Table of Content

    Do you want to start language school business?

    Are you thinking about starting a language school? Well, the United States has the largest immigrant population as compared to all other countries due to job and study opportunities. And knowledge to speak and write English fluently is required in several study programs and job fields.

    So, if you are intended to hire a team which can teach desired languages accordingly, then, you will be required to make a detailed business plan for language school. To let you know about the essentials of a language school business plan, we are providing one here, for the startup, ‘Naomi Language School’.

    Executive Summary

    2.1 The Business

    Naomi Language School will be a licensed and registered language school based in Boston, with the aim of teaching English, French, Spanish, German and other languages. The school will provide various courses meant to teach language skills from basic to intensive level.

    2.2 Management

    To manage the school, Naomi will be there in her school by herself, besides, she will hire administrator, coordinators, and tutors. In this business plan english language school pdf, you will later find out the details of how the business will be actually started and run.

    2.3 Customers

    Knowing your customers can help you a lot in taking major decisions while making language school business plan template. There are a large number of universities and colleges in Boston which offer scholarships to international students. And there are many people from outside the US, who came here just to make a living. So, our customers will be very diverse, relating to different countries, speaking different languages.

    2.4 Target of the Company

    Our target is to help foreigners understand our language and norms, to settle in our country. Our other targets are to become the most renown language tutoring center while earning a profit margin of $15k per month by the end of the first year.

    language school business model - 3 years profit forecast

     

    Company Summary

    3.1 Company Owner

    Naomi Connery is a knowledgeable lady with a bachelor’s degree in English Language & Literature from the University of Oxford. Besides English, she is adept in speaking and writing German, French and Spanish Language.

    3.2 Why the Business is being started

    Naomi can use the relevant skills she has by starting a language school business. To fulfill the desire of running her own business, while availing what she has achieved so far, the best option she figured out was to start a language school.

    3.3 How the Business will be started

    Although Naomi is multilingual, still she can’t run the school on her own. She will rent a building which was previously a high school. After getting essential licensing, the building will be renovated. Naomi will purchase the essential inventory, and will hire tutors to teach the English language to non-English people, and other languages as well to be learned by anyone.

    Naomi didn’t take the risk of preparing english school business plan by herself. Her business plan for language school which is given here as a sample is written by professional language school business plan writer. The costs for the startup are as follows:

    language school business plan - 3 years profit forecast

    The detailed startup requirements are given below:

    Start-up Expenses  
    Legal $55,300
    Consultants $0
    Insurance $32,750
    Rent $32,500
    Research and Development $32,750
    Expensed Equipment $32,750
    Signs $1,250
    TOTAL START-UP EXPENSES $187,300
    Start-up Assets $0
    Cash Required $332,500
    Start-up Inventory $32,625
    Other Current Assets $232,500
    Long-term Assets $235,000
    TOTAL ASSETS $121,875
    Total Requirements $245,000
    START-UP FUNDING $0
    START-UP FUNDING $273,125
    Start-up Expenses to Fund $11,875
    Start-up Assets to Fund $15,000
    TOTAL FUNDING REQUIRED $0
    Assets $23,125
    Non-cash Assets from Start-up $18,750
    Cash Requirements from Start-up $0
    Additional Cash Raised $18,750
    Cash Balance on Starting Date $21,875
    TOTAL ASSETS $0
    Liabilities and Capital $0
    Liabilities $0
    Current Borrowing $0
    Long-term Liabilities $0
    Accounts Payable (Outstanding Bills) $0
    Other Current Liabilities (interest-free) $0
    TOTAL LIABILITIES $0
    Capital $0
    Planned Investment $0
    Investor 1 $332,500
    Investor 2 $0
    Other $0
    Additional Investment Requirement $0
    TOTAL PLANNED INVESTMENT $695,000
    Loss at Start-up (Start-up Expenses) $313,125
    TOTAL CAPITAL $251,875
    TOTAL CAPITAL AND LIABILITIES $251,875
    Total Funding $255,000

    Products

    Mentioning the services, you want to provide in your language school business plan template, can help you a lot in figuring out the best ways of advertisements and earning profits.

    The language learning programs which will be offered in Naomi Language School are:

    • Basic English Learning Program: For children and teens, and for the foreigners, we will provide basic English learning program enabling them to speak and write English.
    • Intensive English Learning Program: For undergrads, grads, and professional incomers we will be offering intensive English learning programs to excel their English speaking and writing skills.
    • Other Language Learning Programs: We’ll offer programs to learn languages like German, Spanish, French, Chinese, Arabic, and Japanese from basic to a comprehensive level.
    • Career Language Training: For professionals who have either come for a managing or other important job in the US, or the natives who will be going in some other country for job works, we’ll be having special and short language programs.

    Marketing Analysis of Language School Business

    Our target customers will belong to diverse countries and cultures; it will be challenging to bring them together in the same environment to learn the same language unless you have done a detailed marketing analysis in your language school business model.

    In this sample business plan language school pdf, we are analyzing our target groups in order to make our services compatible with their needs.

    5.1 Market and Industry Trends

    The United States is recorded for having the highest number of international students worldwide. In order to fill the gap between foreigners and natives, there are currently 13,240 language training centers operating in the US, generating a revenue of $2 billion annually according to IBISWorld. Although there are enough language training centers, yet there is an increasing demand for more, with an expected growth rate of 2.5 percent. So if you manage to administer your students and their requirements efficiently, you won’t be at loss.

    5.2 Marketing Segmentation

    Our experts have identified the following type of target audience which can become our future consumers:

    language school business plan - marketing segmentation

    The detailed marketing segmentation of our target audience is as follows:

    5.2.1 Foreigners: Our biggest target group will be the students and professionals who come to Boston to continue their studies and jobs respectively. They usually find difficult to be fluent with the new language. Moreover, certain jobs and study programs require them to get a workshop on the English language before entering the relevant institute.

    5.2.2 US Citizens: This group comprises of those students and professionals who are native of US but require some additional language skill regarding English or some other language. For such people, professionals and students we’ll be teaching a few languages other than English in our center.

    5.2.3 Professional & Career Oriented: We’ll be having special and short timed language training programs for the professionals who either have to excel in English language or some other languages which we will be offering.

    The detailed market analysis of our potential clients is given in the following table:

    Market Analysis
    Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
    Foreigners 32% 11,433 13,344 16,553 18,745 20,545 13.43%
    US Citizens 48% 22,334 32,344 43,665 52,544 66,432 10.00%
    Professional & Career Oriented 20% 12,867 14,433 15,999 17,565 19,131 15.32%
    Total 100% 46,634 60,121 76,217 88,854 106,108 9.54%

    5.3 Business Target

    Our main targets to be achieved over the next three years are:

    • To earn a profit margin of $15k per month by the end of the first year
    • To start online language training besides our current work by the end of the third year

    5.4 Product Pricing

    Our services are highly efficient, therefore we haven’t priced our services low, they are in fact priced a little bit higher than our competitors.

    Strategy

    As mentioned earlier that there are a lot of language schools running in the United States, so before thinking about how to start a language school business you must think about something additional and more lucrative. In this language school business model pdf you can read about the competitive aspects and advertisement define a strategic plan Naomi Language School will adopt.

    6.1 Competitive Analysis

    Our biggest competitive advantage lies in our workforce. Our tutors are highly experienced and professional and they know the tactics of teaching an entirely new language to those who are alien to it. Secondly, we’ll be greatly benefitted by our location. Boston is the city with two major universities Harvard and Massachusetts Institute of Technology; so students from all over the world desire to come here to study further. We are exactly located in the metropolitan area, where those students can easily approach us to remove their hesitation of speaking a new language. Lastly, we will not only be teaching the language, but we will also be teaching the skill, we’ll arrange group talks and interactions so that foreign students can adjust with the new people.

    6.2 Sales Strategy

    To advertise our services:

    • We will carry out a large-scale social media campaign.
    • We will arrange free seminars to exhibit our teaching methods.
    • We’ll contact notable institutes to let us introduce our services to their foreign students.

    6.3 Sales Monthly

    language school business model - sales monthly

    6.4 Sales Yearly

    language school business plan - sales yearly

     

    6.5 Sales Forecast

    language school business plan - unit sales

    Sales Forecast      
    Unit Sales Year 1 Year 2 Year 3
    Basic English Learning Program 1,887,030 2,680,320 2,588,240
    Intensive English Learning Program 802,370 815,430 823,540
    Other Language Learning Programs 539,320 770230 1,002,310
    Career Language Training 265,450 322,390 393,320
    TOTAL UNIT SALES 3,494,170 4,588,370 4,807,410
    Unit Prices Year 1 Year 2 Year 3
    Basic English Learning Program $140.00 $150.00 $160.00
    Intensive English Learning Program $600.00 $800.00 $1,000.00
    Other Language Learning Programs $700.00 $800.00 $900.00
    Career Language Training $650.00 $750.00 $850.00
    Sales
    Basic English Learning Program $2,149,800 $2,784,000 $3,383,200
    Intensive English Learning Program $120,050 $194,500 $268,500
    Other Language Learning Programs $50,110 $71,600 $93,000
    Career Language Training $139,350 $194,600 $249,850
    TOTAL SALES
    Direct Unit Costs Year 1 Year 2 Year 3
    Basic English Learning Program $0.70 $0.80 $0.90
    Intensive English Learning Program $0.40 $0.45 $0.50
    Other Language Learning Programs $0.30 $0.35 $0.40
    Career Language Training $3.00 $3.50 $4.00
    Direct Cost of Sales
    Basic English Learning Program $989,300 $1,839,000 $2,679,700
    Intensive English Learning Program $66,600 $119,900 $173,200
    Other Language Learning Programs $17,900 $35,000 $52,100
    Career Language Training $19,400 $67,600 $115,800
    Subtotal Direct Cost of Sales $1,294,100 $1,699,400 $2,104,700

    Personnel plan

    Staff required by Naomi Language School is given here in this business plan for language school sample with a little job description.

    7.1 Company Staff

    Naomi will manage and supervise the overall operations, other staff will be:

    • 1 Administrator for managing all operations
    • 1 Accountant for maintaining financial records
    • 2 Sales Executives responsible for marketing the school
    • 10 Tutors for tutoring different languages
    • 2 General Assistants for undertaking various day-to-day
    • 2 Cleaners for cleaning the facility
    • 1 Freelance Web Developer for managing school’s web pages and social media accounts
    • 1 Front Desk Officer for receiving calls
    • 1 Security Guard

    7.2 Average Salary of Employees

     Personnel Plan      
    Year 1 Year 2 Year 3
    Administrator $85,000 $95,000 $105,000
    Accountant $45,000 $50,000 $55,000
    Sales Executives $187,000 $194,000 $201,000
    Tutors $445,000 $452,000 $459,000
    General Assistants $152,000 $159,000 $166,000
    Freelance Web Developer $85,000 $95,000 $105,000
    Front Desk Officer $50,000 $55,000 $60,000
    Security Guard $45,000 $50,000 $55,000
    Total Salaries $597,000 $611,000 $625,000

    Financial Plan

    Doing detailed financial analysis in your language school business plan is essential as it will list all the startup costs, salaries of your employees, and other expenses along with a plan to cover these expenses. A language training center doesn’t require a lot of investment unless you want to spend too much on getting the perfect location. The investment and expenses Naomi did in order to meet the criteria of an excellent language center are given here in this english language school business plan pdf. This language school business model is written by a professional business plan writer, revised by a financial expert. So, you can take help from here, in case you are starting the same business.

    8.1 Important Assumptions

     General Assumptions      
    Year 1 Year 2 Year 3
    Plan Month 1 2 3
    Current Interest Rate 10.00% 11.00% 12.00%
    Long-term Interest Rate 10.00% 10.00% 10.00%
    Tax Rate 26.42% 27.76% 28.12%
    Other 0 0 0

    8.2 Brake-even Analysis

    language school business model - brake-even anlysis

     Brake-Even Analysis  
    Monthly Units Break-even 5530
    Monthly Revenue Break-even $159,740
    Assumptions:
    Average Per-Unit Revenue $260.87
    Average Per-Unit Variable Cost $0.89
    Estimated Monthly Fixed Cost $196,410

    8.3 Projected Profit and Loss

     Pro Forma Profit And Loss      
    Year 1 Year 2 Year 3
    Sales $309,069 $385,934 $462,799
    Direct Cost of Sales $15,100 $19,153 $23,206
    Other $0 $0 $0
    TOTAL COST OF SALES $15,100 $19,153 $23,206
    Gross Margin $293,969 $366,781 $439,593
    Gross Margin % 94.98% 94.72% 94.46%
    Expenses
    Payroll $138,036 $162,898 $187,760
    Sales and Marketing and Other Expenses $1,850 $2,000 $2,150
    Depreciation $2,070 $2,070 $2,070
    Leased Equipment $0 $0 $0
    Utilities $4,000 $4,250 $4,500
    Insurance $1,800 $1,800 $1,800
    Rent $6,500 $7,000 $7,500
    Payroll Taxes $34,510 $40,726 $46,942
    Other $0 $0 $0
    Total Operating Expenses $188,766 $220,744 $252,722
    Profit Before Interest and Taxes $105,205 $146,040 $186,875
    EBITDA $107,275 $148,110 $188,945
    Interest Expense $0 $0 $0
    Taxes Incurred $26,838 $37,315 $47,792
    Net Profit $78,367 $108,725 $139,083
    Net Profit/Sales 30.00% 39.32% 48.64%

    8.3.1 Profit Monthly

    language school business plan - profit monthly

    8.3.2 Profit Yearly

    language school business plan - profit yearly

    8.3.3 Gross Margin Monthly

    language school business plan - gross margin

    8.3.4 Gross Margin Yearly

    language school business plan - gross margin yearly

    8.4 Projected Cash Flow

    language school business plan - cash flow

     Pro Forma Cash Flow      
    Cash Received Year 1 Year 2 Year 3
    Cash from Operations
    Cash Sales $40,124 $45,046 $50,068
    Cash from Receivables $7,023 $8,610 $9,297
    SUBTOTAL CASH FROM OPERATIONS $47,143 $53,651 $59,359
    Additional Cash Received
    Sales Tax, VAT, HST/GST Received $0 $0 $0
    New Current Borrowing $0 $0 $0
    New Other Liabilities (interest-free) $0 $0 $0
    New Long-term Liabilities $0 $0 $0
    Sales of Other Current Assets $0 $0 $0
    Sales of Long-term Assets $0 $0 $0
    New Investment Received $0 $0 $0
    SUBTOTAL CASH RECEIVED $47,143 $53,651 $55,359
    Expenditures Year 1 Year 2 Year 3
    Expenditures from Operations
    Cash Spending $21,647 $24,204 $26,951
    Bill Payments $13,539 $15,385 $170,631
    SUBTOTAL SPENT ON OPERATIONS $35,296 $39,549 $43,582
    Additional Cash Spent
    Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
    Principal Repayment of Current Borrowing $0 $0 $0
    Other Liabilities Principal Repayment $0 $0 $0
    Long-term Liabilities Principal Repayment $0 $0 $0
    Purchase Other Current Assets $0 $0 $0
    Purchase Long-term Assets $0 $0 $0
    Dividends $0 $0 $0
    SUBTOTAL CASH SPENT $35,296 $35,489 $43,882
    Net Cash Flow $11,551 $13,167 $15,683
    Cash Balance $21,823 $22,381 $28,239

    8.5 Projected Balance Sheet

     Pro Forma Balance Sheet      
    Assets Year 1 Year 2 Year 3
    Current Assets
    Cash $184,666 $218,525 $252,384
    Accounts Receivable $12,613 $14,493 $16,373
    Inventory $2,980 $3,450 $3,920
    Other Current Assets $1,000 $1,000 $1,000
    TOTAL CURRENT ASSETS $201,259 $237,468 $273,677
    Long-term Assets
    Long-term Assets $10,000 $10,000 $10,000
    Accumulated Depreciation $12,420 $14,490 $16,560
    TOTAL LONG-TERM ASSETS $980 $610 $240
    TOTAL ASSETS $198,839 $232,978 $267,117
    Liabilities and Capital Year 1 Year 2 Year 3
    Current Liabilities
    Accounts Payable $9,482 $10,792 $12,102
    Current Borrowing $0 $0 $0
    Other Current Liabilities $0 $0 $0
    SUBTOTAL CURRENT LIABILITIES $9,482 $10,792 $12,102
    Long-term Liabilities $0 $0 $0
    TOTAL LIABILITIES $9,482 $10,792 $12,102
    Paid-in Capital $30,000 $30,000 $30,000
    Retained Earnings $48,651 $72,636 $96,621
    Earnings $100,709 $119,555 $138,401
    TOTAL CAPITAL $189,360 $222,190 $255,020
    TOTAL LIABILITIES AND CAPITAL $198,839 $232,978 $267,117
    Net Worth $182,060 $226,240 $270,420

     8.6 Business Ratios

     Ratio Analysis        
    Year 1 Year 2 Year 3 Industry Profile
    Sales Growth 4.35% 30.82% 63.29% 4.00%
    Percent of Total Assets 4.35% 4.71% 5.80%  9.80%
    Accounts Receivable 5.61% 4.71% 3.81% 9.70%
    Inventory 1.85% 1.82% 1.79% 9.80%
    Other Current Assets 1.75% 2.02% 2.29% 27.40%
    Total Current Assets 138.53% 150.99% 163.45% 54.60%
    Long-term Assets -9.47% -21.01% -32.55% 58.40%
    TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
    Current Liabilities 4.68% 3.04% 2.76% 27.30%
    Long-term Liabilities 0.00% 0.00% 0.00% 25.80%
    Total Liabilities 4.68% 3.04% 2.76% 54.10%
    NET WORTH 99.32% 101.04% 102.76% 44.90%
    Percent of Sales
    Sales 100.00% 100.00% 100.00% 100.00%
    Gross Margin 94.18% 93.85% 93.52% 0.00%
    Selling, General & Administrative Expenses 74.29% 71.83% 69.37% 65.20%
    Advertising Expenses 2.06% 1.11% 0.28% 1.40%
    Profit Before Interest and Taxes 26.47% 29.30% 32.13% 2.86%
    Main Ratios
    Current 25.86 29.39 32.92 1.63
    Quick 25.4 28.88 32.36 0.84
    Total Debt to Total Assets 2.68% 1.04% 0.76% 67.10%
    Pre-tax Return on Net Worth 66.83% 71.26% 75.69% 4.40%
    Pre-tax Return on Assets 64.88% 69.75% 74.62% 9.00%
    Additional Ratios Year 1 Year 2 Year 3
    Net Profit Margin 19.20% 21.16% 23.12% N.A.
    Return on Equity 47.79% 50.53% 53.27% N.A.
    Activity Ratios
    Accounts Receivable Turnover 4.56 4.56 4.56 N.A.
    Collection Days 92 99 106 N.A.
    Inventory Turnover 19.7 22.55 25.4 N.A.
    Accounts Payable Turnover 14.17 14.67 15.17 N.A.
    Payment Days 27 27 27 N.A.
    Total Asset Turnover 1.84 1.55 1.26 N.A.
    Debt Ratios
    Debt to Net Worth 0 -0.02 -0.04 N.A.
    Current Liab. to Liab. 1 1 1 N.A.
    Liquidity Ratios
    Net Working Capital $120,943 $140,664 $160,385 N.A.
    Interest Coverage 0 0 0 N.A.
    Additional Ratios
    Assets to Sales 0.45 0.48 0.51 N.A.
    Current Debt/Total Assets 4% 3% 2% N.A.
    Acid Test 23.66 27.01 30.36 N.A.
    Sales/Net Worth 1.68 1.29 0.9 N.A.
    Dividend Payout 0 0 0 N.A.

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