For many entrepreneurs, starting an education-related business may prove to be one of the smartest decisions they’ve ever made.
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Long overlooked by the private sector, education is a blossoming industry for business startups. That sense of opportunity resonated at last year's Venture Capital in Education Summit, where Peter Campbell of private equity firm Generation Partners remarked: "A theme you hear from the president is that in the next 12 years we have to retake our primacy as the most educated nation on earth. As an investor, that's the kind of trend you want to align yourself with."
Emerging opportunities in education
If you’re interested in breaking into the education market, it pays to do a bit of studying to find out what angle of entry makes the most sense for you. Although dissatisfaction with traditional education is anything but a state secret, a number of other factors have boosted business opportunities in education, including:
- Continued growth of — and interest in — online education.
- Massive federal, state and local spending — much of which is focused on supplemental educational services like tutoring.
- A struggling economy. "Any time you have a downturn in the economy, it's an excellent time to retool on the education side," says Charles Matthews, executive director of the Center for Entrepreneurship, Education and Research at the University of Cincinnati.
- Increasing competition for admission to prestigious colleges and universities.
Students’ desire to earn acceptance into the colleges of their dreams prompted Glenn Clayton to launch Appleton Learning in Huntsville, Alabama. The tutoring and test preparation business directly serves some 80 schools in Alabama and Tennessee, and has recently opened satellite locations in Houston.
"Both individuals and schools see an increasing need for new and improved methods," says Clayton. "Global competition in education is becoming more apparent to Main Street, and the result is an increased emphasis on the quality of the education our kids are receiving."
Entrepreneurs are also gaining footholds in other educational disciplines, as illustrated by private companies such as the following:
- CALA Academy (Cultural Awareness and Language Acquisition Academy), a Las Vegas-based language school that teaches Spanish and English to employees, managers and executives to better communicate with clients and co-workers.
- Grasshopper Preschool Prep Kits, a Cedarhurst, New York, company that provides educational and play products for pre-preschool children.
-College Essay Organizer, an online service that helps students manage college application essays and other requirements.
This diversity of businesses not only underscores the range of opportunity in the education sector, but it also highlights an enormous market with significant service gaps.
"Entrepreneurs always love market inefficiencies and underserved markets," says Matthews. "It’s not so much that the current educational systems or providers are doing a bad job — although there is certainly room for discussion around the job that is being done — as much as it’s entrepreneurs seeing underserved market opportunities and moving to provide solutions."
Taking on the private sector stigma
However, the education road is not without potholes. For one thing, some public schools are hesitant to work with private education service providers, notes DeNita McGuinn, owner of a Lawrenceville, Georgia, tutoring company.
"There is a stigma of being a private, for-profit company when approaching public schools," she says. "Most public school system employees have not had exposure to the private sector and may feel uncomfortable about sharing information with families about outside services."
Education also faces many of the same challenges encountered in any industry. One problem lies in product-focused education companies, which face an uphill battle when it comes to "explaining" a new product. The more unique or innovative the product, the harder it can be to win over potential buyers.
"The right sales avenue is, truthfully, a tricky question and something that I’m currently assessing," says Rachel Rudman of Grasshopper Preschool Prep Kits. "I would say the Internet and catalogues have been the best. These mediums allow for an explanation, and one typically gets the buyer who is looking for something educational or has time to explore."
Another major issue is reputation — critical in any arena, but particularly sensitive when it comes to education.
"The difference between a good school and a bad one is its reputation," says Marco Bettelli, director of business development at SAE Group, an international creative media technology training institute. "Your business will live or die by the people that are part of the organization, so it’s very important that the people within your organization share the vision and are ensuring that the students are getting the best possible education they can.
"But it's an opportunity to assist in the development of individuals," he adds. "Very few other industries give you the opportunity to etch an existence from helping people to achieve their dreams."
Jeff Wuorio is a veteran freelance writer and author based in southern Maine. He writes about small-business management, marketing and technology issues.