From pre-schools and nurseries, through to universities and other higher educational establishments, the challenges facing all areas of the education sector have never been more pronounced.
Additional support for working parents in the form of increased free childcare hours for children aged three and four, from 15 hours to 30 hours per week has come at a cost to nurseries as they struggle without sufficient government funding to ease the financial burden of delivering this. Those establishments opting to not offer the free hours, however, are facing financial hardship from a different source as they fail to attract parents who are understandably keen to take advantage of the money-saving scheme. Add to this, increases to the national living wage and enhanced workplace pension contribution levels for employers, and early years providers are finding their margins severely tested.
Government funding cuts
Funding cuts have hit establishments at the other end of the education spectrum. The recent reduction of government funding and subsequent tuition fee hike for students has had a huge impact on universities, with prospective undergraduates now more likely to weigh up the value of attending university than ever before. Poorer ranked universities in particular are feeling the heat as they struggle to justify their worth to students who are becoming more and more discerning. Furthermore the removal of government funding for nursing degrees has seen student numbers plummet by almost a quarter. This is before the as yet unknown effect Brexit may have upon student numbers, particularly those from mainland Europe.
Squeezed incomes have impacted independent schools with the demand for private education lessening, while the emergence of free schools and academies has created a multitude of complications of their own as performances come under scrutiny and budgets fail to add up.
The need for specialist advice
In an industry where maintaining standards and staffing levels is fundamental, pinpointing areas from which to cut costs is not always as obvious or straightforward as it may be in other sectors. Many advisory practices simply do not understand the sector and the acute challenges educational establishments are up against. Due to this, non-sector specific advice is given which is inadequate during times of impending or actual distress.
RBR Advisory’s team of education experts, however, specialise in devising innovative solutions to ease the financial pressure on nurseries, schools, colleges and universities. Turnaround following a period of distress is not always a quick or easy process; however, our partner-led, hands-on approach means you will have a true industry specialist with you every step of the way helping to mitigate risk and implement robust plans to set you in solid stead for the future.
The demand for an educated and skilled workforce will always be there, the key is ensuring your establishment is positioned correctly to attract the right kind of people. As student expectations rise, you need to demonstrate your offering represents good value for the investment of both the time and money required. We can offer assistance and support to heads, governors, and directors alike, regarding both financial and non-financial concerns, providing the opportunity to refocus and consider a future strategy which will be robust enough to deal with further regulatory, funding, and legislative amendments.
We will take an independent view of current management structures, teaching resources, and processes to ensure your business is organised in a manner which limits inefficiencies and utilises available funds in the best way possible. A consideration of short and long-term liabilities will be weighed up against current income and future growth potential to ensure liquidity levels are appropriate both now and in the future. Should capital need to be introduced, our commercial finance team will locate appropriate and cost-effective funding channels.
Strategic M&A transactions
Budget cuts have seen an unprecedented number of mergers take place in further and higher establishments as resources are pooled to deliver higher quality outputs. If you feel this may be a possibility for your situation, our transaction team offers the full spectrum of corporate finance services allowing us to assist with mergers, acquisitions, disposals, as well as sourcing the required funding to enable completion of these transactions.
