KSE IOM Consulting Case Overview: Nota Bene Music Academy
By Oleg Zubchenok and Nataliya Bykova DiGiovanni
Entrepreneur: Yana Reznichenko, Nota Bene Music Academy
Website: https://nota-bene-academy.com.ua/
Facebook: https://www.facebook.com/NotaBeneMusicAcademy
Instagram: https://www.instagram.com/nota.bene.academy/
YouTube: https://www.youtube.com/channel/UC_js6OztvyocmXiSpm3ZBfw
KSE Consultant: Oleg Zubchenok (https://consulting.kse.ua/#mom-experts):
Business size: Small
Several companies have already received individual consultations from the experts of Kyiv School of Economics within the framework of the project of the International Organization for Migration IOM Ukraine, and one of such companies is Nota Bene Music Academy in Kyiv.
We already wrote about one business, and now we want to introduce you to another: Nota Bene Music Academy. Let's take a look at its challenges and solutions, as well as the ideas and questions that were discussed with the co-owner of the company, Yana Reznichenko.
The art education industry, particularly for children and teenagers, holds great importance, especially in Ukraine, particularly at this time. The enterprises in the art industry have faced significant challenges in the regions where hostilities occurred and are ongoing, as well as in almost all other parts of Ukraine due to the ongoing war and full-scale invasion. Many parents with children have left the country for safety reasons, while some have relocated to the Western regions. Furthermore, the majority of families are experiencing a decrease in income, which also impacts their ability to afford art classes for their children. Based on our own observations (not statistical data) there has been an average decrease in the revenues of such companies in the range of 30% or even 50%, and there are not so few cases of deeper decline up to 80%.
Culture serves as a glue that keeps society strong together. Ukrainians have always been passionate about music; it has always been a part of family gatherings and weddings, and performing is deeply ingrained in our traditions. As the great writer and philosopher Albert Camus once said, "Without culture, society, even when perfect, is but a jungle. This is why any authentic creation is a gift to the future." The creative education sector plays a vital role in shaping the future of the modern Ukrainian society and preserving our cultural heritage.
In addition to safety issues and declining purchasing power, the primary concern in the field of supplementary education for children and teenagers in Ukraine at this time is the recruitment of qualified candidates and the ongoing training of the teaching staff, who also are forced to frequently relocate.
Some schools chose to fully or partially transition to online learning as a response first to the pandemic, then immediately as a response to the war, in many cities and towns in-person education is simply not possible for safety reasons. The Nota Bene music academy had already adopted the use of online classes, and this idea was further discussed during consultations. The main problem is that such an approach is not 100% feasible for teaching children and teenagers to play musical instruments and immerse them in the world of music to foster love for art and performance without direct access to the instruments and teachers tete-a-tete, especially at the initial stages. This is the reality at present time.
On the other hand, this situation has also presented some unique opportunities. For instance, I myself (Nataliya) have been able to take advantage of the shift to online learning and enroll in an MBA program at one of the best graduate schools in Ukraine. Before, this would have been impossible as the program was entirely in-person. If you are interested in taking high-grade music classes from top instructors at a fraction of the cost of in-person learning, contact Nota Bene school.
Goal: Increasing sales and boosting revenue.
KSE expert Oleg Zubchenok and Yana Reznichenko from Nota Bene Music Academy worked through various revenue boosting options.
1) Creating an independent online learning product that can help increase sales and improve business resilience to make it strategically the most important aspect for future revenue streams. This aspect remains a focus for Yana and her academy. As someone who has worked in the field of online education for adults for over five years, Oleg shared his personal experience as well as generally accepted practices:
Services best optimized for online learning
Adapting and refining offers to different audiences and markets
Upgrading equipment for more effective online classes
Best practices for organizing and motivating instructors to conduct classes in the academy's equipped premises instead of or in addition to private lessons from home.
2) Upgrading the existing educational products and services provided by the academy to make them even more attractive to students, with additional measures (concerts, open days, partner performances, etc.) can be enhanced and added to increase the number of young and not-so-musically talented individuals in the academy. This could also include expanding the adult client segment both in regular education and in specific thematic events. For this work, the use of a tool such as a Customer Value Proposition for each individual client segment and overall for the company would be helpful.
3) They explored how the company's premises could be additionally utilized for partnership co-operations, collaborations, and obtaining additional income from renting out the premises during hours when they are not occupied for main music classes. More details on the calculation exercise for operational capacity will be discussed in the following section.
Goal: Resources optimization.When working with customers it is necessary to make sure that all resources are utilized effectively and the teaching team is organized to provide high-quality service and a positive work environment. This involves scheduling lessons efficiently, setting up fair payment and incentives for teachers, and fostering open communication with both customers and teachers.
First of all, the workload of both teachers and all music classes in the academy was analyzed on weekdays and during working hours. Time periods were identified when there were windows in classroom scheduling, and Yana and Oleg brainstormed how this time and these classrooms could be put to use to ensure higher classroom occupancy and, subsequently, increase in revenue. Fortunately, the academy has many well-equipped classrooms, and it looks like the developed strategy is going to be successful in increasing classroom occupancy.
For businesses in a similar industry, it can be helpful to study the logic of the hotel business and the key metrics that are monitored, and then tailor them to your own business model. Some important metrics to consider are Room Revenue, which refers to revenue generated from room sales; Occupancy, which indicates the percentage of the business that is occupied or utilized, broken down by days and hours; and ADR (Average Daily Rate), which represents the average price per room or night.
For improved efficiency and lean operations with little to no wasted time or other resources, it is absolutely recommended to look closer and write down the description of the business processes. This is also the most universal task for most businesses, as many processes require not only optimization but also serious restructuring similar to the framework of automation and digitization. One of the most important tasks that Nota Bene faces, is the implementation of a convenient and effective CRM system for this purpose (The owners are considering two products - Voopty and Integrica). Oleg recommends that business owners consider using simple tools such as the RACI matrix and SIPOC for describing and analyzing their processes. Due to the smaller scale of their business, process improvements generally have an impact on other performance metrics such as quality, speed of process cycle, convenience for customers and employees, rather than revenue. However, this optimization sets the base for digitalization and scaling of the business, which Oleg will discuss further.
Additionally, Oleg suggested addressing issues related to the organization of the teaching team, such as payment systems, motivation, recruitment, and retention, as well as cooperation with external teachers beyond the academy's staff.
Scaling of the business. While not an urgent priority, scaling is an important and strategic question and will become relevant in the next 9-12 months, Oleg predicts. Nota Bene as a business is organized and run by talented musicians who have undergone entrepreneurship training and want to continue to grow. The owners know every detail, and have created and tested an effective business model that can be expanded within their own network of music schools, a network of partners/franchisees, or through outsourcing music classes to public schools. Given market realities, franchising appears to be the most promising option within Ukraine and abroad. However, other such issues should also be taken into account such as market capacity, mono-brand format, or partnership with other educational projects as part of child development and education centers.
Oleg and other KSE experts would greatly appreciate any constructive feedback on whether this format is appealing to you and whether you would be interested in a more detailed description of our business cases. Our aim is to create reviews similar in style to the Harvard Business Review, but customized to small and medium-sized businesses in Ukraine, reflecting the realities of 2022/2023.
