002: Diversifying income streams in the COVID era

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Independent schools have been increasingly diversifying their income streams, with more schools embarking on fundraising, hiring out facilities and setting up international franchises to supplement fee income.

With all of these income streams now affected by the COVID-19 pandemic it’s important to have a structure for auditing each activity and assessing whether you have the right balance of diversified income.

In this episode I’ll give you three simple steps to audit each of your income generating activities.

Episode highlights

What is income diversification? (1:25)
What does this mean in an independent school? (2:40)
What’s changed in the COVID era? (4:20)
The questions your school should be asking (5:10)
Auditing your income streams in three steps (6:50)
Step 1: What’s changed externally? (7:30)
Step 2: Analysing your internal operations (10:20)
Step 3: Making changes (12:55)

Three steps for auditing your income generating activities

Step 1: What’s changed externally?

Use PESTEL analysis to identify which trends will affect each of your income generating activities (PESTEL = Political, Economic, Social, Technological, Environmental and Legal trends)
Which trends are temporary and which are permanent?
Which present challenges and which offer opportunities?
What is the potential of each income stream for our school in the short, medium and long term?

Step 2: Analysing your internal operations

This will look very different for each income generating activity
However, staffing decisions will be key to all activities
Keep reviewing furloughing decisions, based on their impact on future income generation potential
For example, any reduction in development office staffing now will make it harder to maintain relationships with potential donors, which will reduce philanthropic income in future.