If you are a single co-founder or a group of founders, you are always conscious of the startup costs and how to lower them without affecting the quality of your offering. Starting a private university can be overwhelming when it comes to the costs that come with it. There are a few costs that you cannot avoid if you want to set up in the state of California:
1. Business license fees: these range from $200 and can reach up to a few thousand dollars if you choose to hire a lawyer to draft the documents for you.
2. BPPE application fees: this is a non-refundable application fee of $5000 that must accompany your application.
3. Audited financial statements: even though you just opened your company, BPPE requires you to submit audited financial statements. Hiring a CPA to do this for you ranges from $3500 - $6000, depending on how complicated your finances are.
4. Campus Lease: this is the highest cost that you will have to fund. The size and location requirements of the campus will depend to a great extent on the type and level of programs that you are planning to offer, the mode of delivery of these programs, and the number of students that will be studying on your campus.
What It Takes
The good news is that you don't have to start big or spend six figures. Here are some recommendations that worked for many of my clients to reduce the starting costs:
1. Business License: consider applying for the license yourself online or use a service like www.legalzoom.com to apply for you at a very low rate.
2. Campus Lease: consider applying for online graduate programs at the beginning and expand to other program levels and other modes of delivery in the future. This way you can rent a shared office from office space providers like Regus, WeWork, or UpFlex. You can start with a small admin office and use the floor plans of the whole serviced area as "available for upscale" spaces once you have students and more staff in your BPPE application. Start small and keep upscaling as you grow and rent conference rooms on an hourly basis for your lectures (if needed).
3. Audited Financial Statements: if you know a little bit of accounting and how to do financial statements then do this yourself. There are a lot of templates out there that can help you and if you are a business owner this is an exercise that you have to do anyway. You can also hire an entry-level accountant to prepare the financial statements for you, this will reduce the extremely high hourly rate of the CPA.
4. Faculty and Staff Hiring: this is one of the biggest costs that you will have to pay if you are opening a private university. The bad news is that there aren't many ways around this. The good news is that you don't have to start paying these high costs before having students and here is how: consider contracting with a pool of adjunct faculty members and make it clear in their letters of appointment that their teaching role will start with the start date of the first cohort of students. Meanwhile, hire the faculty to do ad-hoc academic and administrative tasks and pay them on an hourly basis to keep them interested. You will also need highly qualified administrative staff members which can be very expensive, to reduce this cost consider contracting them on a consultancy basis at the beginning. Many of these members have either a full-time job already or act as consultants for a number of universities without being exclusive to any of them.
5. Website and LMS development: consider hiring overseas freelancers through websites like UpWork. From my experience, they are as efficient but way cheaper than the US-based options.
These are some of the ways to reduce your starting costs that worked for many of my clients but of course, each university has its own specific needs and challenges. If you need a customized solution for your startup university, email or call me today to book your free consultation.