How can providers balance the budget?

Reducing budgets and VAT inequity vis a vis schools and sixth forms is now an established matter of fact. So how can providers balance their books?

The textbook answer is to reduce costs and increase income. But textbooks and reality rarely meet. So is there a way forward that works?

Business exemplars

If we look outside our own sphere there are many examples that providers might consider. Many of these will take us outside of our comfort zones; but diminishing budgets was never a comfortable place anyway.

Let’s start close to home with ways to increase income, and dare I say it, profit, that are not totally alien.

There are more and more training organisations approaching me that only run full cost courses. The majority run courses that providers can, and do offer, but the providers I refer to rely totally on the full cost route. Many ignore the exam route as their customers prefer NOT to take exams

Take the private trainer offering a course very similar to the foundation degree the local college couldn’t fill. They’ve stripped out the exam but it is essentially the same course as the foundation degree that failed. It is a horticultural course, is now run in a prestigious garden, has a waiting list and makes a substantial profit each year.

Or consider the provider that offers CIPS, CIM and ISMM courses. They keep overheads low by not owning a classroom or campus, but offer courses at over a dozen university locations throughout the UK. They have expanded over the last years and are profitable.

Another profitable provider I work with runs catering courses 360 days a year. They have seen growth in both professional and leisure courses and have expanded throughout the recession. They’ve built their own campus.

Each of these providers have tapped into benefits that “conventional providers” have missed. The horticulture courses are free of exam pressure and are taught at famous garden venues. They are ideal for the affluent demographic that has time on their hands and want a course where learning is mixed with meeting people of similar interest in wonderful surroundings.

The catering courses use the best ingredients, are taught by chefs with Michelin kitchen experience and are quite addictive. I’ve now taken over a dozen courses with them .. courses from one day to one week in duration.

Joint ventures

Years ago, as an FE marketing director, I ran weekend courses and events in partnership with leading brands and magazines. My partners would promote the courses as exclusive to their readers, or buyers, and the college would then undertake delivery. Courses were often run at weekends for a simple reason. Saturdays and Sundays were what suited the clients/delegates best (we never referred to them as learners!).

Nothing beyond any provider

None of the above is beyond any provider and each of the above examples have been very profitable over many years.

The problem that prevents most providers from going down the same route is mindset. They can’t get beyond the need to offer qualifications, run courses at conventional times or refer to the people that attend as learners.

If providers want to increase income they really need to analyse how these successful businesses operate.

I’m not advocating stopping all courses that lead to qualifications; they are still important. But we do need to consider what the public actually want to spend money on and offer them what they want rather than what we want to run. Believe me there is a lot of money out there.

Thinking the unthinkable

I started this article with mention of comfort zones. So let me take you further outside your comfort zone.

I see many businesses, with expensive cost bases like FE, totally rethinking their business models. I believe FE needs to consider if their business model also needs rethinking and perhaps emulate these unconventional thinkers.

For example, in many towns banks and post offices are becoming a rarity, and where they exist they have limited opening times. In my small village I have the luxury of a full post office service from 7.30 am to 9.30 pm, seven days a week. The reason; the village shop has merged the post office counter and check outs.

In another village the local shop, pub and post office have merged. You can post a parcel, buy some toothpaste and meet friends for a drink in one location seven days a week.

These businesses felt the wind of change and made uncomfortable decisions rather than face terminal decline.

FE needs to remain faithful to its core offer but also needs to think wider if it is to remain solvent. It needs to think about expensive classrooms and workshops that remain empty many weeks of the year and use them rooms seven days a week. It needs to really sweat its resources if it is to remain solvent

If providers want to attract the community over the threshold, to experience and enjoy its offer, perhaps they need to step outside of their comfort zone, offer courses, toothpaste and post office facilities seven days a week.

Or would merger, closure or slow demise be a more comfortable way forward.

Marketing consultant Stefan Drew was previously director of marketing at two FHE colleges and now works with providers throughout the UK, Europe and the US – visit: http://www.providermastermind.com