How do I check whether a private or Montessori school is profitable before buying?

A school’s statements do not look like those of a shop. Money arrives in lumps around the start of the year, while costs run steadily through twelve months. A good month in September can say little about a thin month in July. To judge whether the school earns a living, read the numbers against the school calendar and bring in your accountant. The checks below are for that reading.

Tuition collected in advance

Ask how tuition is billed: by year, by term or by month. If families pay ahead, find out how much covers months the school has not yet taught, and how the statements show it. Money received early is not all earned yet. Your accountant can explain how it is recorded, and your lawyer can help write who owes those families their remaining months after closing.

Discounts, aid and re-enrolment

List every discount the school gives: siblings, staff children, bursaries and payment plans. Ask how much tuition is actually collected against the posted fee for each grade. Then look at re-enrolment by grade over several years. A grade that shrinks steadily is a pattern to understand, not a blip to wave away.

The owner who is also head of school

Ask what the owner is paid for acting as head, and ask your accountant how that shows in the statements. Ask what a hired head would cost, who would do the job, and whether families would stay. The tutoring profit check covers hourly session income, which is a different model.

The summer months

Ask how the school pays its rent, staff and loans when tuition is not coming in. Read a full twelve months of cash flow, not just the busy ones, and ask whether a camp or rental income helps. Ask a lender early about what they will want to see.