eK-12 Business Plan

1,338 views

Published on

Bethel University Masters Program final project.

Published in: Education
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,338
On SlideShare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
28
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

eK-12 Business Plan

  1. 1. Office Location:36 Main Street W.Waconia, MN 55378 612-965-0688 Members: Ryan Jaeger Amanda Klein Peter Meyers Robert Schmaltz Andy Sorensen
  2. 2. ContentsExecutive Summary .......................................................................................................... 5 The Opportunity ............................................................................................................. 5 Company Description ..................................................................................................... 5 Mission Statement and Vision ........................................................................................ 5 Product - Momentum...................................................................................................... 6 Target Market ................................................................................................................. 6 Marketing Strategy ......................................................................................................... 7 Competition .................................................................................................................... 7 Competitive Advantages and Distinctions ....................................................................... 7 Management................................................................................................................... 8 Funds Sought and Exit Strategy ..................................................................................... 8 Financials ...................................................................................................................... 9The Business Opportunity ................................................................................................10Company Description .......................................................................................................11 The Company ................................................................................................................11 Company Location .........................................................................................................11 Mission Statement .........................................................................................................12 Vision ............................................................................................................................12 Core Values ...................................................................................................................12 Form of Business...........................................................................................................13The Market .......................................................................................................................13 Demographics/Geographic ............................................................................................13 Lifestyle and Psychographics .........................................................................................14 Purchasing Patterns ......................................................................................................14 Page | 1
  3. 3. Market Size and Trends .................................................................................................15The Product ......................................................................................................................15 Momentum ....................................................................................................................15 Momentum Walkthrough ...............................................................................................17Strategic Position & Risk Assessment ...............................................................................23 Industry Trends .............................................................................................................23 Competitive Environment ..............................................................................................24 Company Strengths .......................................................................................................24 Definition of Strategic Position .......................................................................................24 SWOT ............................................................................................................................25Momentum Support – Services & Hardware ......................................................................26Financial Plan ..................................................................................................................27 Salaries .........................................................................................................................27 Revenue Growth ............................................................................................................27 Loans/Capital Required .................................................................................................29 SBA Advantage...........................................................................................................29 Investor Loan .............................................................................................................29Milestones ........................................................................................................................30 Year One: ......................................................................................................................30 Year Two: ......................................................................................................................30 Year Three: ....................................................................................................................30 Year Four: .....................................................................................................................30 Year Five: ......................................................................................................................30Management and Organization .........................................................................................31 Organization - Members ................................................................................................31 Page | 2
  4. 4. Leadership ....................................................................................................................31 Advisory Board ..............................................................................................................33Marketing Plan .................................................................................................................33 Company Message .........................................................................................................33 The eK-12 Brand ...........................................................................................................34 The eK-12 Approach ......................................................................................................34 Thought Leadership .......................................................................................................34 Expansion of offerings ...................................................................................................34 Technology & data supported curriculums.....................................................................35 Marketing Tactics ..........................................................................................................35 Offline Marketing Tactics ...............................................................................................36 Online Marketing Tactics ...............................................................................................36 Strategic Partnerships ...................................................................................................37Sales Strategy ..................................................................................................................38 Sales Force ....................................................................................................................38 Sales Cycle ....................................................................................................................38Operations Plan................................................................................................................39Technology Plan ...............................................................................................................45 Infrastructure ................................................................................................................45 Employee Issued............................................................................................................46 Intellectual Property and Contracts................................................................................46Risk Assessment ..............................................................................................................47An Overview of the Competition ........................................................................................48 Competition – Companies ..............................................................................................48 Competitive Position ......................................................................................................50 Page | 3
  5. 5. Future Competition .......................................................................................................50 Exit plans ......................................................................................................................50 Long-Term Development ................................................................................................51Appendix 1 .......................................................................................................................52 List of Main Education & Training Services ....................................................................52Appendix 2 .......................................................................................................................53Appendix 3 (Marketing Membership Budget) .....................................................................54Appendix 4 (Marketing Plan) .............................................................................................55Appendix 5 (Addtl Marketing Expenses) ............................................................................56Appendix 6 (Technical Equipment)....................................................................................57Appendix 7 (Financials) ....................................................................................................68 Summary of Cash Flows ................................................................................................68 Summary of Profit and Loss: ..........................................................................................69 Balance Sheet 2013: Year End .......................................................................................70 Balance Sheet 2014: Year End .......................................................................................71 Balance Sheet 2015: Year End .......................................................................................72 Balance Sheet 2016: Year End .......................................................................................73 Balance Sheet 2017: Year End .......................................................................................74 5 Year Financial Summary (Chart) .................................................................................75Appendix 8 (Momentum Screenshots) ...............................................................................76References ........................................................................................................................86 Page | 4
  6. 6. Executive SummaryThe Opportunity From 1970 to 2011, there has been a 375%increase in educational spend with no measurableimprovement in educational results (Coulson, 2012).Further, standardized testing indicates that themajority of American students do not meet requiredlevels for proficiency in math, reading, and scienceranking them 30th place in the world (Childress, 2012).The opportunity to improve how students learnthrough enhanced technology, assessment and metrically driven continuous improvementoffers a lucrative investment opportunity when considering market size. According toInstitute of Education Sciences, the National Center for Education Statistics state thatthere were 98,817 operating public elementary/secondary schools during the 2009–10school year (NCES, 2012).The company that owns the data on best content deliverymethodology would be uniquely positioned within the $863 billion education market.Company Description Founded in 2012, eK-12 is a Minnesota-based, limited liability company (LLC). eK-12 provides evidence-based educational improvement through a technologically enabled delivery, assessmentand data resource system for public, private and charter schools via its Momentum productoffering.Mission Statement and Vision eK-12’s purpose is to revolutionize the educational system and transform studentoutcomes through individualized learning plans and evidence-based curriculumassessment. eK-12’s vision is to be the knowledge center for educational success throughtechnology delivery, assessment and data management. Due to existing relationships andidentified need, eK-12 will pilot its Momentum product to 2,250 students in the WayzataMiddle School System. eK-12 looks to expand to a total of twelve schools by 2017 focusing Page | 5
  7. 7. on the affluent school districts of Edina, Eden Prairie, Minnetonka, Plymouth andWoodbury.Product - Momentum Momentum is eK-12’s proprietary delivery, assessment and datasoftware system. The system is designed to enable school-providedcurriculum and deliver it to students in an electronic medium, assess theirskills, and record data for reporting. Momentum will leverage tablets,smartphones, and computers to engage students in an individual andinteractive learning session, while exposing children to the widely used waysof doing business in today’s technologically evolving society. This will allowfor ongoing and custom improvement in the classroom, based upon student needs. Thisdata will be compiled and analyzed into information that establishes metrically proveneducational solutions that help maximize school’s abilities and district budgets. Momentumis not constrained to a single platform allowing schools to utilize existing hardware. Momentum is eK-12’s proprietary delivery, assessment and data software system. The system is designed to enable school-provided curriculum and deliver it to students in an electronic medium, assess their skills, and record data for reporting.Target Market eK-12’s target market consists of teachers, media specialists and administration inkindergarten through 12th grade education in Twin Cities’ school districts such as Wayzata,Edina, Eden Prairie, Minnetonka, Plymouth, and Woodbury. These schools were selectedbecause they reside within affluent communities and have enrollment in excess of 5,000students with a history of funding technology investments. Page | 6
  8. 8. Marketing Strategy As a technology-based company, the eK-12 brand will be simple, colorful, and reflectexcellence and aspirations of educational institutions. This technology made simpleapproach will be easy to understand by the use of visual diagrams, touch screens, andlarge engaging images that appeal to the end-user. eK-12’s marketing will target the largestselling points of teachers, administrators, and students utilizing insights that were gainedthrough interview research. Specific online and offlinemarketing activities will include but are not limited to:trade shows, print advertisements, industrynetworking, website advertising, and social media.Competition The competition within the educational market consists of software developers andspecific curriculum-based textbook providers such as Scholastic, Pearson Digital Learning,and Renaissance Learning. While the established competitors currently occupyrelationships with the target market, they have not successfully integrated to deliver theircontent with today or tomorrow’s technology.Competitive Advantages and Distinctions eK-12 is focused on supporting content for a curriculum that evolves just as fast astheir learners through its delivery, assessment and data management approach. By usingclassroom data, eK-12 will be able to identify effective components within currentcurriculums and build software programs that allows for learners to achieve their very best.Additionally, teachers and students will benefit from the electronic and individualizedlearning plans for a broad range of class skill levels. Updates to curriculum content caneasily and cost effectively be implemented through daily downloadable updates. Page | 7
  9. 9. Management The five founding members of the LLC will manage and lead the organization. Themanagement team brings a diverse background and will perform multiple responsibilitieswithin the organization. Additionally, eK-12 will utilize an Advisory Board to gain additionaleducational expertise. eK-12 will use outside contractual resources for softwaredevelopment, accounting, legal and other needs as required for growth.Funds Sought and Exit Strategy eK-12 is seeking $250,000 in private eK-12 is seeking investor funding. The funds will be used $250,000 in private during business startup, primarily assisting investor funding. in people, equipment and marketingactivities. These investments will carry a 15% annual interest These investments willrate, and will be repaid by the end of the third year of carry a 15% annualoperation. Additionally, eK-12’s founding members will interest rate, and arecontribute $250,000 as an initial investment and secure a planned to be repaid by$250,000 small business advantage loan. the end of the third year eK-12 will operate in growth mode from the date of of operation.incorporation, and will continue in that mindset until eithera strategic partnership or competitive buyout opportunitycomes available. Page | 8
  10. 10. FinancialsCategory 2013 2014 2015 2016 2017Sales $111,600 $1,114,875 $3,274,331 $5,251,406 $6,716,250Gross $78,000 $440,625 $1,379,606 $2,449,481 $3,121,875ProfitExpenses $580,996 $619,295 $1,015,913 $1,055,336 $1,279,097Net Profit ($502,996) ($178,670) $272,770 $1,045,609 $1,382,084 Page | 9
  11. 11. The Business Opportunity eK-12 is seeking to unify several markets in education bydeveloping a unique integrative software platform that merges delivery,assessment, and reporting. There is good reason to believe that thiscould result in a large, scalable business with extremely large growthpotential. This is due to the unmet need and high demand to provideteachers with integrative platforms that allow them to enhance educationwith the targeted use of technology. eK-12 recognizes the need to applyinnovative solutions to educational issues by creating a digital deliverysystem for curriculums that includes assessment and detailed reporting tools allowing forthe development of evidence based education. In March 2012, Harvard Business Review (HBR) cited that in nationwide NationalEducation Advanced Placement (NEAP) tests taken in 2009 that 74% scored below“proficient” in math, 62% in reading, and 79% in science (Childress, 2012). Worse yet, theU.S. has fallen to near 30th place in both reading and math behind most other first worldnations and even behind some second world nations. To remain competitive, HBRadvocates new technological approaches to education (Childress, 2012). eK-12 seeks toanswer that call by creating a new method of learning through technology that both allowschildren to learn optimized and individualized material faster and more completely. Further, eK-12 understands that additional increases in school budgets are unlikely, and therefore will create a system that consolidates systems down to a more cost effective and streamlined single platform. Since 1980, the President’s education budget went from approximately $7 billion witha handful of programs to $77 billion in 2011 with dozens of educational programs(Education Department Budget, 2011). In 1997, the total spending across local, state, andfederal education was approximately $442 billion. By 2009, it had almost doubled to $863billion (US Government Spending, 2012). Even accounting for inflation, it still representsan almost 32% increase in spending. This trend isn’t ending anytime soon. According to Page | 10
  12. 12. the Bureau of Labor Statistics, the Education sector is expected to be the third largestsource of growth in the next 10 years (Occupational Outlook Handbook, 2012). Despite theincrease in jobs and spending, it has not resulted in improved educational results. In July 2012, the White House issued another two waivers to states from “No ChildLeft Behind.” These waivers make over half the states exempt from the Congressionalattempt at education reform (Johnson, 2012). It is estimated that the White House willexempt another 10 states from meeting the goal of 100% proficiency in reading and mathby 2014 (Ohlheiser, 2012). Despite the exemptions, the President and the Congress intendto rewrite the law to help fix its shortcomings but not eliminate it. While standardizedtesting is sometimes criticized, it remains one of the key metrics used to analyze thesuccess of a school. The Cleveland mayor, the governor of Ohio, and the teacher’s unionrecently agreed to overhaul how teachers are hired, fired, and are paid based onperformance. This performance will be partly measured on test scores (Banchero, 2012).eK-12 has recognized that there is strong market demand for technology to remaincompetitive with our overseas counterparts. Like HBR, we believe that a new industrybased on technology and education is ripe for developmentCompany DescriptionThe Company eK-12, LLC is a Minnesota-based company providing evidence-based educationalimprovement through a technologically enabled educational delivery and assessmentsystem for public, private and charter schools via its Momentum product offering.Company Location eK-12 corporate headquarters is located at 36 Main Street W, Waconia MN 55378.This location was selected due its close proximity the Minneapolis and low cost structure.The physical location serves as office space for eK-12’s management team, softwaredevelopment, and the server farm necessary for data storage. Page | 11
  13. 13. Mission Statement eK-12’s mission is to revolutionize theeducational system by enhancing thecapabilities of educators to teach the nextgeneration through the strategic use ofenhanced technological delivery and proper dataassessment. eK-12 will simplify the technology barrier for educators, and provide them witha system that transforms educational outcomes for children in K-12 private, public, andcharter schools. eK-12 will provide this change through individualized learning plans forstudents delivered via the Momentum product.Vision eK-12’s vision is to be the knowledge center for educational success throughtechnology delivery and data assessment. By focusing on evidence-based education, eK-12will help provide a means to apply educational solutions to curriculums. Knowledge anddata will be shared through the use of technology devices, which will allow for ongoing andcustom improvement in the classroom, based on the need of the end user, the students.This data will be compiled and analyzed into information that establishes metrically proveneducational solutions that help maximize school’s abilities and district budgets.Core Values eK-12’s core values are important because they provide a foundation for success andare in alignment with our educator target market to partner together to effectively to betterthe educational experience for students. eK-12’s expects its partners, suppliers andcustomers to adhere to its core values in support of its overall mission. These valuesinclude:  Making a difference, one child at a time  Maximizing the educational achievements of all students through measurement  Enhancing the power of educators and their impact upon students  Showing integrity in all of its actions  Bringing hope and the spirit of transformation to the future of education Page | 12
  14. 14. Form of Business eK-12 will be formed as a Limited Liability Company (LLC) as it provides the mostflexible partnership formation and tax treatment process. The LLC will be organizedthrough Articles of Organization filed with the State of Minnesota and governed through theOperating Agreement. The five founding members will fund the initial partnership andliability is limited to each individual’s capital contributions. The tax law is undergovernance of the Internal Revenue Service.The MarketDemographics/Geographic The demographic and geographic statistics describe the details of the target marketand help identify the means to maximize the communication of the business. eK-12’s target market for Momentum is the key decision-makers in the Characteristics: educational process: teachers, librarians, media/IT  Ages 23-55 specialists, administration and school board members.  Family oriented Through research, eK-12 has identified decision makers will  Technically adept  Conservative be between the ages of 30-55. Payscale.com indicates the  Socially responsible average teacher medium salary to be $40,182 - $44,337 (Pay  Fun seeking Scale, 2012). According to the National Center for Education  Value education Statistics (NCES) there were 3.7 million full-time equivalent elementary and secondary teachers in September 2011. Thisnumber has risen 7 percent as of April 2012 (NCES, 2012). Among full-time and part-timepublic school teachers in 2007-2008, 76% of public school teachers were female, 44percent under the age of 40, and 52 percent had a master’s degree or higher. Compared topublic schools, a lower percentage of private school teachers were female (74 percent), wereunder age 40 (39 percent), and had a master’s or higher degree (38 percent) (NCES, 2012).Therefore, from these statistics, eK-12 can create target messages that resonate withindividuals based on specific demographics. Page | 13
  15. 15. The target market will be tested with eK-12’s pilot program in the Wayzata,Minnesota middle school system within fifteen classrooms, specifically five each in grades6th, 7th, and 8th.Lifestyle and Psychographics Lifestyle and psychographics of eK-12’s target market help shed light on the interestand buying patterns of individuals within the educational system. Based on interviews andother research performed for the business plan, eK-12 can confidently describe its targetmarket with the following primary lifestyle characteristics: family oriented, technicallyadept, conservative, socially responsible, smart shopper, fun-seeking, good housekeeper,kids at heart, and most importantly understanding of the value of education (Personalcommunication, August, 2012).Purchasing Patterns Due to multiple levels of approval, the decision making process to propose and agree toimplement Momentum as part of a class or school district will likely be an intenseengagement. According to eK-12’s school district interviews, new classroom products areconsidered at any point in the school year, especially if it fits a need. Classroom programsare typically initiated for school consideration by the teacher and other aids, such as mediaspecialists. These decisions are then brought to administration and school boards, basedupon requirements. The following is a list of influential considerations for educationalsoftware (Personal communication, August, 2012):  Benefits students  Improve test scores  Ease of functionality, not overly complex  Better than existing offering  Serves a need  Brings efficiency, allowing for time to be spent elsewhere  Program committed to ongoing improvements and updates  Good quality and familiar brand name with good customer services and warranty Page | 14
  16. 16. Market Size and Trends eK-12 believes its business concept offers a lucrative investment opportunity whenconsidering market size. According to Institute of Education Sciences, the National Centerfor Education Statistics state that there were 98,817 operating publicelementary/secondary schools during the 2009–10 school year (NCES, 2012). Schoolenrollment is currently flat, but there is a higher emphasis on education to improve oureconomic financial position (NCES, 2012). Technology-based learning is a key part of the innovation in education that willdefine the future. Today’s students are working with technology in and outside of school.This is a fundamental component of what they will experience throughout their entireworking life. The trend that efficient technology brings to the classroom impacts thisevolution. The baby boomer generation teachers are leaving the education system whichopen positions for generation Y and X teachers to implement new teaching methods forlearning. Lecture driven teaching does not engage with the student on an individual leveland therefore teachers are searching for better ways to interact and hold the attention ofindividual learners. Additionally, with school district budget cuts, departments are lookingfor ways to consolidate resources to solve many of their needs and provide cost savings tothe budget.The ProductMomentum Momentum is eK-12’s proprietary delivery, assessment, and datasoftware system. Utilizing what eK-12 calls the “D.A.D method,” (Delivery,Assessment, and Data) it is designed to take school provided curriculumand deliver it to students in an electronic medium, assess their skills, andrecord data for reporting. Page | 15
  17. 17. Momentum presently leverages tablets, smartphones, and computers to engage students in an interactive learning session, while exposing children to the widely used andaccepted ways of doing business in today’s technologically evolving society. Momentum isnot constrained to a single platform allowing schools to utilize existing hardware.Momentum is designed around serving four primary stakeholders: students, parents,educators, and content providers. • Individualized Lesson Plans w/ varied approaches • No limits education (self-paced) Students • Social learning • Single login for all grades, assignments, due dates • Uniform look and feel from class to class (K-12) Parents • 24/7 Real time progress reporting • Reporting tools for curriculum comparison • Constantly updated content Educators • New assessing methodology • Steady cash flow Content • Reduction of production costs • Purchasable data offerings that measure curriculum effectiveness Providers Page | 16
  18. 18. Momentum WalkthroughFigure 1: Diagram of Momentum workflow Momentum starts by establishing independent electronic calendars that are availableto students from the website, their phone, or the tablet. Calendar entries containinformation about upcoming assignments, special events, and various instructor drivennotifications (see figure 2). It includes their task list and current progress. This deliverymethod is already in use on most college campuses and children as early as the fourthgrade are already learning “calendaring” skills in Minnesota schools. eK-12 believes thereis a need to teach children these skills earlier in life and do it in a way that’s fun andunderstandable. Page | 17
  19. 19. Figure 2: Example of Apple iPad Calendar with Momentum scheduling integration Upon login, the Momentum application will contain all of that students varioussubjects and their respective lesson plans. The instructor will guide the students through alesson plan that will contain elements of both interactive learning and class participation(see figure 3). Page | 18
  20. 20. Figure 3: Screen shot of Momentum App: Electronic Textbook Then, the student will utilize the Momentum application to start an individualizedportion of the process that will reinforce the learning while simultaneously providingfeedback to the system and instructor. When the predetermined achievements of thelesson plan have been met, the system will announce to the learner that an achievementhas been “unlocked” and that they have been awarded a certain number of points (seefigure 4).Figure 4: Example of achievement unlock notification Page | 19
  21. 21. The achievement methodology is being borrowed from Microsoft’s Xbox Live system which was introduced in 2005. Achievements have been an overwhelming success and most major entertainment companies have adopted it – including Sony,Nintendo (coming 2013), Battle.Net, and Valve/Steam. Gaming as a whole has shown toincrease student success. On the average, academic games in the classroom have beenshown in studies conducted by the Marzano Research Laboratory to have a 20 percentilegain in student performance (Marzano, 2010). Each lesson will have a set number of maximum On the average,points that can be earned with varying values being given to academic games inthe achievements of each lesson plan. This gives the the classroom haveindividual student/ lesson plan a real time metric to track been shown inand measure progress. Achievements can potentially be studies conducted byunlocked in a non-linear order allowing students to explore the Marzanoand progress in a subject at their own pace. The Research Laboratoryachievements will be setup in such a way that they can be to have a 20done at varying intervals of mastery. Grades can be tied to percentile gain inhaving unlocked certain achievements, but students will not student performancebe constrained to only meeting the minimum requirements. (Marzano, 2010).Students who desire to achieve higher levels of success canadvance at their own pace through the lesson plan at schoolor at home. As learners unlock achievements it is displayed on their school profile alongside theirindividualized school avatar. This provides a social element to their work in school andchildren can identify and compare achievements with their classmates and friends (seefigure 5). Page | 20
  22. 22. Figure 5: Screenshot of the home screen of the Momentum iPad app (with Social) – seeAppendix 8 for additional screenshots Momentum will allow educators to track many different types of metrics on students.They can see how fast some achievements are unlocked, which are the most frequentlyaccomplished, and identify the most advanced or struggling students. Additionally, theMomentum system will use individualized plans to dynamically modulate the difficulty ofthe plan in real-time as well as change the delivery type (ex: audio vs. visual) so thatstudents are able to benefit from multiple types of delivery as well as move at a pace thatmaximizes their ability. This is important because students learn at different paces, withdifferent mediums. Data collected from Momentum will be used to build bettercurriculums, suggest mediums that help students learn best, and give children a chance toexercise their knowledge until proficiency is proven (see figure 6). Page | 21
  23. 23. Figure 6: Example report from Momentum showing unit completion time, accuracy, and pointsachieved Page | 22
  24. 24. Strategic Position & Risk Assessment eK-12’s objective is to be the premier technical software delivery and assessmentprovider for education in grades kindergarten through twelfth grade in the Twin Cities. Toachieve this goal, objectives have been established to build the program using real-timestatistics to nurture and enhance Momentum. The strategic position emphasizes:  Software that implements efficiencies into the day and life of a teacher, student, parent, and administrator  An experience that encourages learning  Custom individualized learning plans  IT savvy resources with skills needed to customize programs to the goals of each school and individual classrooms  In-person or online training of software systemIndustry Trends The education industry trends show investmentdollars continuing to support the workforce of thefuture. Despite the often talked about budget cuts, itis proven that investing in education and the skills ofelementary, primary, and secondary education willdirectly impact the U.S. job market and economy.“An estimate of $1.15 trillion has been spent nationwide on education at all levels forschool year 2011-2012, a substantial majority comes from state, local, and private sources”(U.S. Department of Education, 2012). Given the recent economic downturn, education willremain a high priority for developing the next generation workforce. Technology devices are creating the classroom of the 21st Century. Many schoolshave implemented tablet pilot programs and are discovering many advantages, including afaster rate in which students learn, the ability to use the Internet as a resource, andeliminating the inconvenience and experience of curriculum textbooks. (Personalcommunication, August, 2012) Page | 23
  25. 25. Competitive Environment There is no other company designed exactly like eK-12 that focuses on bothtechnology delivery via a custom software interface and offering assessment of studentlearning. Yet, other competitors have relationships within the target market. It will be thetask of eK-12 to gain the trust and confidence in the educators and curriculum provides todisplace the competition. The sales approach, much like the learning approach, will behands-on with integration of the software to allow for the ability to drive to the individualneed of the prospect. A tradeshow is an example of this process as eK-12 would use theface-to-face opportunity for teachers to interact with a tablet and Momentum, while asystem expert or experienced user walks them through features and benefits of the system.Company Strengths With its unique technological delivery and assessment system, eK-12 will set thecourse to evolve just as fast as their learners. By using classroom data, collected throughthe Momentum product, eK-12 will be able to identify effective and ineffective componentswithin current curriculums and build software programs that are best in breed that allowsfor learners to achieve their very best. Additionally, teachers and students will benefit fromthe electronic lesson plans and individualized learning plans for a broad range of class skilllevels. Because of the software learning platform, updates and modifications to content caneasily be implemented by sending revisions through a program update, a much more costeffective solution than investing in text books year after year. Lastly, eK-12 believes thetechnology capabilities of the company will be a valuable resource for education andcurriculum programs.Definition of Strategic Position The difference between eK-12 and its competitors is that they were founded ascompanies publishing textbooks, other publishing materials and assessments, and justrecently started offering technology solutions. eK-12 is based first and foremost ontechnology, and thus, will launch the company with the foundation of technology, researchand processes critical to the success of students in the 21st century classroom, rather thanbe tied to mediums of the past. The data gathered from the system will give the company asignificant head start, should imitators attempt to replicate the program. It will require Page | 24
  26. 26. several years to acquire datasets and competitors will always operate in a data deficitcompared to eK-12. eK-12 intends to measure far more than just test scores allowing forpotential licensing of curriculum data in the future. This makes changes to curriculumrelevant and applicable. eK-12 believes this will be a highly profitable business solution and expects a returnof investment in three years (see P&L statement in Appendix 7). The complexities of theapproval process will cause for a long sales cycle that will need to be factored into thestrategic objectives of the marketing and sales plan. This technology based delivery andassessment system improves in time as the foundational pool of data becomes larger, whichbetters the investment by validating product updates.SWOT A SWOT analysis was used to evaluate eK-12’s position. This method identifies eK-12’s strengths, weaknesses, opportunities, and threats to illustrate the company, productand services. This meaningful information is used to maximize elements both in andoutside the marketplace, so eK-12 has the opportunity to market with a clearunderstanding of their market differentiators. FAVORABLE UNFAVORABLE INTERNAL STRENGTHS WEAKNESSES  Efficient agile business model  Marketplace presence  Curriculum design, one that  Curriculum go-to responds to the classroom of market strategy, (6 tomorrow month delay)  Target customer, if already, and  Branding challenge IT client when starting as an  Quality Product Portfolio IT service company  Education – well funded by  District, schools, and public resources teachers must invest  High Employee Productivity and adopt technology  Interactive learning environment  Debt like no other in the marketplace  Programs that are simple to use with many built in efficiencies  Individualized learning plans Page | 25
  27. 27.  Investor in Research and Development EXTERNAL OPPORTUNITIES THREATS  Close the gap between  Decrease in public technology and curriculum funding  Product leverage peer pressure  Another established in a positive way company generates a  Curriculum provider similar product in partnerships year one.  Product betters with time, as  Insufficient protection more data is compiled of intellectual  Opportunity to gain a loyal products (ie. reputation through IT services Classroom data)  Fast developing emerging  Regulations markets  Not for profit  American Product competitive organizations  CompetitionMomentum Support – Services & Hardware eK-12 understands that multiple streams of revenue are essential to the success ofthe business. Therefore in support of Momentum, eK-12 will have service and hardwarerevenue streams, as well as curriculum licensing fees that will be discussed in greaterdetail in the strategic partnerships section of this business plan. eK-12 will providetechnical support, repair and maintenance of existing technology and all aspects of itsproduct offering. The services will ensure that educators spend their time focused onlearners, not technology. The actual revenue stream is projected at $69,000 in year one,$3,609,000 in years two and three, and $9,552,750 in years four and five. eK-12 will establish various partnerships with hardware vendors to supply thetechnology used in the classroom. Tablets like the Apple iPad and Microsoft Surface,software licensing, low voltage wiring, wireless access points, switching gear, servers, andother technology goods and services will be sold through eK-12 to support their mission.From the customer’s perspective, buying hardware through eK-12, or through traditional Page | 26
  28. 28. distribution will be cost neutral proposition. eK-12 assumes they will realize a 5% profitmargin on all hardware sales. By developing these ancillary revenue streams, eK-12 can help fund its growth into tothe educational market and deliver $13,230,750 in additional revenue support over the firstfive years in operation.Financial Plan eK-12 realizes in order to become a successful startup that some key assumptionsneed to be made and explained in realizing the full potential of profits.Salaries Each principle member of eK-12 will receive a salary of $50,000starting out for the first three years with a 3% increase for inflation. In yearfour, the founding members will get a raise to $61,000 and finally receive a$100,000 salary in year five. eK-12 plans on employing a full time programmer/operations employee from thestart, with a base salary of $100,000. Financial estimates include an annual raise of 3%due to inflation. According to payscale.com trend lines for IT personnel, a $100,000/yearbase will provide eK-12 with a very competent programmer, which is essential for the initialdevelopment work. In years three through five, there will be two additional programmersadded to compensate for the increased workload. Additionally, eK-12 will add two administrative employees and two sales professionals to help with increased demand and sales lead generation. To ensure the “right”people are brought in, market competitive salaries have been assumed in future financialprojections.Revenue Growth eK-12 will focus on growth upon incorporation. The plan’s revenue growth comesfrom a “conservative” estimate on what could truly be attained. The largest source of Page | 27
  29. 29. revenue growth is from the Momentum platform. eK-12 projects moving into two newschools in 2014 and three new schools each year from 2015-2017. eK-12’s pilot programwill begin with one class (750 students) in each grade. The price of Momentum softwareper student starts out at $15per seat. That will increase by 10% in year two and 25% inyear three. For clarity eK-12 has Momentum increasing in price over years two and three.This is due to eK-12 possessing useable data that will increase client value. Early adopterswill realize a reduced price, in order for us to secure initial business. eK-12 also has projected tablet sales, packaged with Momentum software as needed.eK-12 realizes that some schools will have already invested in tablets and will only beinterested in Momentum software. For financial projects, it is assumed that hardware saleswill be included in 75% of the new schools added annually.Residual revenues will increase exponentially forMomentum, while hardware is only a one time sale. eK-12will negotiate a 5% distributor discount on hardware tojustify the sale. This will allow ek-12 to recoup costs forhandling the transaction, while keeping the pricing cost neutral for the customer. Service contract fees will be in place for $7.00 per month per tablet per tablet. Thenumbers of units projected are directly correlated to the number of Momentum units soldper month. The final revenue stream is content licensing. eK-12 believes that introducing onemedium to handle all of the students learning is critical. Based on personal interviews, ek-12 has established that a “normal” text book will last three calendar years before beingreplaced (Personal Communication, 2012). The average student will have six classes andbooks at a given time in school. The average cost of each book is approximately $100(Personal Communication, 2012). That $100 would normally go directly to the textbookprovider, but instead will be channeled through eK-12 as a residual revenue stream. eK-12will be taking a 30% fee on licensing content. The licensing fee is projected at $16 amonth per user. That number is derived from assuming six textbooks at $100 each, lasting36 months. eK-12’s 30% fee equates to a $5 profit each month per user. Just as the Page | 28
  30. 30. service contracts stated above, this licensing fee will also be directly correlated to thenumber of Momentum units sold monthly.Loans/Capital RequiredThe loan assumptions are as follows:SBA Advantage eK-12 will pursue a $250,000 SBA Advantage loan through US Bank. This type ofloan allows financing for startup businesses. The note can be extended to seven to tenyears, but eK-12 believes the note will be paid off in full within 5 years, while carrying aninterest rate of 5.5%. The rate is a standard market rate on SBA Advantage loan programs.Investor Loan eK-12 will also seek a three-year term, $250,000 loan made available through privateinvestors. The rate will be 15% APR as normal market conditions support. These loans areplanned to be paid off first within three years. eK-12 will do this because it’s the highestinterest rate and therefore the largest expense in interest paid. The amount of $250,000came into play for startup capital as eK-12 develops its product and takes a loss for thefirst two years. After year three, eK-12 will show a profit and the remaining moneyrequested that hasn’t been fully used (SBA NOTE) will provide 6-9 months of liquidity inreserves that support all operating expenses, with the assumption of no revenue beinggenerated. While a conservative approach, this practice will help alleviate liquidityconcerns and ensure free cash flow for the startup phase of the business. ALL RELATED FINANCIAL DOCUMENTATION CAN BE FOUND IN APPENDIX 7 Page | 29
  31. 31. MilestonesBelow is a high level summary overview of financial projections for years one through five.Year One: eK-12 projects a net loss of -$502,996 in the first year. This is due to heavy development in Momentum and no significant revenue for the first nine months. The additional losses are also attributed to the high startup costs of the business.Year Two: eK-12 projects a net loss of -$178,670 in year two. As you can see from the balance sheet and income statements, our pilot program with Wayzata is generating revenue, along with the addition of two more schools. We have also increased the pricing of Momentum by 10% in year two.Year Three: eK-12 projects a net profit of $272,770 in year three. Three more schools have been added to the revenue stream and Momentum has appreciated in value by 25%, due to the added value of the data that has been collected. eK-12 added five additional employees in marketing, development, and administrative positions in year three.Year Four: eK-12 projects a net profit of $1,045,906 in year four. An additional three schools have been added to the revenue stream. Assuming that eK-12 has defined itself in the marketplace and the original sunk costs of the startup have been absorbed.Year Five: eK-12 has projected a net profit of $1,382,084 in year five. Another additional three schools have been added to the revenue stream. Operational efficiencies have been realized, which are lowering our operating costs. The five principle members of the organization are now fully involved in the business while drawing higher salaries. Page | 30
  32. 32. Management and OrganizationOrganization - Members As an LLC, management will consist of eK-12’s five founding members. Each memberwill be responsible for key components within the organization, although all members willshare in sales and as needed areas of responsibility within the company structure. Keyaspects such as software development and accounting will be an outsourced activityperformed under contractual guidelines.Leadership Peter Meyers (President): Peter is currently the VicePresident of Client Engagement and Service Delivery for SIRVA Inc.His background includes nearly 20 years of professional experienceranging from corporate America to entrepreneurship that enabledhim to participate in the creation of three different companies.Peter’s main skill sets range from leadership, operations, marketingand account management. Peter has been involved in multiple industries, but has alwaysfocused on the transference of data to meaningful information for customers. He bringsstrategic simplicity to complex business matters. For eK-12, Peter will serve as Presidentand be responsible for overall management and strategic direction of the company Andy Sorenson (Vice President): Andy is currently anEngineering Manager for Donaldson Company, Inc. Hisprofessional experience consists of over ten years in engineering forthe Donaldson Company and Stratasys Inc. With that experience,Andy has always been focused on leadership, productivity, andefficiency. Andy is critical to the success of this company inensuring all deadlines are met and time is well spent, while alwayskeeping a strong focus on the customer and ensuring satisfaction. For eK-12, Andy willserve as a Vice President and be responsible for overall management of operations and Page | 31
  33. 33. overall project management. His main goal is to ensure company values and goals areconstantly moving forward and always on task. Robert Schmaltz (Vice President): Robert is currently theDirector of Information Technology for Roxbury CapitalManagement. His experience consists of over 18 years as an ITprofessional. Robert’s skill set ranges from network architecture,enterprise deployment technologies, software development, serverand infrastructure support; followed with budgeting and datamanagement. Of those 18 years Robert has worked for Rockwell-Collins, Best Buy,Stratasys, Metro Machine and Engineering, and Roxbury Capital Management. During hisprofessional career Robert has over 10 years of leadership experience. With eK-12 being atech company mixed with education, Roberts experience is critical in all product life cyclesand company goals. For eK-12, Robert will serve as a Vice President and be responsible forall data management, software development, and ongoing IT support. Amanda Klein (Vice President): Amanda is currently theDirector of Marketing and Strategy for Star Exhibits. Amanda’sprofessional experience consists of over 10 years of advertising,marketing, sales, idea generation and public speaking. Amandahas worked with a variety of technology consulting and advertisingfirms across the Twin Cities ranging including N’compass,Touchpoint Media, and Star. Amanda brings essential creativity, innovative and marketingacumen that will help drive eK-12 into the future. Her presentation and relationshipmanagement skills are world class and make her an essential member in this LLC. For eK-12, Amanda will be responsible for marketing strategy and activities. Her duties will includemarketing campaigns, ensuring that eK-12 is on the leading edge of technology. Amandawill also be responsible for customer service and account management. Ryan Jaeger (Vice President): Ryan is currently a Business Banking officer for USBank. Ryan’s professional experience consists of over four years in the corporate bankingworld ranging from account management, sales, and finance. In the four years of his Page | 32
  34. 34. development, he has worked for Aerotek and US Bank NA. Bothareas constantly being promoted at a rapid pace and trulyunderstanding the business goals and needs. Ryan is a truerelationship builder/provider for all clients and internal employees.Ryan brings a level of expertise in finance that many people don’thave. His knowledge of key ratios, business leverage, and cash flowcalculations are extremely critical to any long-term success that eK-12 will have. For eK-12, Ryan will serve as a Vice President, responsible for key accountmanagement and overall sales. His goal will be to have a balanced focus on bringing innew clients and growing existing ones. Responsible for all customer service requests asneeded in the initial stages of the business, as Ryan will later shift his focus to full financialoversight.Advisory Board The main deficiency in the eK-12 founding member’s strengths and attributes is theirlack of knowledge and involvement in the educational process and system. To buttressthese weaknesses, eK-12 will form an advisory panel that will help drive these initiativesand bring credibility to the process. eK-12 envisions that this advisory panel would becomprised of the following:  At least one individual that is extremely well versed in data compilation and analysis  At least two different district superintendents that are versed in curriculum changes  A strong mix of individual front-line educators with varying tenure.  High caliber teachers that have displayed “excellence” amongst their peers  A seasoned Parent Teacher Organization (PTO) representative  A member from a well-established and respected curriculum providerMarketing PlanCompany Message“Maximizing genius through technology infused education” Page | 33
  35. 35. The eK-12 Brand The eK-12 brand is the visual look and feel that reflects the tactical attributes of thecompany. As a technology-based company that interacts with the creative minds withinschool systems, the brand will be simple, colorful, and reflect excellence and aspirations ofeducational institutions. This technology made simple approach will be easy to understandby the use of visual diagrams, touch screens, and large engaging images that appeal to theend-user.The eK-12 Approach This idea for a company started with a group of colleagues that were impacted dailyby the school system, be it teachers, parents, or students themselves. Concerned for thefuture of education, and feeling trapped with the desk and lecture approach, eK-12 askedthis simple question… What if? This thought process evolved into eK-12’s business plan.This company is built with a strong foundation of passionate people with the desire to makea difference and change the way of thinking about education. This new approach includesthe following points of differentiation in thought leadership, offerings, and technology anddata supported curriculums.Thought Leadership The more eK-12 can teach the smarter eK-12 looks. The smarter eK-12 looks, themore schools (clients) will want to work with the company. The people and network of eK-12 believe they can be a valued resource to school districts faced with complex decisionsand challenges. To obtain thought leadership, marketing content will utilize white papers,case studies, webinars, and mobile learning centers that feature the proprietary Momentumsystem.Expansion of offerings eK-12’s on-line product catalog enables districts and schools to confidently engagethe company from beginning to end on a project. With IT services and technology basedcurriculum delivery, the company has the ability to not only implement the software, butcustomize the use for maximized efficiency. eK-12 can advise schools on smart andinnovative hardware solutions that will meet the need for the school, grade, or classroom. Page | 34
  36. 36. Technology & data supported curriculums The method and approach at which people learnbest varies amongst students. The traditional teachingmodel does not maximize technology in the classroom.Often times, tablets such as Apple iPad’ s or MicrosoftSurface’s are tested in the classroom environment, bysimply having a few available to use. They are not tiedto the curriculum or individual lesson plans assubsequent devices. eK-12 believes in introducingtechnology early, as it will be something the learner willexperience throughout their entire life. The proposed technology uses electronic lessonplans and individual assessment software on a tablet of another device to participate inclassroom learning. The results and feedback of the individual learning is then logged,stored, and kept for further development. This research brings assurance and assistanceto methods of teaching as the data will indicate the level of comprehension of the studentfor all those who play a role in this person’s educational future.Marketing TacticseK-12 distinguishes itself from its competitors with a better understanding of the needs ofthe end user. The selected marketing activities were chosen with purpose, as the companybelieves the following identified methods and mediums reach our audience and target theirneeds as a potential consumer of Momentum. The previously highlighted points ofdifferentiation and usability examples will be the motivation of the company’s marketingtactics. eK-12’s marketing will target the largest selling points of teachers, administrators,and students utilizing insights that were gained through interview research. (Personalcommunication, August, 2012) These include:  An opportunity to better the learning experience  Bridge the gap of curriculum, lecture driven teaching and technology in the classroom  User friendly  Monitors progress and reports with date driven results Page | 35
  37. 37.  Exciting and easy to use  Ability to sample the product before purchase  Competitive pricing  Create a culture of learning on each individual device  Highlight features beyond what is already being usedOffline Marketing Tactics eK-12 has identified several tactics to market the product and service offerings. Inthe first two years, sales and marketing will drive to expand into the marketplace throughmultiple channels of communication. Content, collateral, and PR will be the responsibilityof the CMO. An annual marketing budget of $27,805 has been accounted for in thefinancials section to meet those needs.MARKETING TACTICS AND ADDITIONAL UPFRONT EXPENSES ARE HIGHLIGHTED IN APPENDIX 3.Online Marketing Tactics eK-12 will make an aggressive effort to drive web site eK-12 will refreshtraffic measured in terms of monthly clicks. The web site will web site content on aserve as the hub of information from other social sites, daily basis byvideos, and training materials. The company believes a high displaying casepercentage of clients can be found on the web, and for that studies, testimonials,will maximize online capabilities. Even though teachers are white papers, andactively involved in the classroom and not in front of the webinar recordings.computer but 1-2 hours a day, they do search for credible This information willsources and ideas through sites such as the school websites, be pushed throughblogs, Twitter, and Pinterest. eK-12 will refresh web site an electroniccontent on a daily basis by displaying case studies, newsletter sent totestimonials, white papers, and webinar recordings. This clients once a month.information will be pushed through an electronic newslettersent to clients once a month. Between the skill sets of the CMO and CTO, the development and functionality of eK-12’s online market will be created in-house, saving the company approximately $60,000 for Page | 36
  38. 38. web site creation, $15,000 for the Email Newsletter based on Twin Cities wide distribution,and $67 for website hosting fees. In future years, the company will have developed a formal website strategy inclusiveof a search engine optimization plan. These plans run anywhere from $15,000-$25,000 ayear depending on their complexity. Online strategies will allow eK-12 to rank high insearch systems such as Google, Bing, and Yahoo when key words are used as a searchsuch as, “tablet learning in the classroom” or “technology and standardized testing.”Strategic Partnerships eK-12 will pursue multiple strategic partnerships in the areas of technology andcontent as a way to control costs and utilize the latest in available technology. In thetechnology space, Microsoft Bizspark is an outstanding strategic partner. MicrosoftBizspark is a free program for startups that offers software, support, and visibility. Theglobal program helps software startups by providing software development tools, technicalsupport, and access to over 2,000 other partners involved in the technology space(Microsoft, 2012). The available software is: ASP.NET, SQL Server, Visual Studio, Windows7, Windows Azure, and Windows Server. The program offers three free years of softwareaccess based upon criteria that eK-12 easily qualifies for. The program requires partners tobe developing software, privately held, be in existence less than 3 years and make less than$1 million in annualrevenue. This partnershipwill function like a freelicensing arraignment formutual advantage. While Bizspark provides access to software and other technology partners, eK-12 willalso pursue a strategic partnership with Microsoft Corporation. Microsoft is attempting tomake in-roads into public education. eK-12 can partner with Microsoft on hardware to testand implement during its pilot program. Lastly, in regards to technology strategic partnerships, eK-12 will make significantefforts to partner with the major players in educational curriculum. These partnerships are Page | 37
  39. 39. critical to the success of eK-12, as part of the proposition we will make to those curriculumproviders. Essentially our business model, if successful, will drastically change the waythat curriculum providers generate content. Shifting to an electronic delivery medium willresult in a loss of revenue by selling textbooks. We will be able to provide curriculumproviders a steady residual revenue stream by converting textbook revenue to digitallicensing agreements. eK-12 will collect on this revenue and make a monthly payment toeach curriculum provider, while marking up and retaining a 30% profit margin.Sales StrategySales Force During the pilot phase, the five founding members of eK-12 will serve as its initialsales force. Each brings a relationship building orientation and sales experience that willallow eK-12 to control costs and direct funds at initial software development. As themembers are equity focused and will not draw sales commission, the sales efforts will notbe incentive based beyond agreed upon compensation and actual ownership. The salesactivity will be closely tied to the previously described marketing elements. The memberswill work tradeshows, network with school boards, and attend educational events to spendtime with teachers and administers.SEE APPENDIX THREE FOR TARGETED MARKETING ACTIVITIES THAT WILL REQUIRE ATTENTION .Sales Cycle According to a personal interview will Bill Kuendig, an educator in the WayzataMiddle School system, the US school system in general makes the majority of systemchanges and upgrades during the summer months to avoid disruption to the educationalschedule. Maintenance, lesson plans, and related technical processes will occur mostlyduring the standard September through June period when there is the majority of usageamong students. Page | 38
  40. 40. Operations Plan eK-12 estimates that the initial software development work andaccompanying viable prototype program elements will be completed inapproximately six (6) months after launching the business in January 2013.This timeline projection is based upon prior experience in softwaredevelopment cycles that multiple founding members have participated in.The prototype is imperative to have as a sales tool and will be a criticalbuilding block in the sales process to help convey the impact that ourMomentum system will have on the educational process and system. Toreduce risk in the development process, the leadership team decided to provide a physicalworking space to house its initial development work. The most obvious concern is aroundprotecting the intellectual property of the proprietary software system, and the membershipbelieves that a controlled environment will minimize the possibility of a security breach eK-12 will lease a physical office space located at 36 Main Street W, Waconia MN55378 to house necessary computer servers in a temperature and humidity controlledenvironment. This installation will create a scalable solution from which eK-12 can deploytheir data center and some small office space. Renovations would require the installation ofsome additional walls, A/C equipment, and additional power carrying an estimated cost of$31,710. The physical space is located just outside of Minneapolis in a location that offers easyaccess to the southwestern suburbs, but at significantly less expensive pricing than wouldbe found in closer proximity to the city. Since the majority of the work will be done onsite,and services will be delivered via the web, the location keeps expenses low but maintainsflexibility. Page | 39
  41. 41. Exhibit 7: Proposed floor plan in rental space (after renovations) Exhibit 8: Waconia location in relation to Minneapolis Metro Page | 40
  42. 42. : Exhibit 9: Rental space in downtown Waconia Exhibit 10: Business front at 36W Main Street Waconia, MN Page | 41
  43. 43. The first six (6) months, projected to start January 1st, 2013 and commencing June30th 2013, will be devoted to software development. The leadership team will implement astage gate process that will allow clearly defined goals and established milestones along theway, to ensure that the progress is directed properly at the desired end result. The goal is afunctional prototype to allow the projected pilot to launch for the 2013-2014 school year.eK-12 will continue to use a stage gate process through their business cycle to ensurecustom projects and needs for schools are attended to, without any surprises at the time ofdelivery. Upon future expansion, it is understood that each and every installation will beunique. This stage gate process provides a development tool and establishes deliverables toreduce rework. Once a purchase order is received and Momentum is installed, key membersfrom the respective school boards that eK-12 is doing business with will join in the stagegate process. It is assumed that most of the project definition work will be done during thesales cycle, allowing time on the back end to complete any other necessary elements..Below is a high level example of the stage gate process and the key deliverables that areexpected within each stage. Page | 42
  44. 44. Stage Gate Layout Since eK-12 does not physically manufacture a product, issues surroundinginventory, production control, manufacturing capacity, supply, and distribution areminimal. However, part of the technology development plan will contain a rigorous qualitycontrol plan and ensure that the testing performed on individual development projects areadequate to fully qualify a product for release. Ongoing testing throughout all phases ofproduct development and installation will unveil answers to processes that may needattention or improvement From a lights-on perspective, the Vice President of Operations will handle all of theday-to-day activities associated with maintaining the physical facility. For the first one tothree years, this office will support software developers and computer servers. Activitiessuch as building maintenance, cleaning, and upgrades will be handled by internal Page | 43
  45. 45. personal. Once the space expands and revenues can support additional resources, theywill be handled either by additional direct hires or outside contractors. Those decisions willbe made based on the current financial position, when deemed warranted by the leadershipteam. In addition to the duties stated above, the Vice President of Operations will also takeon the role of directing our field service and installation employees. Activities surroundingthese individuals will include: taking and fielding technical service calls, scheduling andcoordinating on-site installation, and troubleshooting activities. Additionally, coordinationof any warranty claims on both the software and the service side of the business will behandled by the operations team. From an order fulfillment standpoint, the Vice President of Finance will serve as thehead of accounting. Within those departments would be accounts receivable and accountspayable. Initially, the Vice President of Finance will act alone in these roles dealing withboth our suppliers and customers in terms of payment. The books will be kept using aproduct such as Quicken, or something similar, until a more rigorous ERP system such asOracle is required to do business. In all actuality, these functions will be limited at thestart, and will further expand as the business grows. As the need requires, additional staffwill be brought in to help fill these roles. The Vice President of Technology will be directing and managing the custom softwaredevelopment process. The initial plan is to bring on a seasoned software developer as acontract employee to assist in the first generation of software. While the Vice President ofTechnology takes on the task of developing the mobile applications, the other developer willbegin the web development and desktop application that will be necessary to house thedata. If additional capacity is needed, eK-12 will use tightly managed contracts andoutsourced IT resources. All software developed will be fully owned by eK-12 and two (2)year non-competes and non-solicitation restrictions will be required for all contractemployees to maintain our competitive advantage. It will be up to the leadership team todetermine what work can be outsourced, without compromising the IP position. The last piece surrounding the operational plan would be centered on contingency andpandemic planning. The Vice President of Technology will be responsible for developing Page | 44
  46. 46. and deploying a contingency plan that will allow eK-12 to remain operational should acatastrophic event occur and wipe out the facility. Insurance quotes have been obtainedand are located in the financial section of this business plan to replace the physicalinventory of servers and office equipment. Additionally, a nightly backup to the Amazon S3cloud will be utilized to ensure that server storage remains intact.Technology Plan eK-12 is a technology delivery, assessment, anddata company. This hybrid state means that it needs toexist at the forefront of the industry to be successful. Inorder to support their education enhancement mission,the technology plan will seek to keep eK-12 constantlyinnovating while refreshing infrastructure on a regularbasis. Additionally, the assessments conducted will beused to further new avenues of inquiry, build evidence-based curriculums, and enhance the digital deliverysystem (Momentum). eK-12’s technology needs are a large portion of the fixed operating costs. Servers,software, and the facilities necessary to support them will consume the majority of thetechnology budget. This is why eK-12 has broken our technology expenses intoinfrastructure and employee issued equipment.Infrastructure The infrastructure represents both direct revenue generating production equipmentas well as non-revenue generating internal use technology. eK-12 believes it is important tooperate on the same technology as their customers. They will utilize the same tools,software, hardware, and cloud services used to support their clients. In common parlance,eK-12 believes it important to “eat our own dog food.” During the startup phase, eK-12 will Page | 45
  47. 47. have a reduced physical footprint with a small number of servers, hardware, and softwarewith estimated startups costs of $213,540.SEE APPENDIX 2 FOR A MORE DETAILED BREAKDOWN OF INITIAL EQUIPMENT NECESSARY ,CONSIDERED , AND QUOTED . The specified equipment installation detailed in Appendix 2 will create a scalablesolution from which eK-12 can deploy their products. Due to the controlled environmentrequirements of a datacenter, a suitable physical location has been identified to meet thoseneeds and is further discussed in the operations section of this plan. The space identifiedis of sufficient size that can host both a datacenter and some small office space at amonthly rental rate of $1,200. Some renovations will be required, including the installationof some additional walls, A/C units, and some additional power and backup generators toensure uninterrupted server functionality.Employee Issued Aside from the datacenter hardware needs discussed earlier, each employee will beissued a phone, PC, and tablet for their professional work use. At all times, eK-12’s staffwill operate in much the same way that they expect their educational partners to work.The software development team will utilize desktops equipped with multiple monitors andsoftware specific integrated-development-environment (IDE).Intellectual Property and Contracts eK-12 will construct the company to reduce risk and likelihood of legal issues inintellectual property and contracts. Momentum will become a registered trademark of eK-12, LLC. As the delivery and assessment software represents unique intellectual propertyand is key to eK-12’ s lasting competitive advantage. Additionally, eK-12 will utilize writtencontracts with schools (customers) and suppliers (vendors) and clearly identify theexpectation of all parties involved in the business relationship. eK-12 estimates that thislegal protection will require a $15,000 investment and provide lasting value to theenterprise. Page | 46
  48. 48. Risk Assessment There are a number of risks associated with a business of …a huge competitive this type, scope, and scale. The educational system is advantage will be constantly evolving and very difficult industry to penetrate. awarded to the The industry as a whole is extremely resistant to change. eK- company that 12 is proposing a complete revamp of the current educational reaches the market model that exists today and the company anticipates first. The intent is to resistance. be an industry driver. Secondly, education is a strongly competitive environment.Another competitor could mimic eK-12’s approach. It is very possible that someone else isalready a year or two into a very similar development process. First mover advantage iscritical with this business venture and someone else that launches a similar idea prior toeK-12’s could trump the work. That is not to say that there is no room for multiplesolution providers in the industry, but a huge competitive advantage will be awarded to thecompany that reaches the market first. The intent is to be an industry driver. Funding is a current and future obstacle. The personal funding that will be raised bythe founding members will give eK-12 a good start to begin the development work. Abusiness model that does not immediately start generating revenue is of high concern, butthat work is necessary to build excitement and interest within the industry. That prototypetool will not only generate excitement amongst the customer base, but will also beextremely valuable within the investment community. Finally, since this change is so dramatic in relation to the historical model, there willbe opposition from the current generation of parents. There is a risk that too muchtechnology integration could hinder a learner’s social interaction with others, and obstructtheir natural creativity. This risk and concern needs to be taken into account during thesales process and other developments eK-12 is prepared for, to ensure there is a “balancingact” of developing a healthy mix. Page | 47
  49. 49. An Overview of the Competition eK-12 completed a thorough competitive evaluation to understand their product andservice capabilities. For the purposes of this business plan, eK-12 primarily focused oneducation software. The top companies were selected to compare and analyze with as eK-12believe this is a learning opportunity in the growth of Momentum.Competition – Companies Scholastic is a global book publishing company known for publishing education materials for schools, teachers and parents.Scholastic has grown its business most recently by acquiring other media companies,including Read180, Education Product Information, Soup2Nuts, Reading Counts, and TomSnyder Productions. As a whole, the company capacities include a comprehensive systemof curriculum, instruction, assessment and professional development (Scholastic, 2012) Pearson Digital Learning is a leader in curriculum solutions for preK-12 grades. They are known based on proven instructional technologies in education. With their product offerings of Waterford, SuccessMakerEnterprise, KnowledgeBox and NovaNet, they offer a variety of services to school systems.They invest in computer-based instruction, development in preparation for high-staketesting, digital learning systems in reading, math, science and social studies (Pearson,2012) Renaissance Learning is a technology-based school improvement and student assessment program for K-12 schools. Renaissance Learning’stools provide daily formative assessment and periodic progress-monitoring technology toenhance core curriculum, support differentiated instruction, and personalize practice inreading, writing and math (Renaissance Learning, 2012). Page | 48
  50. 50. Archipelago Learning is a subscription-based software as a service provider of education studies used by over 14 million students innearly 38,700 schools throughout the United States, Canada, and United Kingdom. Theirdigital supplemental product suite uses technology to transform education. Their goal is tomake rigorous learning fun, engaging, accessible, and affordable. The companys corebusiness, Study Island, provides standards-based instruction, practice testing, and othertools for students in Kindergarten through 12th grade. As of July, 2012 they purchasedanother education technology solutions known as PLATO Learning. PLATO was known foronline courses and standards-based assessments that accurately identify student needsand prescribe course study with interactive instruction (Archipelago, 2012) Scientific Learning Corporation is a worldwide company that strives to develop learners to their full potential. The company develops, distributes, and licenses technology that accelerates learning byimproving processing efficiency of the brain. Scientific Learning uses technology to teachlanguage, reading, and comprehension skills in public and private schools in the US and 45other countries. Flagship products include FastForWord, FastForLanguage, andFastForLiteracy software. This company is different from the rest, as it also sells directlyto parents. eK-12 targets this company as the closest representation to this business plan.Along with their education services, they also provide online consulting, web basedtraining, and remote technical consultants (Scientific Learning, 2012). Compass Learning is an expansive curriculum that covers every grade, and every course, including advanced placement, collegereadiness, ELL/ESL, gifted and talented to response to intervention students. They focuson empowering teachers by providing a wide range of support services to provide apersonalized learning experience (Compass Learning, 2012). See Appendix 1 for more specifics on the competitive landscape. Page | 49
  51. 51. Competitive Position eK-12 will offer the ability to integrate technology and improve learning opportunitiesthrough a unique delivery system, assessments model and data driven results for to betterthe learner of today and tomorrow. This platform combined with established curriculumsprovides the flexibility for real time electronically delivered product updates. Through theMomentum delivery system, teachers and students will willing adopt technology as morethan just a device but a resource to addresses the immediate need in schools today. There will be a new product learning curve when introducing Momentum, because ofthe drastic shift from traditional paper delivery system to a technologically rich deliverysystem. Through eK-12’s marketing and sales efforts, the company will first strive to beinvolved in a pilot program in schools and eventually become a necessity that complimentsthe learning style of students today. Competitors that are expected to be encountered mostoften include Scientific Learning, for the similarity of services, and Renaissance Learning asa Midwest regional company.APPENDIX 2 CONTAINS SPECIFICS ON THE COMPETITIVE REVENUE LANDSCAPEFuture Competition eK-12’s competitors are constantly evolving and expanding through investment byacquisition of other education programs and companies. A reasonable prediction of futurecompetition will be the company’s dependence on technology not textbooks to teachcurriculum. The companies who align themselves closely with a technology by partneringwith eK-12 will improve standardized tests and stand out amongst the rest. By focusing onindividual’s year over year performance, students are compared to their own progress andnot a “typical” classroom or school standards.Exit plans A predetermined exit plan is a crucial element to consider up front. The foundingmembers of eK-12 mutually agree that the initial $50,000 investment is critical to startingthis business. The first three years of major development and establishing the businessdoes not leave room or cash flow for an exit of any one individual. That original investmentmay not be recouped in any way shape or form during the first three years of business, Page | 50
  52. 52. unless there is a majority agreement decision to sellout to an interested party. If thatsituation happens to become a reality, a legal team would be involved to equally split theproceeds, and any opportunity to remain a part of the business would involve an individualpersonal negotiation with the buyout entity. Regarding investments made by outside venture capitalists, a percentage ownershipoption would be made available, taking into account that the founding members will alwaysmaintain a 51% majority ownership stake. An outside party, when warranted by investorinterest, will perform an annual valuation process as necessary. A legal team will also bebrought into the mix when that scenario comes up, to take into account current economicconditions, market interest rates, terms and conditions of any investment opportunity.Long-Term Development As with any new startup company, there is a high probability that a new andinnovative breakthrough in technology will trigger high interest from the industry, andbecome a takeover target by a larger competitor. In the future, after the business isestablished, the founders of the business would be open to a long-term strategicpartnership. eK-12 would consider the financial windfall that could come as a result of amajor player takeover and complete buyout. Page | 51

×