or comply with any further formalities automatically protects most of these assets. However, it is still necessary to identify and categorise those assets because the ownership rights and the ways to protect them may differ between the different types of asset.

At the same time, there may also be a wealth of other intellectual assets tucked away in your filing cabinets and hard drives, waiting to be discovered. These may include valuable trade secrets, know-how, methodologies, customer learning, and market research.

Related: Tech Implementations In Africa – Staying Ahead Of The Game

Once you have linked the value drivers and competitive advantages in your business with the assets that produce them, list those assets and classify them according to the structure that they take.  Are they people-based or embedded in technology or documentation. Do any of them qualify for statutory protection?

The outcome should be an inventory of all your intellectual capital, classified according to the different levels of protection available as well as their importance to your business.  You probably don’t have the time, energy or budget to protect everything, so taking the time to do this exercise will ensure that you separate the wheat from the chaff which will save you in the long run.

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