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STARTING A SECONDARY SCHOOL BUSINESS IN UGANDA

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Introduction

Secondary schools are educational institutions for students in the age brackets ofb13-19 years. The school will be mixed for both girls and boys. It will cater for both day and boarding sections. It follows elementary or primary education, and is sometimes followed by university (tertiary) education. Secondary schools have in recent years increased in number according to the ministry of education and sports’ meaning the business is viable.

The viability of this business is attributed to the increasing population of people in Uganda and many pupils are joining secondary schools thus a need for more secondary schools. The startup capital for this investment is US $ 1,670,000 and working capital is estimated at US$ 10,000 generating TR of US $ 691,200 in academic year in academic year 1, US$1,822,500 in academic year 3, US$ 2,902,500 in academic year 4 and US$ 2,902,500 in academic year 5 years discounted at the rate of 10%.

However in academic year 1 there is expected revenues since it’s a year of planning and construction so no student is expected to join.

The project’s operating expenses are US$ 32,200 in AYr 1, US$ 777,167 in AYr2,US$963,881 in AYr 3, US$ 1,506,621 in AYr 4, US$ 1,508,364 in AYr 5 discounted at 10% for 5 years. However, these expenses will be paid out of the student’s school fees. The project’s net profit after tax is estimated at US$1,737,647 with a net profit margin is 21%.payback period of 2 years. Capital Investment. The scale of Investment is relatively big as it involves buying many different assets as described below.

Capital Investment Costs (in US$)

Total (US$)
Fixed Assets 1,955,000
Land and Site Development 170,000
Construction of Laboratory 140,000
Completion & construction of Classrooms 220,000
Construction of dormitories 240,000
Development of Sports facilities 30,000
Construction of Teachers’ Houses 0,000
Construction of Office Admin. Block 50,000
Construction of Computer Laboratory 50,000
Furniture, Sickbay, Lab., Office, Kitchen Equipment 295,000
Motor Vehicles (3Ton Truck yr1, Bus yr3) 175,000
Textbooks 80,000
Sports Equipment 10,000
Total Investment 1,670,000

Profit and Loss Account

Activity AYr 1 AYr 2 AYr 3 AYr 4 AYr 5
Revenue (Adjusted For Fees Default Factor) 10% 691.2 1,822.5 2,902.5 2,902.5
Expenditure
Staff Costs 474.78 321.63 506.91 506.91
Office Administration and Operational Expenses 0 225.3 538.87 841.99 842.32
Utilities 8.4 8.82 9.26 9.72 10.21
Transport, Insurance, PR, Maintenance and Repairs 16.0 16.8 17.64 18.52 19.45
Depreciation Expenses 7.8 51.48 76.48 129.47 129.48
Total Operating Expenses 32.2 777.17 963.88 1,506.62 1,508.36
Net Profit(Loss) before Interest and Tax -32.2 -85.97 858.62 1,395.88 1,394.14
Per Term -10.73 -28.66 286.21 465.29 464.71
Activity AYr 1 AYr 2 AYr 3 AYr 4 AYr 5

 

School Payroll Expenses

Projected No. Of Staff
A/YR 2 A/YR 3 A/YR 4 A/YR 5 Rate@ Month Per Person.(US$)
Head Master 1 1 1 1 1,200
Deputy Head Teachers 2 2 800
Director of Studies 1 1 1 1 700
Matron/Patron 2 2 2 2 500
Subject Heads 10 10 10 600
School Teachers 10 5 15 15 500
Bursar 1 1 1 1 800
Accounts Assistants 2 4 4 400
Pool Intern Teachers 5 10 10 200
Nonteaching 5 5 10 10 250
Others 5 5 10 10 150
Total 25 37 66 66

 

School Fees Revenue (US$’000’s)

No. Of Fees Rate/ term Term I Term II Term III Total Fees Total Fees 90%
Students
Academic year 2
School Fees Day 100 0.4 40.0 40.0 40.0 120.0
School Fees Boarding 240 0.9 216.0 216.0 216.0 648.0
Sub- 340 25 25 25 768 691.

 

No. Of Fees Rate/ term Term I Term II Term III Total Fees Total Fees 90%

 

Students
total 6.0 6.0 6.0 .0 2
Academic year 3
School Fees Day 150 0.5 75.0 75.0 75.0 225.0
School Fees Boarding 600 1.0 600.0 600.0 600.0 1,800.0
Subtotal 750 675.0 675.0 675.0 2,025.0 1,822.5
Academic year 4
School Fees Day 150 0.5 75.0 75.0 75.0 225.0
School Fees Boarding 1,000 1.0 1,000.0 1,000.0 1,000.0 3,000.0
Subtotal 1,150 1,075.0 1,075.0 1,075.0 3,225.0 2,902.5
Academic year 5
School Fees Day 150 0.5 75.0 75.0 75.0 225.0
School Fees Boarding 1,000 1.0 1,000.0 1,000.0 1,000.0 3,000.0
Subtotal 1,150 1,075.0 1,075.0 1,075.0 3,225.0 2,902.5
TR Projection 3,081.0 3,081.0 3,081.0 9,243.0

Market Analysis

This school will cater for a niche market of pupils from middle class families. This market segment has got the ability to pay for quality education at a premium. The middle class is a growing class of Uganda’s economy.

There is ready market throughout the country as more and more children go to school. The UPE programme has boosted the numbers. The quality of the school also determines the number of students in a school in terms of qualified staff, good examination results, infrastructures like good buildings, dormitories, nice looking compound among others.

Source of Supply of Machinery, Equipments and Raw Materials

The supply of raw materials, Machinery and Equipments is procured locally although it could also be imported from countries like Japan, South Africa and Chain.

Government Facilities and Incentives Available

There are low tax rates and sometimes no taxes at all on most of the industrial equipments and raw materials. Tax policies also favor industrialists for example VAT deferment and tax exemption on scholastic materials.

Risk Certainty

This business idea is associated with some manageable risks like outbreak of fire. This can be caused poor electric connections. However, this can be addressed by insuring the school and putting in place preventive measures like fire extinguishers, among others.

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