Running a business, large or small, is not an easy task. But for RTO operators, there are some unique factors that can make or break a training business in its first year. After speaking with our clients, we felt it was important to share these challenges with you, along with some advice to help you address them in your own business.
1. Compliance
It should probably come as no surprise that the compliance requirements that come with running a registered training organisation are considered to be the most time consuming and challenging part of first year operations.
Before you even begin to take enrolments, you will need to register with ASQA. In lodging your registration, you are effectively completing a comprehensive business planning process, one which we have previously highlighted is a must do for any business (see: Why RTOs should embrace ASQA’s Financial Viability Risk Assessment). Allow yourself plenty of time to complete this process. Engage experts to help you with any areas that are unfamiliar to you or not your core area of focus (for example, financial reporting or course development).
Next, diarise time every month to review your compliance and ensure your files are up to date. We’re all guilty of leaving work tasks we dislike to the last minute; this approach will reduce the burden and also provide you with valuable data about your business on a regular basis.
2. Employing and Managing Trainers
No matter how strong your operations, your RTO will only be successful if you can attract and retain students. Having the right teaching staff in place is critical to maintaining a strong reputation among students, both current and future. We regularly hear from our clients that hiring trainers is one of the biggest challenges they face throughout their operations. This is further exacerbated by the ASQA standards which require your trainers and assessors have the appropriate level of vocational competencies, industry skills and teaching qualifications.
So how do you know you’re hiring the best? Much like any business, a good hire is someone who fits not only the role description but also the culture of the organisation. Be clear about the style of trainer you want, how they will be involved in the development of the training and their approach to assessment. Conduct diligent reference and qualification checks. If there are any question marks over a candidate, ask yourself if you can really afford the risk? Consider looking outside the usual recruitment options – are there people working in the trade/profession that would be interested in teaching part time?
You may also want to utilise a remote or online training resources to reduce your delivery costs. This can free up your trainers to focus on in-person activities and may even help you speed up assessment processes.
And don’t forget, you will also need to demonstrate to ASQA that you have professional development plans in place for your trainers. The right approach to the professional development of your staff can make all the difference when it comes to retention.
3. Cash flow
You’ve employed your trainers, you’ve marketed your classes and now you’re waiting for the enrolments to come flooding in. But what happens when you receive that first bill for your utilities? Or your first rental payment is due? How do you ensure you can cover your expenses when there is limited revenue coming through the door?
Managing cash flow is all about knowing your numbers and planning ahead. Start by creating a cash flow statement, where you record your incomings and outgoings. Look for ways to extend your payment due dates with suppliers and to encourage early payments from your buyers.
At the beginning, it is almost certain that you will have shortfalls; make sure you have a cash reserve to help you navigate the negative months. This will take the pressure off trying to cover your expenses through new sales alone. Of course, the sooner you can break even, the better for your business; use your cash flow statements to predict when you will reach this break-even point.
Have you faced any of these challenges? How did your business overcome them? We’d love to hear about your experience – share your thoughts by sending us an email or posting on our Facebook page. And, of course, if you’d like help managing your cash flow, compliance requirements or payroll, give us a call today.