Stephanie Manuel loved the performing arts so much as a child that as a young adult she devoted all her spare time to amateur dramatics and even married a West End performer. Yet it was only when she had children that she thought of a way she could make money from her passion.
"I wanted my children to learn how to sing, dance and act and that meant taking them all to different classes. It took up so much time that I thought a performing arts school that combined all three would be great." Unfortunately, her bank manager didn't share her enthusiasm and her application for a loan was turned down. Years later, in 1988, her interest was rekindled by a chance encounter at a party. Bank manager David Sprigg "already had two small businesses and wanted to start some more. So I told him about my plan."
Sprigg stumped up £8,000 and Manuel quit her telesales job and rented halls for three after-school performing arts schools in different parts of Surrey. Each one was open one day a week. As principal, Manuel hired coaches for the three disciplines.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Marketing the schools was simple "back then people actually read the local paper". Her gut feeling, that children "love to perform" and that parents would prefer an all-in-one venue, proved spot on and classes were quickly oversubscribed. A lifetime dedicated to amateur dramatics meant that Manuel could now make the most of her contacts.
When they heard about her success, some asked if they could open up their own schools, with her backing, through a joint venture. In 1991, Manuel and Sprigg decided this was the way forward and new schools opened in Derby and Peterborough. With more offers for joint ventures coming in, Sprigg quit his job at the bank and worked for Stagecoach full time. By 1994, there were 24 Stagecoach schools, half of which were joint ventures. Nonetheless, the pair decided to change the model and sell franchises instead.
"Running the extra schools as joint ventures meant that we were responsible for a lot of administration. We decided that franchises were the best way to grow quickly." Stagecoach would receive an up-front fee plus 12.5% of turnover in exchange for the brand, training and marketing tips to franchisees.
The firm continued to grow, helped in part by changing fashions in London's West End theatre district. "Traditionally, shows relied on performers with specific skills. They would have a troupe of ballerinas, a cast of actors, etc. That changed, and shows began to want children who could act, dance and sing." Stagecoach admitted children of all abilities, opening up a large new market. "Children love to perform, regardless of ability."
By 2001, the firm had around 250 schools on its list it was time to raise more funds on the London Aim market. They were able to expand the business with £3m, retain a 31% stake and take out £800,000 each. The business now has 680 schools, operated by more than 300 franchisees, training about 38,000 students.
Last year, the firm collected almost £30m in franchise fees. However, Manuel is leading a management buyout that would make Stagecoach a private company once again. These days, she says, "being on Aim costs us a lot and achieves little".
'We face a £6m inheritance tax bill under Reeves's changes – it's sheer terror'
Millions of over 50s fear pension investment risk – how should you position your portfolio?
