Charter School Association Myths and Science of Sustainability

LET YOUR NON-PROFIT GROW Creating Sustainability The Science and Myths of Building High Performance Non-Profits E. Ted Fujimoto, President Landmark Consulting Group, Inc.

LET YOUR NON-PROFIT GROW

“ Sustainability” LET YOUR NON-PROFIT GROW Earned Revenues Philanthropic Funding Your Mission Your Core Operations

“ Sustainability” LET YOUR NON-PROFIT GROW Core Operations Your Mission Opportunities Scaling Risks Philanthropic Funding Earned Revenue

“ Sustainability”

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” LET YOUR NON-PROFIT GROW

LET YOUR NON-PROFIT GROW 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

LET YOUR NON-PROFIT GROW 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” LET YOUR NON-PROFIT GROW

Association LET YOUR NON-PROFIT GROW Advocacy Events Services Products

Radical Idea Case Study LET YOUR NON-PROFIT GROW

How to LET YOUR NON-PROFIT GROW Core Operations: Membership Products & Services Events Marketing & Sales Finance HR Board State B-Member Council State A-Member Council State B Advocacy State A Advocacy State B – Unique Services/Support State A – Unique Services/Support CEO State B ED State A ED VP/COO State A Association State B Association

CMO LET YOUR NON-PROFIT GROW

LET YOUR NON-PROFIT GROW 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” LET YOUR NON-PROFIT GROW

“ The Perfect Fit” LET YOUR NON-PROFIT GROW Marketability Significant Value 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 Expertise

“ How To Get Real Market Input LET YOUR NON-PROFIT GROW 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

Product Mix LET YOUR NON-PROFIT GROW Entry Entry Mid-Level/Partial Solutions Mid-Level/Partial Solutions Big Complete Solutions Entry Entry Mid-Level/Partial Solutions Big Complete Solutions Customer Perceived Needs

“ Myth of Earned Revenue” LET YOUR NON-PROFIT GROW $1M additional expense to generate $1.4M in earned revenue (71% profit margin) Core Operating Base Line

“ Myth of Earned Revenue-CMO” LET YOUR NON-PROFIT GROW Need as much contributions as they did at the beginning or more Number of Schools

“ Myth of Earned Revenue” LET YOUR NON-PROFIT GROW MYTH – More earned revenue = less philanthropic funding needed

Earned Revenue Principle LET YOUR NON-PROFIT GROW Activity

More perceived value than actual cost

Generates more cash than it costs

Generates margin – for risks, growth, and opportunities

Activity Activity Activity

Examples:

Services – 2-3x times cost = minimum 30% margin

Products – higher volume = 5-10% margin

Cash Flow – Generating more cash inflow than outflow LET YOUR NON-PROFIT GROW Biggest enemy of cash flow is TIMING! Q1 $100K Expense Q2 $100K Expense Q1 $0K Revenue Q2 $0K Revenue $ (100K) $ 0 $ 100K $ 200K $ (200K) $ (200K) $ (100K) $ 100K Q3 $100K Expense Q4 $100K Expense Q1 $200K Expense Q2 $300K Expense Q3 $400K Expense Q3 $100K Revenue Q4 $200K Revenue Q1 $400K Revenue Q2 $600K Revenue Q3 $800K Revenue $ (100K) Period $ (100K) Cumulative $ 300K $ 400K $ 400K $ 800K Year 1 Year 2 Planned Launch Profitable Cash Positive

Cash Flow – Generating more cash inflow than outflow LET YOUR NON-PROFIT GROW Biggest enemy of cash flow is TIMING! Q1 $100K Expense Q2 $100K Expense Q3 $100K Expense Q4 $100K Expense Q1 $0K Revenue Q2 $0K Revenue $ (100K) $ 0 $ 100K $ 200K $ (200K) $ (200K) $ (300K) $ (100K) Year 1 Year 2 Planned Launch $ 100K $ (100K) $100K Expense $200K Expense $300K Expense $100K Revenue $200K Revenue $400K Revenue $600K Revenue $800K Revenue $ (100K) Period $ (100K) Cumulative $ 300K $ 400K $ 400K $ 800K Profitable Cash Positive

Cash Flow – Generating more cash inflow than outflow LET YOUR NON-PROFIT GROW Biggest enemy of cash flow is TIMING! Q1 $100K Expense Q2 $100K Expense Q1 $0K Revenue Q2 $0K Revenue $ (100K) $ (100K) $ 0 $ 50K $ (200K) $ (400K) $ (300K) $ (400K) Year 1 Year 2 Planned Launch $ (350K) $ (100K) $400K Expense Q3 $100K Expense Q4 $100K Expense $100K Expense $200K Expense $300K Expense $100K Revenue $200K Revenue $400K Revenue $600K Revenue $800K Revenue $ (100K) Period $ (100K) Cumulative $ 200K $ 400K $ (150K) $ 800K Profitable

LET YOUR NON-PROFIT GROW Team Team Team

Timing

Commitments

Volume

Skill/Exprience

Staffing

Rhythm

Advocacy Business Event Business Procurement Business Consulting Business Etc Business Advocacy Business Event Business Procurement Business Consulting Business Etc Business

LET YOUR NON-PROFIT GROW Team Team Team

Timing

Commitments

Volume

Skill/Exprience

Staffing

Rhythm

CMO Advocacy Business Event Business Procurement Business Consulting Business Etc Business Advocacy Business Event Business Procurement Business Consulting Business School daily operations Business

LET YOUR NON-PROFIT GROW MYTH – Having smart/experienced people is enough to launch/operate multiple businesses.

“ In Action” LET YOUR NON-PROFIT GROW Organization Focus Business Team Business Team Team Business

“ Using Small Teams” LET YOUR NON-PROFIT GROW Each Business Team Team Leader (Owner – Accountable – Authority) Team Members – Resource Pool

“ No Silos” LET YOUR NON-PROFIT GROW Dependable Specific Deliverables Timelines Quality Levels Business/Team Business/Team Deliberate and Structured Relationships, Cooperation, Collaboration

Governance LET YOUR NON-PROFIT GROW Business Business Business Board of Directors Board of Directors Advisory Board Association Association Contracts Internal Staff A B C

LET YOUR NON-PROFIT GROW MYTH – Build it and they will come!

“ Know your customer” LET YOUR NON-PROFIT GROW

How to LET YOUR NON-PROFIT GROW

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

“ Generate Results” LET YOUR NON-PROFIT GROW 50% qualified lead rate 25-50% close rate

“ Five Sustainability Strategies” LET YOUR NON-PROFIT GROW

More than Sustainability Increased Capacity, Scale, Growth! LET YOUR NON-PROFIT GROW

LET YOUR NON-PROFIT GROW Discussion/Q&A E. Ted Fujimoto, President Landmark Consulting Group, Inc. [email_address] 415-963-4406 www.ConsultLandmark.org

LET YOUR NON-PROFIT GROW CharterConnect

State Association

Advocacy

Events

P&S offerings

Visits/Meetings

Charter School Leaders 100% Immediate Awareness Rapid, 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.

LET YOUR NON-PROFIT GROW Thank you!!! E. Ted Fujimoto, President Landmark Consulting Group, Inc. [email_address] 415-963-4406 www.ConsultLandmark.org