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Rising staffing costs, falling pupil rolls, the impact of VAT changes…with so many financial pressures on private schools, it is no wonder more leadership teams are thinking much more carefully about long-term sustainability.

One way many are doing this is by considering how commercial activity can help boost their balances, perhaps through leasing access to assets such as playing fields or swimming pools, using boarding facilities for holiday lets in the summer, or holiday camps.

The recent - analysing the commercial activity of 139 private schools across England, Wales and Scotland - makes clear the extent of this work.

Specifically, its findings suggest the median school now generates around £333,000 per year in commercial revenue and nearly one in five schools generates more than £1 million annually through commercial activities.

Cumulatively, the sector has seen median annual growth of around 9 per cent since 2022-23.

To be clear, it is not about schools suddenly “becoming businesses”, despite the way the discussion is sometimes framed.

Schools remain educational institutions first and foremost. Their purpose is still rooted in pupils, outcomes, pastoral care and community.

But if schools have assets, facilities and expertise that can help to increase incomes, it would be remiss not to use them to ensure great financial stability.

Questions of scale

One longstanding assumption has been that strong commercial performance depends largely on scale and facilities, and therefore sits mainly within the reach of large boarding schools with extensive estates.

The benchmarking data indicates that the picture is far more complicated than that, suggesting that the relationship between school size and commercial revenue generation is relatively weak, and that schools with smaller pupil populations can still generate substantial levels of commercial income.

In practice, leadership and strategic clarity appear to matter far more than raw scale. Schools with a formal written commercial strategy generate more than double the average commercial revenue of schools operating without one.

Schools with a dedicated commercial lead also significantly outperform those where responsibility for commercial activity sits alongside several other roles.

Similarly, schools where commercial leadership forms part of senior strategic decision-making tend to generate stronger outcomes than those where it remains operational and disconnected from wider school planning.

Strategic thinking

The data reflects the reality that commercial activity rarely succeeds when it develops as a collection of isolated projects. In those circumstances, it can easily become fragmented, operationally burdensome and relatively low-impact.

The schools appearing to perform most strongly commercially are not necessarily those pursuing revenue most aggressively.

More often, they are schools where commercial development feels closely connected to the wider identity and strengths of the institution itself.

That can be seen in the increasing shift away from simple “dry hire” models towards more developed in-house provision. Sports facilities support community clubs outside school hours. Theatre spaces become part of local cultural activity.

Schools package their own expertise into specialist programmes and services. Holiday provision strengthens relationships with existing and prospective families.

The study finds that schools operating fully in-house swimming provision, for example, generate substantially higher revenues than those relying entirely on external hirers.

What emerges from this is a picture of a sector becoming gradually more sophisticated in the way it approaches commercial development.

Stages of development

What is also clear, however, is the fact that schools are at very different stages of development.

Some have highly mature commercial operations generating substantial annual income. Others are only beginning to think seriously about the issue at all. Many still rely largely on informal systems and relatively small-scale activity.

That variation is entirely understandable because schools differ enormously in geography, demographics, facilities, staffing capacity and local demand. There is no single commercial model that works universally.

What’s more, while there are clear advantages to having a well-thought-out and implemented commercial strategy, there are risks as well.

Schools can easily become distracted by commercial opportunities that generate limited strategic value while consuming disproportionate operational time and leadership capacity.

For instance, setting up a campus offshoot overseas can be a very large investment with a small income, at least initially. It has proved a success for many, but should not be entered into lightly.

Meanwhile, others may pursue projects simply because neighbouring schools are doing something similar rather than because the activity genuinely fits their own context or strengths.

That is why strategic clarity matters so much in this area.

Luke Ramsden is head elect at St John’s College Cardiff