How to Start a RTO: Steps, Costs, Timeline, and Alternatives

Interested in establishing your own Registered Training Organisation (RTO)? It’s a rewarding venture that lets you shape Australia’s future workforce. This guide will take you through the precise steps, costs, marketing requirements and necessary considerations for creating your RTO.

What is an RTO

An RTO is a recognised provider of Vocational Education and Training (VET). As an RTO, you will play a pivotal role in teaching practical skills and granting nationally recognised qualifications to your customers.

Starting an RTO: Things to Consider

Starting an RTO is no small undertaking. As with any well-delivered project, consideration needs to be given to planning out the business and opportunity that you see in front of you and working out if it is viable. A great (and fun) place to start is just by reading up about the history of VET in Australia. This will give you a great background and understanding of the industry. More importantly, here are some of the must-have considerations when starting your RTO.

1. Researching Your Market

Kick-start your journey by understanding your potential market. Look for skills gaps in your local industries and decide what qualifications you can offer to fill these. Your market research should cover the demand for these qualifications, potential learners, and competition.

2. Developing Your Business Plan

Your business plan is the backbone of your RTO. This should outline your strategic direction, market positioning, growth plans, financial projections, risk management, and staffing strategy. The Australian government offers a free Business Plan template to get you started.

3. Designing Training and Assessment Strategies

Each RTO must deliver training and assessments compliant with the Standards for Registered Training Organisations (RTOs) 2015. Select the training packages you’ll provide and draft your strategy for training and assessment. Make sure it meets the needs of your learners and employers. If you need some tips on improving your training and assessment strategy, we have the perfect guide for you.

4. Gathering Infrastructure and Resources

Your infrastructure should align with the type of training you’re providing. This includes acquiring suitable training facilities, learning materials, and technology. For instance, a cloud-based platform like Cloud Assess can streamline your RTO operations and make compliance easier.

5. Staffing Your RTO

Staffing your RTO involves recruiting qualified trainers and assessors who also have the necessary vocational competencies. Keep in mind that your staffing should align with the scale of your RTO and the scope of your registration.

6. Common Problems RTO Managers Face

To avoid surprises, you should do adequate research about common problems that RTO managers face. This includes managing copious amounts of paper (if you don’t choose an online solution), managing visibility, ensuring efficiency and growth, meeting compliance requirements, and guaranteeing the best possible student experience.

RTO Registration Process: A Step-by-Step Guide

1. Initial Registration Application

Starting your RTO involves a detailed initial registration process managed by ASQA (Australian Skills Quality Authority). You should also check out ASQAs detailed guide on initial registration to understand the process in more detail. Here are the crucial elements you need to prepare and submit:

1. Business Plan: Your business plan should include details on your strategic and operational plans, market research, financial projections, and marketing strategies. The Australian government provides a free business plan template here.
2. Understand the Regulatory Requirements: Familiarise yourself with the VET Quality Framework and the Standards for RTOs 2015. They provide a national set of standards to ensure consistent, high-quality training and assessment services in the vocational education and training (VET) system.
3. Prepare Your Documentation and Evidence of Compliance: This is a critical step in the registration process. Your evidence should demonstrate your organisation’s capacity to provide quality education and training. The evidence needed includes, but is not limited to:
   1. Self-assessment against the Standards: As part of the initial registration process, you should conduct a self-assessment of how your organisation meets the requirements of the Standards for RTOs 2015. This is a useful tool to ensure that you are meeting all the necessary requirements. This self-assessment allows you to critically examine your resources, practices, and capabilities in alignment with the required standards.
   2. Fit and Proper Person Requirements Declaration: This form ensures that you, and other key personnel, meet the character requirements set by ASQA. Each person with managerial control must fill out this form. It can be found here.
   3. Financial Viability Risk Assessment (FVRA) Report: This demonstrates your capability to sustain operations financially. You’ll need to provide a range of financial documents, including forecasted revenue and expenses, and a business viability report. ASQA provides a useful tool here.
   4. Training and Assessment Strategies: For each qualification, course, or unit of competency you intend to offer, prepare a strategy outlining how you plan to deliver training and conduct assessments. ASQA provides guidelines here.
   5. Curriculum Vitae for all Trainers/Assessors: You will need to provide evidence of the qualifications and vocational competency of all your trainers and assessors.
   6. Policies and Procedures: Submit your planned policies and procedures that detail how your RTO will operate and ensure compliance with the Standards for RTOs 2015.
4. Pay the Application Fee: The application fee is AUD $600 and is non-refundable.
5. Submission of Evidence: After paying the application fee, you’ll have 90 days to submit your evidence of compliance to ASQA via ASQAnet. Make sure to check out some common RTO compliance concerns before submitting your evidence – this can save you a lot of time (and money).
6. Await Initial Assessment: ASQA will review your application for completeness, which can take up to 30 days. If anything is missing or needs clarification, they will contact you.
7. Risk Assessment and Audit: If your application passes the initial assessment, it moves to the risk assessment and RTO audit stages. These stages generally take 3-5 months but can take longer depending on the complexity of your application and scope of registration. This is explained more in detail in the next part of this post. At this point, you will be invoiced for the assessment at a cost of $8000 AUD.

Before you apply for registration, you should have everything ready because ASQA expects that you’re ready to start operating at the time of application. It’s critical to understand that applying to become an RTO means you’re committing to continuous compliance with the VET Quality Framework, which includes the Standards for RTOs 2015, and other relevant legislation.

Once your application is submitted through ASQAnet, ASQA will conduct an initial assessment, which might be followed by an audit. It’s essential to be prepared and familiar with this process so you can successfully register your RTO.

2. The Audit Process (ASQA Assessment)

The audit process includes both a risk assessment and a more in-depth audit:

1. Risk Assessment: Once your application passes the initial assessment phase, ASQA conducts a risk assessment. During this process, ASQA considers various factors such as the proposed scope of your registration, the level of experience your staff members have, and your past compliance history if applicable.
2. Notification of Audit: If your application progresses past the risk assessment, ASQA will notify you of the audit. The notice will provide the details of the audit, including the audit’s scope, the standards to be audited against, the proposed audit team members, the proposed dates, and a request for any additional information if required.
3. Audit Plan: You will receive an audit plan that will detail the specific processes and practices that will be reviewed during the audit.
4. Conducting the Audit: The audit itself may be conducted at your premises or remotely, depending on the circumstances. During the audit, ASQA auditors review your documentation, observe your practices, and interview your staff and students if applicable. They aim to assess your compliance with the VET Quality Framework.
5. Audit Report: After the audit, the audit team will prepare a report outlining their findings. If non-compliances are identified, you will be provided with an opportunity to address these.
6. Addressing Non-Compliances: If non-compliances are found, you have 20 working days to provide evidence that you’ve rectified these issues. If you need more time, you can request an extension from ASQA.
7. Final Decision: After all non-compliances have been addressed, ASQA will make a final decision regarding your RTO registration. If approved, you will receive your RTO registration certificate.

Remember, the audit is an ongoing process, not a one-time event. ASQA conducts regular audits to ensure that RTOs maintain compliance with the VET Quality Framework. Always aim to prepare for and cooperate with these audits to maintain your RTO status.

How Long Does it Take to Start an RTO? Registration Timeline

Overall, the initial registration process generally takes approximately 4 to 6 months. This is split up according to the following steps:

1. Submitting your application: The timeline starts with you submitting necessary documentation via ASQAnet.
2. Initial assessment stage: Review of your application for completeness, possibly requesting additional information (up to 30 days).
3. Risk assessment and audit stages: Duration can vary, typically taking an additional 3-5 months.

Please note that the durations provided are approximate and can vary based on the complexity of the application and other factors.

Be aware that ASQA maintains close monitoring for the first two years of operation to uphold standards. Stricter scrutiny was also implemented since July 1, 2018, with the additional evidence-based requirements that we discussed.

To make sure your registration proceeds as quickly as possible, prepare your application thoroughly and respond promptly to ASQA’s requests. Consider consulting an experienced professional or organization specialising in RTO registration for guidance.

Cost of Starting an RTO

1. Initial Registration Application Fee or Lodgement Fee

The initial investment for starting an RTO is $600 AUD as of 2023 and it is non-refundable.

2. Assessment Fee

This fee covers the cost of ASQA’s assessment of your application, including the audit. As of the most recent information, the assessment fee is a fixed amount of $8,000. This fee must be paid within 90 days after you submit the application, and it’s refundable in part if your application does not proceed to audit.

3. Annual Registration Fee

Once your RTO is established, you’ll also need to pay an annual registration fee. This fee is tiered based on the number of qualifications you deliver:

• 0–4 qualifications: AUD $1,130
• 5–10 qualifications: AUD $3,220
• 11–60 qualifications: AUD $6,975
• 61 or more qualifications: AUD $10,730

4. Ongoing Costs

Complying with the VET Quality Framework involves regular audits, maintaining and upgrading training resources, staff professional development, and administrative costs. These can be substantial and should be factored into your budgeting.

One of the biggest costs that RTOs face is with regards to ensuring compliant training. While this can be done using traditional methods, one of the most cost effective ways to do this is using an RTO software for training and assessment. Cloud Assess is a software that can ensure ease of training and compliant assessment for all your students.

Tip: Before investing in this solution, make sure you know how to make the most out of our RTO software.

Potential Revenue Streams

Your main source of income will be student fees. Depending on your courses, you may also qualify for government funding programs. Remember, your pricing should be fair and competitive.

1. Government Funding: Many RTOs benefit from government funding schemes. These schemes can be complex and often vary between different states and territories in Australia. Understanding these schemes and how they might apply to your RTO can be a significant source of revenue.
2. Corporate Partnerships: RTOs can establish partnerships with businesses to offer specific training programs tailored to their needs. This could be a significant source of revenue and could also increase your RTO’s reputation in the industry.
3. Consulting Services: RTOs with expertise in a particular industry or vocational area could offer consulting services to businesses. These services might include designing custom training programs, offering advice on skills development strategies, or assessing existing training programs for quality and effectiveness.
4. Online Courses and International Students: With the right infrastructure, RTOs can offer online courses to students all over the world. This could dramatically expand the market reach of your RTO and offer a significant revenue stream. Just make sure that you are complying with CRICOS requirements.
5. Short Courses and Workshops: In addition to standard qualifications, RTOs can offer short courses or workshops that provide specific skills training. These can be offered to both individuals and businesses and can provide additional revenue.
6. Sale of Training Materials or Resources: If your RTO develops its own training materials or resources, these could potentially be sold to other organisations or learners.

Remember, your primary goal as an RTO is to provide quality training and assessment that meets the needs of your learners and the industry. While exploring these revenue streams, it’s crucial to maintain this focus to ensure your RTO’s long-term success.

Alternatives to Starting an RTO

While starting an RTO may be an attractive option for some, it’s important to consider alternative pathways that can still provide opportunities in the Vocational Education and Training (VET) space.

It’s important to thoroughly research and understand the requirements and implications of these alternatives. Each option comes with its own considerations, such as contractual agreements, legal obligations, and alignment with the VET regulatory framework. Consulting with industry professionals or relevant organisations can provide valuable insights and guidance on the best alternative pathway for your specific goals and circumstances.

Here are a few alternatives to starting your own RTO:

1. Partnerships with Existing RTOs

Instead of starting from scratch, you can explore collaborations or partnerships with established RTOs. This allows you to leverage their resources, expertise, and infrastructure while delivering your specialised training programs under their registration.

2. Subcontracting

Subcontracting arrangements involve partnering with an existing RTO to deliver specific training programs on their behalf. This allows you to focus on delivering training without the full administrative and compliance responsibilities of being an independent RTO.

3. Course Accreditation

If you have expertise in a specific field, you can consider seeking course accreditation instead of establishing an RTO. Course accreditation allows you to develop and deliver a single accredited course without the need for full RTO registration.

4. Consultancy and Training Services

Another option is to provide consultancy and training services within your area of expertise. You can offer customised training solutions, workforce development programs, or consultancy services to businesses and organisations without the need for RTO registration.

5. Employment in Existing RTOs

If you are passionate about vocational education and training but not keen on the administrative responsibilities of running an RTO, you can explore employment opportunities within existing RTOs. This allows you to contribute to the sector while working in a supportive and established organisation.

Final Thoughts

Starting an RTO involves numerous steps, investment, and continuous commitment to quality and compliance. But the opportunity to create a real impact makes it all worth it. With this guide, you’re now equipped to embark on your RTO journey.

Starting an RTO is an exciting opportunity to shape Australia’s future workforce. With the proper research and planning, you will be able to embark on this rewarding journey in no time. Get ready to make a positive impact and empower learners in the vocational training landscape.