Entrepreneur case study-Turner Test Prep Co.

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Entrepreneur

Case 1A

Turner Test Prep Co.

Introduction

In the Spring of 2003, Jessica Turner felt that she had come to a crossroads with her business. As the founder and CEO of Turner Test Prep, a California company specializing in preparing people for the Certified Public accountant (CPA) exam, she felt that she was not achieving market share and growing in the right direction. After three years of providing prep classed to both students and professionals, Turner had about 10 percent of the market and was facing fierce competition from her primary rival, National Testing Services. Uncertain with which growth direction to take, Jessica contemplated several options.

Background

Jessica Turner started Turner Test Prep in the summer of 1997 after graduating from Case Western Reserve University's Weatherhead School of Management with a master's degree in accounting. She passed the CPA exam and began applying to Big Six accounting firms. Frustrated after receiving several rejections, Jessica began to consider other employment options. Her undergraduate degree was in business, and after graduation, Jessica worked for several years in the business office of a small test prep company based in San Francisco. The company prepared students who wanted to take primarily the SAT, GRE, GMAT, MCAT, and LSAT. Although her job was to manage the company's business affairs, she also began teaching math to students several nights a week. Jessica received training from the company in teaching basic testing skills, and she applied those skills toward teaching the math portion of the exams. She received positive feedback from her students as a conscientious and innovative teacher.

Jessica felt that her experience as a teacher for the test prep company helped her when she began studying for the CPA exam. She knew how to study efficiently, how to organize her notes, and how to practice for the various sections. Jessica was one of the 25 percent of students who passed all sections of the CPA exam on the first try.

When contemplating what to do next, Jessica was struck by the fact that so many of her colleagues were unable to pass the exam. Convinced that she was not only skilled in the accounting and finance principles but also in knowing how to study effectively, she decided to start her own test prep business teaching specifically to the CPA exam. She was confident that students and professionals wishing to become CPA's would benefit from a full-service program that gave students full classes and individualized attention so that they could pass the exam.

Jessica returned to California, put together a business plan, and secured financing from a local venture capital firm specializing in small start-ups. She decided to focus her business and marketing efforts in the San Francisco Bay area. Based on her research and the Bay area's concentration of different types of business, Jessica estimated that there was a market of about 1,000 students a year.

The CPA exam

Although people with undergraduate of graduate degrees in accounting or business may do accounting work for a company, becoming a CPA provides an additional certification that employers prefer. Becoming a CPA can increase an accountant's salary by 10 to 15 percent and is typically necessary to secure upper-level positions. In order to be certified to become a CPA, people must fulfill the following requirements:

Have a college or master's degree with 24 semester units dedicated to business-related subjects, and at least 24 credits in accounting (a minimum of three credits), auditing (a minimum of three credits), business law, finance, and tax subjects;

Pass the CPA exam;

Have two years of work experience with a bachelor's degree of one year of work experience with 150 course credits.

The exam is offered two times a year, in May and November. It is a grueling two-day, 15-hour event comprised of multiple choice, essay questions, and problem sets. The...
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