SuccessLab Trains Brains

The company is currently negotiating leases at two additional shopping centers in Virginia and plans another four, all around the Washington DC beltway this year. "In 2006, we'll add eight more and move further away from the Beltway, but remain in the Northeast," Beale tells GSR. "Ultimately, we'd like to grow the business in a significant way. There's big demand for what we're doing, and I expect to eventually be nationwide. But, there's no specific time frame for expansion.

"We're not going the franchise route, because we think we maintain the quality and efficacy of the program if the units are company-owned. In addition, I'm passionate about educating children, and not passionate about being in the business of selling franchises, which is what happens when companies grow via franchising," he says.

Beale recently sold a business that provided furnished office space from over 200 locations in the US and Europe. A fund that had invested in his previous business, he says, talked with him about buying a tutoring company. "Tutoring is now a $3-billion-a-year business," he says. Of that, Beale estimates about half is paid to what he calls "kitchen-table tutors." Another 35% to 45% of the total market, and the fastest growing segment, he says, is retail centers.

Beale did not take his equity advisor's tip, but, during due diligence, "I got excited about the tutoring industry," he says. "I started looking for the best way to get involved and wanted to differentiate from the other developments taking place in retail learning centers." His research led him to "Structure of Intellect," a "brain science" developed about 30 years ago by Mary and Bob Meeker to assess cognitive and perceptual skills for the US military. "The military had an 80% dropout rate in its fighter pilot program," Beale says, "and, after using the Meekers' work in recruiting, the dropout rate fell to 3%."

For SuccessLab, the program was woven into an integrated practice protocol that assessed 26 cognitive abilities and 17 perceptual skills, according to Beale. "It's based on the belief that intelligence isn't fixed and can be trained. On that belief, the Meekers' developed a program to remediate problems their assessment uncovered. It is used in over 500 schools," he adds. It is also the basis of SuccessLab Learning Centers, where it is combined with the company's own curriculum.

A trained professional conducts and evaluates assessments of SuccessLab students at company headquarters before tutoring begins at the retail center. SuccessLab instructors, primarily teachers who work at the centers part time, receive five full days of training before working at a center, initially in tandem with another certified SuccessLab instructor. If these teacher-instructors utilize SuccessLab's proprietary system in their outside, full-time teaching practice, "it's all the better," Beale contends.

Three full-time staff members "and many part time instructors staff the centers," Beale says. Typically, a student enrolls for two one-and-a-half hour sessions of tutoring a week at a cost of $55 an hour. SuccessLab centers are open until 8 p.m., and most of the tutoring takes place after 3 p.m. while testing of new students takes place during the day.

The centers also offer an Early Learner's Program for kindergarten-age children during the day. Toddlers usually attend two-and-a-half hour sessions twice a week for a flat rate of $325 a month.

The metro DC area provided SuccessLab with an ideal demographic, according to Beale. "We look for areas in which the average household income within a four-mile radius of a center is about $80,000 a year or more and where there is a minimum of 15,000 student-age children between the ages of five and 17.

"We like grocery-anchored community shopping centers, primarily at end-caps in non-anchored strip malls, " Beale says. "We're looking at some Big Box-anchored malls, but that's not our preference, because we're community-oriented. We get very involved with the community, and our retail centers have to feel comfortable to students and their parents."

SuccessLab's retail tutoring competition comes from franchise operations, which are proliferating. Chief among them are Baltimore-based Sylvan Learning Centers, which has about 950 units nationwide, and Huntington Learning Centers, which is based in Oradell, NJ and has approximately 320 units in 30 states.