Maybe you are an expert in your field and want to own a company that trains others, or perhaps you simply want to own a highly profitable and successful business?
Whatever your reasons, starting a registered training organisation (RTO) is a great way to create an excellent business that thrives by helping others reach their goals.
Understanding how to become an RTO can be a daunting task when you don’t know what you are doing..
With a huge amount of preparation required, as well as all the compliance requirements, risks, and logistical hurdles – starting an RTO on your own for the first time can be overwhelming.
The Australian Skills Quality Authority (ASQA) has set an extensive list of rules and obligations that new RTOs must follow. Compliance with the National Standards is vital to starting your own training organisation.
For new prospective RTO owners, making sense of the National Standards can be confusing and demands a lot of study and analysis. As such, becoming an RTO for the first time can be difficult, particularly for those new to the vocational education and training (VET) sector. It can be harder still if you have other priorities like business, work, or family.
With proper research, good decision making, the right resources, and careful planning, successfully starting an RTO is however entirely possible..
How to Become an RTO
Starting an RTO properly, with careful planning and following all the necessary steps for compliance can pave the way for your RTO’s success.
Good groundwork will save you wasting thousands of dollars and hundreds of hours in the long run. Don’t just ‘jump in’ and lodge an RTO application without doing proper research and planning. You will need to know the National Standards well to understand how to become an accredited training provider in Australia.
Steps for Becoming an RTO:
- Research the National Standards, VET industry, and/or other relevant standards, codes, or regulations
- Ensure you meet financial viability requirements
- Get all training and assessment resources you need to start your RTO
- Produce your marketing materials
- Prepare policies and procedures
- Prepare other requirements and conduct a self-audit
- Submit your RTO registration application
- Successfully navigate through your RTO registration audit
1. Research the National Standards and VET Industry
Becoming a registered training organisation requires that you learn as much as you can about the Australian VET sector. You should also be familiar with the National Standards, any other relevant standards, codes, or regulations that will apply to your new RTO.
ASQA is the major regulator for the VET industry and governs 90% of training providers in Australia. ASQA handles RTOs delivering courses in most states and territories, Australia-wide, online, and CRICOS courses that cater to international students.
The Victorian Registration & Qualifications Authority (VRQA) and the Training Accreditation Council (TAC) regulate RTOs operating locally in Victoria and Western Australia.
ASQA’s website has general information about the VET sector and the National Standards. The Standards for Registered Training Organisations (RTOs) 2015 covers all the rules and regulations of which all RTOs must follow. Starting up a registered training organisation requires compliance with the Standards in the following areas:
- Marketing and Recruitment
- Support and Progression
- Training and Assessment
- Regulatory Compliance and Governance Practice
You must also comply with the other components of the VET Quality Framework:
- the Fit and Proper Person Requirements,
- the Financial Viability Risk Assessment Requirements,
- the Data Provision Requirements,
- and the Australian Qualifications Framework.
Understanding your obligations under the Standards for RTOs 2015 (or other relevant state regulations) and the VET Quality Framework is a critical first step in becoming an RTO.
These two frameworks provide the foundation blocks of your RTO. You will need to comply fully with all clauses and conditions, as well as meet all requirements to successfully start an RTO.
2. Meet Financial Viability Requirements
To become an RTO, you must be able to satisfy ASQA’s (or another relevant state regulator’s) financial viability risk assessment. This crucial step in the new RTO audit process proves to ASQA that you have the financial capability to meet the startup and running costs of your new RTO.
To prove to the regulator that you do meet financial viability requirements, you will need to prepare your RTO business plan, a detailed financial forecast, and complete a financial viability assessment. This is to show that your new RTO has the financial capability to:
- purchase necessary equipment and/or stock to start your RTO;
- acquire all the resources needed to provide courses in the RTO scope of registration;
- hire enough qualified staff to deliver all the courses on scope;
- provide necessary support to students;
- survive in business to ensure students can finish their training with your new RTO;
- meet cashflow requirements sufficiently, including meeting enrolment/revenue estimates;
- meet all other operating costs of your RTO (e.g. training venue/s, office rent/lease, utilities, travel, other running costs, etc.)
As outlined, to satisfy the regulators, the key documents are:
- Your RTO Business Plan;
- Complete ASQA’s Financial Viability Assessment (FVRA) Tool; and/or
- Complete 24-36 Month Financial Forecast
Your RTO business plan
A business plan provides a detailed overview of your new RTO’s business goals, and provides details and the strategies you will use to achieve those goals.
It makes sense that an RTO regulator requires a good business plan with your new RTO application. A well-constructed business plan proves that you have properly planned and considered your new RTO’s goals and know how to get there.
It shows you have identified internal and external influences, drivers, and strategies that will ensure you start an RTO that is likely to be successful.
Your RTO Business Plan typically lays out your short and long-term goals for the first couple of years of your new RTO. These goals can include your enrolment targets, revenue goals, and things like extensions to scope, new course goals, and your RTO’s expansion goals and strategy.
Your RTO business plan at the minimum should include the following:
- Overview of the RTO, discussing the:
- sources for initial funding
- target market
- key clients and/or industries
- courses offered
- equipment and facilities
- Organisational structure with persons and position titles
- Goals and objectives of your training organisation
- Strategic or long-term direction of your RTO
- including possible addition to RTO scope of registration
- Industry market analysis where your RTO will deliver training and assessment considering:
- target location
- delivery method/s
- notable competitors
- market demand
- Strength, weaknesses, opportunities and threats (SWOT) analysis
- Financial objectives for the next 12 and 24 months
Complete ASQA’s Financial Viability Assessment (FVRA) Tool
As mentioned above, another part of the VET Quality Framework is the Financial Viability Risk Assessment Requirements.
As a new RTO, you provide evidence of this with your RTO application by providing a business plan, and providing financial projections:
- For ASQA new RTO applications – completing ASQA’s Financial Viability Risk Assessment (FVRA) tool on (find the FVRA Tool here)
- For TAC new RTO applications – completing a 2-year forecast, balance sheet, and cashflow projections
- For VRQA new RTO applications – completing a 3-year forecast
As well as completing the above, evidence or associated bank balance/s, bank reconciliations, and other financial documentation need to be provided.
Once a forecast has been created using one of the documents above, these will need to be reviewed and signed off by a qualified accountant. He or she must not have been involved in drafting the financial forecast.
There are also requirements that the accountant must meet depending on the regulator, such as being independent and external to the applicant’s organisation, and/or being a member of a professional accounting body such as CPA-Australia.
3. Get all Training and Assessment Resources you Need to Start your RTO
Having compliant, good-quality training and assessment resources before becoming a registered training organisation is critical for your RTO application’s success, and will be a major focus of ASQA’s initial registration audit.
You must have all training and assessment resources required for every course and training product you intend to deliver upon successful registration before lodging your new RTO application.
For all units and courses you intend to deliver, critical training and assessment resources you will need to start an RTO are:
- Learning materials
- Compliant assessments/assessment tools
- Any/all necessary venues/facilities (rented, leased, or bought)
- All necessary equipment
- Compliant trainers and assessors
4. Produce your Marketing Materials
To become an RTO, ASQA requires all new RTOs to provide examples of marketing collateral they intend to use to enrol students.
This is because it is a requirement of the standards that RTOs give complete and accurate information about their services to potential students. Students must understand everything they are getting, anything they require, and any other course entry requirements prior to starting a course, amongst many other things.
That may seem easy compared to ASQA’s requirements for training and assessment. In reality, however, ASQA requirements of an RTO’s marketing materials are very robust and specific.
All new marketing materials must comply with ASQA’s standards, and include all information students need to make an informed decision to study with you – such as your schedule of fees and the fee structure for all your courses.
Although you cannot use brochures and websites to advertise courses until your application has been approved, and you have become an RTO – you must have compliant marketing materials ready when you submit your application.
Marketing materials can include your RTO’s website, brochures, student handbook, and so on. Here are some helpful RTO marketing guidelines you can use to make sure your materials are compliant with ASQA’s standards.
5. Prepare Policies and Procedures
To start an RTO, you must be able to provide evidence to ASQA that you have policies and procedures in place to ensure compliance with all of the Standards for RTOs.
Your policies and procedures will need to ensure compliant marketing and student enrolment practices, sufficient support and progression, effective training and assessment, regulatory compliance and governance, and student completion procedures.
You also need to have systems and tools set up to maintain ongoing compliance and quality assurance. To do this, you must develop policies, procedures, and systems covering your new RTO’s entire area or operations including, but not limited to:
- Training and assessment
- Trainer compliance and supervised trainers
- Validation requirements
- Industry consultation requirements
- Marketing and recruitment
- Refunds and fee management
- Complaints and appeals handling
- Completion compliance
- Regulatory compliance and governance
6. Prepare other requirements and conduct a self-audit
As we have seen, starting up a registered training organisation requires a lot of research and preparation.
Below is a short list of other documents or things you will need to prepare for your RTO application:
- Accomplished Fit and Proper Person Requirements
- An accomplished Statutory Declaration Form
- Business registration documents to support your type of legal entity
- Third party partnerships and agreements, if applicable
As of July 1st, 2018 – new RTO applicants no longer have a chance to fix their non-compliances. As such, it is recommended you fully meet all requirements before submitting your application to start an RTO.
If you fail and there are major non-compliances identified, you may be forced to repeat the whole application process, including paying the application fees again and undergoing another crippling wait while it is processed.
ASQA’s self-assessment tool comes in handy as one of the features in the updated process of becoming an RTO. It is a pre-audit audit tool to check if you meet the required standards set by ASQA.
It’s a fairly comprehensive form that outlines exactly the kind of evidence you need to submit. You can access the self-assessment tool here.
7. Submit your RTO registration application
Becoming an RTO requires that you submit your application on asqanet, ASQA’s online registration service. You can upload documents of evidence, manage your registration and even pay fees on the web portal.
Consider the fees in the application part of the start-up costs to become an RTO. Upon submitting your requirements, you need to pay an initial lodgement fee of $500. An initial assessment fee of $8,000 is charged after ASQA has finished the risk assessment stage of the audit. You may refund this fee if you withdraw your application and the audit has not yet begun.
8. Successfully navigate your RTO registration audit
Your application to become an RTO is now reviewed, starting with risk assessment. All the documents and evidence you have prepared in the previous steps are now carefully scrutinised by ASQA. This includes the fit and proper requirements of all persons involved in your organisation. The financial viability requirements are also checked at this stage.
After risk assessment, ASQA will now conduct the registration audit. As mentioned, you only get one chance to pass a new registration audit. If you fail, you will have to repeat the whole registration process.
To prepare for the audit, you should be familiar with the ASQA audit model. This model groups the ASQA Standards into six chapters:
- Marketing and recruitment
- Support and progression
- Training and assessment
- Regulatory compliance and governance practice
The audit model may seem complicated at first, but remember that the purpose of the audit is simple. ASQA wants to make sure that you can deliver quality training and assessment.
To that end, ASQA will check your resources, facilities, and trainer profiles to see if you can do so. They will check your policies and procedures to see if your new RTO intends to follow the ASQA Standards. Finally, they will check your quality assurance systems and processes to make sure that you will keep following the ASQA Standards.
Outline all your policies, procedures, and other relevant documents under the correct chapter. Prepare training and assessment resources that you have validated beforehand. This way, when the auditor checks if you follow a specific requirement, you will know what to show him/her.
You should also prepare your tools and facilities. These registration audits always happen onsite. When ASQA’s auditor arrives at your front door, your goal is they will be satisfied with what they find.
As mentioned earlier, becoming an RTO in Australia can be daunting. Having complete and compliant requirements before you submit your application is critical. ASQA will demand a lot of information from you, and they will only ask once. You need to be sure that you can deliver.
The good news is, it can be done. With proper preparation, the first time you apply to start an RTO will be the only time you do so.
360RTO can help you become an RTO with a range of registration packages for your new RTO. Keen to start your RTO in Sydney, Melbourne, Brisbane, Perth, Adelaide, or anywhere in Australia? Feel free to call 1300 931 604 now for assistance, or request an RTO registration info pack here.