Bsm Goes Bust

[keef]

This one surprised me, partly because I thought the British School of Motoring was a solid business & secondly because it isn't being widely reported:

http://www.dailymail.co.uk/news/article-1352260/AA-buys-UKs-biggest-driving-school-BSM--just-1.html

http://www.thisismoney.co.uk/markets/article.html?in_article_id=522025&in_page_id=3&position=moretopstories

[Kyoto]

Such a simple business.

Get a bunch of people to give driving lessons, keeping half of what they charge or charging them up front for the franchise.

Main expense is advertising, which should ultimately have some positive ROI.

Amazes me that companies like this need to be leveraged at all.

[StainlessSteelCat]

There's a lot of mileage in this business

LOL.

Fewer people learning to drive perhaps (not much point if you can't afford to run a car and don't need it for work). Having said that I can't actually remember seeing BSM ad in the last few years. But I have seen lots of one man bands etc at car boot sales and elsewhere.

Edited February 1, 2011 by greencat

[phead]

I know former a BSM instructor, and its gone wrong recently. The fiat deal was a mess, people just didn't like them, and the deal wasn't even thought through correctly as the fiat didn't have the disabled adapters available that the specialist bsm instructors needed. Also they had messed up the regions and were sending them to appointments 1 hour away.

On the plus side independent instructors are very tax "savvy" , cash transactions are fun!

[aussieboy]

Such a simple business.

Get a bunch of people to give driving lessons, keeping half of what they charge or charging them up front for the franchise.

Main expense is advertising, which should ultimately have some positive ROI.

Amazes me that companies like this need to be leveraged at all.

Leverage is /was a good yway to acquire.... And to refinance and take out some profits.

[stargazer]

Guess BSM was one of those buisnesses where an independant "one man band" can compete against it. Such competition will have lower overheads and as someone pointed out, the opportunity for cash transactions.

It's relatively straight forward for an experienced and competent driver to pass the exams to be a professional instructor. I think it's a favorite for ex-police drivers who already have a reasonable pension to do this sort of thing on a part-time basis, they're in a better position to lower prices or survive with fewer customers when there's a downturn.

[interestrateripoff]

I can remember the fiat deal, so BSM has collapsed.

The wife wanted to get the eldest driving lessons but he wasn't interested, probably thinking about all the costs involved in getting a car etc.... With so many young people at college driving is a luxury they can't afford.

[Bruce Banner]

I can remember the fiat deal, so BSM has collapsed.

The wife wanted to get the eldest driving lessons but he wasn't interested, probably thinking about all the costs involved in getting a car etc.... With so many young people at college driving is a luxury they can't afford.

You beat me to it. Too many Fiats, too much debt.

[SarahBell]

I can remember the fiat deal, so BSM has collapsed.

The wife wanted to get the eldest driving lessons but he wasn't interested, probably thinking about all the costs involved in getting a car etc.... With so many young people at college driving is a luxury they can't afford.

A driving licence is pretty useful though whether you have your own car. It's something for the CV if nothing else.

[dryrot]

I know former a BSM instructor, and its gone wrong recently. The fiat deal was a mess, people just didn't like them, and the deal wasn't even thought through correctly as the fiat didn't have the disabled adapters available that the specialist bsm instructors needed.

When I saw "fiat" I immediately thought of a currency/loan scam, rather than the Car Make! I've been on HPC too long...

[winkie]

I can remember the fiat deal, so BSM has collapsed.

The wife wanted to get the eldest driving lessons but he wasn't interested, probably thinking about all the costs involved in getting a car etc.... With so many young people at college driving is a luxury they can't afford.

.......mine are not interested either....prefers the buses/night bus and the tube...

[richc]

I took driving lessons through BSM last year, and I'm surprised they made it this long. BSM was a complete non-entity -- there was no there, there. The "employees" were all contractors, and the cars and property were all leased and then charged back to the instructors. The only thing they were doing was answering the phone (after a really long wait) when you first phoned up (via an outsourced call centre), and then giving you the phone number of a local instructor after trying their hardest to sign you up for more lessons then you would ever need. There was no value added at all for the instructors doing the actual work of teaching. BSM should have been focusing on marketing and quality control to protect the brand, but was turned into a corrupt, short-term "financial vehicle" for the bankers.

[getknk]

sad to see one more firm going down ..

may be excessive tax?

[kingsgate]

They were always very expensive for lessons compared with everyone else, even when I learned to drive 20 years ago.

[Topher Bear]

Good. They have the worst instructors out there. Regularly see bsm cars without learners being driven badly. Maybe road death statistics will improve.

[Nationalist]

I learnt with BSM 30+ years ago. Back then they were the best and the most expensive. To instruct for BSM you needed more than just the basic instructors' qualification. They had a "shop" in town with a full time reception and the instructors congregated there when they didn't have a lession - I guess they were full time employees.

An obvious candidate for the private equity crowd to hollow out, get creative with the finances and ultimately destroy.

[7clubs]

I see driving instruction as a very visible example of a pervasive UK disease - that of wanting to earn a (supposed) decent sum of money for little effort. Sure, people may want or need to learn to drive, but so many rather deluded souls have bought into the driving school franchise idea, or may have set up independently, in the hope of untold riches for sitting on their arses in a passenger seat all day, I live very close to a sixth-form college, the street is a constant convoy of AA/BSM (no more)/independent school cars. Another unproductive pursuit that, latterly, appears to have become a sham, if not a scam.

[VickieJo]

I see driving instruction as a very visible example of a pervasive UK disease - that of wanting to earn a (supposed) decent sum of money for little effort. Sure, people may want or need to learn to drive, but so many rather deluded souls have bought into the driving school franchise idea, or may have set up independently, in the hope of untold riches for sitting on their arses in a passenger seat all day, I live very close to a sixth-form college, the street is a constant convoy of AA/BSM (no more)/independent school cars. Another unproductive pursuit that, latterly, appears to have become a sham, if not a scam.

There may be some examples of this but I know some people in the industry and in fact many fail at the first hurdle. The big companies such as the AA , BSM and Red make earnings promises that, in my opinion are not far off outright fraud and tempt people in. They are charged several thousand pounds for training but many are left having paid this and then failing the examination.... As self-employed people they cannot even usually charge the training as a taxable expense.

Then they have to pay a weekly franchise which eats up much of their earnings... On the other side of it these companies take fees and a weekly franchise so they have by far the best part of the deal. How then has BSM gone bust? I would suspect that some in charge have been earning very well....

Edited February 1, 2011 by VickieJo

[7clubs]

There may be some examples of this but I know some people in the industry and in fact many fail at the first hurdle. The big companies such as the AA , BSM and Red make earnings promises that, in my opinion are not far off outright fraud and tempt people in. They are charged several thousand pounds for training but many are left having paid this and then failing the examination.... As self-employed people they cannot even usually charge the training as a taxable expense.

Then they have to pay a weekly franchise which eats up much of their earnings... On the other side of it these companies take fees and a weekly franchise so they have by far the best part of the deal. How then has BSM gone bust? I would suspect that some in charge have been earning very well....

That was really what I was getting at - the promise of easy riches for little effort to tempt in the naive and/or inherently lazy, with the only real winners being those at the top of the pyramid franchise.

[SarahBell]

Driving instructors "schemes" have been advertised on telly for a few years now... a particular one anyway.

"work when you want" - well when people want driving lessons anyway

[Byron]

Sad about BSM. They were very good in my opinion and all my family passed first time learning through them.

Of course, that was when they were a proper school.

It is shocking to hear of the deliberate mismanagement just to line a few pockets.

Sadly, the instructors and pupils will suffer with no come back on the get rich quick swine who broke this company.

[Mikhail Liebenstein]

Driving instructors "schemes" have been advertised on telly for a few years now... a particular one anyway.

"work when you want" - well when people want driving lessons anyway

I think a lot of it was franchised, and ironically this is a perfect example of how cost cutting margin squeezing companies eventually go bust.

It tends to start with the franchiser / tier 1 company squeezing its franchisees / resellers margins to increase short term profit so the CEO can get a bonus.

Of course eventually these margin squeezes hurt they fracnisee/reseller and so they either set up on their own and compete against the franchiser or change their tier1 supplier.

This is what has probably killed BSM, as it rather easy to set up in competition if you are a qualified instructor. Similarly in the IT industry, a mix of commoditisation of screwing resellers is what killed firms like SGI and Sun - they got the short term gains, but saw there breadth of their channels shrink.

Equally structured finance also seems to have played a role.

Personally I believe if a CEO/buyout firm is able to destroy a firm in this way (ie putting short term profit over long term health), then the directors should be made personally liable for the debt.

[Monkey]

i thought BSM was owed by or owned RAC?

they have/had some involvement

or am i barking up the Wrong tree

[Hyperduck Quack Quack]

I wonder if BSM's failure has anything to do with switching from mostly Vauxhall Corsas to Mostly Fiat 500's. OK, a learner car is a learner car, but I can't imagine many young men, if they have a choice, selecting a Fiat 500 to learn in!

or am i barking up the Wrong tree

...no, you just backed into the wrong tree! But I'm pleased to tell you that you passed your driving test Edited February 1, 2011 by Hyperduck Quack Quack

[VickieJo]

i thought BSM was owed by or owned RAC?

they have/had some involvement

or am i barking up the Wrong tree

It used to be owned by BSM but got sold to one of these private equity companies. They very quickly then sold it on to some of their own mangement at a much lower price. So many will be smelling something wrong there perhaps already. Now the management is getting out...

If the FSA or government authorities are around I would suspect that a look at what this management was paid might be in order.....