Throwing away a steady job for a career in theatre is rarely the route to riches. So perhaps it's not surprising that when David Sprigg left Barclays in 1987 to run a performing arts school for children, his mother asked if he'd taken leave of his senses. Not only was he throwing financial stability to the winds, but he'd only just got married. "But then," says Sprigg, now 51, "you tend only to get one chance like this in your life."
Sprigg had recently bumped into Stephanie Manuel, a drama teacher, at a party at Hampton Court. "I told her my passion had been to set up my own small business and she said: 'That's funny. I've always wanted to set up my own theatre school'." Fed up with dragging her son to ballet class one evening, then a drama and singing class the next, she wanted to start a school where children could learn singing, dance and drama all in one place, rather than forcing parents to pay extra for three separate classes.
Impressed with the idea, in 1988 he sank £8,000 into Stagecoach Theatre Arts, starting up three schools around Surrey with Manuel. Almost all of the initial money went on marketing. "We put little advertisements in papers and within six weeks we had 87 students paying £125 a term." In the early days, it helped that they had no big capital requirements. They simply rented out church halls for three hours every Saturday morning, rather than taking on expensive leases for dedicated premises. They also collected the fees and paid the teachers themselves.
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But it wasn't all plain sailing. Sprigg had to support himself as a drummer in a band for two years, while the overall economic situation didn't do him any favours either. "Mortgage rates were 15% at the time. I had one on a three-bed house in Teddington, and had to get six lodgers in to pay it. Stephanie used to have to buy me clothes from charity shops." Without a steady salary, Sprigg had to support himself for three years, working on the side as a drummer in pubs and clubs, because the "business couldn't afford to pay for both of us".
By 1989, the pair had opened two more schools and turnover had reached £30,000. And by 1994, they had 24 schools in total, which was when they decided to franchise the business. Sprigg divided Britain into 100 territories, each containing 500,000 people, which he then sold as units. But with franchises paying the main firm just 12.5% in revenues, Sprigg felt they had been too hasty. In 2001, with turnover at £1.4m, Stagecoach floated on Aim and took the chance to buy some franchises back.
It was a clever move. It gave Stagecoach the funds to expand into Germany and America; and along with sales from the repurchased franchises, sales in the most recent year to June came in at £6.4m. So far, the group's expansion has also proved immune to the slowdown. "The recession in the late 1990s didn't affect us at all, unless a parent was made redundant. Parents will give up foreign holidays, new clothes and a car for their children's enjoyment. So we're lucky because we're right at the top of the food chain."
Jody studied at the University of Limerick and she has been a senior writer for MoneyWeek for more than 15 years. Jody is experienced in interviewing, for example in her time she has dug into the lives of an ex-M15 agent and quirky business owners who have made millions. Jody’s other areas of expertise include advice on funds, stocks and house prices.
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