A few days ago, I was driving through a housing area and I saw a very nice Q-dees kindergarten.
It was a new double storey house with striking colour painting on the gate and surrounding fence.
I thought to myself, “I wonder how much it costs to run a kindergarten franchise in Malaysia like Q-dees“.
When I reached home, I went online to do some research.
I found some very interesting information about Q-dees published on www.fortune.my/.
The website shared the following information about Q-dees education franchise in Malaysia:
- Brand Reputation – One of the top and strongest names in kindergarten education in Malaysia.
- Initial Capital – Around RM120,000. This varies according to the location of your operations.
- Return on Investment – You need to have funds to operate for the first 2 years. After that, it should be self-sustaining.
- Location – Crucial as most established residential areas would already have Q-dees’ presence.
- Customer Segment – Residential areas, especially new ones.
- Franchise Fees – RM50,000 which is quite low in this segment.
- Royalty Fees – 5%
The power of word-of-mouth marketing cannot be underestimated. Families who have previously sent their children to Q-dees are usually very positive about the outcome. As such, they usually tell other parents about it.www.fortune.my
It is no doubt Q-dees kindergarten and preschool franchise business in Malaysia is a great business opportunity.
If you are planning to start a Q-dees education franchise business, what would be the biggest challenge?
The biggest challenge I would say is the initial capital investment needed.
The good news is, the Ministry of Domestic Trade and Consumer Affairs or Kementerian Perdagangan Dalam Negeri dan Hal Ehwal Pengguna Malaysia (KPDNHEP) has a Micro Franchise And Affordable Franchises Program and Q-Dees is one of the participating franchisor.
In the Micro Franchise And Affordable Franchises Program, there is a matching grant for franchises prospects.
What is the matching grant?
According to KPDNHEP website:
“The grant is intended to reduce the start-up cost of a franchise business to be borne by B40 and M40 entrepreneurs where the financing rate offered is up to a ratio of 90:10 to potential franchisees.”
The B40 and M40 groups are household income groups based on the definition issued by the Department of Statistics Malaysia in 2020.
To apply for the grant, the conditions are:
- Malaysian citizen aged 18 years and above.
- Open to B40 and M40 group who have a family or single and open to entrepreneurs or small traders who conduct business directly and full time.
- Entrepreneurs or small traders must have a valid license/ permit/ business register issued by the authorities.
- For applicants who want to start a business are required to have their own cash contribution capital of at least 10% of the financing as a commitment to run a franchise business.
- Preference to applicants who already have a strong intention/ offer/ agreement from the franchisor for the micro/ affordable package applied for.
When I am writing this article (May 2021), Q-dees is offering a franchise package costing RM95,000.00 under the Affordable Package franchise program.
If you were to contribute 10% capital as per the matching grant requirement, you would have to come out with RM9,500.00 to take up Q-dees business franchise package.
The initial capital investment is needed for:
- Cost to secure your business premise
- Business premise renovation cost
- Business premise rental cost
- Equipment cost
- Utility cost such as water, electricity, internet, telephone and security bill
- Bank loan interest if you were to take a loan to operate your franchise business
- Royalty fees
- And of course the salary that you have to pay to your teachers monthly
All in all, you will need to have a capital of at least RM150,000.00 to be able to sustain your education franchise business for a minimum of 2 years.
Is there an alternative?
If you are in the B40 or M40 group, are you will to risk RM150,000.00 of your saving or borrowed money to operate a franchise business that you do not have any experience at all?
What if you do not have the RM150,000.00 start up capital to operate an educational franchise business, is there another alternative to start your own business?
The good news is, there is and it is via an online dropshipping business.
In the following section, I will share with you the online business that me and my husband have been operating full time since March 2018.
If you were to start an online business, there are challenges as well.
From my experience, the biggest challenge is choosing what product to sell.
What is the solution to the above challenge?
The solution is by using the concept from the book The Blue Ocean Strategy written by Renée Mauborgne and W. Chan Kim.
I will explain it in the form of a story.
There were 2 good friends name Michael and Jeffry.
Both Michael and Jeffry went to the same primary school, secondary school and college together.
When Michael and Jeffrey graduated from college with their diploma at hand, they have the aspiration to start their own business.
Both have some saving in their bank account because they worked part time when they were studying in college.
Michael took out all his saving and started to look for product to sell for his business.
He wanted to sell smartphone accessories because everyone has at least one such device at hand therefore the market is huge.
He decided to to buy the smartphone accessories in bulk from China and sell it locally with a profit.
What Michael has done trying to sell smartphone accessories is equivalent to trying to fish in a Red Ocean.
The characteristics of a red ocean are:
- Compete in an existing market space
- Beat the competition
- Exploit existing demand
- Make the value-cost trade-off
- Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost
The fact is, it is unlikely Michael will succeed in his business due to the nature of red ocean where the competition is very stiff and the only way for him to differentiate with his competitor is to reduce his product selling price.
By being cheaper than his competitor, he will slowly but surely bleed his business until he cannot sustain it anymore.
The blood of every business in the water is turning it red…thus the name Red Ocean.
Is there a better approach to choosing product for a business?
That was what Jeffry thought to himself after seeing the bad experience Michael had with his business.
A better approach to selecting a product is using The Blue Ocean Strategy.
What are the characteristic of a blue ocean?
The characteristics are:
- Create uncontested market space
- Make the competition irrelevant
- Create and capture new demand
- Break the value-cost trade-off
- Align the whole system of a firm’s activities in pursuit of differentiation and low cost
For a better understanding of The Blue Ocean Strategy, check out the 2 minutes video below by Harvard Business Review.
In the video above, it highlighted a case study on Cirque du Soleil using The Blue Ocean Strategy to grow and excel in an industry with limited growth potential.
A compelling aspect of Cirque du Soleil’s success is that it did not win by taking customers from the already shrinking circus industry, which historically catered to children. Instead it created uncontested market space that made the competition irrelevant.Blueoceanstrategy.com
Jeffry realised that to be successful in his business, he has to avoid the red ocean at all cost.
Instead, he has to find a product which is in the blue oceans of uncontested market space and make the competition irrelevant.
How do you find a blue ocean product?
How do you find a blue ocean product ideal for an online business?
Firstly, I would suggest you get a copy of the Blue Ocean Strategy book and read it.
By reading the book, it will give you some ideas on how to identify the best product to promote in your business.
By chance, back in 2018, I managed to locate a supplier in Malaysia that has a blue ocean product line.
It is a type of athleisure garment with far infrared ray (FIR) emitting properties.
Back then, there were no large or established product brands in that category in South East Asia countries.
The company that I partnered with created a new product category making competition irrelevant.
In less than 3 years, the company has dominated the category with its core product in Malaysia, Singapore, Brunei, Hong Kong and Indonesia.
Because the company offers dropshipping service, I do not have to keep any inventory therefore my business start up capital was relatively small.
Nonetheless, I managed to grow my online business quickly with customers located locally and internationally by leveraging on the blue ocean product.
Thank you for reading this article and I hope it gave you some insight on the alternative to an educational franchise business if you do not have the start up capital.
If you are currently exploring new business opportunity, reach out to me by clicking the link below to contact me on WhatsApp and I’ll be happy to share more with you.