With a generally agreed population estimate of 200m people and an annual population growth rate that is nearer to 2%, education is undoubtedly a growth sector in the Nigerian economy and will remain so for a long while. Nigeria’s population distribution, according to data from the CIA World Fact Book, shows that 52.44% (104m) of the population are aged 19 years or below. To think that this distribution numbers represent only the pre-school to high school age and excludes the tertiary education age group provides an indication as to the size of Nigeria’s education industry. This report is focused on the pre-tertiary level schooling population which accounts for most school startups. This report is focused on the pre-tertiary level schooling population which accounts for most school startups.

There is a constant need in the economy to keep expanding educational infrastructure across all levels, pre-school, primary, secondary and tertiary levels in order to keep up with the demand for educational services by the population. It is of little surprise then that establishing a school ranks high on the start-up list of many would be entrepreneurs as the market gap for educational services is all too glaring. Moreover, starting a school is regarded as the ultimate small business.

While the generally often stated goal by education entrepreneurs is usually to improve the standard of education and provide adequate educational infrastructure for the school-age population, one of the key motivations is the perception that schools as a business, are cash cows. While this may be true at some point in the life cycle of a school, it certainly does not start out that way at any level of the schooling experience, even at the pre-school stage. And promoters of schools will need to have run the school for several years, if not across generations before the school can become the cash cow envisaged at its start.

Four Overlooked Issues While Starting A School

Several, if not all school entrepreneurs, have been surprised by four characteristics of the schooling business. The first is that revenues come in only 3 times a year, at the start of the first, second and third terms and this especially hits you hard in the first term of the school as it is not yet at full capacity but expenses are already in place.

The second, and they are hardly ever prepared for this, is that teachers salaries, electrify and other expenses still have to be paid during the holidays especially the long vacation. This implies that the school management will have to arrange for short-term funding to cope with these period pending when school fees are paid.

A third characteristic of an early stage school business is that schools require continuous investments sometimes well past their fifth year of existence. This is because they are either expanding facilities to cope with additional students or moving to a permanent site from rented spaces.

The fourth and perhaps most humbling characteristic of schools as a business is that the demand for school services is price elastic and prices can therefore not be randomly increased otherwise enrollment will decline.

A lack of preparation on the part of several education entrepreneurs on how best to cope with these four characteristics of the education business plays a major role in the potential stagnation, decline or even closure of many schools. So before you step out to launch that new school be sure to have a plan in place to deal with these four realities as having that plan in place could mean the difference between your success and failure.