Saturday, September 03, 2011

Searching for A Business Model

If I have spent last 18 months working in designing, developing and delivering business degree courses in Britain, I wish to spend the next 18, or 36, or longer, to build the capability to deliver such British Education programmes worldwide. I think this is only the logical next step for me, and in line with what I have done before, during my time in International Franchising and e-Learning companies. Whether or not I can achieve this within the context of my current client project is not certain: Often, companies which are successful in one way of doing business are terribly difficult to adapt to another business model, even if the next business model is only the logical next step.

However, that battle aside, I am not sure about the shape of the business model yet. I, and the people I have discussed this with, are all guessing that this is a good opportunity, because it appeals to common sense. A global education for a globalized world, sounds like a cheesy headline of a morning paper: By definition, a self-evident thing. However, education still remains highly regulated, beset by vested interests, and impossibly difficult to trade in across borders. Indeed, that is the opportunity: My ideas of creating an unified platform for exporting British Higher Education is triggered by the sobering statistic that only 2% of world's students study in an university outside their country of birth. Clearly, a business can be built expanding access to global higher education to the pupils who have not tried it so far.


This way, I have a feel of the market and demand, but this is not the same as finding the business model. My underlying assumption about the capital structure is that there will be angel investors and private equity firms backing up international education start-ups because of the common sense appeal of the same. I see the exit option for such investors, and clearly they will constitute two stages of funding rather than one, coming from the public capital markets or trade buyers, where these trade buyers will be the large For Profit education companies with global ambitions. However, I am also conscious of the timing: In a way, we are at a maturing stage of investor interest in For Profit education, given the less-than-optimal student success and increased regulation of such providers in the US, where the student loans, primarily on the back of soaring college fees, are becoming unsustainable. 

The market we target are different, in Asia and Africa, where there is a seemingly unlimited number of young people whose hopes and aspirations are sky-high. But, it is also important to look at the cost model, as the paying capacity of these consumers are lower than their western counterparts and some clever method is needed to spread the cost over a longer period of the students' lifetime. Without this, even with demand, the offerings may not be scalable: Without scale, indeed, the export model of education does not work.

This is where my new-found interest in economics, banking and finance come from. I am trying to gain some understanding of various financial instruments, and how student finance work in different countries. I am having to cover some lost ground - I studied economics back in the 80s (my Masters was completed in 1992) and the subject changed considerably since. Besides, my reading list then contained nothing of the economics of education, which is precisely the focus of my studies now. I have tried working out the financial models of computer training and English learning before, with some success, and this is another time I am having to do this exercise. This is possibly the most complicated of it all, given the kind of service education is, and even with a rather inelastic demand situation overseas (or so one thinks), it is not easy to structure the finances so that the investors, students and the administrators in various countries are all happy.

No comments:

Popular Posts

How To Live

"Far better it is to dare mighty things, to win glorious triumphs even though checkered by failure, than to rank with those poor spirits who neither enjoy nor suffer much because they live in the grey twilight that knows neither victory nor defeat."

- Theodore Roosevelt

Last Words

We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time.

- T S Eliot

Creative Commons License

AddThis