Starting a School in Japan – Introduction

Starting a School in Japan – Introduction

For foreign residents, starting a school in Japan has to be the most common business options. It’s also one of the most common businesses that people fail at.

While the market for another English school seems to be saturated, there are many opportunities for hard-working, entrepreneurial minded foreigners in Japan.

The reason starting a school is so easy is also a reason why it can be hard to have even mediocre success. There are no special licences required (unless you want to offer dispatch services), space to teach the lessons and often you can get your first few students through friends, acquaintances and connections you have made in the community from living here for a few years. That also means that it is easy for other foreigners to do the same!

Reasons to go it Alone as a Teacher

For all the love we have for Japan, there’s no doubt that English teaching as an industry has plenty of room for improvements. You might be stuck in a chain company that cares as little about you as the students they are meant to be serving. Maybe you asked for your paid holiday and your company gave you some schpiel about teamwork and that’s why they are breaking the law and not letting you enjoy your summer. All you know is that you would rather be doing all this work for yourself than for someone else. You just need to get some students, right?

Not so fast.

Starting an English school in Japan is not only a big responsibility, but a tough undertaking. You might be a great teacher (and for your future students’ sakes, I hope you are), but running a business is a completely different task with a different required skill-set than teaching English classes. If you plan to make the jump from being a full-time teacher to running your own show, you should get it straight in your head which route you want to go.

Ronin Teacher

If you want to have multiple masters, one can make more money and have more freedom working many part-time teaching gigs than being a full-time teacher. You may be able to snag a part-time university teaching job and fill up other hours at other schools. Make sure you are always building your teacher network and looking for the next better-paying job as there is little security with this method. When you do have a multiple sources of income, you will feel a certain freedom and strength when negotiating with employers. Unlike with a full-time job, if something happens and you lose it, you just need to find something to replace that part of your schedule rather than having your whole life turned upside-down.

Lone Wolf

While not a school owner, you can make good money from just teaching private lessons whether it be at your home, coffee shop or your student’s company. Couple this in with some translation and editing work, and you can pay the bills. Many people combine being a Ronin and Lone Wolf. This is pretty low-risk and much of what you need (i.e. website, business cards, flyers, Google Calendar, etc) are very cheap to make and produce. These first two cases involve a direct exchange of your time for money. This is not entirely bad; however, it is way different from running a company and the risk/reward is magnified exponentially.

School Owner

This is where you can make the most money as well as run a school the way you think it should be run. While you may have to teach (often a lot at the beginning), the end game is to have a business where you do not have to teach and can hire others to exchange their time for money, while you grow your asset.

Shrinking wages

That’s why we are putting together this series on starting your own English school in Japan. If you remain a Native speaker for hire, you’ll never make more than what one might charitably refer to as a “reasonable salary”. There is constant downward pressure on wages, and while ¥250k per month might be alright as a single 20-something, you can’t provide for a family or even for your long term financial needs with that kind of money. There are better paying jobs and we did a breakdown of which teaching jobs pay the best, but that’s nothing on what you can make as a business owner.

Studying English is not as popular as it was

While the population is falling, there are still opportunities out there. Over the last two decades in Japan, it seems like studying English is not as trendy as it used to be. Classes used to be packed with office ladies and housewives as learning English was their hobby. You still get a lot of hobby English learners but the popularity is like that of taking piano lessons: just one of many pastimes which has a sophisticated ring to it. Many of those students have moved away from learning English.

Serve a Specific Need

There are students with a practical and specific need, and students and business people will always have a need. The good thing about this is that the market is getting increasingly customized. The big chains do not customize well leaving some good niches out there for people like you. Looking at the level of English here (as a very broad, but fair and documented generalization), the need for quality language education is not being met well. You can compete and win against the large chain schools by innovating, being creative with your class structures and by getting results that the big chain communication schools don’t even bother to pretend that they can help their students achieve. There are hundreds of success stories and we will give you information on how you can be one of these in the coming articles in this series.

You will want to start with the end, your vision if you like, in mind.  Before you start your school, you should have it in your mind whether you want to to be school owner, operate a school, work for yourself, or just a way to supplement your income.

Types of School

You basically have three choices:

1) Open a business from scratch,

2) Buy an existing school, or

3) Open a Franchise using your own name or the name of the franchiser.

Start from Scratch

Opening from scratch is the route that a lot of teachers pick, and for good reason. You’ve seen other schools and you can do it much better, and drastically improve your students lives and their English ability.

If you decide that you want to forge ahead and be a school owner, you probably have a dream of building a school with your charming personality and wonderful teaching skills. It might work, but there are a lot of things to think about. Where will you hold the lessons? Even if you speak Japanese how will you communicate with the parents and get them to trust you enough to leave their children with you? There is a lot to think about and it isn’t all cut and dry.

Pros

• You can make your school whatever you want it to be. You are in charge. Your vision can become a reality!
• Once the school grows, you can hire other teachers, make more money and teach less.
• You can (sort of) choose your students. Wanna teach kindergarten? Do it! Wanna teach only test prep for Jr High students. That’s fine too (as long as you can get students)!
• This is your new baby. Its name is “school” – as your school grows you may create something beautiful and formidable, and open up branches around Japan. A legacy to be proud of!

Cons

• Being in charge isn’t all fun and games – You need to design curriculums, deal with hiring and firing, work with problem staff and deal with parents whose demands you need to take seriously even if they don’t know the first thing about education (or English for that matter).
• Your income may be unstable until you have your school organised and running – Be prepared to earn way less and work way more for a bit.
• Expensive and complicated – While you’re trying to get students to help you make some money, at the same time you’ll have to take on quite a bit of risk (though there are ways to mitigate this that we’ll talk about in Part 2). A commercial property lease is no joke, and the real estate industry is as opaque as concrete, especially for foreigners. It’s possible you’ll need to find a Japanese citizen to partner up with in order to get a lease.
• Who is your partner? – Do you really want your wife/husband to be your employee? Yikes, that’s gonna be a strain on the relationship. Thing is, though, that you’ll probably want a Japanese person at the helm with you to talk to parents, even if your Japanese is outstanding.

Remember, you are in charge and all responsibility is on your shoulders.  I see a lot of teachers imagine how their school’s owner is getting rich by charging 5,000 yen for a 45-minute private lesson while the teacher is only getting half of this, but this thinking is not productive as it does not consider the various costs involved in getting this student in the door to the school.

To Franchise or not to Franchise

At JobsinJapan.com, our employer database is filled with small schools that have gone bust. It is almost as bad as the list of failed restaurants. While I appreciate the allure of owning your own company and customising it 100% the way you want, considering opening up a franchise is one way to mitigate your risk. Be sure to take a look at what the franchise provider is offering and if you also have those skills and the ability to develop good processes, then you may not need this.  If you think you could benefit with having a more experienced business partner, then see if their offerings are what you need.

What a franchise entails

Please do not think that being a franchisee owner means that you will have to work less. These are not for lazy people, but this structure can offer expertise (marketing, administration, contracts, processes, best practices etc.) and reduce many hassles allowing you to concentrate on revenue generating activities. From what we’ve seen, having the help of a franchise operation often means the difference between success and failure (and marriage and divorce, but more on this in a future article).

Different types of franchise

There are many different types and flavors of franchise operations.  Having a franchise does not necessarily mean you can not have a school with the name of your choice or teach in the way you think best.  Think of a franchise as your more-experienced business partner. Just think about how many McDonald’s, Kumon, Anytime Fitness, Pizza Hut franchise owners would have been successful if they would have tried to open a business on their own.

Are you a teacher or a business-person?

Do you know how to start a company in Japan, hire foreign staff to answer phones and talk to parents, or where to find your first students? That stuff is no joke, and learning how to market to parents and get their kids on board is no picnic. That’s where a franchise school comes in.

Do you know what you’re in for?

Do you know how to start a company in Japan, hire foreign staff to answer phones and talk to parents, or where to find your first students? That stuff is no joke, and learning how to market to parents and get their kids on board is no picnic,and that is just the beginning. That’s where a franchise school comes in. A franchise already has the marketing, materials and expertise. They will help you with strategies on how to maximize your income and build out the business side. It is easy to keep track of class size and capacity for more students when you have thirty students, but your system may start to hit rough waters when you hit three hundred.  

It’s your class, your students, and if you are a good teacher and get more students, you’ll get more money. It’s kind of like jumping up two rungs on the ladder when trying to start your own school.

Pros of going for a franchise

• You can mitigate start-up costs, no need to do all the hiring, develop all the materials.
• Staff, administration is all taken care of – You don’t have to go and get an MBA to figure out how to run a business from every angle, as the franchise will take care of their business owners.
• Move forward faster – Your school can be up and running much faster because you don’t have to go through as much of the hiring, systems planning and figuring out the basic steps. The franchise will want you to succeed so they will help you get your school profitable.

Cons of going for a franchise

The reputation

• of the franchise is now your school’s reputation. If another one of the franchised schools blunders spectacularly on national news, you might find that enrolments decrease or that your current students start shopping around.

Initial Payout

• Depending on the franchise, there may be various initial start-up of franchise fees.

Ownership & control

• A franchise is going to want to maintain an image with their brand. If you want to start using a different curriculum or style of teaching, the franchiser may have issues with that. You are buying into a system of doing things; their system.

Royalty payments

• The franchiser is going to want to make money on this as well, so expect to be paying some money back to the mother ship. There may also be other fixed or variable monthly payments. For example, there maybe be a mandatory amount you need to pay for marketing activities. You get economies of scale, but perhaps you can’t use this marketing budget as you would have spent it.

Long-term contract

• Read the fine print to see what you need to do if you want to break off from the franchise. This is going to be just as difficult as separating from any other business partner.

We do not want to give the impression that you will be freer or happier with your own school rather than having a franchise as this is not the case.  We actually think that, provided you select the right master franchiser, this is the safest bet for a long-lasting school as they have existing processes in place. It is rare to find the individual that possess both the skills to make a fantastic teacher and business owner, and a franchise will help protect you from yourself.

Third Operation – Purchase an Existing School

Whether owned privately or a franchise, some owners of varying success sometimes want to get out of the game… or out of Japan. These opportunities are harder to find and we’ll cover them in a future article. Not only will you have to take a hard look at the school’s financials, you will need to see why the school was successful (or not, as the case may be). If the students attended mainly due to a charismatic teacher/owner, you will need to calculate the potential drop in students.It might be more than you can stomach.

Conclusion

Starting a school is definitely no cakewalk, but if you’re really passionate about education and want to stay in Japan for the long-term, it is one of the best options to make more money.Choose your schedule and eventually control where your money is coming from rather than being beholden to a faceless corporation who will only ever give you one year contracts. It isn’t as difficult as it looks, and whichever route you take we’ll give you some of the nuts and bolts in the next article in this series.