A realistic budget will allow an institution to measure how efficient it really is. When you lay out all these plans and you tie them up with expenses and enrollment projections you start to distinct which programs are worth working on. I feel like once one has an understanding of the cost structure of the institution, it will become much easier to grow at the right rate.
Thanks Nadine. You've provided the secret to successful planning and results. Be realistic and be sure your goals are attainable. School owners often balk at thinking ahead 5 years. But it's essential because it tells everyone you expect to be around for a long time. Year 5 doesn't have to be fleshed out in detail. However, knowing if you want to be a college in 5 years, for example, helps to determine the steps and timelines to get there during the 4 years leading up to the 5th. Thanks, Susan
A realistic budget will lead to realistic growth. The institution is not preparing for more than it can support and goals are obtainable. Over the course of 5 years, a clearly defined and realistic plan will lead to long-term success and sustainability of the institution.
A perfect formula for success, Brian. Sounds like you conduct an effective feasibility study when considering something new, such as a new training program. Many schools fail to do this. A feasibility study should be so complete that if there is a decision to not move forward, you have all the back-up data to support your decisions. And if you decide to move forward you know all the areas of concern to watch for. Thanks for providing such complete steps for putting a budget in place. Susan
A budget puts in place the incremental perimeters that need to be achieved in order to meet a long term goal. Every goal can be broken down to its elementary components in terms of profits and losses. If we want to reach a certain level of growth we first look at the potential interest (leads) for new program. We formulate what type of marketing initiative it will take to inform the target demographic that we are offering the program and what it will cost. We also, determine what size space will be necessary to offer the program and either reorganize the current space we have in order to provide space for the program. Or we initiate a search to lease adjacent space and evaluate the cost of fit-up construction. We then get a professional in the field help us develop a budget for what equipment will be necessary to successfully train students in the new program. We also, determine what the minimum initial enrollment needs to be in order to break-even when offering the program for the first time and we forecast how soon we can expect to turn a profit in the program.
Sounds great, Judith. Looks like you have the budget process working for you. You are giving specific goals to your managers to justify their budget in terms of student outcomes. That's great. They will be able to show results in terms of $ and student success and satisfaction. Thanks, Susan
As with most facets of running a business, a budget can be stickly adhered to or act as a flexible guideline. Obviously it has a direct connection to the number of enrollments and as such we see it as a flexible tool. Our departments are asked to focus on how their requests will enhance the student's educational experience. If their requests for line item improvements meet this criteria, then we do everything we can to implement the request. This covers, not only classroom equipment, but also new software that will speed up or smooth out current processes.
For example, we recently approved a budget item for an "Attendance Hotline", this number allows the student to call, leave a message that is transcribed to email and sent to the Registrar and the instructor. This enables the instructor to contact the student in "real time" and not wait to connect with the student days later.
The staff understands that purchases are dependent on cash flow and are willing to delay plans if needed. Herein lies the "flexible" part of running a small busines.
Yes, Christopher, budgets are very important. It's like the chicken and the egg? Which comes first? Maybe goals and ways to meet them come first. And then the budget to implement the goals and to demonstrate the outcome. If someone can show that it takes $1000 to get $50,000 worth of new student enrollments, that could be money well spent. Creativity can emerge when people have great ideas they are excited about. And then use their creativity to develop ways to economically reach them. Thanks, Susan
Short and long term goals can be obtained only when the staff understands the budget and how it will effect all departments now and in the future. The growth and success of business depends on a solid budget and employee awarness. Why we have budgets and the budgets importance in everyday spending, and how we budget today can have a impact on tomorrow.
Thanks John, You have totally outlined how a budget can drive a school and measure results. Now the question is, how to get staff to understand the budget so they each do their part in getting results. Some school owners give the budget to each department and let the directors figure out how to reach goals. Others invite directors to participate in setting the budget. Best wishes, Susan
A realistic budget is a powerful tool for monitoring progress towards a goal, as well as evaluating deviations from the goal. Important components would include expected enrollment; expected revenue and expected expenses, as well as detailed explanations for how these figures were derived. Included in the expense category should be a detailed marketing budget.
Great outline re budget, Mark. Thanks. There also needs to be a contingency amount of about 20%. And most important, each department head needs to know his/her budget and be accountable for it. That means ideally monthly reports and updates about how things are going and rewards for meeting budgets and ways to put new plans in place when budgets aren't met. Everyone on staff has to be accountable and know that their efforts affect the bottom line. And ideally that they are earning their salaries. Thanks, Susan
A realistic budget provides the roadmap for the school to meet the goals of their five year plan. It includes projected student population growth by program, anticipated operating expenses to appropriately provide the product that you are delivering, additional expenses for new Chairs, faculty, staff, facilities, and equipment based on growth projections of existing programs or addition of new programs. A dollar figure must be tied to all elements of your plan to ensure you have the resources needed to carry out the plan.
