With the upcoming release of our ‘2020 Children’s Activity Sector Report’ Mark Rasche, Deputy Chair of CAA has provided a review on the current state of the sector. The report has been created based on research of over 1,000 businesses and will provide a unique benchmarking tool for any business owner in the sector. To register to receive the report via email on its release please visit – cca-report.co.uk
As someone with 26 years’ experience in the sector and having helped hundreds and hundreds of businesses within it, it falls to me to give a report on the state of the children’s activities sector in 2020.
The sector is continuing to grow, with in excess of 40,000 businesses operating within it and rapidly growing in number, too. There are nearly 500 franchisors within the sector running a huge vast network of franchisees within them that represent a large chunk of the 40,000.
There are new entrants to the market all the time too, with the sector representing great opportunities for recent graduates to start their own business, mums looking to get out of the corporate world, and former staff of other businesses to strike out on their own and run their own businesses, rather than work for someone else.
The default method to growth appears to be franchising with people building up a successful business, then thinking how to scale and distribute it more widely, this model offers a low-cost, low-risk solution. Many businesses are also growing organically in their own regions and focusing on the opportunities that are arising.
The whole sector is still relatively new, with some of the oldest businesses being only 20 years old. Most are less than 10 years old, and a great proportion will be less than 5 years old, with new ones appearing all the time.
The opportunities have arisen, in my opinion, due to a fundamental change in society. Twenty odd years ago, I went to the USA to coach for Major League Soccer and was shocked that kids didn’t play out, or go ride bikes around their neighborhood in between organised coaching sessions in various sports and activities. They played on computer games and watched TV. Our society is sadly moving this way, precipitated by societal changes in that there’s a lot, lot more cars on the road so kids can’t play out in the streets, the green spaces and parks are disappearing, being sold off by cash strapped local authorities, and also parents are much less willing to let their kids just play out around the neighborhood, worried by greater perceived threats of doing this and because our country just isn’t as safe a place for kids to play out on their own anymore.
This presents an opportunity because parents want something safe for their children to still get great experiences in their life. Nowadays, they want a kid’s activities class with a qualified instructor who’s DBS checked, fully insured, first aid trained, and has been through a safeguarding course, among other things. In short, they want professionals to look after their kids and are prepared to pay for this quality of service. This is not to denigrate the grass-roots sector where kind-hearted and well-meaning people give up their time to coach kids and this sector is still very important, the professional sector is just in addition to this.
The other societal changes are that the traditional model of the bread-winner family is changing, and a lot more mums are going back to work a lot earlier than they would have a generation before, thus necessitating the need for much higher levels of childcare in the form of after school clubs.
The ever increasing obesity epidemic that will bankrupt the NHS and mean that this generation of children will be the first to live a shorter life than their parents on average, and the tragic increase in mental health challenges that young people face, means that kids activities businesses are needed more than ever, as they are some of the very best tools against these two twin threats to our kids’ health and well-being.
So, there’s huge driving factors behind the rapid rise and increasing growth of the sector as between the 40,000 businesses there’s an estimated £12.5bn in revenue being spent but I’d actually argue it’s probably at least double that in reality because primary schools have nearly £20,000 a year to spend on PE, a lot of which is going out to 3rd party companies in the sector to deliver, and schools & nurseries are the source of a lot of business for the sector.
The industry is also relatively protected from Brexit due to its nature and also any economic slow-down as a result shouldn’t impact it too much, as the last thing people do is cut back on their kids. Parents will cut discretionary spend on themselves before they cut their kids activities.
The sector is also innovating both in terms of activities that kids do, reflecting what’s cool at the moment i.e. Ninja Warrior & Parkour type activities coming in to complement traditional gymnastics, climbing, and other related activities. Kids will always need to be active, how they do that might shift a bit over time. Organisations are also innovating in the method of delivery, as direct delivery has been going for years and years, franchising has proven really common over the last 10 years and now some organisations are looking at virtual delivery, where they, their staff, or franchisees don’t need to be there at all. It’s a new sector and fast-growing but also an innovative one, which is a great sign.
The size of the businesses in the sector is growing too. We have a huge range, from lifestyle businesses, providing someone with flexible working around their family, to businesses whose revenue is huge, have institutional investors, and we may have the first kids’ activities business listed on the stock market soon. The range is very important though, as we need to be a broad church that is open to the start up just looking to find that balance between family and work and the huge business employing thousands.
I’m personally very proud of the UK Children’s Activities sector as I’d argue we’re the best in the world at this stuff, as we’ve probably got the most mature sector in the world from my travels and my experience of master franchising overseas. It’s UK brands that overseas people want to see.
Overall the sector is very buoyant, very robust, growing rapidly, innovating, and employing hundreds of thousands of people to work with millions of kids each week.
At some stage every child in the UK is going to experience a children’s activities business, whether that’s as a pre-schooler, in nursery, a school, a birthday party, event, or just a regular class that they attend. It highlights the need for greater compliance and regulation that the Children’s Activities Association provides to protect nurseries, schools, parents, and, most importantly, kids, so it’s important that a greater percentage of the 40,000 businesses in the sector engage with the CAA and join to help protect those kids.
Mark Rasche, Deputy Chair, CAA
To register to receive the ‘2020 Children’s Activity Sector Report’ via email on its release please visit – cca-report.co.uk