A question to ponder—one not to invoke fear, but to inspire preparedness:
What will your private school do when a recession hits?
Now twelve years into recovery after the Great Recession, America is now in the longest-running “bull market” economy in her history. Given the natural ebb and flow of economic patterns, not to mention the recent financial turbulence of the trade wars, the next recession is not a matter of “if” but of “when.” For many families, private school is considered a discretionary expense—one that could be rethought during the belt-tightening of a recession, especially if a high-quality public school alternative is available.
That said, a recession doesn’t automatically mean private schools must close or go into bankruptcy. Many such schools have weathered financial hard times before, and many will do so again. However, you don’t just want your school to survive a recession—you want it to thrive, to prosper in spite of it. Your best chance of doing so is to be proactive—taking steps now to make your private school recession-proof. Let’s discuss some ways that your private school should prepare to recession proof your school.
Solidify Your Marketing Strategies
You don’t want to wait until the throes of a recession to develop a robust marketing plan for your private school. Institutions that struggle to recruit students in a good economy will struggle that much more in a bad one. For that reason, work now on developing and refining marketing strategies that are as strong and effective as possible. Educate yourself on your competitors’ practices, learn your target market, and hone your branding and messaging to reach that market effectively.
If possible, work with a marketing strategist to help create and execute a plan individualized to the needs of your school and your community. By the time recession hits, your marketing strategy should be a well-oiled machine so you can focus on working smarter and harder on recruitment. Marketing takes time to implement and execute. Waiting until you are down 25% and in the midst of the recession is the worst time to get serious about enrollment. Start today so that when the recession hits, you are able to continue to recruit students.
Explore Additional Revenue Streams
The businesses and organizations most likely to weather economic ups and downs are those who have diversified their income streams—much the same as a healthy financial portfolio contains a diversity of investments. If and when recession strikes, you need to expect a drop in recruitment. If your only revenue stream is tuition money, you may find your school struggling to hang on during an economic downturn.
To avert this crisis, start working now to establish additional sources of revenue so your school doesn’t have to rely solely on tuition for its income. Let’s look at a few examples of alternative revenue streams that other private schools have implemented successfully.
Alumni fundraising. It’s common practice for private schools to build a base of financial support among their alumni. Not only can a strong alumni support system help subsidize expenses not covered by tuition, but it can provide a bedrock of stability during financial difficulties. Just like student enrollment, building an alumni program takes time. If you haven’t implemented this yet, consider doing so now.
Summer camps and programs. Offering a variety of summer programming can be a great way to utilize existing faculty and facility resources while generating income that is not tuition-dependent. It can also serve as an excellent opportunity to introduce your school for families not currently enrolled for possible future recruitments.
Tutoring services. Tutoring offers yet another avenue for the school to earn additional income, as well as income for your teachers—and if you open the tutoring to non-enrolled children, it can become an additional touch point for possible recruitment.
Dual-credit courses. If your private school serves high school students, you may be able to partner with one or more local colleges to offer dual-credit courses—a popular trend that allows students to earn high school and college credits simultaneously. While this arrangement may not directly increase your revenue, it adds considerable value for students and their parents by shaving thousands of dollars off their college tuition costs. This benefit alone may incentivize many families to keep their students enrolled in a recession, especially if finances get tight.
Set up virtual/online classes. In recent years, the Internet has opened up a whole new set of options for virtual education that schools didn’t have during previous times of recession. You might do a cost-benefit analysis of equipping your classrooms to stream classes online. You can structure these classes as supplementary/optional or continuing education courses, or you may want to offer your complete curriculum to students out of town. With the right marketing and branding, you can utilize this option to extend your enrollment beyond your classroom capacity, tapping a much larger pool of potential recruitment.
Explore variable tuition. This concept draws inspiration from the hospitality and travel industries who change their prices based on availability and demand. Airlines may offer significant discounts to fill the remaining seats on their planes for example, while hotels do the same with vacant rooms. Getting some tuition for those empty classroom seats may be better than leaving the seats empty. If you’re having challenges filling your classrooms, variable tuition might be a viable solution.
Evaluate Your Cost Structure
Expanding revenue streams is just one way to create greater financial stability; mitigating costs is another. During a recession when income streams may be limited, you may have to find creative ways to cut costs—however, you don’t have to wait for an economic downturn to “trim the fat.” Begin looking now at areas of waste or unnecessary expense, and redesign your structures to operate more efficiently. Some examples:
Automate or outsource basic functions. Many repetitive office functions today, from email communications to payroll to data entry, can be either automated using software or outsourced to inexpensive third-party services. Doing either (or both) could enable you to operate with fewer administrative personnel.
Leverage virtual schools to fill gaps. We talked about the possibility of implementing virtual courses yourself, but you can also use virtual platforms to close some educational gaps. For example, if you can’t justify the cost of paying a teacher to offer a college prep class to just a handful of students, you might partner with an existing virtual school that offers that class as an alternative.
Review ancillary offerings. Of course, no one likes to talk about the necessity of cutting clubs, sports, or other extracurricular activities. However, we recommend doing a cost analysis of these programs to make sure they are at least financially viable. If they are not, they may need to be re-evaluated should budget cuts become necessary. Saying goodbye to the football team may be both difficult and unpopular, but most parents send their children to private schools for education, not the sports. In the end, they wouldn’t want to sacrifice STEM education for the sake of the team.
Times of recession can be challenging even for the most in-demand private institutions, but with pre-planning and a bit of creativity, you can help your school weather the downturn relatively unscathed. Most importantly, remember that whether it happens a year or a decade from now, a recession is inevitable. You may not be able to fully recession-proof your school, but these tips can help you weather that storm better than those who did not prepare.