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Running a Balanced Business

David Kitchen is Managing Director of Consultancy firm, The Leadership Team
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Business Sense from The Leadership Team

The difficulties faced by large funded training providers like First 4 Skills and learndirect is a huge blow to learners, staff and other providers in the supply chain. Other smaller providers like Norfolk Training Services and UKTD have suffered Grade 4 Ofsted reports which potentially leads to a loss of contract and a likely loss of a business for people who have worked hard and built up their business over many years.

Of course, government funding has to be monitored and managed this way and there must be the most serious consequences for non-performance or non-compliance of public money.

The issue lies with the (lack of) strategy of the business owners who get hooked on a favoured funding stream, believe that it is there to stay and think that they cannot do both commercial and funded training at the same time. People also do not believe that you can plan a long-term strategy when the funding regime continues to change as they are constantly having to adapt to suit. We do not believe that this is correct – you can build a plan around the certainties and likely certainties.

So, let’s look at where we are now with the skills agenda. Whilst there is potential uncertainty with government in that a small majority and the pressures of Brexit may result in another general election – and a strong possibility that Labour may win. Whoever wins it is very likely that Apprenticeships are here to stay. It is also very likely that now the government has passed over much of the ‘funding’ to employers via the Apprenticeship Levy, that this will also remain in place. These two areas are therefore pillars by which you can build your strategy.

Advanced Learning Loans appear to be doomed under Labour, but could continue for a while under the Tories, despite the fact that there has been no opportunity to join ROTO or apply for a contract for some time. This remains a good funding stream if used correctly but appears to have a limited shelf life. ESF in the main comes to an end in July 2018 which means this is a short-term programme and NOT to build a business strategy around.

Adult Education Budget appears to be on the rise again and with the forthcoming need for skills post Brexit and the likely distribution of learndirect’s contract in 2018-19, this is one to watch.

The Apprenticeship Levy is probably the key pillar of a training providers plan. Plus – the relationship between the employer and provider is a commercial relationship not a funded one. Having negotiated commercial terms with a large employer there is no reason why this cannot be a part of your strategy and commit to a % of your business as commercial business with no reliance on funding. Most businesses work this way, selling their services to those that need them and there is no ‘funding’ involved.

It requires a change of mindset and focus but if you can get your commercial revenues to cover your overheads then you have a much better chance of survival and will be able to weather the next storm when it inevitably comes.

David Kitchen is Managing Director of Consultancy firm, The Leadership Team

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