Should You Buy an RTO or Start One from Scratch?
A common question we hear from our clients is, “Should I buy an existing RTO, or should I open one myself?” In today’s fast-changing vocational education and training (VET) landscape, subject to frequent regulatory shifts, this decision is crucial. Many of our clients face this dilemma, weighing whether to embark on the challenging journey of setting up their own RTO or take advantage of the opportunity to purchase an existing one. Each path has its own set of challenges, benefits, and potential drawbacks, all of which require careful consideration to make an informed decision.
Advantages of Buying an RTO
1. Immediate Revenue Stream
When you buy an existing RTO, you gain instant access to a revenue stream, enabling you to start operations without having to wait for approvals, saving on costs like rent.
2. Established Infrastructure
Acquiring an established RTO gives you access to existing premises, equipment, and staff, saving you time and resources that would otherwise be spent on building these from scratch.
3. Built-in Market Presence
Buying an RTO means you inherit an existing market presence, including potential customer loyalty. This can provide a head start in attracting students and generating revenue quickly.
4. Longer Registration Period
When you purchase an RTO, you inherit its existing registration status, which could extend beyond the typical two-year initial registration period for new RTOs.
Disadvantages of Buying an RTO
1. Inherited Compliance Issues
One major concern when buying an RTO is the possibility of inheriting compliance issues. Even though you gain instant revenue, unresolved non-compliances can lead to regulatory scrutiny and damage your RTO’s reputation and profitability.
2. Inherited Resource Challenges
You may inherit resourcing problems, such as outdated systems or insufficient staff. While these can be addressed, they may disrupt the smooth operation of your RTO initially.
3. Limited Customisation
Buying an existing RTO may limit your ability to put your own unique stamp on the business. You inherit established practices, structures, and culture, which can restrict your flexibility in making changes.
4. Potential for a Change of Ownership Audit
Purchasing an RTO often triggers an audit, which could uncover any inherited compliance issues. Even after acquiring the RTO, you may need to prepare for a regulatory audit.
Advantages of Starting an RTO from Scratch
1. Starting with a Clean Slate
When you establish your own RTO, you can build it from the ground up without inheriting any compliance issues. This allows you to design an operation that aligns perfectly with your values and vision for a compliant, high-quality organisation.
2. Full Customisation
Setting up your own RTO gives you the opportunity to infuse your unique identity into every aspect of the business, from the curriculum to the branding, allowing for complete creative and operational control.
3. Control Over Every Aspect
Starting your RTO gives you the power to create a fully compliant environment. You have control over every process and structure, ensuring everything is done to your exact standards and in the best way possible for your target audience.
Disadvantages of Starting an RTO from Scratch
1. High Initial Costs
Starting an RTO requires a significant financial investment, from rent and equipment to regulatory fees. The upfront costs can be substantial, requiring careful planning and financial resources.
2. No Established Client Base
Building a clientele from scratch takes time, effort, and significant marketing investment. You’ll need to establish your presence in a competitive market, which can be a lengthy process.
3. Risk of Not Getting Approved
Although rare, there’s always a chance that your RTO application could be rejected. This would mean losing the time and money you’ve invested in the process.
4. Changing Industry Demands
The qualifications you plan to offer may no longer be in demand by the time you’re approved, or other RTOs may have already saturated the market. This can limit your competitive edge in a fast-evolving sector.
How SKG Consulting Can Help You Decide!
SKG Consulting offers a range of services to support you in your decision-making process, including:
- Due diligence audits
- Change of ownership services
- Addition to scope services
- RTO setup services
- Rectification support
- Ongoing compliance assistance
If you need expert guidance to navigate your RTO journey, contact our professional team today! We’re here to help you make the best decision for your future in Australia’s VET sector.