Coaching institute has become a part of the education system in India. The popularity of coaching institutes has increase 35% more than the last five years. 95% of the high school students take up coaching classes for most of the subjects.
Requirements for starting up the business
You would need a commercial space at a central location for the children to reach easily. Adequate lighting, furniture for seating arrangements, lockers for children to keep their belongings, competent staff and dedicated support staff are the basic requirements. If you are planning to conduct a small scale coaching center, you need not obtain few licenses from the government. But, if your coaching center venture is as big as an institution, you would need to get a trade license and pay tax for the revenue generated through the center. If your income exceeds 9 lakhs per annum, you need to register your business and pay service tax within thirty days.
About the market
Since the capital involved in the business is moderate and the barriers for new comers in the market are less, there are a lot of competitors in the market. Switching power of the buyers is very restricted as a student might not float from one coaching center to another. With increasing number of students in the city, the scope of the market in the future is immeasurable.
Capital involved in this business
If you are planning to lease a large area as your premise with the furniture, it would cost you around 50,000 to 60,000 rupees per month. The salary for a staff would be around 15,000 to 20,000 per month (experienced staff). Support staff can be hired at 7,000 to 10,000 per month. Thus, you would need to have a working capital of not more than one lakh to 1.25 lakh per month, including the variable costs. If you own a house or a room which can be converted into a classroom, you can cut short on the rent factor. Based on the subject, class, board of education and others, a student can be charged between 6,000 and 10,000 per month. All you would need is just 10 to 15 students to break-even and create good revenue.
Profitability of the market
83% of the parents are looking for a coaching center for their children in primary classes. On an average, a household pays 500 to 700 rupees per hour for the centers that takes care of the primary school students till one of the parent returns to pick them up. In such cases, apart from the subjects, you need to train them on extra-curricular activities too. You need to create an aesthetic environment for coaching small children which would increase the capital involved but, the return on investment is very high.
According to a report, in the last three years, a rural family spends 2,000 rupees for coaching centers for a child and a family in an urban area spends about 2,750 to 3,500 rupees for coaching their children. This fee can go up if the coaching for some competitive examination or college syllabus.
Scope of the market
With the constant rise in the number of colleges and schools without increase in the standard of education, there is an accelerated increase in the scope for this market. Since the craze for government jobs is very high among the youth, the coaching centers for competitive examinations would be profitable in the future.
- You need to have separate and experienced teachers for each subject.
- Your premises should be large enough to hold many students without congestion.
- Provide discounts and referral discounts to increase your customer base.
- Make sure to pick a location near an institution like school or college to increase the exposure of the business.
- You need to make sure to adhere to the standards that are followed by the government or else, you would be out of business in no time.
- Create a logo and demonstrate professionalism in your business to attract more students.
Marketing and Growth
The result that you produce in one academic year would stand as your base of advertisement. Make sure to hire some famous instructors to gain more customer base. Handing pamphlets and advertising through bills would be very effective. Remember that the profitability of the business totally depends upon the number of students in the institute. You should aim at increasing the number of students by at least 10% every year to have a sustainable business.