Have you ever taken a look at your net tuition revenue growth? If not, you may be surprised to find that your school is slowly going out of business. I have looked at the information on a number of private schools and discovered some surprisingly depressing information. Take a look at the data from one of them. Will they be here in 10 years? How about your school? Is your net tuition revenue continuing to slide? What can you do about it?

I looked at 8 years of the school’s net tuition revenue data from 2008/09 to 2015/16 as seen in Table A. The school’s net tuition revenue has gone from 3,699,000 in 2008/09 to 2,506,000 in 2015/16.  (This school is not a client of mine, yet.)

Table A – numbers in thousands

[table id=1 /]

Then, I calculated where the school should be, if it increased its net tuition revenue by 4% a year starting in 2009/10.  In 2015/16, the school should be generating $4,868,000 as seen in Table B.  However, in 2015/16, the school actually generated only $2,506,000 as seen in Table A.

Table B – numbers in thousands

[table id=2 /]

In Table C, you can see how much more the school should be generating.  In the first year 2009/10, the difference was only $14,000, but the following year, 2010/11, it was $663,000 and it never stopped increasing.  

Table C – numbers in thousands

[table id=3 /]

Currently, the school should be generating 94% more income in 2015/16 than it actually is.  If you sum up the total loss from Table C over the 7 years, the school has lost revenues equal to $10,575,000.

At this point in the school’s history, it is probably being affected by the following:

–          Larger than average deferred maintenance issues

–          Lower teacher salaries, yielding less quality teachers

–          Weaker student composition

–          Poor leadership, unless there has been a good replacement

–          A need to maintain very high tuition increases

What if the school had dedicated resources, perhaps 10% of the $10.5 million over time, to implement a great marketing and recruiting program and used the balance to boost the quality of the educational experience? Wouldn’t this have made a difference for this school?

You would be amazed to see how many schools are in this position.  I believe there are hundreds of schools whose net tuition revenues are 50% to 150% lower than they should be with a normal 4% increase beginning the year of the stock market crash of 2008.  Schools blame the crash, but that wasn’t the only reason.  Other reasons include poor quality of service to families, no marketing foresight, and marginal leadership.  Perhaps, it would be a great study by National Association of Independent Schools.  Do trustees want to hear about this? I believe the data would provide evidence that many schools are slowly going out of business.  Is it time to pay attention?

Click here to download your copy of the spreadsheet to review your net tuition revenues.  You have to download the spreadsheet to use it.  Click the download button twice, because the first time it tries to get you to sign-up for Dropbox.  Cancel out and click the download button again.

All you need to do is to input your data (area in blue) for the net tuition revenue generated over the last 8 years and all the other fields will calculate for you.  You can change the percentage increase per year, if you would like.  Contact me for questions or to help your school stop the erosion in your net tuition revenues.