Selecting the building where your school is to be located will have a profound effect on your growth and profitability. It will take a good bit of scouting around and research to find the right location.
It is common in China to see tight geographic clusters of the same businesses. You’ll see six, eight, or even ten or more stores on the same block selling similar products, e.g., kitchen furnishings. This is particularly true in wholesale markets where you can find a dozen shops with absolutely identical product lines pressed cheek to jowl.
Likewise, you’ll sometimes find English training schools often grouped together on the same street. At first glance that might seem the logical choice, but it could also be a disaster.
I’ve watched a small school start in an unprofitable area and then be quickly joined by two or more competing schools. The problem was, the first school wasn’t making enough money with the entire market to itself. Needless to say, none of those schools were ever going to be profitable.
If you are employing and paying foreign teachers, you’ll need to charge more than the competition is getting for delivering Chinese instructor led courses. That means you need to choose an area where the target market can pay more than the going rate.
You need to go where the money is. Generally, that is going to be the central business district (CBD). That is also where the best public transportation is too: an important consideration for your customers.
The CBD is going to have the highest rent. You should be prepared and expect to pay top dollar for your school’s rent.
When you are out looking at potential buildings, keep in mind that it does matter who the owner is. It may be difficult to find someone willing to sign a multiyear lease and you may not be initially inclined to do so yourself—a decision you may come to deeply regret.
If the building is owned by, say, the government, they generally won’t be particularly interested in doing anything for you beyond collecting the rent. In the alternative, you may find a private landlord who will watch your business grow and then, at the end of your annual lease, refuse (at the last possible minute) to renew.
Suddenly, you are out on the street looking for a new location. And what about your students? Not to worry, the owner’s brother-in-law just happened to need a place to open up his new English language training school, thank you very much. It can and does happen.
When you rent commercial property, it is normal to pay either six months or one year up front. You’ll need to budget for that expense.
The rent for commercial property is calculated at a cost of X amount, per square meter, per day. The lease includes common areas (stairwells, hallways, etc.) as well as “dead areas,” i.e., unusable space. You will need to measure the area yourself and don’t be surprised by the difference between the space you are paying for in contrast to what you can actually use. Just measure for the sake of a “reality check” and negotiate with the owner if you feel you are paying for too much dead space.
Don’t get led astray by different rent calculation methods when comparing locations. Always insist that the rent be quoted in a standardized rate, i.e., X amount, per square meter, per day. Then personally determine the area of the usable space for each location you are considering and compare rates based on viable area, not total area. Don’t let owners just throw prices at you. Always make sure you are comparing apples to apples.
You’ll need to rent enough space to allow for growth. The typical commercial building comprises multiple floors. Each floor has enough space for about eight good-sized classrooms and administrative areas. Calculate growth capacity at about 225 students per classroom (at a maximum class size of twenty-five). So, two classrooms can handle a student body of about 450 pupils if efficiently scheduled.
Once your school opens and begins to gain some students, you can bet the bank that the rest of the space on the floor will be quickly snatched up by other businesses, often your competitors.
To counter this, and if the owner is willing, you might rent every other room on the floor if you don’t have the desire or ability to rent an entire floor, such that it might take you years to fully utilize an entire floor of space. Renting alternating rooms will discourage competitors and other businesses from moving in to some degree, as they will understand upfront that they won’t be able to rent a contiguous block of rooms on the same floor as future need dictates.
It is common for commercial property to be rented in a “bare wall” state, i.e., the area consists of nothing more the front door and exterior or retaining walls. You’ll have to work with the owner to ensure that all the necessary remodeling is done prior to occupancy. You will need to draw up absolutely clear and specific plans (such as a project management plan with a clear and binding timeline) and to check the progress of the remodeling every day.
Consider the following example: You have preexisting male and female public bathrooms with Chinese porcelain toilets already installed. You tell the owner you want, in addition to these Chinese toilets, “two Western toilets installed in the bathrooms” for your teachers. After you agree to pay for them, the owner indicates that this will be no problem whatsoever. Later, you find both Western toilets have been installed in the same bathroom: two in the men’s room and none in the ladies’. Take nothing for granted and leave absolutely nothing to chance. Clarifying precisely what you meant after the fact, no matter how obvious and clear you had initially assumed the work order to be, won’t save you the added expense of correcting the problem later.
In addition, don’t be surprised to find you are paying nearly double for electricity over the residential rate as, in many cities, the government has approved a higher charge per kilowatt for commercial buildings over what residential properties have to pay.
You’ll need to furnish your classrooms too. I prefer whiteboards since chalk dust is a nuisance. Don’t buy the desks that have moving parts. Trust me on this. Some desks take over an hour to assemble, require constant adjustments and will be sold to the scrap man within a year. You can have desks custom made, delivered and assembled for less than it would cost you to purchase them retail, and these make for a much more sophisticated appearance.
Now that I’ve covered the process of selecting, renting, and furnishing your school, the next installment of Opening Your Own School, Part IV, will address some rather interesting and unexpected sociopolitical issues I refer to as “Welcome to the Neighborhood.”