All businesses need to be able to forecast for future performance and independent schools are no exception. Strategy and finances should be intertwined, Daniel Cohen reports for Independent Insights magazine…
Setting key performance indicators, modelling cash flow and producing financial projections are all essential in ensuring that the path the school is on leads to stability and success. However, in order to make realistic projections for the future, it is essential to analyse the data from the school’s past and present.
When it comes to financial forecasting knowledge certainly power. Collecting analyzing and interrogating data on the school performance to date considering this in the light of current and future market intelligence and she was the financial future can be matched with a great degree of accuracy. This makes it possible to set targets for achievable for school stuff and to calculate expectations of income that are realistic and decisions on future expenditure.
History certainly gives us clues to the future and for an independent school this means keeping accurate day today records of the admissions performance. Most schools use a management information system (MIS) but it is important to ensure that it is being used to its maximum benefit. Often, admissions teams are unaware of the capabilities of the MIS and there are some who are not able to analyse the information it holds and who do not have access to an analysis tool to do it for them. It is absolutely crucial to log every inquiry, every visit, every offer of a place, and every acceptance and rejection. Each statistic, reviewed in contacts and over several recent years, can give huge insight into the overall admissions performance of the school and can offer vital pointers to future success and failure.
Calculating conversion rates from one stage to the next quickly identifies any leaks in the admissions pipeline and signifies aspects of the process that are in need of attention and improvement. For example, if the conversion rate from enquiry to visit is on a downward trend over recent years, then it could be that the customer service skills of the admissions team require some sharpening, or marketing collateral such as the school’s prospectus is not appealing to the school’s target market families and encouraging them to arrange their visit. Maybe an automated reminder should be set up for the admissions team to contact enquirers again if they have not made an appointment after a month? Identifying and addressing these issues can reap huge benefits in terms of pupil recruitment, and having analysed past performance it is possible to take into account the investment in improvement to set realistic targets and projections for the future.
Consider the market
Understanding the school’s market and where it is positioned within it provides the necessary context for your school’s own performance data.
Knowing the size of the available market is a detail many schools simply overlook, but this is absolutely crucial as it demonstrates whether or not the school is viable; if there are simply not enough children of the right age or gender living within a reasonable commuting distance (for a day school), then the school will not be able to thrive. Market research and population analysis provide the statistical information that helps to build a picture of the schools current market and how it is expected to evolve in the future. It can also reveal locations that are populated by the school’s target market but are as yet untapped.
Once a market for the school has been established, the goal is to maximize market share, which requires an assessment of the strength of the school’s competition. If the market is particularly crowded, then the school will need to establish itself in a new or strengthened position, which may require investment in aspects that will set it apart from its competitors. For example, a sporty school that is jostling for market share with other local schools that are performing increasingly well in sports may look to invest in the addition of a new and exciting facility that takes sports provision to another level, or perhaps choose to develop an enhance a second or third specialism, such as drama or music, that will differentiate it from the others.
It is only by analyzing the performance of the school In comparison with its competitors in the context of the market that the school’s future potential for success can be assessed.
Once this is understood, a strategy for realizing this potential can be put in place through the setting of realistic goals and income projections.
Measurements and metrics
Strategies are nothing without key performance indicators to show the way and demonstrate progress, but many schools struggle to measure their success.
At the outset it is important to agree performance measures and metrics that will be used consistently. For schools looking to increase their admissions, conversion rates are a useful go-to, but other more subtle measures can also be put in place to ensure that the school is recruiting from an identified new target market, for example, or in particular year groups, and these can give valuable insight into the success or otherwise of specific marketing campaigns, change messaging or team focus. Surveys of new joiners and even non-joiners are particularly effective in drilling down into the reasons why certain families are choosing the school – or choosing competitors – and this informs future marketing strategy and indicates whether or not financial targets are likely to be met.
Indeed, the importance of being able to accurately forecast income cannot be overstated as its impact is felt in every corner of the school. Plans for new or improved facilities, salary and pension increases, not to mention Day today campus maintenance and operation, all depend on the promise of a steady flow of income well into the future.
Analysing and understanding the data the school already has, and viewing it in the context of available market intelligence, removes the need for those twin evils – guesswork and assumption. Instead it ensures that decision-making for the future is built on a firm foundation.