Halladay Education Group - School Start-Ups https://halladayeducationgroup.com/blog/school-start-ups en Measure Twice & Cut Once - Market Study & Business Planning https://halladayeducationgroup.com/Market_Feasibility_Study_And_Business_Plan_For_New_Private_Schools <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p class="bodytext1">Like many of you, I've had a number of summer jobs going to university. One of them included working for a construction firm building houses. I don't claim to be a great carpenter, but one adage a foreman shared with me always stuck - 'measure twice and cut once'. This same ethos applies to organizations considering starting new programs or even new schools. You need to envision what you want to build and then measure market demand for your new entity and costs/resources associated with its development in a detailed business plan before you move forward (and begin the cutting).<br /><br />However, on too many occasions HEG has been brought into a project after a client has begun Feasibilitythe process of starting a new school or program (or even opened it) without gauging whether the entity is feasible or sustainable. They make unfounded decisions with no basis for their operational/educational/financial benchmarks and have to either make reactive adjustments on the run or finally shut the program down when they realize there's not enough sustainable demand (or funds) to keep it open. Can you imagine building a house without a blueprint. But it happens in the education market.<br /><br />If you plan on opening a new school, be it K-12 or post secondary, you need to ensure you've done your 'measuring' before launching your school. There's so much at stake. Have you done your homework to ensure your school model will be sustainable in your market? Is there a large enough market willing to pay for the program and services you're offering? Is the tuition fee you're charging reflective of operational costs and short-falls in your initial years of operation? And if you're a for-profit, will there be a reasonable pay-back period to your investors and realistic profits? Once you launch your school, there's no turning back. And in school marketing, word-of-mouth is still the number one marketing tool, so you don't want to stumble right out of the gates.<br /><br />If you're planning to start a new school, or even expand your established school, you need to complete the necessary research and due diligence to formalize your educational-operational-governance-finance model and determine whether there is demand in your market for the educational program you're envisioning. From there you need to quantify the costs associated with starting and operating your school to break-even point, and the value it will return to your founders and investors.</p> <p class="bodytext1">You don't want to be caught in the trap of building your school and hoping students and parents will show up. The risk is too high, and frankly, irresponsible. However, it happens.<br /><br />A market~feasibility study and business plan should formalizes your school's educational / operational / business / financial model, determine its feasibility in your market, start-up capital requirements,<br /><br />five-year operational budget, internal rate of return (profit), facility-site requirements, and conveyance of the proposition to your investment and/or founding group. The rationale behind the Study and Business Plan is to consolidate the scope of your formation project through an extensive business case analysis to finalize the educational, operational, and business framework, quantify HR, facility/land requirements (and costs), enrollment demand, start-up and capital requirements, break-even point, pay-down to investors, internal rate of return, and net income. Upon conclusion of the Study, you can clearly assess the project's feasibility and optimal model for development, and pre-operation milestones as per the four-step model i.<br /><br />The rationale behind completing a Market Study and Business Plan is to formalize the scope of the formation project through an extensive on-site business case analysis, market review, and identification of the critical elements and costs associated with developing your school. Upon conclusion of the Study, you have a blueprint to guide you through the entire school formation process.This allows you to move forward fully informed and prepared and not make gut decisions with no data. <br /><br />An effective market~feasibility study and business planning should determine the optimal market for your school and financial projections within the Business Plan, focusing on:</p> <ul> <li class="bodytext1">F<span class="bodytext1">ormalization of the school model:</span></li> <li class="bodytext1">Market demand;</li> <li class="bodytext1">Educational program(s);</li> <li class="bodytext1">Accreditation requirements and licensing;</li> <li class="bodytext1">Potential combinations of grades for each stage of development;</li> <li class="bodytext1">Human resource considerations;</li> <li class="bodytext1">Infrastructure requirements;</li> <li class="bodytext1">Funding requirements;</li> <li class="bodytext1">Management team, governance model, and organizational chart.</li> <li class="bodytext1">Determine target market(s), enrollment projections, and marketing and admissions plan;</li> <li class="bodytext1">Review the business case for the establishment of a school in the Client's designated market;</li> <li class="bodytext1">Financial costs/assumptions for start-up budget and five-year financial plan;</li> <li class="bodytext1">Corporate and investment/funding structure;</li> <li class="bodytext1">Address issues/strategies to ensure a successful start-up and operation of the school:</li> <li class="bodytext1">Develop a Business Plan, providing an Executive Report, recommendations, and costing profile with an overview of demand for the proposed school, capital requirements, profits, investment pay-down, and the 'blueprint' to move forward.</li> </ul> <p class="bodytext1"><span class="bodytext-bold">Related Experience</span> <br /><br />HEG is recognized as the leader in the development of market~feasibility studies and business plans. We've experience with projects over $150 million in new cities in Asia to smaller non-profit schools. We've worked with for-profit and non-profit clients in North America, Asia, Europe, Middle East, and Africa. Our team's work has spanned over 100 school development projects totaling more than $1 B.</p> <p class="bodytext1"><span class="bodytext-bold">Next Step</span><br /><br />Douglas, if you would like to build a solid foundation and develop a sustainable school, and would like to find out more about HEG's market~feasibility study and business planning services, please contact HEG directly by sending an email to <a href="mailto:info@halladayeducationgroup.com">info@halladayeducationgroup.com</a> or calling HEG at 1-604-868-0002.<br /><br />To your success,<br /><br />Douglas Halladay<br />President<br />Halladay Education Group</p></div></div></div><div class="field field-name-field-addthis-blog field-type-addthis field-label-above"><div class="field-label">addthis:&nbsp;</div><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Measure Twice &amp;amp; Cut Once - Market Study &amp;amp; Business Planning - Halladay Education Group" addthis:url="https://halladayeducationgroup.com/Market_Feasibility_Study_And_Business_Plan_For_New_Private_Schools"><a href="http://www.addthis.com/bookmark.php?v=250" class="addthis_button_facebook_like" fb:like:layout="button_count"></a> <a href="http://www.addthis.com/bookmark.php?v=250" class="addthis_button_tweet" tw:count="horizontal" tw:via="AddThis"></a> <a href="http://www.addthis.com/bookmark.php?v=250" class="addthis_button_google_plusone" g:plusone:size="standard"></a> <a href="http://www.addthis.com/bookmark.php?v=250" class="addthis_button_pinterest"></a> <a href="http://www.addthis.com/bookmark.php?v=250" class="addthis_button_compact"></a> </div> </div></div></div><div class="field field-name-field-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category: </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/blog/school-start-ups">School Start-Ups</a></li></ul></div> Tue, 18 Aug 2015 01:31:11 +0000 admin 251 at https://halladayeducationgroup.com Who Is Driving Your New Private School's Priorities? Can You Shrink Your Way to Success? https://halladayeducationgroup.com/Developing_A_Business_Plan_For_A_New_Private_School <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p class="bodytext1">One of the critical blunders we see time-and-again with start-ups is that fact that founders haven't developed a detailed enough strategic business plan from pre-formation to operation over a five to seven year timeline to adequately determine whether: (1). The school is feasible in that particular market based on its program/operation/finance benchmarks; and (2) They've adequate capital to cover the initial cash-flow shortfall in the first two to three years of operation until they reach their break-even point.<br /><br />Our rule of thumb when establishing a school is: it needs to break-even within 24-30 months; it should be able to pay down its debt within eight to ten years, and IRR (depending on location) should range upwards to 25 to 35%.<br /><br />Nevertheless, the fact is that schools don't break even right away. There's just too much overhead that extends costs before you reach an enrollment point whereby you break even. However, when you reach that point, then it's clear sailing, along as you ensure that you continue to deliver on the program quality you committed to the at the beginning. You can't cut corners here!<br /><br />For those schools, be it established or new, that do not adequately prepare a strategic financial plan and budget, they end up in a cash crunch, and in most cases, start cutting back on program resources and staffing and/or dip into next year's tuition to cover this year's shortfall. This is a slippery slope to get on and it becomes more a matter of "when" not "if" the school shuts down. I've seen it too many times now.<br /><br />There can be fine balance between delivering on program quality and achieving your mission and being financially responsible. But that's what planning is about. Measure twice...cut once.<br /><br />But who is the driver of ensuring you achieve your strategic priorities? Who drives the decision making for your school? Is it the accounting office, Head of School, or the Board? Is it the 'bean counter' or the educational CEO of your school's vision. Don't get me wrong, there has to be financial accountability, but who ultimately makes the decision on the bottom line? And what's your bottom line and how do you measure it?<br /><br />In today's eNewsletter I want to talk more about who drives your school's decisions regarding short- and long-term strategic priorities and how to align your school's planning to ensure your institution is sustainable and directed towards your goals within a financially responsible process. In simple terms, this is what strategic planning is about, and something no successful school (be it for-profit or non-profit, new or established) can do without in today's every changing world. <br /><br />I read an article (Monday Morning Memo) a few months back that shared a story about a cafe owner who was famous for their soup, who was told by their accountant they could improve profits considerably if they added 5% more water to their recipe. The accountant was right. Water was added and no one noticed. Months later, the cafe added 5% more water and still no one noticed. Later, more water was added. And then a little more, but never more than 5% since they'd demonstrated that customers couldn't detect just 5% more water was added.<br /><br />As you guessed, the cafe owner didn't lose customers incrementally, but all-at-once. "The soup here just isn't as good as it used to be." It proves that operators have a blind spot to the all-at-once backlash that comes from watering down the soup. Businesses expect to see incremental declines when they're incrementally abusive, but that's not how it works. When clients pack up to leave, they take their business (your students) with them and leave all at once.<br /><br />The key principle for cost-cutters is that profits go up when costs are lowered. On paper, this makes sense since a cost-cutter's forecast doesn't project a decline in business.<br /><br />In the short-term, cost-cutters look brilliant.<br /><br />Later, when clients quit buying soup (enrolling students at your school) and the business begins to crumble, the cost-cutter becomes an even bigger champion: "See, I told you? If I hadn't cut expenses, we'd really be in trouble now. But with our new, lower overhead, we're still profitable. I've saved the school."<br /><br />Don't shake your head. I've watched it happen at many schools and it makes me want to scream.<br /><br />My question is, who determines your school's priorities, and do you develop a short- and long-term plan to enable you to responsibly align your resources to achieve your goals, allowing you to ride out the dips in start-up and operations?<br /><br />I'm not implying that all accountants are meddling. Someone has to ensure you live within your means. In fact, it's easier to raise revenues than slash costs.<br /><br />However, when you're a new school, you cannot shrink your way to profitability (and sustainability). You need to ensure that you've the capital in place beforehand to cover your initial short-fall; not "cut" your way through it.<br /><br />In fact, in during your initial start-up years, you should develop an accountable business plan that allows you to grow your school's program quality rather than shrink it.</p><p class="bodytext1">I'll finish off with one more pearl from the article to drive home the concept that you can't 'shrink' or shrivel' your school to success...<br /><br />A cost-cutter buys grapes and makes raisins.<br />An entrepreneur buys grapes and makes wine.<br /><br />You'll never see a person arrive to a celebration<br />carrying a box of raisins.<br /><br /><span class="bodytext-bold">NEXT STEP</span><br /><br />If you would like to find out more about strategic planning or school formation services, or advise on the review and implementation of your current plan, please contact HEG to find out more by sending an email to <a href="mailto:info@halladayeducationgroup.com">info@halladayeducationgroup.com</a> or calling directly at +1-604-868-0002.</p></div></div></div><div class="field field-name-field-addthis-blog field-type-addthis field-label-above"><div class="field-label">addthis:&nbsp;</div><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Who Is Driving Your New Private School&#039;s Priorities? Can You Shrink Your Way to Success? - Halladay Education Group" addthis:url="https://halladayeducationgroup.com/Developing_A_Business_Plan_For_A_New_Private_School"><a href="http://www.addthis.com/bookmark.php?v=250" class="addthis_button_facebook_like" fb:like:layout="button_count"></a> <a href="http://www.addthis.com/bookmark.php?v=250" class="addthis_button_tweet" tw:count="horizontal" tw:via="AddThis"></a> <a href="http://www.addthis.com/bookmark.php?v=250" class="addthis_button_google_plusone" g:plusone:size="standard"></a> <a href="http://www.addthis.com/bookmark.php?v=250" class="addthis_button_pinterest"></a> <a href="http://www.addthis.com/bookmark.php?v=250" class="addthis_button_compact"></a> </div> </div></div></div><div class="field field-name-field-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category: </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/blog/school-start-ups">School Start-Ups</a></li></ul></div> Tue, 18 Aug 2015 00:49:11 +0000 admin 247 at https://halladayeducationgroup.com