Charter School Capital - Building a Growth Strategy May 2014

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


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


Stages of Growth


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%


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


STAGES OF GROWTH

Strategic approach

Start-up Growth Sustainability Financing

Facilities

Community involvement Academic accountability Operational support


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


STAGES OF GROWTH

Strategic approach

Start-up Growth Sustainability Financing Any liquidity Flexibility/

scalability Facilities In target locale Modular


Awareness Fulfill the promise


Establish program Measure program

Operational support Outside experts Transitional resources


STAGES OF GROWTH

Strategic approach


scalability Cost


Modular Curb appeal/cost


Awareness Fulfill the promise Fabric of community


Establish program Measure program Continuous improvement


In-house team


STAGES OF GROWTH

Strategic approach


scalability Cost


Modular Curb appeal/cost






In-house team


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


The Start-up Phase


STAGES OF GROWTH

Start-up

Common Misperceptions Founding team to “create” best practices “If you build it, they will come.”


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


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


The Growth Phase


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


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


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



The Sustainable Maturity Phase


STAGES OF GROWTH

Sustainable maturity

Common Misperceptions With growth, comes distance Time to cash in Challenges decrease as you scale


STAGES OF GROWTH


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


STAGES OF GROWTH


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


Recap


STAGES OF GROWTH

Recap


scalability Cost

Facilities In target locale Modular Curb appeal/cost Community involvement





In-house team


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


Questions?



Thank you.


Stuart Ellis 877-272-1001 [email protected]