School Financial Model Example

Our School Financial Model Structure covers all the essential aspects you need to consider when starting or scaling a School business. By following this structure, you can better understand your revenue streams, costs, and assets, helping you optimize profitability and strategically plan for growth.

Effective financial planning is crucial for a school business, whether it’s a start-up or a well-established institution looking to expand. A comprehensive school financial model not only helps in understanding typical revenues, direct costs, employees, expenses, and assets; however, it also provides insight into potential new and profitable revenue streams. The school financial model structure is essential because it serves as a blueprint for decision-making and resource allocation, although it can be complex at times. This complexity can deter some from fully engaging, but those who persist may uncover significant advantages.

The School financial model structure

Revenues

The revenue streams for a school business are diverse; they should be carefully considered to project earnings accurately. Typical revenue streams include: however, there are nuances that one must recognize. Although this diversity can enhance profitability, it can also complicate financial forecasting. Because of these factors, one must approach revenue projections with caution, because even minor miscalculations could have significant impacts.

• Tuition fees are calculated by multiplying the number of students by the tuition rate.
• After-school programs generate revenue from extra-curricular activities or extended care options; however, this can vary significantly.
• Textbook and supply sales yield income from selling educational materials to students, although the demand fluctuates throughout the year.
• Facility rentals provide revenue from renting out school facilities for private events, which can be lucrative, because many organizations seek such spaces.
• Cafeteria sales generate income from the sale of food and beverages on campus.
• Donations and fundraising are voluntary financial contributions from donors or fundraising events, but they often require extensive outreach efforts.
• Endowments offer income from invested funds, which provide ongoing financial support to the institution, although the returns depend on market conditions.

Cost of goods sold

The cost of goods sold (COGS) represents direct costs associated with revenue streams, including materials and labor directly tied to products or services. For schools, COGS might include various expenditures; however, this can vary greatly. Although they may seem minimal, these costs can accumulate quickly. Because of this, understanding COGS is critical for effective budgeting. Schools must consider all factors, but they often overlook hidden expenses. Textbooks and supplies can be quite expensive; the costs of acquiring educational materials for resale are often higher than expected. Cafeteria supplies also contribute significantly to overall expenses. The costs associated with purchasing food and beverages fluctuate, because they depend on various factors.

Employees

Typical employees who are essential in school business include administrators, teachers, and support staff. However, the roles they play may vary significantly. This creates an interesting dynamic, because each position has its unique responsibilities. Although some might perceive these jobs as straightforward, the reality is often quite different. It requires a blend of skills and adaptability. But, one must not forget the importance of collaboration among them.

• Teachers are responsible for delivering education and supporting student learning; however, their roles extend beyond mere instruction.
• Administrative staff handle school operations, enrollment, and record management, which are crucial for smooth functioning.
• Maintenance workers maintain facilities and ensure a safe environment for both students and staff, because safety is paramount.
• Counselors provide student support services, guidance, and career advice, helping individuals navigate their paths.
• IT support staff manage technology infrastructure and support digital learning platforms, although they often work behind the scenes to facilitate effective education.

Operating expenses

The typical operating expenses for a school business exclude loan repayments or interest; however, they include various costs. This is important because, although there are many factors to consider, some expenses cannot be overlooked. For instance, utilities and salaries are essential. These costs can vary significantly, depending on the specific institution. Thus, understanding these expenses is crucial for effective financial planning.

• Utilities, such as electricity, water, and other essential services, incur various costs; these are necessary for operations.
• Insurance provides critical coverage for property and liability.
• Office supplies, including stationery and printing, contribute to expenses.
• Marketing and advertising are crucial activities to promote the school and attract students because they enhance visibility.
• Professional development is important, although it entails training and development costs for staff.
• Equipment maintenance requires regular servicing and repairs; however, this is essential for longevity.
• Cleaning services maintain cleanliness and hygiene within the school, which is vital for a conducive learning environment.
• Security services ensure safety and security on the premises, thus fostering a safe atmosphere.
• Software licenses represent necessary costs for educational and operational tools.
• Transportation costs relate to student and staff transport services, which are also significant for overall efficiency.

Assets

The most common assets often essential for a school business include various resources; however, these can vary significantly based on the institution’s specific needs. This is because not all schools operate in the same manner, although they may share some fundamental characteristics. Consequently, some schools might prioritize technology over traditional materials, but each decision is influenced by its own unique context. Buildings and facilities serve as the physical structures where educational activities often occur; however, furniture and equipment, such as classrooms, office furnishings, computers, and other educational tools, are equally essential. Vehicles—like buses or vans—play a significant role in student transport.

Funding Options

The most common and often overlooked funding options include numerous alternatives exist. Some individuals may prefer grants; others, loans. Although the choice largely depends on specific circumstances, this decision can be crucial. Because funding availability varies, it’s essential to thoroughly evaluate each option. However, many ignore the potential benefits of diverse sources.

• Grants are financial assistance from government or private institutions and are characterized by the absence of repayment obligations.
• Loans comprise borrowed funds that must be repaid with interest over time.
• Equity investment involves raising capital by selling shares of the school to investors, which can be beneficial because it provides immediate funding.
• Partnerships, collaborations with other educational bodies or businesses, enable institutions to share costs, thus enhancing resource efficiency.

A truly professional school financial model is founded upon the operating Key Performance Indicators (KPIs) that are pertinent to the school business. Some prominent KPIs include but are not limited to: enrollment rates, funding sources, and student retention rates. However, it is critical to understand that these KPIs can vary significantly depending on various factors, because the context and specific circumstances of each school are unique. Although these indicators provide insight, they must be interpreted carefully, as they do not tell the whole story. This approach allows for a nuanced understanding of financial health. In other words, a comprehensive analysis is essential to draw meaningful conclusions.

• Student enrollment numbers significantly affect tuition revenue; however, average class size also plays a critical role. This metric influences teacher recruitment and infrastructure requirements because a larger class may necessitate additional resources.
• The student retention rate, representing the percentage of students who continue their education year over year, is vital for institutional stability.
• Although the teacher-to-student ratio directly impacts the quality of education, it also affects operational staffing costs.
• Facility utilization rate measures the efficiency of classroom usage, which can influence decisions regarding expansion.
• Cost per student, calculated by dividing total costs by the number of students, is essential for effective budgeting.
• Alumni contribution rate, which reflects the percentage of alumni providing financial support, is crucial for sustaining programs; this underscores the importance of maintaining strong alumni relations.

Driver-based financial planning represents a process whereby one identifies key activities often referred to as ‘drivers’ that exert the most significant influence on business outcomes. This approach facilitates the construction of financial plans grounded in these pivotal activities. It enables the establishment of relationships between financial results and the requisite resources—such as personnel, marketing budgets, and equipment—needed to attain these outcomes. If you seek to understand more about driver-based financial planning and why it is an optimal method for strategizing, consider watching the founder of Modeliks elucidate this concept in the video below.

The objective of the financial forecast outputs should enable you, your management, board, or investors to consider how various scenarios might unfold. However, it is crucial to understand that these projections are not infallible because they depend on numerous variables. This uncertainty can lead to different interpretations; thus, stakeholders must remain vigilant. Although the data is insightful, it should be approached with caution, for the future is inherently unpredictable. But, by analyzing these forecasts, one can make more informed decisions, which is essential for success.

Quickly grasping how your school business will perform in the future is essential. You will gain comfort from knowing that the plan is well thought through, realistic and achievable; however, understanding what investment is needed to implement this plan and what the return on the investment will be is equally important.

To achieve these goals, here is a one-page template on how to effectively present your financial plan.

Apart from this one-page summary of your plan, you will need three projected financial statements; however, this is not the only requirement. Although the statements are crucial, providing context is equally important. Because the audience must understand the rationale behind your projections, clarity is essential. This template serves as a foundation, but remember to customize it to fit your unique circumstances.

• Profit and Loss reflects revenue, costs, and profits over specific periods.
• Balance Sheet shows the school’s financial position, including assets and liabilities.
• Cash Flow Statement displays cash inflows and outflows to provide insights into liquidity, although it can be complex to interpret.

A professional school financial model will assist you in thinking through your business, identifying resources you need to achieve targets, setting goals, measuring performance, raising funding and making confident decisions to manage and grow your business. Understanding your economic landscape through structured financial insights empowers you to steer your school towards sustainable success. However, it is crucial to recognize that this process requires diligence and adaptability. Although it may seem daunting at first, embracing these principles can lead to significant progress. But be aware, because not all models fit every institution perfectly; customization is key. This approach will ultimately enhance your strategic planning and operational effectiveness.

If you need help with your financial plan, try Modeliks , a financial planning solution for SMEs and startups or contact us at contact@modeliks.com and we can help.

Author:
Blagoja Hamamdjiev , Founder and CEO of Modeliks , Entrepreneur, and business planning expert.

In the last 20 years, he helped everything from startups to multi-billion-dollar conglomerates plan, manage, fundraise, and grow.