Validation of Business Idea As an Opportunity

Business Idea: Tutorial Classes at Deoghar, Jharkhand Courses Offered: IX XII & Engg Entrance Customer need identified A good quality coaching and career guidance institute at deoghar town in Jharkhand Unmet and Unfelt needs: (i) Quality teachers and guidance (ii) One stop solution for Science, Maths & English (iii) Career Guidance (iv) Structured Mentoring (v) Personalized attention (vi) Stress free learning

How is the customer currently being served what are the options available? (substitutes and alternatives) Currently customers are being served by a. Private Tutions for individual subject b. Mediocre Quality Coaching Institutes at Deoghar c. Self Study d. Teachings at colleges and schools. Options Available a. Course Material thru post. ( Brilliant etc.) b. Good Coaching Institutes at Patna, Kota & Delhi. c. Special classes by respective schools

How different is the solution? Why should the customer prefer it to other options?
a. Quality Faculty Members
b. State of Art infrastructure viz. classroom, multimedia, ca

c. Personalized performance monitoring and guidance

d. Appropriate location to minimize travel time. e. Student/ faculty ratio of 20:1 per subject f. Regular feedback to parents g. Attractive fee structure h. Free Spoken English Classes i. Course structure design in congruence with colleges syllabus

What is the Differentiation ?

Major Differentiation a. Quality Faculty b. One stop solution for all subjects c. Personalized attention d. State of art Library e. Exclusive study hours with personalized counselling/ guidance on weekends f. Refreshment facility at institute. g. Assistance for filing application for entrance exams. h. Personal growth training sessions Minor Differentitaion a. Course Material b. Good ambience ( classroom, toliets etc) c. Career counselling for parents

Who is the customer?

Identify your target segment The target segment will be a. Kids of Salaried class middle income parents. ( viz. Bank employees, teachers, engineers, govt employees etc)

b.

Kids of High Income Group ( viz. Doctors, Lawyers, Businessmen )

How attractive is the market?

How many customers are there? (market size) Deoghar Town IXth & Xth : 4000 XIth & XIIth: 2000 Engg Entrance : 1000

How many will buy from you? (market share) IXth & Xth : 100 ( CBSE, ICSE, Jharkhand Board) XIth & XIIth: 150 Engg Entrance : 50 Is the Market attractive to enter ? (market trends) Yes, because our school / college education system is not enough to cater to the ever growing competition standards. Also the student enrollment and population is growing very fast at Deoghar.

Important Insight on Market & Industry

Markets is attractive Industry is not attractive as entry barrier is

less and substitutes are available, switching cost is low. The growth rate of market size is optimistic. Good level of competition is expected in coming years as new players and established players would be entering the market. Higher competition would lead to innovative methods of teaching and also increased awareness among student community. Pricing and differentiation would be the key parameter.

Industry Attractiveness

Entry barriers : Low to medium

Substitutes: Available
Supply power: Low Buyer power: Low but will increase with time as the competition grows.

Competitive rivalry: Medium to High Overall Profitability : Medium to High ( depending upon the scale of operation)

What is your competitive advantage ?

Are you superior in the value chain(making and

marketing activities) than your competitors? Competitive Advantage: a. Good networking among professors and teachers. b. Good contacts in the local media ( newspaper & TV channel) c. Impressive background and degree of owner. d. Major variable cost would be towards stationery/ reading material, test papers etc which can be optimized by tie up with local printer/ publisher. e. State of Art classroom infrastructure and ambience.

Is the timing right ?

Are you within the window of opportunity ? Yes, because the customer expectation and aspiration towards education and professional degree is increasing. The growing competition in entrance exam requires quality coaching and guidance and government/ private school infrastructure is not enough to cater it. The priority of schools are good marks in Board exams rather than shaping students career.

How will you make money ? Approx Yearly Expense & Revenue Expense

Loan Principal & Interest: 6.0 lacs

Salaries: 7.0 lacs Stationery : 7.0 lacs

Other Overheads ( Tax/Bills/ etc) : 8 lacs

Revenue Tution fees: 65 lacs

PBT= 37 lacs

How much money will you need ?

How much will it cost to acquire and retain customers?

Initial Advertisement & Campaign: 5 lacs

How long will it take to attract customers ? Initial Campaign : 4-5 months How quickly will customers pay ? Advance payment for one month

How slowly can suppliers be paid ?

1month credit How much money will be needed for cash break even? 40 lacs

Will the business attract investors?

How much money is required?

Initial Investment of Approx 40 lacs in land , building and minimum office equipment
What Is the payback period?

2 years
How attractive is the exit option? Established institute with good student base can fetch good value. The infrastructure viz. land and building will appreciate with time.

What Are You Good At?

Money Skills 15 lacs will be sourced from personal resources and balance 25 lacs from Banks.

Getting the people ?

The differentiation strategy is pivoted on

availability of sincere, qualified, committed & loyal faculty members which remains the main source of concern. How to get and retain them ? For retaining, good salary will be offered along with some % of ownership. Will people cost make the business model unviable ? No