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Quantifying the Prosperity Gap and Improving Institutional Business Models

Building a more sustainable and profitable business model requires creativity and patience.  Too often institutions have learned to get by with less, but this is not a scalable or viable long-term financial model; in fact, this “death by a thousand cuts” is a recipe for disaster.  The higher education landscape is evolving; many institutions are unprepared to respond effectively to these challenges.  The goal of AGBIS is to help each institution we work with–public or private, large or small–find appropriate responses, strategies, and solutions so that they can continue to compete.  

Quantifying the prosperity gap at your institution is a key first step in building a better business model.  This entails examining cash flow gaps, operational gaps, and infrastructure gaps to determine how much real revenue growth will be needed.  For example, if an institution with a $600 million budget identifies a $45 million gap in financial and operational needs, they may need to witness $150 million of revenue growth over a five to sevent year period to address this gap. No amount of cost cutting alone will allow them to get there.  

Thus, identifying your prosperity gap is crucial in understanding how much revenue growth you need; cost cutting and improving efficiencies may still be tools that can be utilized to this end.  Ultimately, though, revenue-growth strategies will be needed, and those strategies cannot be developed or effectively employed without knowing how much revenue is needed or for what purposes.  

AGBIS can assist your institution in completing its needs and financial assessment.  If you’d like to learn more about how AGBIS can assist you in developing new business models and growing revenues, please call our office (202)-776-0868, or join one of our complimentary webinars offered each month.  

Rick Beyer, Managing Principal, AGB Institutional Strategies