Charter School Association Myths and Science of Sustainability

LET YOURNON-PROFIT GROW

Creating SustainabilityThe Science and Myths of Building

High Performance Non-Profits

E. Ted Fujimoto, PresidentLandmark Consulting Group, Inc.


Your Mission


“Sustainability”

Your Core Operations

Earned Revenues

Philanthropic Funding

Your Mission



Opportunities

Scaling

CoreOperations

RisksPhilanthropic

Funding

Earned Revenue



• Enough capital ($) generated from earned revenue to:– Pay for core operations to fulfill mission– Surplus to pay for scaling, risks/mistakes, as well

as new opportunities

• Dependency on philanthropic funding only for:– Scaling, Risk Mitigation, and New Opportunities


“Sustainability-Principle”

• Sustainability is about creating more “perceived” value by customers than the cost to operate that activity and business.


“Five Sustainability Killers”


Meet Mark• Real estate agent• Mortgage Broker• Organize your move• Interior Designer • Home Insurance• Life/Health Insurance• Financial Advisor, Securities Broker • Tax Preparer• House cleaning• Yard Service• Pest Control• Auto mechanic• Windshield repair• Kids tutoring


MYTH – To be a great Association, we must solve as many member needs as possible.

To be a great Non-Profit, we must solve as many constituents needs as possible.

To be a great CMO, we must solve as many of our school site needs as possible.


“Hedgehog Concept”


Association

Advocacy

Events

Services

Products


Radical IdeaCase Study

State A Association State B Association


How to

Core Operations:Membership

Products & ServicesEvents

Marketing & SalesFinance

HR

BoardState B-Member

CouncilState A-Member

Council

State B AdvocacyState A Advocacy

State B – Unique Services/Support

State A – Unique Services/Support

CEOCEO

State BED

State BED

State AED

State AED VP/COOVP/COO


CMO


MYTH – The association will be a near-automatic first choice by members for solutions .

MYTH – The non-profit/CMO will be a near-automatic first choice to receive help for customers/schools.


“Survey Myth”


“The Perfect Fit”

Marketa

bility

Significan

tValue

Profitability

Do charters perceive a huge need and want to buy a solution?

Does the business model support creating short-term and long-term profit?

Does the solution save charters significant costs and/or create huge additional value?

What we can be deeply passionate about?

What we can be the best in the world at?

Passion

Exp

ertise


“How To Get Real Market Input

Be Humble

Your best ideas

• Talk to 50 customers• Open conversation of biggest issues they feel like they need help with• Association won’t be able to solve all their issues• Which issues do they think the Association is or can be capable of providing the most value• One on one, small groups

• Validate needs and perceived value with broader customers• Larger groups, survey


Value Principle

• Perceived value is what counts• Too expensive to change perceived value• Customer does NOT have to purchase with the

“right motives” to receive benefits/value• Your offering does NOT need to be a complete

solution to be the right product• Thirst/Desire/Comfort is why people buy from

one versus another

Customer Perceived Needs


Product MixEntry

Entry

Mid-Level/Partial

Solutions

Mid-Level/Partial

Solutions

Big CompleteSolutions

EntryEntry

Mid-Level/Partial

Solutions

Big CompleteSolutions


“Myth of Earned Revenue”

$1M additional expense to generate $1.4M in earned revenue (71% profit margin)Core Operating

Base Line


“Myth of Earned Revenue”

MYTH – More earned revenue = less philanthropic funding needed


Activity• More perceived value than actual cost• Generates more cash than it costs• Generates margin – for risks, growth, and opportunities

ActivityActivityActivity

Earned Revenue Principle

Examples:• Services – 2-3x times cost = minimum 30% margin• Products – higher volume = 5-10% margin


Cash Flow – Generating more cash inflow than outflow

Biggest enemy of cash flow is TIMING!

Q1$100K

Expense

Q2$100K

Expense

Q3$100K

Expense

Q4$100K

Expense

Q1$200K

Expense

Q2$300K

Expense

Q3$400K

Expense

Q1$0K

Revenue

Q2$0K

Revenue

Q3$100K

Revenue

Q4$200K

Revenue

Q1$400K

Revenue

Q2$600K

Revenue

Q3$800K

Revenue

$ (100K)Period

$ (100K)Cumulative

$ (100K) $ 0$ 0 $ 100K $ 200K

$ (200K) $ (200K)$ (200K) $ (100K) $ 100K$ 100K

$ 300K $ 400K

$ 400K$ 400K $ 800K$ 800K

Year 1 Year 2

Planned Launch Profitable Cash Positive




Q1$100K

Expense

Q2$100K

Expense

Q3$100K

Expense

Q4$100K

Expense$100K

Expense$200K

Expense$300K

Expense

Q1$0K

Revenue

Q2$0K

Revenue$100K

Revenue$200K

Revenue$400K

Revenue$600K

Revenue

$ (100K)Period

$ (100K)Cumulative

$ (100K) $ 0$ 0 $ 100K $ 200K

$ (200K) $ (200K)$ (300K) $ (100K)

$ 300K

$ 400K$ 400K

Year 1 Year 2

Planned Launch Profitable Cash Positive

$ 100K$ 100K

$ (100K)




Q1$100K

Expense

Q2$100K

Expense

Q3$100K

Expense

Q4$100K

Expense$100K

Expense$200K

Expense$300K

Expense

Q1$0K

Revenue

Q2$0K

Revenue$100K

Revenue$200K

Revenue$400K

Revenue$600K

Revenue

$ (100K)Period

$ (100K)Cumulative

$ (100K) $ (100K) $ 0$ 0 $ 50K

$ (200K) $ (400K)$ (300K) $ (400K)

$ 200K

$ (150K)

Year 1 Year 2

Planned Launch Profitable

$ (350K)

$ (100K)

$400KExpense


TeamTeam

AdvocacyBusiness

EventBusiness

ProcurementBusiness

ConsultingBusiness

EtcBusiness

TeamTeamTeamTeam

AdvocacyBusiness

EventBusiness

ProcurementBusiness

ConsultingBusiness

EtcBusiness

•Timing•Commitments•Volume•Skill/Exprience•Staffing•Rhythm


TeamTeam

AdvocacyBusiness

EventBusiness

ProcurementBusiness

ConsultingBusiness

EtcBusiness

TeamTeamTeamTeam

AdvocacyBusiness

EventBusiness

ProcurementBusiness

ConsultingBusiness

School daily operations Business

•Timing•Commitments•Volume•Skill/Exprience•Staffing•Rhythm

CMO


MYTH – Having smart/experienced people is enough to launch/operate multiple businesses.

Business Team


“In Action”

Organization Focus

Business TeamTeamTeamBusiness


“Using Small Teams”Each Business TeamTeam

Team Leader (Owner – Accountable – Authority)

Team Members – Resource Pool


“No Silos”

Business/Team

Business/Team

Deliberate and StructuredRelationships, Cooperation, Collaboration

DependableSpecific DeliverablesTimelinesQuality Levels


Governance

Business

Business

Business

Board of Directors

Board of Directors

Advisory BoardAssociation

Association

Contracts

InternalStaff

A

B

C


MYTH – Build it and they will come!


“Know your customer”


•Know how many have need•Create 100% awareness•7 multi-mode communication hits•Communicate value /benefits•Stay on message/Keep it simple•Create predictable rhythm•Use entry and up-sell opportunities•Build trust/credibility•Don’t wait for perfection

How to



“Generate Results”

50% qualified lead rate25-50% close rate


“Five Sustainability Strategies”


More than SustainabilityIncreased Capacity, Scale, Growth!


Discussion/Q&A


[email protected]

www.ConsultLandmark.org


CharterConnectState

Association

-Advocacy- Events- P&S offerings- Visits/Meetings

Charter School Leaders

100% Immediate AwarenessRapid, Personal, and Informed Communications to all your members

Hi Joe, this is Gwen from the association…how are you? George

wanted me to give you a quick call to let you know the bill AB 231 actually passed…this means $100 more per student next year…how do you like

that?We thought you would love to know because I know you had helped us with your letter to Senator Brown.


Thank you!!!


[email protected]

www.ConsultLandmark.org

Economy & Finance

Charter School Association Myths and Science of Sustainability