There are 3 stages to dealing with debts, but they are not what you think!
If you are a school leader, you will be required to submit a “deficit recover plan” and meet regularly with someone from finance to discuss how the budget will balance.
It is discussed as a singular problem. It is not discussed as a clear process – it focuses on the problem, not the solutions that can effectively initiate the change. Therefore, it is often viewed like this.
- There is a shortage of funds and bills are more expensive.
- There is now a deficit budget that must be paid back.
- How will you pay back the debt?
- There is a shortage of funds, bills are more expensive, and now a “deficit recover plan” needs to be written / implemented, too.
Erm, can anyone see why the plan is about to fail?
Having personally recovered University debts of £32,000 and addressed school deficits of up to £80,000, I have some experience in “recovery plans” and will now share a 3-stage process that will help shape a far more effective plan.
I like to call it my bleeding patient approach.
If you stumble upon a person who is bleeding heavily, you do not start their treatment by writing a “recovery plan” – the same goes for your school, business, or personal debt. You need to start with your ABCs.
- Analysis.
Get a comprehensive overview of the situation. Do your head to toe analysis thoroughly, identify all the leaks, injuries and bleeds. You need to know exactly what you are trying to treat if you want the treatment to be effective.
- Stop the loss.
Until you can find the root cause of the bleed, you cannot prevent further loss. There is likely to be multiple leaks, but you need to start with the biggest bleed and apply the most pressure there to stop further loss. You can only focus on one place to apply the pressure to stem the flow – lots of little sticking plasters won’t work – you need one tight bandage. Get one loss under control before moving on to other bleeds.
- Strengthen the recovery.
A patient will not gain long-term health by treating the illness alone. The same goes for your school budget, business, or personal debt recovery. In this phase, you need to work hard on building income streams. A common error in dealing with deficit budgets is to focus on cuts but not on growth. Only cutting back will lead to an ongoing decline – soon you will have nothing to offer and more business opportunities will be lost by people going elsewhere. Growth is an essential part of recovery – so invest wisely!
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