Education Financial Budgeting Tips from Finance and Education Experts
There are still a lot of people who get offended when they read the word “industry” with education. Let alone talk about education financial budgeting tips. Although we don’t like to break it to them that education is a big business, we do understand where they’re coming from. After all, education should be about nurturing young minds and preparing them for the future- not turning a profit.
However, the fact of the matter is that running a school, college, university, or any other type of educational facility costs money. A lot of money. And if you’re not careful with your finances, you could find yourself in some serious trouble.
That’s why we’ve put together a list of the top education financial budgeting tips. This article will help you keep your educational institution running smoothly and keep those young minds happy.
Importance of Education Financial Budgeting
There’s no denying that financial budgeting is important for any business. But it’s especially important for the education industry. Here are a few reasons why:
- Education facilities are expensive to run
- There is a lot of competition in the education industry
- Tuition rates are always changing
- Financial aid and scholarships can be unpredictable
- Government funding can be unreliable
Now you know how important education financial budgeting is. Let’s discuss some of the contemporary education business models active today.
Contemporary Education Business Models and Education Financial Budgeting
There are four general types of educational institutions:
For-profit: These organizations exist to make a profit for their shareholders. They’re usually investor-owned and may be publicly or privately traded.
Not-for-profit: These include public schools, state colleges, and many private schools. They generally don’t have shareholders and any surplus is reinvested back into the organization.
Individual providers: These include tutors, educational consultants, and other specialists who offer their services to students or parents.
Community-based: These are typically nonprofit organizations that are run by religious groups, charities, or other community organizations.
Except for the not-for-profit institutions, all other types of educational organizations need to generate revenue to stay afloat. That said, let’s take a deeper look at the remaining three models and what are their education financial budgeting needs or problems.
For-Profit Educational Institutions and Their Financial Needs
The for-profit model is the most straightforward one. The main source of revenue for these organizations comes from student tuition and other associated fees. Other revenue streams may include government grants or contracts, donations, and investments.
The expenses for for-profit educational institutions are similar to any other business. They include staff salaries, benefits, and training, building maintenance and operations, marketing and advertising; and other general and administrative costs.
The main challenge for for-profit educational institutions is to generate enough revenue to cover their expenses and still make a profit. This can be difficult, especially in industries with high competition or low margins. But with careful planning and execution, it is possible to achieve success.
Now, there are some minor differences between the sub-types of these for-profit institutes. The three main types are:
These are privately owned and operated for-profit schools, colleges, or universities. They’re usually small, with fewer than 1,000 students. Usually, one owner or a small group of owners controls these institutions.
These are for-profit institutions that have a contract or affiliation with a non-profit institution. These contracts allow the for-profit school to offer degrees or certificates on behalf of the non-profit school. For example, a for-profit college may have a contract with a state university to offer its degrees.
Virtual Educational Institutes
These are online-only or blended (a combination of online and offline instruction) for-profit educational institutions. They’re usually small, with few employees, and have low overhead costs. But we have seen a surge in the number of virtual for-profit institutes in recent years.
Individual Education Providers and their Financial Needs
The individual educational providers consist of tutors, educational consultants, and other specialists. They usually offer their services to students or parents. And charge for their services on an hourly basis, per project, or retainer basis.
The expenses for these types of providers are usually low since they don’t have many employees or overhead costs. But does any business run without expenses? Of course, not! These providers have to shell out money for:
- Rent (if they’re not working from home)
- Marketing and advertising
- Office supplies and equipment
- Accounting and legal fees
Different countries and states have different regulations regarding individual providers. So, it’s important to check with your local government before starting your individual education business.
Community-Based Educational Organizations and Their Financial Needs
These types of organizations are usually nonprofits that are run by religious groups, charities, or other community organizations. They may or may not charge for their services. But a general rule of thumb is that if they’re providing services to the community based on public funds, they’re not going to charge for it.
The revenue streams for these types of organizations include government grants, donations, and investments. They may also charge fees for some of their services, like after-school programs or summer camps.
Now that we’ve covered the different types of for-profit and nonprofit educational organizations and their finances, let’s get to the part you’ve been waiting for – education financial budgeting.
We are going to assume that you are a for-profit educational institution since that’s what this guide is about. If you’re a nonprofit, some of this information may not apply to you. But we’ll still try to provide useful tips that you can use for your organization.
Education Financial Budgeting Tips from Finance and Education Experts
Oak Business Consultant is a leading provider of financial management services for various industries. We’ve also helped schools, colleges, and universities with their finances, and we can help you too. The best thing about Oak Business Consultant is the amalgamation of a number of expertise and skills. You will find education experts as well as finance gurus who can help you with your budgeting.
Some of the working tips that our experts have to offer are:
1. Make a List of All Your Revenue Streams
Since you have to start somewhere with your education financial budgeting, it’s best to start with your revenue streams. Make a list of all the ways your for-profit educational institution generates income.
Here are some examples:
- Enrollment fees
- Room and board
- Application fees
- Transcript request fees
Once you have an ideal list of all your revenue streams, you can start analyzing how many of them are stable and which ones are seasonal or unpredictable. This will give you a better idea of how much money you can count on every month, quarter, or year. Then it also depends on your financial needs as to how you want to use this money.
2. Make a List of All Your Expenses
Just like your income, you need to know where all your money is going. This will give you a better idea of where you can cut costs and save money. Again, start by making a list of all your expenses, including:
- Employee salaries
- Employee benefits
- Office rent
- Marketing and advertising
After you have all your expenses down on paper, you can start evaluating which ones are fixed and which ones are variable. Fixed costs are the costs that you have to pay every month, quarter, or year, regardless of how much money you’re making. Variable costs are the costs that fluctuate depending on your revenue.
If you are running an online business, then your variable costs will be things like website hosting, online advertising, and pay-per-click campaigns. If you have a brick-and-mortar business, then your variable costs will be things like inventory, supplies, and shipping.
3. Allocation of Resources
Once you have a good idea of your organization’s revenue and expenses, you can start allocating your resources. This is where you decide how much money to put into each area of your education business.
For example, if you have a lot of variable costs, then you may want to put more money into marketing and advertising so that you can bring in more revenue. On the other hand, if you have a lot of fixed costs, then you may want to put more money into things like employee salaries and benefits so that you can keep your employees happy and productive.
But resource allocation works differently for different educational facility types. Let’s have a look at each one of them:
Allocation of Resources for Online Education Businesses
If you are running an online education business, then your biggest expense will be your website. You will need to invest in a good domain name, hosting, and design. You will also need to pay for marketing and advertising to get students to enroll in your courses. Other than that, you will also need to pay for course materials, licenses, and certifications.
Allocation of Resources for Brick-and-Mortar Education Businesses
For a physically located educational facility, your biggest expense will be your building. You will need to pay for the mortgage or rent, utilities, and insurance. You will also need to invest in furniture, supplies, and equipment. And just like online education businesses, you will need to market and advertise your facility to get students to enroll.
4. Track Your Progress
Once you have allocated your resources, it’s important to track your progress so that you can see if you are on track to meet your goals. You can do this by setting up a simple spreadsheet or using accounting software. But let us tell you that Financli is a software subscription program that lets you do all of this and more. Also, if you think you need help with your education financial budgeting, then please reach out to us and we would be more than happy to help you.
5. Review and Update Your Budget Regularly
Looking at the current global financial situation, it is important to review and update your budget on a regular basis. This will help you make sure that your education business is prepared for any unforeseen circumstances.
For example, if there is a recession, then you may need to cut costs so that you can stay afloat. On the other hand, if there is an influx of students, then you may need to increase your budget so that you can accommodate them.
No matter what the economic conditions are, it is important to review and update your budget regularly so that you can make sure that your education business is on track. You definitely don’t want to wait for another wave of a pandemic to hit us and then start scrambling to figure out what to do.
6. Bookkeeping and Accounting
When it comes to bookkeeping and accounting for your education business, there are a few things that you need to keep in mind.
First of all, you need to make sure that you keep track of all your income and expenses. This will help you see where your money is going and where you can cut costs.
Secondly, you need to make sure that you pay your taxes on time. This is important because if you don’t, then you may end up owing a lot of money to the government. And lastly, you need to make sure that you maintain proper financial records. This will help you when it comes time to file your taxes or apply for loans. For this purpose, you can consider hiring Oak Business Consultant’s professional bookkeeping and accounting services.
7. Get Professional Help
If you are struggling to manage your finances, then you may want to consider getting professional help. There are a lot of financial advisors and consultants out there who can help you with your education business budget.
But before you hire someone, you need to make sure that they are qualified and that they have experience working with businesses in the education industry. You can do this by checking their credentials and reviews. But to relieve you from this burden, we are here with all our financial services.
Getting professional help is a great way to make sure that your education business is on track financially. It is also a good way to get peace of mind knowing that someone else is handling your finances.
Education businesses need to be very careful with their finances. This is because if they are not managed properly, then they can quickly become bankrupt. We witnessed hundreds of such cases, especially during the Covid-19 pandemic.
But if you follow the tips that we have mentioned in this article, then you will be able to manage your finances properly and ensure that your business stays afloat. Just remember to track your progress, review and update your budget regularly, and get professional help if you need it.