Whether your RTO is a new business, or you are in your business’s growth stage, you want to be sure that your RTO is set up for success. Your passion for training and your business is there to make you money, not lose it. Therefore you need to ensure that you are setting your business up to succeed.
There are many components of your RTO that needs to be taken into consideration. What I see too often is training and marketing is first and sadly the finances seem to be last on the list. When in business, managing the money in your business with confidence is vital. Cash flow drying up is one of the top reasons for business failure. Knowing your business numbers is an essential part of the business. You need to see if you are making money to grow and stay in business for the long term.
An RTO is a business in a regulated industry, and sometimes this means that you need to take a cut in the first couple of years. But after that you need to make a profit, unless of course you have very deep pockets!
Love the educational aspect of your RTO, and love your numbers.
For you to make a profit, means you need to have financial objectives in your RTO.
Don’t be a victim. Take responsibility for your RTO business, and learn to look at where it is financially.
Complaining about the government, COVID or other changes in your industry is being a victim. A victim to your circumstances. You have a choice; you can be very bitter and complain, or you can do something about it. Life is about decisions and choices.
But what do you do with that money you are bringing in?
Create an efficient system for billing clients.
When dealing with models of invoices they need to be sent promptly, and show clear terms for when they are due, as well as penalties for late payments. You can also motivate clients to pay early by offering discounts for paying on time and perhaps additional discounts for paying early.
Make sure you follow up on any payment defaults for ongoing scheduled payments.
A sound record-keeping system in place
Minimize missed bills by having a clear and efficient billing strategy that is linked to an accounting software suitable for the size of your RTO business. These can be linked to online payments, and Student Management Systems and help make bookkeeping easy. They also generate financial reports efficiently.
Interpret the data by reading and understanding financial reports
By reading and understanding financial reports, you will have feedback on how your business is performing, and you will identify the strengths and weaknesses in your business. For example, you can tell which course is the most profitable, which in turn tells you what you need to do more of.
Set up a financial plan and following it
A financial plan gives direction for your business. Once you lay out specific financial goals for your business, you can measure your performance against those goals on monthly. Planning your business and where you believe it needs to go is a great exercise, and as an RTO you can utilise the FVRA tool that ASQA provide. Yes, we have all heard the negative comments about that tool, yet the reality is, it can help you see where you are, and plan where you want to be. This exercise gives you immediate feedback on what worked and what didn’t work, so you can adjust your approach as needed. This helps make your RTO the most profitable it can be.
Calculate the ROI for advertising and marketing.
It’s important to know what kind of return you’re getting for the money you spend on advertising, marketing and promotions. Track everything on a spreadsheet, or for online advertising, it’s fairly easy to track analytics (such as with Facebook or Google ads).
Manage cash with confidence
Cash management is one of the most essential functions in business. Implement a system to manage your cash flow. Cash flow means the money that flows in and out of your business, and ensuring you have the cash to meet bill payments requires management of timing.
Don’t skimp on items essential to creating the best products and services. At the same time, make sure you’re not paying more than you need to. Even minor expenses add up over time, so it’s always useful to look for ways to cut costs.
The bottom line is how you manage your business’s money will determine how profitable your RTO will be. If you aren’t following how the money moves in your business, you likely are leaving money on the table. If you want to be successful in business, financial wisdom is just as important as mastering your specialty.
The most profitable companies know their business numbers, ensure they don’t have money leaks and maximize their profits. Sadly, many talented people fail because they haven’t taken the time to learn how to manage their finances. Take the time to identify areas where you need to get up to speed and start making any necessary adjustments.
Should you need help with managing the finances in your business, a business coach is the perfect coach to help you make more money in your business.
Need some help?
Talk to Merinda for 15 minutes about your RTO