The Cost of Being A Rookie When Growing A Business

This is a true story.

I know a school that was relatively new and started off like gang busters.

The head teacher was passionate and brought with him experienced and dedicated teachers to put the school on the path of success.

By the end of the first year, they had twice as many students enrolled than they’d originally projected.

By the end of the 2nd year they were rated as one of the top new schools

This turned out to be the top of their success.

In the middle of the second year, the school owners (who had no history of education before opening the school) decided that all the money and budgeting decisions had to be made through their empowered accountant in the head office.

Now this accountant had no real business experience and had never practiced in any developed country.

Furthermore this accountant was given a bonus for the “cost savings” she could capture in now the school was operating.

The clouds came rushing in.

The head teacher left, then started another school that’s now doing really well.

Finding a replacement was difficult because no one wanted a situation where an accountant ran a school.

Finally, they brought in a new principal who was a refugee from another school, and who was all too happy to escape the employment law issues they had caused at their old place.

A new regime was installed.

But the accountant still had control of the checkbook and the budget – not to mention the stupid bonus scheme that benefited the accountant personally.

Meanwhile, a qualified teacher with three of her kids enrolled in the school was working as a teaching assistant at the school.

She didn’t need to work.

But she enjoyed working with the children and didn’t mind not working as a full-fledged teacher.

As a TA, she didn’t get a discount for her kids to attend the school, and she was okay with that.

Christmas break came and went.

When the next pay cheque came in it was about $100 lighter.

When she asked if there was a mistake.. she was rudely told that she wasn’t eligible for holiday pay yet based on a technicality.

It was a new technicality.

She was never told about it before.

They refused to budge and were a bit aggressive.

Insulted, she resigned on the spot and pulled out her three children who attended school and paying fees.

Here’s the math:

The school nickel and dimed her to save $100.

(The accountant might have received $5 of that but I’m not sure).

When she pulled her kids out, the school lost $36,000 in fees.

Since then, what they lost in fees has skyrocketed to $175,000.

Right now the school is scrambling for children while other schools have waiting lists.

They’re waiving all fees while others are charging $1,000 or more just to register.

Our three lessons for the day:

Don’t nickel and dime your people.

Don’t put someone in charge of the money who doesn’t know anything about growing a business.

Don’t prioritize cost cutting over investing to grow a business.

Take the next 30 days to prove to yourself that you can have your cake and eat it too!

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