India tops the list in the largest population of school going children in the world. It is also a well-established fact that Indians spend a great deal of money on education. Studies reveal that the second most important item in the spend list of Indian families is school education, just after food and grocery. This makes entrepreneurs look at school business in India as a grand opportunity.
Being one of the most profitable businesses these days, schools education has its own limitations. The foremost constraint is that schools have to be a not-for-profit entity by law. So, they have to be set up through charitable trusts, societies, Section 8 Company or by the government. This means that the surplus profits cannot be taken out of the institutions and hence entrepreneurs seeking profits through school education business need to think twice.
However, the school education attracts a huge number of entrepreneurs and is a sought after business opportunity. To explain this, five key reasons can be listed based on the market analysis and experience of the edupreneurs.
More Demand than Supply
We all know that there is an ever increasing demand for schools. The number of government schools is not adequate to cater to the large school going population in India. Hence, the supply is more than demand which attracts private investment
Entry Barriers
It is not an easy task to open a school. The entrepreneurs have to fulfill a long list of rules and regulations and compliances to open a school and get recognition. This works in favour for those entrepreneurs who are willing to put in efforts and get every detail and compliance right.
Lucrative School Fees
It is quite noticeable that the school fees has been on the rise on a regular basis. It would not be wrong to say that the school fees increases higher than inflation in our country. School owners have plenty of pretexts to demand a raise in school fees and justify it.
Revenue Visibility
School education is one of those businesses that has high visibility of revenue. The model of school business is quite clear and viable. The chances of earning a huge revenue are quite evident and certain. There would have be something drastically wrong if any school does not give a good margin of profits.
Working Capital
One of the major concerns of an entrepreneur in any business is the generating the working capital. However, in the case of schools, the collection of school fees happens in advance which makes it easier for the owners to run the school operations smoothly. No other business offers such a beneficial characteristic.
These are some of the main reasons why entrepreneurs are keen to invest in school business in India. Though the school set up cost is usually pretty high, the profitable return on investment (ROI) makes it rewarding for the entrepreneurs.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin