Regardless of whether you are operating a nursery, a university, or anything in between, the challenges inherent in running, managing the finances of, and engaging with stakeholders of an education establishment, have never been greater.
The increase in free childcare hours for 3–4-year-olds, was a move welcomed by parents across the country. However, for those who own and manage nurseries, delivering these additional ‘free’ hours without suitable government funding to back it up, has caused huge amounts of financial and emotional stress.
Nurseries were left with two choices; either subsidise the ‘free’ hours with the hope of recouping money from additional paid for hours, or else choose not to offer the free hours and risk alienating those parents who do want to participate in this scheme.
The lasting impact of the Covid-19 crisis has changed the way people view education, and the best ways of providing this vital learning. At the height of the pandemic, teaching was forced to be delivered primarily via digital platforms. While this proved to be a suitable workaround for many, others did not have the means to participate. Schools and colleges had to ensure every student had the necessary equipment to continue their studies outside of the classroom. The cost of doing this, however, stretched already tight school finances to breaking point.
While face-to-face learning has been allowed to resume, some establishments are keen to maintain an element of distance learning in their timetables going forward. This has caused some concern as to whether already increased tuition fees can be justified should in-person contact time be reduced even further. Time will tell whether students vote with their feet – and their pockets – when weighing up the value of a ‘virtual’ education experience.
The value of a university education has been firmly under the spotlight since the hike in tuition fees which switched the onus for paying the majority of the cost from the government and on to individuals. With prospective students now faced with yearly fees of up to £9,000 plus living costs, many are now giving more consideration to alternative options which may be more economically viable.
Ongoing uncertainty with the continuing Covid-19 pandemic is piling yet more pressure on universities as the annual intake of overseas students is restricted. Those establishments which rely on the income generated from those paying higher overseas tuition fees could be hit particularly hard.
With the pool of prospective students shrinking, universities are having to pull out all the stops to prove their worth and entice these sceptical individuals to their establishment. For many, particularly those who cannot rely on their reputation alone, this means a greater level of financial investment is needed to improve the facilities on offer. With many universities’ finances finely balanced, this is a risky strategy which may not pay off for all.
The legacy of Covid-19 threatens to affect not only universities, but also hit the demand for private education too, particularly from the lucrative international market. Extended lockdown periods, coupled with bans on overseas travel, has led some parents to keep their children closer to home in the event of a similar situation occurring in the future. Only time will tell what impact this, along with long-term market decline and increased competition, will have on independent schools over the coming years.
When companies are in trouble, one of the first steps is often to identify cost-cutting measures, and areas where immediate savings can be made. This may involve reducing the number of staff, sourcing alternative suppliers, or even closing down an arm of the business entirely. While this approach can be hugely successful for some, this strategy cannot as easily be applied to an educational backdrop.
In any educational establishment, maintaining - and exceeding - standards is absolutely vital. From ensuring minimum staffing levels in early years settings, through to prioritising the learning and safety of students above financial gain, turning around a distressed education business is rarely a straightforward process. It is not just the interests of creditors and/or shareholders which need to be considered, but also the ongoing requirements of those enrolled at the nursery, school, college, or university,
Education providers often have wide and diverse stakeholder base, not all of whom are at the same level of financial knowledge. Supporting and managing those stakeholders is an important role for management.
Without a deep understanding of the industry and the multitude of factors which must be considered, the best advice simply cannot be given. At Begbies Traynor Group, we have a specialist team of education experts who are perfectly placed to talk you and your clients through the options available to devise a robust, yet flexible strategy, which places the needs of the company, its creditors, and also its students at the forefront.
Regardless of the challenges being faced, the good news is that there will always be a demand for quality education from both students and parents alike. Ensuring your company is in a solid financial position, allows you to seize on the opportunities this industry presents, safe in the knowledge that the business is operating on solid foundations and agile enough to weather any future changes to funding or government legislation.
As a multi-disciplinary practice, we are here to assist you or your client’s nursery, school or university at all stages. Through our property consultancy arm, Eddisons, we can assist with obtaining condition improvement funding (CIF) for building improvements and estate management, while our corporate finance team can help explore the opportunities selling or merging with another establishment could bring.
Whether you are a headteacher, governor, company director, or working on behalf of an education client, our partner-led team are here to assist across all areas of business restructuring and turnaround, commercial funding, and property services.