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Weathering the economic storm

November 13, 2007

Hello again,

The economics pundits are making warning noises: higher oil prices, low American dollar, banks in trouble; all these are indications that the global economy is heading...

... for trouble. Maybe everything will bounce back but if it doesn’t you may be kicking yourself for not giving your school a health check now to see if it can weather the storm.

Look at your costs and what can be saved. That is not the same as not spending. But think of flexible leasing agreements on equipment rather than heavy capital outlay and have a staffing plan that allows you to use staff on short contracts as and when they are needed. This may sound like a disservice to teachers but it will be better in the long run to be able to keep a small permanent staff than go under and make everyone redundant. On the issue of costs it is tempting to slash spending in areas such as advertising and training. This is not the best way. Advertising is your channel of communication to clients so instead of cutting, think of advertising new deals and new services. And training helps you maintain quality. Even if you have to trim the budget you might think of ways of training that are more cost effective. Use existing staff to give in-house training, for example.

Be vigilant about cash flow. Are any major clients paying late or defaulting? Don’t allow your business to incur overdraft costs because clients are not paying on time. If they are having difficulty in paying in full then arrange a part-payment process with them to keep your own cashflow healthy. And make sure you are not too dependent on a narrow range of major clients because if they cut back you will suffer.

Have a plan B. Work out your options in the case of a downturn in business. Perhaps you can fill the gap with other services: cross-cultural briefings, soft-skills training, editing and translating services, English for specific purposes, offering your school as an exam centre, recreational classes, consultancy, course delivery through distance learning. Look at the talents and facilities you have and how you can use them in fresh ways to generate new lines.

Remember that in difficult times competition will be greater so don’t sacrifice quality; everyone will be more focused on getting greater value for money and quality will be important.

It sounds like a cliché but try to see the recession as an opportunity. People will still need your services and it may be that less efficient schools will fold leaving you opportunities to attract their students: it’s an ill wind….

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