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Friday, July 27, 2007

An Entrepreneurs's Guide To Starting A Charter School

http://www.uscharterschools.org/facilities/fac_dev.htm

Introduction

Facility
Development

Needs
Assessment

Site
Selection

Construction/
Renovation

Appendix A
Appendix B
Appendix C
Appendix D
Appendix E

In many ways, charter school operators are entrepreneurs. Entrepreneurs starting a new business venture prepare a written plan to communicate their vision and to create a roadmap for realizing that vision. A business plan helps evaluate opportunities, set goals and standards, and implement ideas.

Charter school operators have a vision for the organization they wish to start and for the results they wish to obtain. They need to mesh this vision with the everyday mechanics of running a school - i.e., getting funding, operating a facility, supervising staff, and, of course, educating students.

A business plan is a key tool in which every operator should invest. The business plan communicates the school's objectives to the board, staff, funders, outside consultants and anyone else who may need to understand what the school is about. The business plan enables school operators to work out problems on paper that could be costly to fix in real life. It describes the school's strategy and how the school intends to achieve its goals. It sets standards for quality and performance and provides a useful benchmark for measuring the school's progress against its stated goals and objectives. When a school's operating environment changes, the business plan will also enable charter school operators to revisit and possibly redefine their objectives.

The business plan should be prepared by those who will be charged with its execution. The principal or board president should be heavily involved. Input should be gathered from as many stakeholders as possible, including parents, staff, chartering authorities, and potential investors.

Unless your chartering authority specifically requires a business plan as part of your charter school application, your application is not the equivalent of a business plan. While parts of the charter application can be used in the business plan, the business plan itself should be a separate document. This is particularly important since some elements of your school may have changed since you first received your charter. The business plan should focus on all aspects of your program outside of curriculum. The business plan is a tool for you to plan out the nuts and bolts of operating your school. Use your plan to go beyond your charter application and work out the nitty-gritty details of running a school.

Great! You're one step ahead. If you are pleased with your business plan, go on to Section III: Needs Assessment, on page 11 of this guide. If you are uncertain about some aspects of your business plan, or if a great deal of time has passed since your business plan was prepared, you might want to review this section anyway. Remember, business plans should be living documents that are updated on a regular basis as conditions change.

Facilities planning is an integral part of the business plan. All the aspects of the school - the number of students, number of staff, level of funding available, expected growth, etc. - will determine the type of facility needed. In return, the physical space of the school will affect the education and services provided - depending on the comfort level, space, accessibility and costs involved. The business plan can help guide the selection of the best available facility, and help the school anticipate the ramifications its physical space will have on its operation.

A business plan need not be overly complex or long. As mentioned, parts of the charter application may be adapted for the business plan.

The following is a suggested outline for a charter school business plan. Operators will want to modify it for their specific needs. Each section will be discussed below.

a. Mission Statement
b. Instructional Focus and Goals
c. Governance

a. Logistics
b. Administration
c. Physical Plant
d. Security

a. Needs Assessment
b. Short-Term Facility Plan
c. Long-Term Facility Plan
d. Site Description(s)
e. Contingency Plan

a. Operating Budget
b. Balance Sheet
c. Capital Budget
d. Cash Flow Proforma

A one to two page summary of the business plan should be included to give readers a quick overview of the school's business plan. It may be helpful to prepare this section after completing the rest of the plan.

This section should briefly describe the school, educational program and legal status.

a. Mission Statement
This describes the school and what makes it distinct from other schools (i.e., its competitive advantage).

b. Instructional Focus and Goals
If the school is using a special curriculum or theme for its educational program, it should be explained here. For instance, some schools emphasize a "back-to-basics" curriculum, or extended school days or school year. This section should include the goals of the school and how it intends to achieve them.

c. Governance
Summarize how the school will be overseen: by the founding Board, Board of Directors (if different from the founding Board), and any other advisory boards. Who has the authority to make decisions for the school and to commit the organization to different courses of action? Who can authorize the school to enter into contracts, to take on debt, to hire and fire staff? This section will refer to the school's Articles of Incorporation and By-Laws, which should be attached to the business plan.

If the school will be administered by a school management company, detail the roles and responsibilities of the various parties in this section.

Example of Mission Statement:
...to provide an engaging educational environment, which surrounds the child in a community of learners, who acknowledge and believe in the unique, yet dynamic nature of the human spirit and strive to foster and nurture the individual through meaningful and challenging opportunities in art, research, communication and science while collectively experiencing a Renaissance of the Mind.

The primary reason for the formation of a charter school is to better serve the needs of public school students and their families. In order to receive a charter, operators have to analyze the market for students and develop an educational program that is unique in some way. This is precisely what entrepreneurs do when starting a business.

Charter school operators should include in their business plan an explanation of why their program will attract students from other schools. How many students are currently in the area? Will the school target a specific part of this population? What percentage of the students does the charter school need to attract to make the school feasible? Why does the charter school think those students will come to its school? What needs will the school meet?

This section should include any marketing plans for reaching out to potential students and parents. These might include community meetings, radio/TV appearances or commercials, or flyers distributed in a neighborhood. If there is already a waiting list for the school, then this section should discuss how students will be selected (e.g., lottery).

The market analysis should also review the competition. What are the other public, charter and private schools in its jurisdiction? Understanding these issues will help the school plan its recruitment and retention strategy for students.

A market analysis might include:

Description of target students
Census of target students in target area
Description of marketing methods to be used, such as
- community meetings
- brochures
- posters
- ads on radio/TV and in print
- mailings
- press coverage
Description of competition (e.g., traditional public schools, private schools, and other charter schools)
If possible include the number of inquiries and letters of intent received as well as the number of applications sent

This section should lay out the reporting structure of the school, the process used in the selection of staff and the standards to be used in reviewing performance. An organizational chart should be included showing the lines of authority for the staff and board.

A management plan will summarize how the school will be managed day-to-day. What are the responsibilities of the principal, the key administrators and staff? If there is a business manager, what are his/her responsibilities? If parents are to play an important role in the management of the school, describe how they will be involved.

If the principal and other key staff are already on board, describe their qualifications. It is helpful to keep copies of resumes as attachments to the back of the business plan.

If the principal or other key staff have not yet been hired, the business plan should include the plan for recruiting these administrators, job descriptions and an estimated timeline for interviewing and negotiation periods. If a search firm will be used, those arrangements should be summarized.

If the school has contracted or plans to contract out major components of school management, this section should explain those contracts and the qualifications of the contractors (also in the Governance section).

This section should also include a discussion of financial management issues. Who will oversee this area? What policies will be followed? Who will record entries in a general ledger? How will invoices be tracked and bills paid? Who will oversee petty cash? What checks and balances will be in place to prevent fraud and other forms of mismanagement that can lead to charter revocation?

The business plan should also outline policies around staff performance standards and reviews. There should be a system for evaluating individuals, giving feedback and justifying salary increases or terminations. Staff training opportunities should be described especially as they pertain to improving accountability goals and standards.

If your state requires the school to have a certain percentage of certified teachers, you need to outline your plan for attracting these individuals. Since retention of qualified teachers is critical to a charter school's success, you need to describe the benefits and other incentives you will set in place to mitigate the effects of rapid turnover.

Management Plan should include:

Organizational chart
Job descriptions
Resumes
Recruiting plan
Details on subcontractors or educational management organizations
Financial management policies
Staff evaluation policies

Day-to-day operations of the school should be detailed in this section. Depending on the school, this could include many different items. At a minimum, the business plan should cover:

a. Logistics
What is the basic school schedule? When will students arrive? What will be the flow of traffic during the transition between classes (i.e., will students rotate or will teachers)? How, where and when will lunch, gym and library activities be held? When will classes be dismissed? Will there be after-school activities? What holidays will be observed? How will students travel to and from school? Is your school responsible for transporting students? What are alternative options if the most desirable plan does not work?

b. Administration
Who will be responsible for answering phone inquiries, receiving visitors, tracking attendance and filing necessary reports to regulating authorities?

c. Physical Plant
What is the plan for managing the facility? (If a facility has not been selected, then plan for this in a general way until your facility has been secured.) Who will perform repairs and maintenance? Who will install furniture and equipment? Who will provide janitorial services?

Section V will discuss how to manage construction and/or renovation to your facility. However, you should include in your business plan a summary of who will oversee this work.

d. Security
How will safety and security issues be addressed? Who will be responsible for these issues?

e. Technology
Will the administration and management of computers, phones, fax machines, Internet connections etc. be managed by a single individual? Will they be contracted out to a company? Include how these issues will be handled and where the responsibility lies for resolution of problems.

This is a "chicken-and-egg" dilemma for some operators. If no facility is identified when the business plan is being prepared, it can be difficult to complete this section. On the other hand, the business plan can be used to help the operator think through the facility needs of the school. Nonetheless, it is important to include as much information as possible about your "envisioned" or "actual" facility plan. At a later date, the business plan can be updated to include facility plans once a site has been selected.

a. Needs Assessment
Operators should include the results of a needs assessment in their business plan, even if a site has not been selected. Section III lays out the components to analyze, including square footage, classroom and other space, outdoor/parking areas, geographic focus, proximity to other institutions, etc.

Whether or not a site has been selected, the school should detail short- and long-term facility needs in the business plan. This will serve as an important reference when reviewing facility needs at a later date.

b. Short-Term Facility Plan
Although schools will ideally open in a permanent location, it is important to anticipate short term solutions to facility needs. This can provide a contingency plan if a permanent space is delayed, or buy the school some time before making a commitment to a permanent space. Short-term needs may be addressed for the first few weeks or months of school, or for as long as the first few years.

c. Long-Term Facility Plan
Operators should work out their long-term vision for the school and what types of facilities will be needed to meet them. Long-term facility plans should incorporate projected expansions in enrollment or programs. They should also include the financial impact of a facility, a plan for disposing of the facility if it becomes obsolete or if the school loses its charter, and ongoing maintenance or property management issues.

d. Site(s) Description
Once a site, or sites (if the short-term site differs from the long-term site), has been chosen, the business plan should be revised to reflect the specifics of the facility.

The site description section should detail the size, location and condition of the facility. A budget enumerating the costs involved in acquiring the facility and renovating it should be included. If additional funds are needed to secure the site, lenders or charitable funders will want to see a business plan and this section in particular. A timeline should also be included, estimating how long it will take to gain control of the facility and prepare it for classes.

e. Contingency Plans
The business plan must contain alternatives in case a proposed site becomes unavailable. Unfortunately, the most common facility problem for charter schools is the unpredictability of the real estate market. Too many charter schools have been plagued by facilities becoming unavailable at the last minute. If you prepare a business plan for only one reason, it should be to have a contingency plan in place for this dilemma.

The Importance of Planning
The importance of short- and long-term facility planning cannot be overemphasized. Many operators rush to open facilities, often creating significant financial and management burdens in the process. You don't have to open your school in a state-of-the-art facility on Day 1! Consider the full range of options available. Many schools have found that occupying a less-than-optimal (i.e., cheaper) facility for the first year allows the school's operations to stabilize and the school's financial assets to accrue - allowing the school to develop a better facility at a later time.

This section should include information on the financial health of the organization and projections about future performance. (See Section VI for further discussion.) The following should be prepared by the business manager or accountant:

a. Operating Budget
This spreadsheet should show the annual revenues and expenses of the school, and any resulting surplus or deficit. It must be approved by the Board. If estimates are used for any items, the assumptions used should be clearly noted. Projections of the budget for future years may be included, as well as a month-by-month breakdown of the current year budget. A model Operating Budget is included in Appendix A.

Once a school is operational, the finance staff should prepare a regular statement of activities or income statement, that shows the revenues received and expenses incurred in a particular period. Schools may be required to produce these statements monthly or quarterly. They provide one of the most important sources of information on the financial condition of the organization. If your school is operational, you should include the most recent copies of this statement in your business plan.

b. Balance Sheet
Once a school is operational, the finance staff should also prepare a statement of financial position, or balance sheet. This is a snapshot of the organization's assets and liabilities at a specific point in time. This is also a very useful tool for understanding the financial condition of a school and should be included in the business plan if available. A model balance sheet is provided in Appendix B.

c. Capital Budget
This budget is for the one-time costs of acquiring and/or renovating the facility to be used. This budget should be separate from the operating budget. See Section VI for more detail on preparing a capital budget. A model capital budget is included in Appendix C.

d. Cash Flow Proforma
This spreadsheet should show the receipts and disbursements of cash for the organization. It usually covers the organization's fiscal year and is broken down by months. This report is important because the timing of funds received may or may not coincide with the time the funds are needed. Therefore, a charter school may have an operating surplus (revenues exceed expenses) but a cash flow deficit (cash inflows may be smaller than cash outflows, perhaps due to the timing of the receipt of the per student allotment). This is an important management tool for operators, as well as something your auditor, lender or funder will need to understand. A model Cash Flow Proforma is included in Appendix D.

The business plan should include an appendix with relevant documents.

They might include:

Copy of the charter contract or application
Articles of Incorporation
Corporate By-Laws
Curriculum summary
Class schedule
Board of Directors list (include professional affiliations; indicate members who are parents of students)
Resumes of key staff
Other financial information

Business Planning in Four Steps and a Leap, Northern Initiatives Corporation, Marquette, Michigan (906-228-5571). ISBN 0-9646706-0-7
U.S. Small Business Administration's online resources at http://www.sbaonline.sba.gov/starting/busplan.txt
The Charter Friends National Network's website at http://www.charterfriends.org/ and its section on business planning http://www.csus.edu/ier/charter/bizpl.html.

Posted by: J / 12:09 AM

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Friday, July 27, 2007

An Entrepreneurs's Guide To Starting A Charter School