One of the important steps after making the decision to open a new school is considering the associated investments. Planning your finances is wise and an extremely important thing to do to maintain an effective gripping of the target audience and to match the needs of the ever-changing market. The feasibility study of the school is required for submitting the best-detailed project report. We at Shri Educare, provide the much-needed services and suggestions about the potentialities and the anticipated return on investment of a proposed school area. We are committed to adding value to your school by providing services like financial feasibility, academic audits, finances, and more.
Why Is Market Research Or Survey Required
Many a time new school startups jump straight into the construction stage of the new school building without analyzing the market, as in, the statutory requirements, what kind of a school will sustain in the long run, and so on. Market survey helps to determine a sustainable concept for your school as well as to ensure you are making the right investment. It is definitely a must thing to do in this volatile nature of the school industry world. Moreover, a lot of money goes into the setup of a new school so it’s always better to avoid uncertainty. Some of the probable methods to conduct analysis has been listed down below –
- Competitive landscaping
- Reviewing marketing plan and sharing the recommendations
- Understand the untapped market and feasibility study of the proposed area
- Analyzing the target market and need for a school in the proposed location
- Drafting of financial feasibility report
Through the feasibility study, various things are taken into consideration like analyzing the existing schools in an area, facilities offered by the school, lesson planning, reviewing revenue, the availability of workforce, and so on.
Why Is Executing Competitor Analysis Important
In any new school project, analyzing the competition in the area you are planning to open your school is an important exercise. A school promoter should have clarity of the points listed down below in advance, considering the existing competition in the market. This is only possible by having a detailed report of the feasibility study. Let us have a look at these points –
- A report of the existing benchmark set by the other schools in the area in relation to its academic programs, facilities, and activities
- A report of the current market trend
- Unique program and co-curricular offering that is not currently hosted by existing schools in the area
- Report of parents readiness to accept a new concept through a new school
- Survey of the quality of teachers and students
- Understanding of the admission process and fees of competitor schools
- The trend of pay structure of faculties in existing school
Is Detailed Project Report Required Before Start Of A School
A detailed project report serves as important documentation for all those who wish to start a new school. The report is a detailed and an all-inclusive development plan that acts as a guide to the school promoters. Further, it can also be used to obtain loans for the planned school project. So, ideally, a project report should be prepared before the start of a new school.
The detailed project report of the school includes important issues concerning the school project like the design phase of the project, philosophy of the school, academic programs, the structure of the organization, marketing and branding material, financial feasibility, market analysis, student admissions, project schedule, and so on.
Main Area Of Focus In The Project Report
Let us have a look at the main focus area in the project report –
- Market Assessment which includes location assessment for the new school project, identification of target audience, and the level of competition in the proposed area
- Gap Analysis which includes SWOT (strength, weakness, opportunity, and threat)analysis and competitor analysis of the school project
- Financial Feasibility which includes ROI calculation, estimated fee collection, and year wise salary expenditure for the coming 10 years, school operation expenditure, and capital expenditure for the entire school project
- Project Recommendation which includes fee plan, HR/staffing plan for the next 10 years, planning on sports infrastructure and curriculum, IT requirements for the school, and so on
- Legal Requirements like recommendations of rules and regulations to be followed within the premises of the school, structural guidance, rules for the school management committee
Planning to start a school in India and looking to add value to your esteemed school? Look no further and connect with Shri Educare Limited today! Since the inception of our company in 2008, we are committed to expanding our reach of providing quality education. We have a complete understanding of the school industry and always strive to offer our best services to the school promoters. Call us to know more about our services and we will be happy to help!
Here is a competitive analysis between Trust, Society, and Section 25 Company (further referred to as Company in the blog). Check it out.
- Permitted scope of activities
A Trust is a legal relationship that maybe created for any lawful purpose. It is generally created for educational, charitable, and socially beneficial activities. The Trust Deed should clearly define the responsibilities and obligations of Settlor and Trustee.
A Society can be formed only for the promotion of science, literature or fine arts, literary, scientific, or grant of charitable assistance or for the diffusion or promotion of useful knowledge, political education, the foundation or maintenance of libraries or reading rooms for members or public.
Company is registered under Section 25 of the Companies Act, 1956. It can be defined as a limited company formed for the sole purpose of promoting commerce, science, art, religion, charity, or any other useful purpose. The Company needs to apply its profits if any or other income in promoting its objects and cannot distribute the payment of any dividend to its members.
The Trustee is the legal owner of the Trust, members have the ownership of Society while the shareholders have the ownership of Company.
- Setting up Process
The setting up process for Public Trust takes between two to three months. The registration is required with Deputy Charity Commissioner of the relevant region. Minimum 2 trustees are required at the time of registration. For Private discretionary Trust, there is no process of registration. It can be created by the execution of Trust Deed.
7 or more members subscribe their names to the Memorandum of Association of the Society and file the same. Certified copies of the same are submitted to the Registrar of Joint Stock Companies with the requisite fee.
The Company needs registration under the Indian Companies Act. The incorporation process takes about three to four months.
The liability of Trust is unlimited whereas that of society and Company is limited.
- Overseas Borrowings
The overseas borrowings in the case of Trust, Society, and Company is not permissible as per ECB.
- Compliance Requirements
Trust does not have any authorized guidelines to be followed for its day-to-day operations. Depending on whether the trust is private or public, there is some annual applicance requirement.
In the case of Society, list of the names, addresses, and occupations of the members of the managing committee of the society must be filed annually with the registrar of joint Stock Companies. The deadline for the same is either on or before 14th days after the AGM or in the month of January.
Annual accounts and annual return of the Company must be filed annually with RoC.
- Alteration of Objects
It is difficult to modify objects of the Trust and impossible in case of original settlers being not present or unwilling to do the same.
Objects in Society can be modified with the approval of 3/5ths of the members while in the case of Company it can be modified anytime subject to the approval of Central Government.
- Management Control
The management control of a Trust is by trustees as appointed under the Trust Deed.
The Governing Council as elected by the society members has the control and management of a Society while in case of Company the control is in the hands of Directors as appointed by the shareholders.
- Operational Control
Establishing operational control is the responsibility of Trustees in line with the Trust Deed.
Governing councils/directors / committee take charge of the operational control in Society whereas in Company the operational control is with the Directors in line with the MOA and AOA.
- Members Participation
Trustees make decisions and have the final say whereas in case of Society and Company, members participation is as stated in the MOA. Further in case of Company, the rights of the shareholders are governed by the Companies Act.
As per the rule, a Trust can be dissolved by the Settlor.
Any number not less than 3/5th of the members is required to dissolve a Society whereas in case of Company, winding up is a time consuming process. It can take anywhere between 10-12 months.
- Funding (Foreign Contribution Regulation Act)
If grants are received directly by the Trust, Society or Company from overseas, approval of Ministry of Home Affairs under Foreign Contribution Regulation Act is required. The entire process is time-consuming and can take anywhere between four to six months. So, the funding process is similar in all three cases.
The only exception is in case of a foreign trustee as the credibility of the foreign trustee needs to be established before the regulator.
- Repatriation of funds
Profits or funds in case of Society and Trust can be utilized for the advancement of their objectives. While any form of repatriation is not possible in case of Company, the same is possible with a RBI approval in case of a Trust.
- Exchange Control/ FDI policy
For setting up an Indian Trust, the easier route is to not have a foreign trustee or beneficiary. In case it does, then the provisions of exchange control applies to the Trust.
In the presence of a foreign trustee, the registration of Trust’s immovable properties would require prior approval from RBI. As a non resident is not permitted to own immovable property in India, the same will not be possible.
Further in the presence of a foreign beneficiary, prior RBI approval is required to make remittances in future and distribution on dissolution of the trust. Such an approval is extremely difficult.
In case of a Company, the ownership of stock is governed by the FDI policy of the Government of India. According to the same, certain activities fall under the direct route, that is, no approval is required for them. For instance, educational research, tendering scholarships, publishing of books. Further, AICTE and University Grant Commission guidelines prohibit a Company from setting up a college, university or any educational institution
- Transfer of Ownership
Transfer of ownership is not permissible in case of Trust while it is permitted in Society with the appointment of new members and resigning of old members. The same should be approved by 3/5ths members resolution.
Company allows transfer of ownership by transfer of shares.
- Tax Implications in hands of entity running the institution
Tax exemption can be sought u/s 10(23C) of IT Act after obtaining required approvals. It is similar in all three cases – Trust, Society and Company.
- Tax Implications in hands of entity providing funds
In all three cases, the donor is eligible for a 50% deduction u/s 80G of the IT Act. If the provision of funds is in the nature of Share Capital to a Company, then no deduction is allowed.