start me up!

Don't give out the names of dead calc tutors!

This week, my students got to hear Jim Pankiewicz, the Area Director of the local Club Z Tutoring. As you may know, Club Z's gig is in-home tutoring. Of course, most in-home tutors are on their own. (You might see their flyers with rip-off phone numbers in your friendly neighborhood grocery store.)

So much is on the line with standardized tests that those tests become a major incentive of customers for the tutoring business, whether in-home or otherwise. Jim's making money faster than many new businesses. He is in -- or nearly in -- "the black." He's making a living. So he feels the impact of the standardized tests. Part of tutoring is content, but part of it is study skills and test preparation. That's getting to be a bigger and bigger part.

Franchises come with a fee (in this case $50K). This fee (the major fixed expense) includes

• the name
• the training
• marketing materials and support
• solo rights to a territory
• good business practices advice
• advice on selecting tutors
• pool of knowledge from other franchises' experiences

(Notice that the franchise fee is a LOT cheaper than buying into a storefront competitor, e.g. Huntington.)

Tutors are "independent contractors." Jim does not have to pay their (our) taxes -- and with tutors only working a few hours a week each in general, that saves a great deal of paperwork as well as money. Other fixed (and mostly infrequent, as opposed to ongoing) expenses incurred relate to advertising:

• Yellow Pages (remember -- these guys only put out a book once a year -- that may govern when you open!)
• business cards
• roadside signs

Competitors include

• Huntington Learning Centers
• Sylvan
• Kaplan
• private individuals (which you really can't concentrate on)

NOTE: At any given time one percent of the students in the area need tutoring. And Jim has found that the competitors' ads raise the parents' awareness of this. In other words, they draw customers not just toward themselves, but toward Jim and Club Z as well. It comes as no surprise, then, that Jim takes advantage of a small ad in the Yellow Pages, and Club Z franchises will by a sponsored ad on Google, near where the larger competitors place their larger ads, so comparison shoppers will call him when they call them.

In this particular business, the students' parents pay the cost of tutoring before the tutor is even selected. This means Jim has money in hand for possibly several weeks before having to pay it out.

Jim acts as an "advance scout" on behalf of the tutors, which is an advantage to the tutors' comfort and safety. He makes use of Craigslist to find tutors easily and at little expense. (Though Craigslist is useful in other ways as well.)

His responsibilities also include visiting schools and talking to guidance counselors about tutoring. A typical enthusiastic response:

Do you know how embarrassed I was to give a parent the name of a Calc tutor who was dead?

In short, this school official was a bit glad to meet Jim. :-)

Jim also researches demographics in great detail. Locally, Robbinsville and Millstone have exploded in population -- and in available money -- since the 2000 Census, which is the dipstick used by Club Z to sell franchise areas. He knew some zip codes would grow, and he used that knowledge to plan his business for future growth. This work would be expected of any business by its smart investors. Investors involved in "due diligence" would LOOK for this information from you.

NOTE: This is a "trigger event" business. (This term is often seen in the context of SQL or object-oriented programming. But the meaning is the same here: the system detects the occurrence of a certain event, and a chain of responses to that event follow.) About five or six days a year (such as the end of a grading period, the date of a grading period progress report, or, say, within a month of a planned SAT sitting), those events occur, and Jim gets phone calls automatically. Radio ads, by contrast, would be ineffective unless they occur at the same time as the trigger events.

Labels: education

posted by Ron @ 9:49 PM