Voice from the Industry

REAL Value Creation, SPECTACULAR Results!

Dr. John Stuppy, CEO, EDUMETRIX — Friday, May 27, 2011

Want to sell your business for the most money? Or hit aggressive sales goals and be a rock star? There’s no faking it— to excel (unsurpassed growth) or sell (great exit), you must plan ahead and execute in the present. There’re some highly effective but little known strategies we’ve found that help our clients in these critical areas:

  • Funding
  • Growth
  • Exit

We’ll share some tips to help you better achieve your goals.

Lessons Learned From the EDUMETRIX EdNET Class of 2010-2011

EdNET is the premier industry networking and deal-making event. Last year we went to the Boston EdNET to reconnect with old friends and engage clients— the EDUMETRIX EdNET Class of 2010-2011. In the ensuing months, we used proven strategies with our “class” and learned some new ones along the way. The result… record-breaking exits, great growth stories, and well-funded starts!

Read on for seldom used but effective strategies to raise money, fund and finish product development, build lucrative sales channels, avoid the partnership trap, and position your company for the best possible exit. We’ll look at a few real case studies (we’ve changed the names) to demonstrate winning strategies and share “lessons learned.”

FUNDING

Do you require funding to finish product development? Or do you need a war chest to bring on great salespeople; market above the noise; or acquire businesses, tools, and technology?

Client Case Study #1 – Funded Development

Mary had a great idea for supplemental math and science software. She completed some modules but knew she needed money to fill out the product. Mary didn’t have any equity to sell.

Solution: We put Mary, her passion, and demonstration modules in front of potential buyers. We found a small DOE willing to prepay for the product, thereby covering all development costs.

Result: Mary finished the product, had credibility, a showcase account, and a super reference. She also had free reign to sell the product everywhere else.

Client Case Study #2 – Strategic With Benefits

Seth had a great education platform idea. He bootstrapped product development and proved his sales model in test sites. Now he was ready to take this to the world but needed a substantial war chest for marketing, distribution, and licensing.

Solution: We identified and introduced the best-fit strategic venture group for Seth’s product space— one that could also open sources for commercial products that could work on Seth’s platform.

Result: Seth got his war chest and several top-brand products to push through his platform. He’s off and running!

Other Funding Tips

  • Fund for NOW – When someone says something like “In three years, there’ll be no printed textbooks,” you should be thinking, “Interesting! But let’s see in three years if you’re right!” It’s risky for a funder to bet on technology, costs, or market trends that don’t exist now.
  • Your Products or Services Must “Fit” – You mustn’t require customers to adopt practices that run counter to the way people are willing or able to work today. This goes quadruple for classroom teachers!

GROWTH

Serving more customers, selling more to existing customers, increasing profitability— these are ways companies compete, gain market share, and create corporate value. Do you have a way to hit aggressive sales targets? Here’s a way:

Client Case Study #3 – Use Elephant Hunters

Kathy’s company developed an effective educational game. She had good success selling to smaller districts, but she found it impossible to get into big ones. We hear it a lot now— “Big districts don’t buy from the little guy.” They prefer to buy from well-established, solution-oriented companies.

Solution: We found a trusted high-volume sales channel that focuses on large district opportunities and got Kathy’s product included in a half dozen large RFPs.

Result: Over $1 million in signed orders in six months… and counting!

Other Growth Ideas

  • Treat Buyers and Users Differently – In the education world, your product and service users are usually not buyers. Be mindful to separate your messaging and pitch the appropriate features and benefits to the right group.
  • Don’t Partner Away Success – Partnerships too often miss the mark. Have you ever inked a partnership deal that didn’t go anywhere? You put out a press release announcing how excited both you and your partner’s CEOs are about the new venture and then…nothing! Today, a lot of your thinking should go into what’ll make for a successful partnership or sales representation program that produces results.
  • Strategic Opportunity Map TM– We find it useful to investigate the market need and competition, product/service, differentiation, cost-benefit model, and other factors. We then create an “SOM” report that prioritizes the hot buttons to focus on and what gaps or weak areas to shore up.

EXIT

Selling your business is easy. What’s hard are the preparation, “unfair advantage,” and track record of success you need to command the best valuation! But we know what’s “on the test,” and you can and should be prepared. What’re your strengths? What’re your gaps, and what gaps you can fill if you want in a reasonable time? Don’t think of “Exit” as a point in time but a smart process leading to that point.

What’s the ideal exit? There’s no perfect formula, since the ideal package is a combination of financial and non-financial parameters each seller must decide for herself. But realize the best exit might come after 6 to 18 months of work to maximize strengths and overcome weaknesses.

Other Exit Tips

  • Certified Exit Planning Advisor (CEPA) – If you exit, consider using a CEPA professional to help you (a) put more money in your pocket— not just on the table— and (b) help you understand what’s important to you overall— financially, lifestyle, transition, etc.
  • Do an Exit Readiness and Exit Attractiveness Analysis – How ready are you to sell? Are weaknesses worth addressing now for the potential of a higher exit compared with the risk of waiting and industry, sales, organizational, and competitor factors? How attractive is your business to a buyer?
  • Valuation – Long before you sell your business, you might want to get a baseline valuation of what your business is worth as well as identify ways to build value for the future.

Report Card

To launch, grow, navigate competitive waters, and exit takes planning and execution throughout your business life cycle. We believe we and our clients should be measured by results, and that plays out well for funding, growth and, where desired, the road to exit.

Hopefully some lessons learned from the EDUMETRIX EdNET Class of 2010-2011 have given you ideas you can take to the market…and the bank!

I welcome your comments. For a list of the “Top 10 Mistakes Owners Make When Preparing to Sell a Business,” send an email to john@edumetrix.com.

Strategic Opportunity Map is a trademark of EDUMETRIX, Inc.

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John Stuppy is CEO at EDUMETRIX. His expertise is helping for-profit education companies raise money, grow, dominate, and prepare to exit. He identifies game-changing, under-the-radar opportunities and creates maximum market power and value. Previously, he was president of start-up TutorVista.com, helped raise $30 million from top-tier VCs, and achieved 825% compound annual growth to create the world’s largest online tutoring company. Pearson acquired TutorVista. John was the CIO at the Princeton Review and earlier held senior positions at ETS and Sylvan/Educate, where he pioneered online tutoring and earned 21 patents. He’s skilled in operations, sales, marketing, product design, online learning, and business development. John has been featured on ABC, CBS, NBC, and in The New York Times and TheWall Street Journal as a noted expert on education. He earned a B.S. degree in biological sciences and a master’s in curriculum studies and teacher education at Stanford University, an MBA in marketing, and a Ph.D. in education policy from UCLA. He may be reached at john@edumetrix.com.