Many may explore diversifying their income streams by finding new uses for their real estate assets or facilities beyond the education sphere. This could include hiring buildings or grounds out as a filming or photography location; a wedding or conference venue; or as a glamping, food or music festival site. All these extra enterprises could provide additional, consistent income, but, as appealing as some of them may sound, it’s important to do the groundwork first to ensure any new venture is a success.
Here are six key questions every Bursar or Headteacher should ask themselves and their team when exploring their options:
1. What facilities do you have available for diversification activities, and when?
Firstly, audit what you have available: is this land or buildings? What quality are they? Do you have ancillary facilities to support different uses such as car parking, WCs, catering, or bedrooms? Can they be safely segregated off from educational facilities if you want to use them during term time (taking into account child protection issues) or do you just want to offer them during holidays and weekends? Will any new activities conflict with your core school functions and how will you mitigate any risks?
2. What and how big are your target market(s) and how competitive are they?
What uses are you considering? What is the local and regional market like for these, both in terms of customer demand and the competition? Is there likely to be a consistent flow or is it more seasonal or trend driven; do local demographics support it?
3. Do you wish to operate your new activity yourself or secure an arms-length agreement with a tenant operator who will pay rent?
This may depend on your schools’ prior experience (for instance, hosting education conferences or school events). Operating an ancillary business directly brings with it maximum control and the biggest financial rewards but is time consuming, while partnering with a more experienced third-party may take away the burden, but will usually reduce profitability.
4. Do you have the necessary resources and appropriate skills manage or oversee new diversification enterprises?
Even if you decide to partner with a third-party, you’ll need to allocate some time to get this relationship off the ground, although they then should take on the day-to-day burden. If run in-house, do you have marketing, sales, administration and event management skills? Also factor in time and resource to have internal conversations with trustees and governors, to ensure all stakeholders understand and buy into why you are undertaking this new venture, and consider how you are going to communicate it to parents and guardians.
5. What permissions and licences do we need to operate legally?
Some uses may require gaining planning permission or a change of use. To host wedding or civil ceremonies you need an approved premises licence, although for just wedding receptions or similar social events a premises licence for selling of alcohol and the provision of entertainment may suffice. In all cases, you’ll need to do full health & safety and risk assessments to protect visitors, students and staff.
6. What costs will be incurred in setting up new diversification activities, what income will we generate and how profitable will it be?
Ultimately, the commercial success of any new venture will come down to the possible up-front investment versus the ultimate profitability. Where that profit goes also needs to be considered relative to whether a school has charitable status; is it more appropriate to set up a separate trading structure?
While this looks like a long to-do list, we don’t wish to deter any school from exploring the possibilities available to it. The potential upsides can be significant: many other uses have been very resilient over the last few years and can provide a very solid income, but you should go into any new events or tourism activity fully appraised of what it may involve.
Further information
Contact Simon Foster
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