According to Channels TV, Nigeria’s inflation rate as of July 2023 stood at 24.08%. The inflation was 24.08% in 2022 according to statistica.com. That shows how expensive things have become in the last few months. As a form of comparison, to make you appreciate the situation, India’s inflation rate is around 9.7% while that of the US is reported by Statista to be 3.2%. With this analysis, you’ll appreciate how expensive things have become and why businesses including schools may have to make difficult decisions.
A motivational speaker and author Robert H. Schuller once said “Tough times don’t last, tough people do”. This quote is very true at a time like this as school owners will currently be under pressure to take difficult decisions that could affect the growth of their schools. School materials are getting extremely expensive while teachers are demanding an increase in salary due to the high inflation. Teachers’ salaries hardly cater to their transportation these days, not to talk of food and other basic needs.
Usually, the only solution at sight is to increase school fees so as to increase cash inflow to address the rising needs. While there are other creative solutions to manage the situation, it is apparent that a large number of schools will opt for these options.
However, increasing school fees should also come with empathy for the parents and be creatively done in a way that will ensure a win-win situation. Hence, the need to explore the following 7 steps as you plan on the school fees increase.
1. Look into your financial records.
Most schools, especially small schools, don’t take their financial accounting very seriously. All they do about finance is just collect school fees and spend the money. They hardly have a comprehensive financial record that can be analyzed at a time like this. Looking into your financial records, if you have one, can help you determine your areas of cash inflow and outflow.
By doing this, you may identify areas of alternative cash inflow instead of school fees increase or consider cutting down some non-productive expenses. This way, you may find that you don’t need to increase school fees. Even if you need to, this exercise will help you to objectively determine how much more you should add. Ultimately, you may need the service of an accountant to help you make sense of the numbers.
2. Identify alternatives.
At first sight, it may seem that all doors are closed. But, think about this. Imagine that the president of Nigeria placed a price on the table. if you find an alternative without increasing school fees you get 50 million naira, will you?
What will be those alternatives? Write them down. That means, if you give yourself the permission to think of alternatives, you’ll get one. Some alternatives could be stopping extra programs and activities such as fruit day that are adding cost, reviewing your staff strength to ensure you’re using exactly what you need, non-academic staff like the school head, school admin, etc, can also teach some subjects to reduce the cost of salary, reduce school time by cutting unnecessary lesson repetition so you can minimize energy usage and staff need, etc. In seeking alternatives, try to engage stakeholders such as your teachers to ensure you consider all angles
3. Add value
If you must add school fees, consider what value you will add to your offer to make it easier for parents to accept. This is the best way to ask for more money from customers. Make them feel that you are not only asking for more money because of the prevailing economic circumstances (because they are also affected by the hike in prices) but also because you are adding more value to your offer. The following are examples of offers you can add for free and will also cost you nothing
a. Parent Workshops and Seminars:
Organize educational workshops and seminars for parents on topics like parenting skills, child development, and effective communication. This can enhance the school’s reputation and provide added value to parents without significant financial expenses.
b. Career Counseling and Guidance:
Offer career counseling services to senior students, helping them explore potential career paths, prepare for college applications, and make informed decisions about their future. This can be managed by utilizing existing staff members with relevant expertise.
c. Health and Wellness Programs:
Introduce health and wellness initiatives, such as physical exercise, diet seminars, or stress management workshops, which promote parents’ overall well-being and mental health. These activities can be led by existing staff with relevant expertise.
4. Provide payment alternatives.
Once you increase the school fees, give parents multiple payment options. By adopting this single strategy, you’ll be surprised to see that parents will not leave your school due to fee hikes because they’ll understand that you’re empathetic.
This is where you needed a professional accountant to help you look at your numbers. For instance, how much can you take from your parents that will be sufficient to meet your expenses? Let’s assume 60% of the fee will cater to that, then you can make parents pay that in 2 installments in the first month while they pay the remaining 40% thereafter.
I understand that parents may default and it may be tough to get your money. However, you must know that the issue of parents defaulting is entirely your problem, not parents. That is a discussion for another day. So, you must be creative enough to apply this. Think of the best way to get your money. One way to do that is to call all parents to a meeting and have a discussion about this.
Let them know you care for them and you don’t want them to be under pressure. Ask them to propose how best you can get your money since you now allow them to pay in installments. Brainstorm together, select some of them to form a part of the implementation task force, document all these, and share with parents that are absent at the meeting. This approach will minimize defaulters and help you to deal with chronic defaulters decisively.
Another alternative is to collect your school fees in kind rather than cash. If some parents are selling the product or providing the services that the school needs, consider collecting your money in kind by getting their product or service in a way that is commensurate with the fee.
This will not only ensure effective collection but also helps to build a stronger relationship with the parents. For instance, if one of them is a real estate practitioner, you can ask for land in return for school fees, this will potentially favor the school as it will be an investment.
5. Increase the fee for a temporary time
This can be an awkward strategy but it can work magic. However, you need the advice of a professional accountant here. Let the accountant tell you the economic forecast and use that to your advantage. If things will get better as promised by the government then you can also tell parents that you are increasing the fee for a temporary time.
The essence of this is to send a strong message to parents that you’re not increasing the fee to take advantage of the situation for financial gains but simply because of the prevailing circumstances. That means, when things get better, you’ll not mind giving discounts where applicable. However, as I said earlier, let an accountant help you out here.
6. Do selective increase
Increasing school fees have the potential consequence of reducing the number of students in your school. This can be counterproductive if not well managed. The problem is that sometimes when this happens, it does not open an opportunity to reduce your staff thereby reducing expenses.
For instance, two students withdraw from each of your classes. This will not lead to a reduction in staff numbers because all the classes are still existing. So how do you solve this problem? Some of you might be in a situation where you can’t increase school fees right now because you just increased last year.
So, if you find yourself in this situation, increase school fees only for new intake and not for existing students. That way, you’ll maintain your number and still remain financially stable
7. Seek stability and not profitability
Take your eye away from profitability at a time like this and seek stability. If you are running the school’s finance well enough, it means everyone working for the school including yourself are getting a salary, and whatever is left is your profit. At this time, the priority should be to stabilize the school and not to seek profit.
Why? If you can be stable without increment, you’ll likely be profitable. Because many schools will be increasing their school fees and parents will be looking for cheaper alternatives. If your school is that alternative, it means you’ve signed up for an inflow of students and you know what that means.
Amidst the challenges facing small school owners today, I extend a helping hand to guide you through these tough decisions and keep your institution thriving.
I’m excited to offer you a FREE consultation service tailored specifically to support small school owners like yourself. If your school is grappling with the complexities of our current economic landscape, wrestling with the decision to adjust tuition fees, or concerned about the potential consequences of such a change, I’m here to provide expert insights and solutions.
Let’s collaborate to ensure your school not only survives but thrives. Click the button below to initiate a chat with me, or feel free to reach out via WhatsApp by messaging 07069059155 directly. Together, let’s pave the way for your school’s continued success.