In the last few years, I’ve visited thousands of schools and I have one on one contact with over 4,000 school owners. Actually, that’s where I draw much of my experience. I’ve been exposed to almost every issue that school owners face and with SOF, we have invented solutions to all aspects of school business.
This experience didn’t come cheap, it took so much research and continuous practice. And in all of my research, I made a discovery worth sharing. Now, here’s the discovery:
I’ve realized that the success equation of every school business has basically 6 parameters. 2 constants and 4 variables. When these variables are combined in the right proportions, every school proportions, ever school business
Notice that I said school business and not just school. That’s because a school and running school business are 2 different things. Yes, please get that clear. Actually that’s another discovery I will shading with you in subsequent classes.
TONIGHT’S PARAMETER IS A VARIABLE, BUT A CRUCIAL VARIABLE – STANDING CAPITAL
This capital is the amount of money available to do business.
You don’t have to have big capital that will likely keep you paying debts for a long time. You can have that if you have access to it, but whatever amount you have, you only need to invest it wisely.
If your’e just starting out your school for instance, or floating a new annex, you’re supposed to invest in a location where you know you’d be king in the jungle. Not somewhere you’d find it difficult to cope. You don’t have to float the new annex in the same local government with the mother school.
If you already have a school, (which is the case for many of us here) and people with bigger pockets suddenly show up in the area, then you may choose not to compete with them at all, OR you step up your investment and match their competition facility for facility, strategy for strategy. The first option is my advice.
But even where you choose not to compete with them, you need to set up your school unique enough to attract parents who are not looking for something bigger than what you offer, but are okay with something of your size. The problem is, there are going to be a few other schools (if not many) of your size and level, so you need to package and present something absolutely unique about your level.
To do well in any business, you need some form of standing capital different from the income generated or running cost. Most of your revenue largely goes into running costs, sometimes, you even end the term with debts. This standing capital will be kept aside, whether or not you break even. It’s not for you, its for the business.
There must be an amount of money kept aside, that enables you respond swiftly to any emergency. And by emergency, I do not mean danger or accidents. I MEAN INNOVATIONS
Sometimes, you need emergency innovations to keep you in the game. Think about this: Next term is third term and if you look around you and observe well enough, you’ll see schools warming up to start and other ones warming up to close shop. Actually as new schools are opening, many are closing.
For the new schools or even existing ones like you who’d want to gain more growth, you need compulsory innovations that will ring a louder noise about you, even as others are also pushing to get some of your customers. It isn’t a contest, but it’s business. And in business, you don’t sit on the fence. Except you’re just running a school and not a school business and you’re not interested in making enough profit to sustain your business.
With a standing capital, you leave the clutter and pump a little investment wisely, do a new thing that will keep you actively in the game. If you’re always waiting for that money from your parents that most times do not even come in bulk, then you may have slow growth. If that continues for too long, may you not be forced to close shop in Jesus name.
So this standing Capital is an important variable in the success equation of your school. Most schools struggle without it.
YOU NEED A STANDING CAPITAL
Now, please understand Me. I’m not despising the joy of new beginnings or the peace that comes with growing at your own pace. I’m instead saying, without a standing capital, growth is always slow. If you’re okay with spending decades still growing at a slow pace, then don’t worry about what I’m teaching today. Otherwise, take care of this angle.
BUT WHERE DO I GET THIS CAPITAL?
The kind of money I’m talking about is not one which you’d always go to the bank every now and then to buy. It’s OK if you always get such loans, but please always assess the utility of such facilities, and be sure you’re getting enough results to justify the troubles that come with it.
I would have advised that you begin to scrape aside some sacrificial savings over time. I can’t tell you a specific amount. If your average school fee is N90,000 per term, and you have 50 children, you’re expecting N4.5 million every term, if everyone pays, or say N3 M at least in revenue. If you set aside N500,000 for 3 terms, that’s N1.5 M in a session. You could do more if you wish.
NOW Listen to this: This money should not be seen as profit or used for charity. You shouldn’t bless people with that money. It is not for you. Its for the business. The continuity of your business is in itself a blessing to many. Business people look into and plan for tomorrow. Even if all is looking good now. This money is an INSTRUMENT of continuity that gives you confidence and makes you carry out compulsory and emergency innovations when you need to. Having this kind of money could give you confidence to close your eyes against debtors in your school in a given term. Even where you’ve taken other loans from banks and you’re still paying, this money must still be set aside.
You should always avoid spending all the money the school brings, in running the school or paying its debts. Set something aside over time and see it as an instrument for the business.
You may need to scale up or scale down this my example to suite your school. No matter the size of your school, The bigger your income, the bigger your standing capital should be. This VARIABLE is crucial in your School Business’ success equation