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Adventurer
Joined: 28 Jan 2006
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 Posted: Mon Dec 25, 2006 4:43 pm Post subject: hagwon expenses |
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I am trying to figure out how much my previous hagwon had in expenses. Here is what I just guessed based on what I know.
2.1 million my salary
0.05 health insurance
.08 pension
.3 my rent 2.48
Korean staff salaries (some work less than others, so I put them all on the average of 550 to be conservative) and there are 5 including the help desk
2.75 million
Building rent in Cheonan (1 million I am guessing)
Electricity, phone, ink, water .600
Commuting for the boss from Daejeon to Cheonan and taxes .400 (minimum)
Taxes 10% out of 10,000,000 = 1 million
Is there anything missing like a franchise fee to headquarters?
How much does somebody pay to just have the name? |
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just because
Joined: 01 Aug 2003
Location: Changwon - 4964
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| Posted: Mon Dec 25, 2006 7:02 pm Post subject: |
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| What about a bus, a driver and gas to put in it????? |
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frankly speaking
Joined: 23 Oct 2005
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| Posted: Mon Dec 25, 2006 7:24 pm Post subject: |
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You forgot heating. Unless that is included in your electric. Rent on the building would be quite expensive. Also Internet.
As stated before bus or van costs. Those and driver will run in excesses of 3 million a month.
550,000 Won a month for Korean staff is a little low. Perhaps that is what the cleaning lady makes but a secretary or other Korean teachers will make around 1,000,000 a month.
Advertising.
The average fee for 1 hour/ 5days a week English Hagwon is 100,000 a month. If you figure 100 students that is 10,000,000 won income.
My rough estimate from the business is that the director usually pulls in around 40 percent. Roughly 4,000,000 out of 100 students. |
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Adventurer
Joined: 28 Jan 2006
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| Posted: Mon Dec 25, 2006 10:47 pm Post subject: |
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| frankly speaking wrote: |
You forgot heating. Unless that is included in your electric. Rent on the building would be quite expensive. Also Internet.
As stated before bus or van costs. Those and driver will run in excesses of 3 million a month.
550,000 Won a month for Korean staff is a little low. Perhaps that is what the cleaning lady makes but a secretary or other Korean teachers will make around 1,000,000 a month.
Advertising.
The average fee for 1 hour/ 5days a week English Hagwon is 100,000 a month. If you figure 100 students that is 10,000,000 won income.
My rough estimate from the business is that the director usually pulls in around 40 percent. Roughly 4,000,000 out of 100 students. |
Thanks for the input. Since she had 50 students she could not have possibly been making money.
2.5 for my salary
2.5 for the Korean minimum
1 for taxes
1 for rent
2.8 (let us be cheap (the boss was) for the Korean salaries
2.4 (bus driver and gas) being cheap again to give her the benefit of the doubt
She was clearly in the red.... The bus driver's salary was something I totally forgot. As far as advertising, the boss didn't believe that (that is probably why she went out of business), and she didn't believe she had to know some English to run the place. |
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Yu_Bum_suk
Joined: 25 Dec 2004
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| Posted: Mon Dec 25, 2006 11:04 pm Post subject: |
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| And bribes. My friend owns a small academy that is only licenced for 20 students even though he has more on the books. Every so often he has to go pay a few hundred thousand won to a government official for it to be overlooked. But the kicker? The government official is one of his student's fathers. Basically his son gets a month's free tuition every third or fourth month because of it. |
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frankly speaking
Joined: 23 Oct 2005
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| Posted: Mon Dec 25, 2006 11:09 pm Post subject: |
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Wow only 50 students. I am surprised she even hired a native speaker. The smallest Hagwon I worked at at about 80 students and 3 native speakers. The director was a complete idiot. It was a kindergarten so she made a lot more per student but she was in the Red for several years.
she had a wealthy family to back her but it finally went belly up. I tried telling her that only 3 students in a class isn't worth it. I really got tired of small classes. I like 6-10 students. Classes of 1-2 are quite boring. Especially for lower level students.
Now when I apply to a school, I always ask how many students that the have. How many Korean teachers and what is the class schedule. I hate rotations. You don't get a chance to develop with the students if you only see them once every 3 days. |
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Adventurer
Joined: 28 Jan 2006
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| Posted: Tue Dec 26, 2006 1:49 am Post subject: |
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| frankly speaking wrote: |
Wow only 50 students. I am surprised she even hired a native speaker. The smallest Hagwon I worked at at about 80 students and 3 native speakers. The director was a complete idiot. It was a kindergarten so she made a lot more per student but she was in the Red for several years.
she had a wealthy family to back her but it finally went belly up. I tried telling her that only 3 students in a class isn't worth it. I really got tired of small classes. I like 6-10 students. Classes of 1-2 are quite boring. Especially for lower level students.
Now when I apply to a school, I always ask how many students that the have. How many Korean teachers and what is the class schedule. I hate rotations. You don't get a chance to develop with the students if you only see them once every 3 days. |
The boss had about 70 students when I came. It went down and down. She never advertised, and she didn't speak except two words in English.
She doesn't have a kindergarten. I don't see why she didn't believe in advertising considering she had so much competition in the neighborhood.
If I knew the situation better, I would have either bailed out and did a midnight run to Japan or given management tips, so she could turn it around and come up with creative ideas to make the place look more spiffy, but my job was teach.
My current students I see on a one-on-one basis, and I am with a good company with a boss who has deep pockets and seems decent. He's been around for a while unlike my ex-boss. They could use some more students, but they are not cheap and shady and penny wise but pound foolish like the old boss. The woman was almost a a bi-polar person when it comes to business. She also quickly told us on a Monday that she sold our floor and that we were moving without finding a place. It seemed childlike. Some of the Koreans were kind of naive and believed her B.S. I've seen plenty of B.S. in my life to know when I see it. |
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wylies99
Joined: 13 May 2006
Location: I'm one cool cat!
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| Posted: Tue Dec 26, 2006 1:53 am Post subject: |
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Yep- your boss was an idiot. Evidently, many shady characters, n'er do wells, and getrichquickers in Korea assume a hogwan is the way to easy riches. 
Last edited by wylies99 on Tue Dec 26, 2006 4:53 am; edited 1 time in total |
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foystein
Joined: 02 Jun 2006
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| Posted: Tue Dec 26, 2006 4:39 am Post subject: |
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| From a business standpoint there are few barriers to entry; therefore, many people start hagwons with the dreams of a good business. There are a myriad of expenses. This would include furniture, computers, servers, paper, copiers, etc. Like most small business owners whether in Korea or the states many don't have the knowledge or experience to run a business. |
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Pak Yu Man
Joined: 02 Jun 2005
Location: The Ida galaxy
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| Posted: Tue Dec 26, 2006 5:36 am Post subject: |
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| Insurance? If you have 50 kids running around...you need some sort of medical insurance. |
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Adventurer
Joined: 28 Jan 2006
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| Posted: Tue Dec 26, 2006 6:33 am Post subject: |
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| foystein wrote: |
| From a business standpoint there are few barriers to entry; therefore, many people start hagwons with the dreams of a good business. There are a myriad of expenses. This would include furniture, computers, servers, paper, copiers, etc. Like most small business owners whether in Korea or the states many don't have the knowledge or experience to run a business. |
Yes, but I don't think many people in North America would simply open up a French language institute and not know beyond saying "Bonjour, comment ca va?". In Korea, you seem to have more of this get rich quick thinking than in North America. I wouldn't open a Spanish language institute back home if I didn't know some Spanish. At least, you should have something going for you whether it is knowing the language and teaching experience or at least have a degree in business or a lot of management experience. If you have none of the above, and you start a business, then you should have your head checked. What are these banks thinking letting all the Toms, Dicks, and Harries start a hagwon? By the way, how much does it cost for a few computers to be hooked to the internet at a hagwon, you would reckon?
Basil |
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Adventurer
Joined: 28 Jan 2006
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| Posted: Tue Dec 26, 2006 6:40 am Post subject: |
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| frankly speaking wrote: |
You forgot heating. Unless that is included in your electric. Rent on the building would be quite expensive. Also Internet.
As stated before bus or van costs. Those and driver will run in excesses of 3 million a month.
550,000 Won a month for Korean staff is a little low. Perhaps that is what the cleaning lady makes but a secretary or other Korean teachers will make around 1,000,000 a month.
Advertising.
The average fee for 1 hour/ 5days a week English Hagwon is 100,000 a month. If you figure 100 students that is 10,000,000 won income.
My rough estimate from the business is that the director usually pulls in around 40 percent. Roughly 4,000,000 out of 100 students. |
Are you sure a bus driver makes that much money? That seems a bit too much. I understand a regular bus driver might make something like that but not a hagwon driver who drives the kids here and there and is almost a part-timer. Especially, when you figure there aren't that many kids.
I think the average kid at my old hagwon costed 200,000 a pop for the parent. I am going based on a brochure that was supposed to go out to the parents a few days before the boss decided to do whatever the hell she was thinking of doing. Explaining her would be too insane. A hagwon cannot really survive on 10 million won. I would guess you would have to be making 13-14 million minimum to make it worthwhile and if you've reached 17 million you are in decent shape and more of a mid-sized hagwon, but you should ideally be at 25 million. If you are at 10, it is Sayonara for you. I think we wayguks should really keep our eyes peeled for the shenanigans out there. |
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Novernae
Joined: 02 Mar 2005
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| Posted: Tue Dec 26, 2006 7:07 pm Post subject: |
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| Adventurer wrote: |
| foystein wrote: |
| From a business standpoint there are few barriers to entry; therefore, many people start hagwons with the dreams of a good business. There are a myriad of expenses. This would include furniture, computers, servers, paper, copiers, etc. Like most small business owners whether in Korea or the states many don't have the knowledge or experience to run a business. |
Yes, but I don't think many people in North America would simply open up a French language institute and not know beyond saying "Bonjour, comment ca va?". In Korea, you seem to have more of this get rich quick thinking than in North America. I wouldn't open a Spanish language institute back home if I didn't know some Spanish. At least, you should have something going for you whether it is knowing the language and teaching experience or at least have a degree in business or a lot of management experience. If you have none of the above, and you start a business, then you should have your head checked. What are these banks thinking letting all the Toms, *beep*, and Harries start a hagwon? By the way, how much does it cost for a few computers to be hooked to the internet at a hagwon, you would reckon?
Basil |
Maybe we wouldn't be likely to open language schools, but look at all the people who's dream in life is to open a coffee shop. They know nothing about coffee and nothing about business. They have a completely impossible plan in their head, that usually focuses on comfy couches without any attention to expenses or separating their product from the crowd. They go ahead without having enough to hold themselves over in the first 6 months and then they're surprised when they're out of business in 2 months. Most of them don't even bother finding out where coffee (their point of being) comes from, let alone learning how to properly use the machines and buy proper product so they don't end up making the same crap as down the street. That sounds a lot like the hagwon industry to me.
About the banks, they don't give money unless they know they can get it back (that's what collateral is for. |
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