Test Prep Business Overcomes Slow Start

Editor's Note: This piece is part of a series about ways people generate extra income while working a regular job.

The entrepreneurs: Adam Cooper, 31 years old, a former head of marketing for a software company outside Toronto; Kalpesh Rathod, 32, a former product manager at ATI Technologies Inc.; and Deland Jessop, 31, a former police officer from Toronto.

The Business: To become a police officer, many police departments require recruits to pass an entrance exam. Test-preparation courses have long existed for everything from the SATs to the MCAT. But in Canada there were no courses to help prospective officers pass the entrance exam. Seeing a need, the trio founded PolicePrep.com, an online test preparation site for prospective police officers.

The Idea: The three met at the University of Western Ontario in 2000 where they were pursuing their M.B.A.s.

"I started kicking around ideas with anyone," Mr. Jessop says. "And one night I was out with Adam and mentioned a training program for police officers. I remember how difficult it was for me to find information about the test when I became a police officer."

The idea turned out to be a perfect fit for the threesome. During college, Mr. Cooper had worked for a test preparation company, while Mr. Jessop brought his experience of going through the process and Mr. Rathod had key technical expertise.

The threesome researched the business over the next year. They met with colleges that ran police programs, set up focus groups with students and searched the Web to gather information they would need to design the online test-prep course. Part of their research online was tracking down questions. Many police departments will post a couple of sample questions to give recruits a general idea of what to expect. They used these samples as a template for writing their own practice tests.

"We would work on it during class," Mr. Cooper says. "If you look at the tests, many of the names used in questions come from people in our classes."

The Business Plan: The first time they put their idea up to public scrutiny, the results were less than positive.

"We were taking this new venture class in the spring semester," Mr. Cooper says. "We presented PolicePrep and our teacher absolutely hated it."

After graduating in April 2002 the threesome, undeterred by their professor's negative review, set to work on launching the business. They each scraped together between C$5,000 and C$6,000 to cover the startup costs, Mr. Cooper says.

Although they had discussed more ambitious business plans, they decided, due to the lower costs, to focus on launching an online-only business first.

"This was just after the Internet bubble had crashed," Mr. Cooper says, "But we knew that e-learning was one of industries that everyone was saying would survive."

They used the roughly C$16,000 in start-up capital to have an outside company build the Web site, database and other programs necessary to run the site. They also developed a book with five tests, one each for Ontario, Saskatchewan, Alberta, British Columbia, and the Royal Canadian Mounted Police.

In August 2002, they launched the site, but things didn't take off -- they averaged approximately one sale a week for the first few months. It quickly became apparent that their goal to have business support the three of them was not going to happen quickly. Mr. Cooper and Mr. Rathod took jobs shortly after the site launched and Mr. Jessop followed suit.

"It was really difficult to take a job," Mr. Jessop says. "But we decided the model was not growing fast enough to justify paying someone a full salary."

For the next two years, the three worked full-time jobs while trying to find time to work on the Web site. On average each would spend eight to 10 hours a week on various tasks from troubleshooting to answering user emails. Their time commitment increased to 20 to 30 hours a week when they launched a new project, such as the U.S. version of their course.

Even during that initial time, the site was bringing in enough revenue to cover its costs.

Google initially served as their main advertising vehicle and they worked with the search engine to figure out which keywords to target, Mr. Rathod says. Now, Mr. Cooper estimates they spend in "the six figures" annually on Google advertising. They also set up partnerships with several colleges across Canada that have law-enforcement education programs, and struck deals with Indigo and Chapters, Canada's two largest bookstore chains, to sell the PolicePrep book. The book, "Comprehensive Guide to Canadian Police Officer Exams," carries a promotional code with a discount for the Web program, which offers five tests, compared to the one in the book.

"Each of those deals added a lot of legitimacy to our company," Mr. Rathod says. "One-off orders on the Internet make it difficult to see where the business is going to go. But once you get your first college account and then your second college account and the bookstore deal, you start to get a better idea that this business is going to work."

They also expanded their offerings. When they first started the site, it focused on Ontario. Since then, the threesome has expanded the site to include practice tests for all of Canada, the U.S., the U.K., Australia and New Zealand.

The Pitfalls: As with many businesses, there was a period of trial-and-error, as well as some unexpected problems along the way. The first mistake was the advertising plan. The threesome decided to spend $10,000 to advertise in the washrooms of Toronto's restaurants and bars, through a local advertising firm which rented the ad space.

"The amount we were putting in was significant for us back then," Mr. Rathod says. "We quickly realized that for an online company we really can't go that route and that we should stick with Google and Yahoo."

Another problem arose when they learned that someone was selling copies of their practice tests on eBay. They then sent a letter to eBay informing the company that the seller was selling copyrighted material and eBay took action to stop the sales.

The Payoff: Since those first days when they were lucky to get a customer a week, the business has grown steadily. In April 2004, the threesome decided that Mr. Rathod would leave his job and work full-time on the business. Mr. Jessop joined him a year later, and Mr. Cooper came on board full-time at the end of 2005. By the end of last year, PolicePrep's revenue had grown to almost C$750,000, and they say they expect it to cross C$1 million for 2006.

The Future: The firm has already begun to expand its online offerings to include test preparation for the civil-servant tests in Canada and the U.K. The threesome plan to add more offerings, Mr. Rathod says.

But the threesome remain entrepreneurial and continue to toss around ideas for possible future ventures, Mr. Jessop says.

"We just haven't come up anything that is as good as what we are doing right now," he says.