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Copyright © 2013 Charter School Capital, Inc.
Building a Growth
Strategy
May 6, 2014
2 Copyright © 2013 Charter School Capital, Inc.
WHAT WE’LL COVER
• Charter school growth stages • Challenges school operators face at each stage • Best practices and takeaways
Agenda
Presentation will be available for download
3 Copyright © 2013 Charter School Capital, Inc.
WHO WE ARE
• Marshall Emerson, Co-Founder and CEO, I CAN Schools
– Ohio-based charter school institution founded in 2008
– Operate seven schools serving more than 2,000 students
• Stuart Ellis, President & CEO, Charter School Capital
– Began funding California charter schools in 2007
– Serve more than 400 charter schools, supporting in excess of 400,000 students nationwide
– Providing creative working capital, facilities financing, and entitlement services
Panelists
Copyright © 2013 Charter School Capital, Inc.
Stages of Growth
5 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
# of Students
Start-up Survival/Establish
Growth Flexibility/Stability
Sustainable Maturity Efficiency
Time (years)
0 2-3 5-10
100%
Students as a % of mature targets
10-25% 25-90% 90-100%
6 Copyright © 2013 Charter School Capital, Inc.
CHALLENGES
Reasons for charter school closures
42%
24%
19%
6% 5% 4%
Financial Mismanagement Academic Authorizer Obstacles Facilities Other
Source: The State of Charter Schools, The Center For Education Reform, December 2011
7 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Strategic approach
Start-up Growth Sustainability Financing
Facilities
Community involvement Academic accountability Operational support
8 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Strategic approach
Start-up Growth Sustainability Financing Any liquidity
Facilities In target locale
Community involvement
Awareness
Academic accountability
Establish program
Operational support Outside experts
9 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Strategic approach
Start-up Growth Sustainability Financing Any liquidity Flexibility/
scalability Facilities In target locale Modular
Community involvement
Awareness Fulfill the promise
Academic accountability
Establish program Measure program
Operational support Outside experts Transitional resources
10 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Strategic approach
Start-up Growth Sustainability Financing Any liquidity Flexibility/
scalability Cost
Facilities In target locale
Modular Curb appeal/cost
Community involvement
Awareness Fulfill the promise Fabric of community
Academic accountability
Establish program Measure program Continuous improvement
Operational support Outside experts Transitional resources
In-house team
11 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Strategic approach
Start-up Growth Sustainability Financing Any liquidity Flexibility/
scalability Cost
Facilities In target locale
Modular Curb appeal/cost
Community involvement
Awareness Fulfill the promise Fabric of community
Academic accountability
Establish program Measure program Continuous improvement
Operational support Outside experts Transitional resources
In-house team
12 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
• Different structures of working capital – Receivable sale – Term loan – Line of credit
• Facilities financing options – Lease option – Bond – Traditional bank loan
• Regarding costs of funds, all costs are NOT created equal – Evaluate total $ cost rather than % rate – Consider fixed transactional costs and penalties, in addition to annual rate
related to costs
Finance considerations
Copyright © 2013 Charter School Capital, Inc.
The Start-up Phase
14 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Start-up
Common Misperceptions Founding team to “create” best practices “If you build it, they will come.”
15 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Start-up
Marshall speak to this series of slides
The Challenges Finding good leadership and teachers Securing resources Finding suitable facilities Healthy enrollment Sustaining high performance as network expands
16 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Start-up
Best Practices Study and meet with schools doing things well Don’t be a master of everything. Master a few things and do them really well
Build genuine and robust relationship with teachers, leaders, vendors, and external constituents Pay close attention to the budget Pay even closer attention to student progress data Do not waiver in your belief or mission
Copyright © 2013 Charter School Capital, Inc.
The Growth Phase
18 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Growth
Common Misperceptions “After the 3rd year, all will be in place and it’s smooth sailing!” Performance and accountability requirements will be stagnant
Done with professional development No need to change routines or systems We’ll have sufficient funds from operating revenue to support expansion Facility upgrades will be minimal, if at all
19 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Growth
Challenges Maintaining high expectations and being flexible Advancing levels of student performance Managing growth with limited resources Upgrading systems to support growth Retaining quality teachers and leaders Matching capital to operational needs
20 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Growth
Best Practices Continuous professional development and leadership training Build on the culture Focus on individualized instruction and data analysis Increase visibility in the movement
Copyright © 2013 Charter School Capital, Inc.
21 Copyright © 2013 Charter School Capital, Inc.
The Sustainable Maturity Phase
22 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Sustainable maturity
Common Misperceptions With growth, comes distance Time to cash in Challenges decrease as you scale
23 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Sustainable maturity
The Challenges Developing and executing a sustainable strategic plan Anticipate challenges Identify aspiration – mission, vision, core values, SWOT Right team to implement strategic vision and plan Reevaluate financing to match your needs
24 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Sustainable maturity
Best Practices Define your objectives clearly and communicate them extensively both internally and externally Celebrate your successes and analyze your failures Develop data-driven culture and make sure you retain the passion that got you started Take what you do seriously with out taking yourself too seriously Develop pillars that define what you do Assess performance regularly and use assessment to improve
Copyright © 2013 Charter School Capital, Inc.
Recap
26 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Recap
Start-up Growth Sustainability Financing Any liquidity Flexibility/
scalability Cost
Facilities In target locale Modular Curb appeal/cost Community involvement
Awareness Fulfill the promise Fabric of community
Academic accountability
Establish program Measure program Continuous improvement
Operational support Outside experts Transitional resources
In-house team
27 Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
• Stages in charter school lifecycle present very different challenges
• Strategy and focus needs to vary significantly as you grow
• Leverage experts at every stage to allow you to focus on educating kids
• Financial analysis illuminates positive potential impact of growth and scale
Key takeaways
Copyright © 2013 Charter School Capital, Inc.
Questions?
Copyright © 2013 Charter School Capital, Inc.
29 Copyright © 2013 Charter School Capital, Inc.
Thank you.