Liz Baker has not been paid since August and has a second job in the evenings, but the former geography teacher does not mind one bit because all of that money is helping to pay for her own school. “It has to be a passion, or you’ll buckle under as it’s a hand-to-mouth existence,” says the 53-year-old who spent 20 years teaching in state schools before setting up her own.

Liz had never intended to do it but in 1998 she decided to home educate her son Martin, who has dyspraxia, after discovering 15 pieces of homework hidden in his wardrobe that he could not face handing in.

It turned out that he wasn’t alone in struggling to adapt to a large comprehensive despite the best efforts of his teachers. And by word of mouth, Liz’s one pupil turned into five, taking lessons in her husband’s music room.

By 2000, Liz opened Great Oaks Small School in her suburban semi in Sandwich with five pupils and two staff, co-founding it with Julie Kelly, a primary teacher. It was aimed at pupils who had struggled at large state schools. In 2003, Great Oaks completed its registration as a school and in 2005 moved into a cottage in Sandwich.

Today, it is based in a rented farm nestling above Sandwich Bay and has 16 pupils and 10 staff. But it is a labour of love rather than something that is making a fortune. Pupil fees are pound;4,000, full-time teachers are paid pound;18,000 a year and the running costs are pound;195,000.

But says Liz: “It’s blooming brilliant when we look at the kids, what they are doing and what they have done.”

It took Liz three years to set up the school. Fiona Carnie of Human Scale Education, a charity committed to reforming education through small-scale learning communities, says it more commonly takes up to a year to set up a very small school. A larger project is likely to take two. All are outside the state system. Registering the school with the Department for Children, Schools and Families, and maybe the Charity Commission, is only the start. Not to mention surviving the pre-registration Ofsted inspection. Great Oaks’s latest inspection said that the quality of education provided is good because it is relevant to the needs of its pupils, allowing Liz to go on holiday for the first time in five years.

The struggle to find the right buildings can make the task even harder, especially in the congested South East and cities such as Manchester, due to the competition for what suitable properties there are from other businesses. And while many teachers might dream of doing such a thing, it never becomes a reality for most because of funding.

Many small, teacher-run schools charge fees below the market rate out of principle to parents who couldn’t normally afford independent education, which means most have to rely on fundraising.

Schools such as Great Oaks have often struggled to offer salaries high enough to attract and retain teachers. Kent County Council pays half of the fees for pupils at Great Oaks but even so, Liz still has to rely on the school’s vision - of a holistic education that ensures the well-rounded intellectual, moral, social, aesthetic and physical development of each pupil - to sell it to teachers rather than the pay. Wages in alternative schools can be 50 per cent less than the state sector, which means many teachers simply cannot afford to drop out. As an independent school, Great Oaks is able to employ graduates who have no teaching qualification, although a unique partnership with a local state school is helping them get qualified through the Graduate Trainee Programme. For qualified teachers it offers a new career in an alternative school.

“It’s the steepest learning curve that I have been on,” Liz says. “I have become an expert in things I never wanted to be, such as unblocking loos. The biggest challenge has been finding the premises for us to teach in.

“A huge fundraising project is still needed to develop the barn for more classroom space and a technology suite. Not forgetting the long-term goal of buying the whole farm and paying staff properly.”

Julie, a numeracy and PSHE teacher, doesn’t teach at Great Oaks for the money. “I teach there because of the love for life it gives to me and my pupils. The realisation is that there is more to life than just money.”

Lizzie Overton, who runs her school on the south coast, knows only too well about the problems of money. She lost five pupils after annual fees increased from pound;4,200 to pound;5,250 a year.

The former deputy became headteacher of Lewes New School in 2006 when she couldn’t find a primary that allowed her son to learn independently and through real experiences, rather than being judged on the neatness of his exercise books.

Visions, however, don’t pay the bills. And even with 53 pupils and a Victorian school bought by the Guerrand-Hermes Foundation for Peace that funds many such projects, Lewes has had to work hard to ensure sustainability.

Like any head, Lizzie, who worked previously for the London Borough of Camden, knows that attracting and retaining good teachers is essential for its continued success. With pupil numbers now rising steadily and waiting lists for places in future reception classes, the school has been able to make the commitment to pay its five full-time teachers on a par with the state sector.

Lizzie believes that harnessing the enthusiasm of the parents is the key to the school’s survival. “One group of dads, called Fathers’ Pride, bake bread and promote the school at a local farmers’ market. Other parents take different roles. This helps to make up for the lack of a support network that heads in the local state schools enjoy, but also helps to make the school a community.”

And despite the struggles, she recommends the life: “Both for adults and the children it’s purposeful and fun. The children can do what they do naturally - learning by playing and by doing things for real. It’s exciting for the teachers, too - we get to work out our own belief system rather than practise the Government’s and as a learner myself, I am now able to move as fast as I want with my own thinking.”

The next Human Scale Education one-day workshop for teachers and parents thinking of setting up their own school is Saturday, March 15, in London. Visit www.hse.org.uk

Be a success

Sean Bellamy, a 45-year-old teacher, has finally made it.

He was 24 when he co-founded the Sands School in the farmhouse of one of the parents in 1987. The aim of the school was to look after the pupils who felt abandoned when Dartington Hall, an independent school that experimented with educational democracy, closed. Even now, Sands School operates without a headteacher, a hierarchy and pay differences. It almost closed twice in its first 10 years, and was only saved by the staff’s willingness to cut their pay to under half the national average.

Twenty-one years later, the school, whose fees are pound;2,389 a term, is secure in its villa in Ashburton, Devon. It has 60 pupils. The full-time teachers are paid pound;22,000 a year. Six out of its 10 have been there for more than 15 years.

Now Sean advises teachers and parents on how to set up their own schools. He says:

- You must really enjoy working closely with children.

- Be prepared for hard times and to rise to the challenge by working a huge number of hours, even just to find the right property.

- You need a very thought out fee and pay structure to reward and retain staff.

- Constantly market your school, even nationally, otherwise it will remain tiny and vulnerable to economic downturns, like the current credit crunch.

- Most of all, recruit qualified staff who are excellent teachers. The Ofsted report can make or break a small school.