Strengths
Montessori schools have become extremely popular among parents seeking to instill a sense of individuality within their children in an environment that promotes self-directed learning. The philosophy pioneered by Maria Montessori has been adopted by many educational professionals throughout the United States. One of the principal strengths that Montessori schools have is that they are able to very quickly generate a substantial enrollment, especially among areas that are wealthy and population dense. An additional strength of a Montessori school is that they are able to produce highly recurring streams of revenue from the ongoing tuition as well as ancillary fees that are associated with early childhood education centers.
As it relates to startup costs, these can vary substantially based on the size and scope of the school as well as the market location. In smaller market areas, the startup costs can range anywhere from $100,000 to $200,000 depending on the size of the facility. For entities that are going to have operations conducted from kindergarten through eighth grade, these facilities can often exceed startup costs of $1 million or more. As it relates to financing, most financial institutions are reasonably amenable to providing the necessary capital to establish these operations. This is primarily due to the fact that these businesses produce highly predictable and recurring streams of revenue which are only at risk during very severe recessions.
Weaknesses
For weaknesses, Montessori schools typically have very high operating costs as a function of their revenue. These institutions are required to hire qualified teachers that understand the Montessori method. Furthermore, these businesses also have significant operating expenses related to facility maintenance as well as general facility costs. In major market areas, there are usually a number of other Montessori schools that are in operation and the owners of these businesses must find ways to effectively differentiate themselves within the market.
Opportunities
There are numerous opportunities for a Montessori school to expand their operations. Foremost, once the initial facilities reach their maximum capacity the owners can establish additional locations outside of the initial target market radius. For a Montessori school, the typical market radius is approximately ten miles. Additionally, for Montessori schools that established their operations with a focus on early childhood education – these facilities can expand the number of raids that are offered typically through eighth grade.
There is also the possibility that existing preschools or private schools can be acquired and rebranded under the Company’s name while also integrating the educational philosophy of Maria Montessori into their academic operations.
Threats
As it relates to threats, the primary issue faced by these businesses is competition. As noted above, in wealthy market areas there are usually a number of Montessori schools that are in operation. Beyond competing with academic institutions that apply the same type of philosophy, there is also competition among other entities that apply other philosophies such as the Waldorf method or the Reggio Emilia approach.
As it relates to threats regarding the economy, most parents view their child’s enrollment in a Montessori school as an absolute necessity for their development. However, very severe economic climates can impact ongoing demand for new enrollees. Additionally, during very substantial economic recessions some families may no longer be able to afford the tuition and costs that are associated with the company’s operations. As such, it is imperative that any owner of a Montessori school keep highly controlled operating costs in order to address potentially challenging economic climates.