Shepherd of the ValleyLutheran Church

University of Mary Fargo, ND

The Consultant Team Mark Fitzloff Team Leader Josh Kadrmas Statistical Analysis Gene Windhorst Statistical Analysis Steve Stenerson Market Analysis Peter Engebretson Market Analysis Matt Sagaser Finance Analysis Kresha Wiest Finance Analysis Patrick Rein Finance Analysis Paul Freeman Marketing Analysis Myra Very Chief Editor and Legal

Agenda Introduction & Overview Statistical Analysis Market Analysis Financial Analysis Legal Analysis Business Recommendations Conclusion

16%

2%2%7%

40%

3%

WELS

0.2%

30%

ELCA

Catholic

WELS

MO Synod

United Methodist

Presbyterian

Other

Unclaimed

F/M Metro Area – Religious Affiliations

Statistics-F/M Metro Area – Growth

Population GrowthSource: US Census

Year Fargo Moorhead West Fargo Metro Area

1960 47,000 N/A 3,328 106,027

1970 53,365 (+14%) 29,687 5,161 (+55%) 120,261 (+13%)

1980 61,383 (+15%) 29,998 (+1%) 10,099 (+96%)

137,574 (+14%)

1990 74,084 (+20%) 32,295 (+8%) 12,287 (+22%)

153,296 (+11%)

2000 90,599 (+22%) 32,177 (-0.4%) 14,940 (+22%)

174,367 (+14%)

2004(est.) 91,048 (+0.5%)

33,390 (+4%) 17,581 (+18%)

178,242 (+2%)

F/M Metro Area – Households

Household MakeupSource: US Census (2000) & City of Fargo

Fargo Moorhead West Fargo

Total households 39,268 11,660 5,771

Family households 20,724 (53%)

7,036 (60%) 4,091 (71%)

Non-family households 18,544 (47%)

4,624 (40%) 1,680 (29%)

Average size (household)

2.20 2.43 2.59

Median Income $35,510 $34,781 $44,542

F/M Metro Area – FamiliesFamily MakeupSource: US Census (2000) & City of Fargo

Fargo Moorhead West Fargo

Family 20,724 (53%) 7,036 (60%) 4,091 (71%)

Married Couple Family

16,407 (42%) 5,515 (47%) 3,308 (57%)

Female Householder, no husband present

3,078 (7%) 1,148 (10%) 572 (10%)

Average size (family)

2.91 3.04 3.09

Median Income $50,486 $49,118 $51,765

Table 2: Target Population - Children under the Age of 5 City # under age 5 % under age 5 Fargo 5,763 6.4 Moorhead 1,870 5.8 West Fargo 1,109 7.4 Total 8,742 6.3 Source: US Census (2000 Census)

Child Population

F/M Metro Area – Children

Market Research – Demand Common characteristics of

successful preschools:Smaller class sizes

15 – 20 students 2 teachers

Clean and bright facilities that are child friendly

Concerns on safety and security Strong academic emphasis

Market Research – Demand Highest market demand is for extended

daycare and preschools West Fargo currently does not have any

Christian preschools. Preschool will be the strongest point of

entry into the existing market.

Market Research – Strategy Word of mouth…

Positive or Negative Program directors

Competitive benchmarking Start the marketing campaign early in the

summer months. Use strong emphasis on the Christian focus

of this preschool.

Financial Analysis - Overview Revenue Expenses Breakeven analysis Risk

Financial Analysis – Revenue Recommended Tuition

Two-day/week session = $75/month Three-day/week session = $95/month One-time registration fee = $25

Non-tuition revenue options Planned giving, fundraising, donations, grants, and

Stewardship programmed monies.

No funding from a lending institution required

Financial Analysis – Expenses Start Up Cost - $8k - $10k

10 Students/SessionAnnual Revenue = $32k

Annual rate of return expected at 8%Annual Operating Expense = $31k

Break Even Graph - SOTV Preschool Program

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

0 5 10 15 20 25 30 35 40 45

Students

Re

ve

nu

e

Revenue

Total costs

Fixed costs

Linear (Total costs)

Linear (Revenue)

Linear (Fixed costs)

Financial Analysis – Breakeven Break Even is 8 students per ½ day

session

Financial Analysis - Risk

Squared

DeviationRate 2nd Year First Year Times

Probability Price Fixed Cost students NPV Probability

25% $994.50 30,223 52 $179,419 7,067,848,970

50% $765.00 43,175 40 $2,331 40,024,40525% $535.50 56,128 28 ($138,969) 5,643,540,252

12751413627

Expected NPV = sum, prob times NPV $11,278Standard Deviation = Sq Root of column I sum $112,922Coefficient of Variation = Std Dev / Expected NPV 10.01

Scenario

Best CaseBase Case

Worst Case

Legal Analysis Federal/State

ND Codified Law Title 15.1 Inspection, qualification, accreditation of facility Licensing of the teacher (B-3 license to supervise student teachers) Curriculum Nutrition

North Dakota Early Childhood Services Chapter 75-03-11 Teacher to student ratio for preschool is 1:11 (kindergarten is 1:20) Teacher’s aid qualifications General guidelines (safety, lighting, etc.)

West Fargo Ordinances Playground (east alley)

Requires 6’ wood fence Parking lot

Requirement of 1 space per 3 seats for church, or 1 space per employee of largest shift, or Demonstrate agreement with local agency

Business Recommendations Overall Vision

Preschool through 12 gradeExtended careSummer care

Business Recommendations Current Facility Issues

Maximum capacity of 40 studentsFull Christian Day School

Hard to compete against established public/private schools

Extra curricular activities, band, and sports

Funding would rely heavily on congregation

Business Recommendations Progressive 20 year plan

Capitalize on current demand: Preschool Maximize growth Efficient use of current facility

Not sitting empty during week

Allow for substantial growth from community Start small and grow at a sustainable rate Additional considerations

Before & After School Care Summer Care (year-round employment for teacher)

Business Recommendations Progressive 20 year plan (continued)

Timeline- 1-2 years: Preschool 3-5 years: Preschool – Kindergarten with extended

care 5-7 years: Preschool – Grade 5 with extended care 7-10 years: Preschool – Grade 7 with extended care 10-15 years: Preschool – Grade 9 with extended care 15-20 years: Preschool – Grade 12 with extended care

Business Recommendations Develop an Image

Name First impression

Customer’s will remember Either draw them or send them to competition

Needs to be easy to remember Describing the essence of the school Suggestion, “Little Lambs Christian

Preschool” In line with with “Shepherd” theme

Business Recommendations Develop the Program

Focus on key areas Limit students to 15 to 20 per session Facility promoting clean child-friendly environment Sound security procedures Christ-centered academic value Strong curriculum

Business Recommendations Pricing and Financial Positioning

Startup costs: $8,000 to $10,000 Cut costs

Donations from area businesses Take inventory of volunteers

Pricing: At or below the competition

2 day/week 2 ½ hour session at $75 per month 3 day/week 2 ½ hour session at $100 per month

Tiered pricing Non-members pay full price Sister congregation members receive a 10% reduction and no

enrollment fee Members receive a 20% reduction and no enrollment fee discount

Business Recommendations Assessment of gross revenue:

Business Recommendations Assessment of expenses:

Preschool Students/Session 20 10

Variable

Summer Craft & Supplies $ - $ -

School Craft and Supplies 1,900 950

Summer Food and Beverage - -

School Food and Beverage - -

Total Variable $1,900 $950

Preschool Students/Session 20 10

Fixed

Principal or Director $ - $ -

Certified Teacher Salary 15,500 15,500

FT Teachers Aide Salary 12,000 -

Payroll Expenses for Aide and Teacher (Health & Life Ins, Pension, Taxes, Worker's Comp) 9,625 5,425

Summer Care Employees - -

Preschool Utilities Expense 1,800 1,800

Summer Care Utilities Expense - -

Liability Insurance 4,000 4,000

Advertising Expense 250 250

Total Fixed $43,175 $26,975

TOTAL COSTS $45,075 $27,925

Net Income (Loss) $18,125 $3,675

Business Recommendations Preschool Staffing

Maximum students at 20 per 1 session Student to Teacher ratio of 11 to 1 1 Teacher

B-3 license to supervise student teachers Student Teacher

$0 cost From area colleges Could cycle new student teachers throughout year

Teacher’s Aide Minimum requirements

Business Recommendations Sample Preschool Schedule

Business Recommendations - Before

77'-3"

72.0 in. x 36.0 in.

5

6

7

8

9

10

11

12

13

16

17

18

19

20

21

22

23 24 25 26

4

3

2

1

14

Business Recommendations - After

77'-3"

48.0 in. x 30.0 in.

31.5 in. x31.5 in.

72.0 in. x 60.0 in.

48.0 in. x48.0 in.

Up

Up 0' 10.5" Rise: 10' 6" Run

Business Recommendations Additional Suggestions

Form volunteer task force Write policies and procedures Establish school calendar Build playground Marketing/Outreach Guided reading Music

Final Thought Starting a school is like planting

a tree…

In 20 years, this seed can become the largest tree in the forest!

Business Recommendations

Questions?