A different tune

There may be trouble ahead, but as your school prepares to face the music, there could be many opportunities for it to consider and strengthen its position. Simon Shneerson explains how to up your tempo

We live in a new world, where middle-class family finances will never be the same. In the short-term, parents will face increasing pressure on their jobs and finances, something most schools are sensitive to and are dealing with in one way or another.

More importantly, though, the next few years will see a permanent re-balancing of family budgets, with higher taxes, lower allowances, and the need to make greater provision for retirement and an occasional rainy day. Schools need to consider this, because everything from pensions being linked to RPI to the withdrawal of family allowances will affect the money that parents have available for school fees.

Third age
One other significant factor is creeping up under the radar, and it could have an equally massive impact in due course. We are now about half-way through the last full generation of affluent pensioners with index-linked pensions and significant equity in their homes.

These people currently provide a great deal of financial support for their grandchildren’s school fees, usually without schools realising quite how much. Today’s parents are unlikely to be able to give anything like the same amount of money when it’s their turn to be grannies and grandads.

So we are seeing two major changes that will fundamentally affect fee-charging schools – poorer parents and poorer grandparents. Not the best basis for a premium-priced market with a million places to fill and a competitor that doesn’t charge at all.

Where now?
So, what does this actually mean? First of all, schools must recognise affordability as a central issue that will drive their future existence in a way it never has before. Price will become increasingly important, although there will always be opportunities both for expensive, excellent schools and for cheaper, pretty good schools. Perceived value will be critical: whatever you charge, it must be worth it, and if parents think a school is worth more, many of them will find ways to pay more.

All this is both bad and good news for fee-charging schools. Bad news: for weak schools that are in the wrong place, or which only offer an average product at an above-average price. Good news: for schools that offer something truly special, and which find ways of doing so at a price that enough parents can continue to afford. And there is still plenty that every school can do to help itself.

First of all, make sure your school is truly special. This may seem blindingly obvious, yet there are far too many independent schools that are not special enough for the harsher world of now. Schools don’t need to have swanky premises or to teach seventeen languages and synchronised swimming, but they do need to have teachers who look really good and, even to a lay parent, can be clearly seen to be going the extra mile – and then another mile too.

Next, increase awareness and appreciation of what you offer, and why you’re worth your fees. Up to now it has been far too easy to advertise small classes and great pastoral care with a glossy prospectus and a jazzy website, and then sit back and hope that prospective parents will turn up with their children and their cheque books. The truth is that schools spend far too little time and money on marketing, so be prepared to spend more, do more and work harder at it, and maximise your word-of-mouth reputation.

Self-control
The next area of self-help is also obvious, and that is cost control. Schools are inherently inefficient (even after two years of recession, look at how many schools’ buildings and resources lie empty most of the year). There are plenty of ways to cut down on waste, trim peripheral activities, and timetable staff more effectively. Cutting costs increases profit margins and gives a useful sandbag for hard times. In addition, leanness and visible efficiency appeals to parents who are themselves being squeezed, and improves perceptions of the value for money a school offers.

For many schools, a combination of offering the right product at the right price, good delivery, good marketing and tight cost control should ensure a happy future. But for others, the difficult climate will simply show up existing weaknesses and force more radical action. A number of schools closed at the end of last term and it is certain that a larger number will close next summer.

Not all bad
Closure can, however, be a positive step, because it is a decisive action which usually stops a deteriorating situation from getting worse. It also helps the remaining schools in the area, and it usually releases cash which a charitable trust or proprietor can often put to better use. So, putting emotions aside, closing a dying school is a good exercise if it’s done at the right time. Planned properly and proactively, closure can happen humanely and calmly, with honour and celebration on all sides.

Consider closing:
• when numbers are down and you can’t see them increasing enough, either because the catchment area is weak or the school is;
• if you are losing money and/or when your borrowing capacity looks limited, and the next major repairs or investment in resources will be hard to achieve;
• if you have heavy borrowings already and won’t be able to afford higher interest rates when they arrive;
• if the school is losing prospective pupils to competitors over the long-term;
• if your governors are tired and can’t find energetic successors; and
• before the bank tells you to.

Mergers, too, will increase, giving a happier outcome than closure if done well. Schools can and should merge from positions of strength as well as weakness, and all the usual rules and opportunities of commercial mergers apply to schools too. A merger gives a great opportunity to create a stronger school that is structured and resourced correctly and that can truly thrive in the changing market.

Consider merging:
• if one or both cannot continue on their own and can bring something positive to the other;
• if one school sees an opportunity to strengthen its own position, spread its overheads or gain access to additional resources;
• if one school has something special that it believes will work elsewhere; or
• if one school (or both) wishes to make fundamental change and needs a catalyst.

But only merge if it will create a fresh new school with a new vision and renewed energy. Never make two weak schools into a bigger, even weaker one.

Free spirits
One final consideration is that many fee-charging schools will start to face new competition in the form of free schools and more academies. These are likely to offer a more independent ethos than has previously been available from the maintained sector, and in some localities they could present a compelling offer for your type of parents. All existing independent schools have the option to convert to one of these formats so, with core funding guaranteed, it may well be a valid option. You might even consider it proactively, if you feel total independence is no longer appropriate.

So, is there trouble ahead? Yes, there may be, but there are also plenty of opportunities for good schools that are able to face the new music and dance to a more appropriate tune. And for those that can’t, it may be time to hang up the dancing shoes or find a new partner for the waltz. Next steps for everyone – watch your toes, prepare your ballroom and make sure your orchestra is well conducted.

Simon Shneerson is a consultant covering all areas of school strategy, business and governance, management and marketing. Simon can be contacted on 01923 283574 or via www.simonshneerson.com. 

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