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How to start an RTO?

Starting a brand new registered training organisation (RTO) can seem like a complicated and daunting feat for many, especially if you don’t have any experience in the Australian vocational education industry. From trying ensure you are able to meet the market’s needs, to deciphering what the Australian Skills Quality Authority (ASQA) requires you to do, to understanding the Australian Qualifications Framework inside out, it can be a tricky and stressful time if you don’t have the right people by your side.

With ASQA’s stringent regulations and strict audit practices, many newcomers to the vocational education and training (VET) industry are shocked at the level of meticulousness that goes into registering their RTOs.

What is the process of starting a new RTO ?

To ensure you get this right the first time, here is a checklist you can use to help you:

  1. Investigate ASQA’s registration requirements – this should be the very first step before you undertake any market research or industry consultation into your plans and strategies as many do not meet the registration eligibility criteria.
  2. Research the market you want to deliver your courses in – whether this is the local market or the international market, your research needs to be thorough and you need to be clear as to whom your target market will be. What gap are you looking to fill?
  3. Speak to others in the VET industry and do a competitor analysis – is what you’re offering needed? Are there others already filling in that niche? If yes, can you do better and provide more value to the students?
  4. Speak to those working in the industry – this will help you understand the pain points of those in the industry and help you validate as well as refine your training and assessment services. For example, if you are looking to delivery culinary courses, are employers satisfied with the training delivered by current RTOs? What are they unhappy with?
  5. Start speaking to RTO Compliance Consultants – pick their brain as to how they can help you in this pre-planning phase and what insights they can offer you about the VET world. Choose a Compliance Consultant who is not only knowledgeable, but also one whom you are comfortable with. You will find that many Compliance Consultants have many years of experience and bear in mind that most of the time, you get what you pay for. The rates charged by the Compliance Consultants usually factor in their experience and compliance adroitness. Your relationship with the Compliance Consultant will not just be for the pre-registration period, but also once you are registered as an RTO as you will need a credible RTO Compliance Consultant to always ensure that your operations are running compliantly so that you will not have to worry about ASQA conducting surprise audits.
  6. Investigate the various training and assessment materials available – there are many providers that offer quality learning workbooks and assessment tools. When comparing providers, the most important factor to analyse is the quality of their materials. There are some that offer really high-quality and compliant resources, whilst others require a lot of work to make them compliant. Note that some organisations charge per unit or per student enrolment, whilst others charge you a licensing fee. These are all important factors to consider to ensure your business’ success once you start enrolling students.
  7. What marketing activities would you undertake – be mindful that depending on which market you are trying to attract, your marketing activities will need to tailor to capture that market’s attention.
  8. Work out your financials – ASQA requires all RTOs to be financially viable. This means that you need a solid business plan and good financial resources to pursue your dreams of starting your very own RTO.
  9. Prepare your business plan – once you have completed the above steps, start working on your business plan so that all of your great ideas and strategies are documented. This will help you envision what the next 5 to 10-years could look like for your business.
  10. Register your business – once you are 110% sure you want to run an RTO, get your entity registered. Speak to your accountant or lawyer on how best to do this. Alternatively, there are many online platforms that can set up your company constitution and register your business with ASIC for a nominal fee. Don’t forget to also complete the registration requirements with the ATO!
  11. Prepare the required documentation to register your RTO – you will need to:
  • Complete a Financial Viability Risk Assessment tool (this is to be done by a certified accountant);
  • Complete a self-assessment on your business’ readiness to delivery training and assessment, and manage the recruitment, enrolment and support of your future students;
  • Complete a Fit and Proper Person declaration for all executive and high managerial personnel of your organisation;
  • Complete the registration form; and
  • Gather all of the required supporting documents – such as the ASIC Company Registration document.
  1. Once all of the documents are ready and you are 100% confident in its accuracy, you can being to lodge your application with ASQA.

What are the costs for starting an RTO?

Item

Approximate Cost (not including GST)

Company registration fees

$1,500

Accounting & Bookkeeping fees

$4,500

ASQA lodgement fee

$500

ASQA application fee

$8,000

RTO consultant fees

$10,000 - $30,000

Student Management /Learning Management Software

$1,200 - $10,000 per year

Learning & assessment resources

$3,000 - $25,000 per course

Traing Resources

$1,000 - $10,000

Salaries and recruitment expenses

$60,000 - $120,000 (based on 2 PT employees)

Office Rental

$40,000 - $120,000 (location dependent)

Website Design and creation

$2,500 - $5,000

What are ASQA’s fees for registering my RTO?

You will be charged $500 when you initially lodge your application with ASQA. ASQA will then undertake a completeness check of your application, and if everything is in order, you will receive an invoice for $8,000. Once the payment is made for the invoice, ASQA will commence the assessment process – by checking that your organisation complies with the VET Quality Framework and the conditions of registration as outlined in the National Vocational Education and Training Regulator Act 2011.

How long will the entire process take?

It may take a few months of pre-planning before you get to the lodgement of the application stage – this is dependent on the pace you work at. Once you have lodged your actual application for registration, ASQA aims to finalise your application within 6-months. Do note that with the Covid-19 pandemic, there may be delays to this timeframe.

Why does ASQA audit so stringently?

ASQA wants to ensure that only quality training providers are given the green light to operate in the VET sector. With all of the scandals plaguing the industry in the past few years, they want to rebuild Australia’s reputation as a credible vocational education provider. Whilst some of their approaches are rather overzealous, if you ensure that your strategies and practices are compliant, ethical, and focus on the student’s best interests, you are in a much better position than the small percentage of training providers who do not factor the above into their strategies and plans. Don’t be a cancellation or sanction statistic.

Please note, the information contained in this article is correct as at the 18th of May 2020.