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New Business Models for Independent Schools Marc Frankel, Ph.D. – Senior Consultant, Triangle Associates (MO) Cynthia Berkshire – Trustee, Wildwood School.

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Presentation on theme: "New Business Models for Independent Schools Marc Frankel, Ph.D. – Senior Consultant, Triangle Associates (MO) Cynthia Berkshire – Trustee, Wildwood School."— Presentation transcript:

1 New Business Models for Independent Schools Marc Frankel, Ph.D. – Senior Consultant, Triangle Associates (MO) Cynthia Berkshire – Trustee, Wildwood School (CA) Charles Clark, Ed.D. - Headmaster Emeritus, St. Edward’s School (FL) Kevin J. Ruth, Ph.D. – President, Endowment Strategies, Inc. (DE)

2 For More Information  Click on “NAIS 2010 – Three Conceptual Models” OR OR  Click on “NAIS 2010 Intro Presentation” Contact Information Marc Cynthia Charles Kevin

3 Independent School Business Model Mission and Values Activities, services, programs Valued Outcomes

4 Pressures on Our Business Model (1) Reliance on ever-increasing tuition to support programmatic additions, competitive salaries, and small class sizes Reliance on ever-increasing tuition to support programmatic additions, competitive salaries, and small class sizes Competition from low- and no-cost providers Competition from low- and no-cost providers Less successful fundraising and lower investment returns Less successful fundraising and lower investment returns Tuition increases softening demand in a stagnant economy Tuition increases softening demand in a stagnant economy

5 Pressures on Our Business Model (2) Reduction in funding to schools Reduction in funding to schools Religious “inner soul” search and revival Religious “inner soul” search and revival “Media on steroids” hyping abundance of problems facing us “Media on steroids” hyping abundance of problems facing us

6 The Next Five Years Nominal investment returns Nominal investment returns Challenging endowment giving Challenging endowment giving Interest rates artificially low; predicted to rise Interest rates artificially low; predicted to rise Stricter selection policies enacted to regulate capital and tax-exempt bond financing Stricter selection policies enacted to regulate capital and tax-exempt bond financing

7 Is It Time to Change the Model? Consider How You “Do School” New delivery strategies New delivery strategies New technologies New technologies New teaching strategies New teaching strategies New focus on differentiated ratios for costing out school operations New focus on differentiated ratios for costing out school operations

8 An Unchanging Formula X t + Y s + Classroom = School X t + Y s + Classroom = School

9 How Do We Exit Baumol’s “Cost Disease” Model?

10 Analogy: Hotel Industry

11 From Here to There Schools need to change something fundamental fundamental within the business model… How we operate it

12 Our Business is Changing

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16 Higher Ed Growth in Enrollment

17 Growth in Enrollment by School

18 What Does It Mean? Concept Concept of location (physical locale) of time (school day, etc.) of school community Where Where efficiencies can be gained What What to start / what to end Sources Sources of programmatic innovation Various Various pricing models Differentiated Differentiated product delivery streams Teacher Teacher productivity

19 Three Questions for Leaders How do we keep the independent school “model” in the face of differentiated competitors? How might we refine (or re-define) our value proposition? How do we decide what is a mission- congruent way of changing how we do school?


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