Step 2 of setting up a new school. What a market research and feasibility study has to settle, what it should contain, and how to tell whether the one in front of you can be trusted.
Most school projects begin with a conviction: a site that looks right, a brand someone admires, a sense that families in the area want something better. A feasibility study is where that conviction meets evidence. Its job is to tell the owner whether the school will fill, at what fee, and whether the numbers hold if it fills more slowly than hoped.
It comes second in the ten steps of setting up a new school, after the founders have agreed what the school is for and before any land is bought or leased. At that point its findings can still change the location, the size, the curriculum or the fee.
Start from purpose
A study needs something to test. That starting point is the school’s purpose: who it is for, what it will offer, and what it should be known for. A useful exercise is to picture alumni coming back in twenty years. What would they say set the school apart, and is that something families in this market will pay for today?
A clear purpose keeps the study honest. Without one, research tends to drift towards whatever the data seems to favour, and the school it describes ends up without a clear identity. The first step in the series covers this in more detail.
The market
The market section answers the question every investor asks first: will enough families choose this school at this fee? That breaks down into demand, ability to pay and the alternatives families already have.
Demand starts with demographics: the number of school-age children in the catchment, how fast that number is changing and where new housing is going. Ability to pay narrows it to the households that can meet the fee for the full length of a child’s schooling, which in most markets is a much smaller group. The study should test both against the realities of the location, including culture, local expectations of schooling and how far families will travel.
The most common error at this stage is assuming what parents value. Founders and investors often project their own preferences onto the market. A good study tests those assumptions with parents directly and reports where they were wrong.
The competition
A competitive analysis looks at the schools families would leave for yours, and the schools you would lose families to. It compares fees, curriculum, results, facilities, the balance of local and international staff, class sizes and what parents say about each school, in reviews and in person.
The analysis shows where existing schools are strong, so the new school does not launch weaker on something parents care about. It shows where they disappoint, which is where a new school can win families. And it shows which groups of students no school is serving well, whether by price, curriculum, location or support for students with additional needs.
GSE typically compares around ten schools. Crowded markets such as Kuala Lumpur need more to give a complete picture, while a smaller market with few international schools may have only a handful worth comparing. Building a Competitive Analysis sets out what to measure.
Staffing
Teaching salaries are the largest cost in most good schools, so the staffing plan and the financial model have to be built together. The study should set staff-to-student ratios for teaching and support roles at each stage of growth, and show how those ratios improve as the school fills.
It should also be realistic about recruitment. The teachers a premium school needs cost more to find and to keep, and a new school with no track record has to persuade them to join. That affects the recruitment budget, the timing of the first appointments and the salary scale, and the study should price all three.
The financial model
The financial model turns the market and staffing findings into numbers. It should run for at least ten years and show when the school breaks even, when it becomes cash positive and where it stands at the end of the decade. It needs to cover the capital required for the building and equipment, the start-up costs before opening, and the operating costs of each year.
The enrolment ramp is where most models go wrong. A new school fills year by year, and the model should be tested on a slower ramp, a fee approved lower than planned and an opening that slips. A project that only works on the central case is not ready for an investment committee. How School Projects Are Financed covers the funding side, and Why Most New School Projects Fail Financially covers the failure patterns.
Risk
The risk section names what could go wrong and what the project would do about it. Typical risks are a slower ramp than forecast, a new competitor, a change in regulation, an economic downturn that hits fee-paying families, and delays to licensing or construction. Each should come with an estimate of its effect on the model and a response the owner can act on.
Risks that cannot be mitigated should be stated plainly. If the market is too thin for the school, the study should say so.
How to judge a feasibility study
A study is only as useful as the questions it was allowed to answer. Before relying on one, an owner should check four things:
- Could it have said no? If the brief only asked how to make the project work, the study was never a test.
- Does the fee come from evidence? The fee should be grounded in what comparable schools charge, what families in the catchment earn and, where fees are regulated, what the regulator will approve.
- Is the enrolment ramp tested? A single forecast with no downside case tells an investor very little.
- Do the sections agree? The staffing plan, the building and the financial model should describe the same school.
For a structured approach, see How to Conduct a Feasibility Study for a New School and the GSE TELOS Feasibility Framework.
What a GSE feasibility study covers
GSE studies range from early desk assessments to full reports of 50 to 250 pages for private equity firms, family offices and school groups. A full study covers the market and competition, a ten-year financial model with break-even and cash flow, risk and mitigation, and an operating plan for staffing, curriculum, facilities and marketing. GSE’s market research and financial modelling has been commissioned by global consulting and accounting firms, an international property advisory firm and a GCC government-backed sovereign fund.
Because GSE also develops and operates schools, its studies are written by people who will have to live with the assumptions. GSE’s feasibility work is led by Senior Director Duncan Douglas.
Frequently asked questions
What is included in a school feasibility study?
Market research, a competitive analysis, a staffing plan, a ten-year financial model and a risk assessment, tied to a clear statement of what the school is for.
How long does a feasibility study take?
Most full studies take three to six months.
When should a feasibility study be done?
Before land is bought or leased and before the brand is chosen, while its findings can still change the project.
What is the biggest risk it should catch?
Overestimating how quickly the school will fill.
About GSE
Global Services in Education (GSE) develops and operates international schools for investors, developers and school owners, and has delivered more than 60 school and education projects across 28 countries since 2011. If you are considering a new school, contact GSE to discuss a feasibility study.
Read next
10 Steps and 10 Articles on How to Set Up a New School
What Most School Development Projects Get Wrong
How to Open an International School in Saudi Arabia, Dubai, and the GCC