Bethel University Masters Program final project.

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. Contents
Executive 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 ...................................................................................................................... 9
The Business Opportunity ................................................................................................10
Company Description .......................................................................................................11
The Company ................................................................................................................11
Company Location .........................................................................................................11
Mission Statement .........................................................................................................12
Vision ............................................................................................................................12
Core Values ...................................................................................................................12
Form of Business...........................................................................................................13
The Market .......................................................................................................................13
Demographics/Geographic ............................................................................................13
Lifestyle and Psychographics .........................................................................................14
Purchasing Patterns ......................................................................................................14
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3. Market Size and Trends .................................................................................................15
The Product ......................................................................................................................15
Momentum ....................................................................................................................15
Momentum Walkthrough ...............................................................................................17
Strategic Position & Risk Assessment ...............................................................................23
Industry Trends .............................................................................................................23
Competitive Environment ..............................................................................................24
Company Strengths .......................................................................................................24
Definition of Strategic Position .......................................................................................24
SWOT ............................................................................................................................25
Momentum Support – Services & Hardware ......................................................................26
Financial Plan ..................................................................................................................27
Salaries .........................................................................................................................27
Revenue Growth ............................................................................................................27
Loans/Capital Required .................................................................................................29
SBA Advantage...........................................................................................................29
Investor Loan .............................................................................................................29
Milestones ........................................................................................................................30
Year One: ......................................................................................................................30
Year Two: ......................................................................................................................30
Year Three: ....................................................................................................................30
Year Four: .....................................................................................................................30
Year Five: ......................................................................................................................30
Management and Organization .........................................................................................31
Organization - Members ................................................................................................31
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4. Leadership ....................................................................................................................31
Advisory Board ..............................................................................................................33
Marketing 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 ...................................................................................................37
Sales Strategy ..................................................................................................................38
Sales Force ....................................................................................................................38
Sales Cycle ....................................................................................................................38
Operations Plan................................................................................................................39
Technology Plan ...............................................................................................................45
Infrastructure ................................................................................................................45
Employee Issued............................................................................................................46
Intellectual Property and Contracts................................................................................46
Risk Assessment ..............................................................................................................47
An Overview of the Competition ........................................................................................48
Competition – Companies ..............................................................................................48
Competitive Position ......................................................................................................50
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5. Future Competition .......................................................................................................50
Exit plans ......................................................................................................................50
Long-Term Development ................................................................................................51
Appendix 1 .......................................................................................................................52
List of Main Education & Training Services ....................................................................52
Appendix 2 .......................................................................................................................53
Appendix 3 (Marketing Membership Budget) .....................................................................54
Appendix 4 (Marketing Plan) .............................................................................................55
Appendix 5 (Addtl Marketing Expenses) ............................................................................56
Appendix 6 (Technical Equipment)....................................................................................57
Appendix 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) .................................................................................75
Appendix 8 (Momentum Screenshots) ...............................................................................76
References ........................................................................................................................86
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6. Executive Summary
The Opportunity
From 1970 to 2011, there has been a 375%
increase in educational spend with no measurable
improvement in educational results (Coulson, 2012).
Further, standardized testing indicates that the
majority of American students do not meet required
levels for proficiency in math, reading, and science
ranking them 30th place in the world (Childress, 2012).
The opportunity to improve how students learn
through enhanced technology, assessment and metrically driven continuous improvement
offers a lucrative investment opportunity when considering market size. According to
Institute of Education Sciences, the National Center for Education Statistics state that
there were 98,817 operating public elementary/secondary schools during the 2009–10
school year (NCES, 2012).The company that owns the data on best content delivery
methodology 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, assessment
and data resource system for public, private and charter schools via its Momentum product
offering.
Mission Statement and Vision
eK-12’s purpose is to revolutionize the educational system and transform student
outcomes through individualized learning plans and evidence-based curriculum
assessment. eK-12’s vision is to be the knowledge center for educational success through
technology delivery, assessment and data management. Due to existing relationships and
identified need, eK-12 will pilot its Momentum product to 2,250 students in the Wayzata
Middle School System. eK-12 looks to expand to a total of twelve schools by 2017 focusing
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7. on the affluent school districts of Edina, Eden Prairie, Minnetonka, Plymouth and
Woodbury.
Product - Momentum
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. Momentum will leverage tablets,
smartphones, and computers to engage students in an individual and
interactive learning session, while exposing children to the widely used ways
of doing business in today’s technologically evolving society. This will allow
for ongoing and custom improvement in the classroom, based upon student needs. This
data will be compiled and analyzed into information that establishes metrically proven
educational solutions that help maximize school’s abilities and district budgets. Momentum
is 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 in
kindergarten through 12th grade education in Twin Cities’ school districts such as Wayzata,
Edina, Eden Prairie, Minnetonka, Plymouth, and Woodbury. These schools were selected
because they reside within affluent communities and have enrollment in excess of 5,000
students with a history of funding technology investments.
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8. Marketing Strategy
As a technology-based company, the eK-12 brand will be simple, colorful, and reflect
excellence and aspirations of educational institutions. This technology made simple
approach will be easy to understand by the use of visual diagrams, touch screens, and
large engaging images that appeal to the end-user. eK-12’s marketing will target the largest
selling points of teachers, administrators, and students utilizing insights that were gained
through interview research. Specific online and offline
marketing activities will include but are not limited to:
trade shows, print advertisements, industry
networking, website advertising, and social media.
Competition
The competition within the educational market consists of software developers and
specific curriculum-based textbook providers such as Scholastic, Pearson Digital Learning,
and Renaissance Learning. While the established competitors currently occupy
relationships with the target market, they have not successfully integrated to deliver their
content 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 as
their learners through its delivery, assessment and data management approach. By using
classroom data, eK-12 will be able to identify effective components within current
curriculums and build software programs that allows for learners to achieve their very best.
Additionally, teachers and students will benefit from the electronic and individualized
learning plans for a broad range of class skill levels. Updates to curriculum content can
easily and cost effectively be implemented through daily downloadable updates.
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9. Management
The five founding members of the LLC will manage and lead the organization. The
management team brings a diverse background and will perform multiple responsibilities
within the organization. Additionally, eK-12 will utilize an Advisory Board to gain additional
educational expertise. eK-12 will use outside contractual resources for software
development, 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 marketing
activities. These investments will carry a 15% annual interest
These investments will
rate, and will be repaid by the end of the third year of
carry a 15% annual
operation. Additionally, eK-12’s founding members will
interest rate, and are
contribute $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 either
a strategic partnership or competitive buyout opportunity
comes available.
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10. Financials
Category 2013 2014 2015 2016 2017
Sales $111,600 $1,114,875 $3,274,331 $5,251,406 $6,716,250
Gross
$78,000 $440,625 $1,379,606 $2,449,481 $3,121,875
Profit
Expenses $580,996 $619,295 $1,015,913 $1,055,336 $1,279,097
Net Profit ($502,996) ($178,670) $272,770 $1,045,609 $1,382,084
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11. The Business Opportunity
eK-12 is seeking to unify several markets in education by
developing a unique integrative software platform that merges delivery,
assessment, and reporting. There is good reason to believe that this
could result in a large, scalable business with extremely large growth
potential. This is due to the unmet need and high demand to provide
teachers with integrative platforms that allow them to enhance education
with the targeted use of technology. eK-12 recognizes the need to apply
innovative solutions to educational issues by creating a digital delivery
system for curriculums that includes assessment and detailed reporting tools allowing for
the development of evidence based education.
In March 2012, Harvard Business Review (HBR) cited that in nationwide National
Education 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, the
U.S. has fallen to near 30th place in both reading and math behind most other first world
nations and even behind some second world nations. To remain competitive, HBR
advocates new technological approaches to education (Childress, 2012). eK-12 seeks to
answer that call by creating a new method of learning through technology that both allows
children 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 with
a 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, and
federal education was approximately $442 billion. By 2009, it had almost doubled to $863
billion (US Government Spending, 2012). Even accounting for inflation, it still represents
an almost 32% increase in spending. This trend isn’t ending anytime soon. According to
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12. the Bureau of Labor Statistics, the Education sector is expected to be the third largest
source of growth in the next 10 years (Occupational Outlook Handbook, 2012). Despite the
increase 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 Child
Left Behind.” These waivers make over half the states exempt from the Congressional
attempt at education reform (Johnson, 2012). It is estimated that the White House will
exempt another 10 states from meeting the goal of 100% proficiency in reading and math
by 2014 (Ohlheiser, 2012). Despite the exemptions, the President and the Congress intend
to rewrite the law to help fix its shortcomings but not eliminate it. While standardized
testing is sometimes criticized, it remains one of the key metrics used to analyze the
success of a school. The Cleveland mayor, the governor of Ohio, and the teacher’s union
recently agreed to overhaul how teachers are hired, fired, and are paid based on
performance. This performance will be partly measured on test scores (Banchero, 2012).
eK-12 has recognized that there is strong market demand for technology to remain
competitive with our overseas counterparts. Like HBR, we believe that a new industry
based on technology and education is ripe for development
Company Description
The Company
eK-12, LLC is a Minnesota-based company providing evidence-based educational
improvement through a technologically enabled educational delivery and assessment
system 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, software
development, and the server farm necessary for data storage.
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13. Mission Statement
eK-12’s mission is to revolutionize the
educational system by enhancing the
capabilities of educators to teach the next
generation through the strategic use of
enhanced technological delivery and proper data
assessment. eK-12 will simplify the technology barrier for educators, and provide them with
a system that transforms educational outcomes for children in K-12 private, public, and
charter schools. eK-12 will provide this change through individualized learning plans for
students delivered via the Momentum product.
Vision
eK-12’s vision is to be the knowledge center for educational success through
technology delivery and data assessment. By focusing on evidence-based education, eK-12
will help provide a means to apply educational solutions to curriculums. Knowledge and
data will be shared through the use of technology devices, which will allow for ongoing and
custom 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 proven
educational 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 and
are in alignment with our educator target market to partner together to effectively to better
the educational experience for students. eK-12’s expects its partners, suppliers and
customers to adhere to its core values in support of its overall mission. These values
include:
 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
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14. Form of Business
eK-12 will be formed as a Limited Liability Company (LLC) as it provides the most
flexible partnership formation and tax treatment process. The LLC will be organized
through Articles of Organization filed with the State of Minnesota and governed through the
Operating Agreement. The five founding members will fund the initial partnership and
liability is limited to each individual’s capital contributions. The tax law is under
governance of the Internal Revenue Service.
The Market
Demographics/Geographic
The demographic and geographic statistics describe the details of the target market
and 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. This
number has risen 7 percent as of April 2012 (NCES, 2012). Among full-time and part-time
public school teachers in 2007-2008, 76% of public school teachers were female, 44
percent under the age of 40, and 52 percent had a master’s degree or higher. Compared to
public schools, a lower percentage of private school teachers were female (74 percent), were
under 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 with
individuals based on specific demographics.
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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 grades
6th, 7th, and 8th.
Lifestyle and Psychographics
Lifestyle and psychographics of eK-12’s target market help shed light on the interest
and buying patterns of individuals within the educational system. Based on interviews and
other research performed for the business plan, eK-12 can confidently describe its target
market with the following primary lifestyle characteristics: family oriented, technically
adept, conservative, socially responsible, smart shopper, fun-seeking, good housekeeper,
kids at heart, and most importantly understanding of the value of education (Personal
communication, August, 2012).
Purchasing Patterns
Due to multiple levels of approval, the decision making process to propose and agree to
implement Momentum as part of a class or school district will likely be an intense
engagement. According to eK-12’s school district interviews, new classroom products are
considered at any point in the school year, especially if it fits a need. Classroom programs
are typically initiated for school consideration by the teacher and other aids, such as media
specialists. These decisions are then brought to administration and school boards, based
upon requirements. The following is a list of influential considerations for educational
software (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
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16. Market Size and Trends
eK-12 believes its business concept offers a lucrative investment opportunity when
considering market size. According to Institute of Education Sciences, the National Center
for Education Statistics state that there were 98,817 operating public
elementary/secondary schools during the 2009–10 school year (NCES, 2012). School
enrollment is currently flat, but there is a higher emphasis on education to improve our
economic financial position (NCES, 2012).
Technology-based learning is a key part of the innovation in education that will
define 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 entire
working life. The trend that efficient technology brings to the classroom impacts this
evolution. The baby boomer generation teachers are leaving the education system which
open positions for generation Y and X teachers to implement new teaching methods for
learning. Lecture driven teaching does not engage with the student on an individual level
and therefore teachers are searching for better ways to interact and hold the attention of
individual learners. Additionally, with school district budget cuts, departments are looking
for ways to consolidate resources to solve many of their needs and provide cost savings to
the budget.
The Product
Momentum
Momentum is eK-12’s proprietary delivery, assessment, and data
software system. Utilizing what eK-12 calls the “D.A.D method,” (Delivery,
Assessment, and Data) it is designed to take school provided curriculum
and deliver it to students in an electronic medium, assess their skills, and
record data for reporting.
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17. Momentum presently leverages tablets, smartphones,
and computers to engage students in an interactive learning
session, while exposing children to the widely used and
accepted ways of doing business in today’s technologically evolving society. Momentum is
not 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
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18. Momentum Walkthrough
Figure 1: Diagram of Momentum workflow
Momentum starts by establishing independent electronic calendars that are available
to students from the website, their phone, or the tablet. Calendar entries contain
information about upcoming assignments, special events, and various instructor driven
notifications (see figure 2). It includes their task list and current progress. This delivery
method is already in use on most college campuses and children as early as the fourth
grade are already learning “calendaring” skills in Minnesota schools. eK-12 believes there
is a need to teach children these skills earlier in life and do it in a way that’s fun and
understandable.
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19. Figure 2: Example of Apple iPad Calendar with Momentum scheduling integration
Upon login, the Momentum application will contain all of that students various
subjects and their respective lesson plans. The instructor will guide the students through a
lesson plan that will contain elements of both interactive learning and class participation
(see figure 3).
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20. Figure 3: Screen shot of Momentum App: Electronic Textbook
Then, the student will utilize the Momentum application to start an individualized
portion of the process that will reinforce the learning while simultaneously providing
feedback to the system and instructor. When the predetermined achievements of the
lesson plan have been met, the system will announce to the learner that an achievement
has been “unlocked” and that they have been awarded a certain number of points (see
figure 4).
Figure 4: Example of achievement unlock notification
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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 to
increase student success. On the average, academic games in the classroom have been
shown in studies conducted by the Marzano Research Laboratory to have a 20 percentile
gain 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 in
the achievements of each lesson plan. This gives the
the classroom have
individual student/ lesson plan a real time metric to track
been shown in
and measure progress. Achievements can potentially be
studies conducted by
unlocked in a non-linear order allowing students to explore
the Marzano
and progress in a subject at their own pace. The
Research Laboratory
achievements will be setup in such a way that they can be
to have a 20
done at varying intervals of mastery. Grades can be tied to
percentile gain in
having unlocked certain achievements, but students will not
student performance
be constrained to only meeting the minimum requirements.
(Marzano, 2010).
Students who desire to achieve higher levels of success can
advance at their own pace through the lesson plan at school
or at home.
As learners unlock achievements it is displayed on their school profile alongside their
individualized school avatar. This provides a social element to their work in school and
children can identify and compare achievements with their classmates and friends (see
figure 5).
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22. Figure 5: Screenshot of the home screen of the Momentum iPad app (with Social) – see
Appendix 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 frequently
accomplished, and identify the most advanced or struggling students. Additionally, the
Momentum system will use individualized plans to dynamically modulate the difficulty of
the plan in real-time as well as change the delivery type (ex: audio vs. visual) so that
students are able to benefit from multiple types of delivery as well as move at a pace that
maximizes their ability. This is important because students learn at different paces, with
different mediums. Data collected from Momentum will be used to build better
curriculums, suggest mediums that help students learn best, and give children a chance to
exercise their knowledge until proficiency is proven (see figure 6).
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23. Figure 6: Example report from Momentum showing unit completion time, accuracy, and points
achieved
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24. Strategic Position & Risk Assessment
eK-12’s objective is to be the premier technical software delivery and assessment
provider for education in grades kindergarten through twelfth grade in the Twin Cities. To
achieve this goal, objectives have been established to build the program using real-time
statistics 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 system
Industry Trends
The education industry trends show investment
dollars continuing to support the workforce of the
future. Despite the often talked about budget cuts, it
is proven that investing in education and the skills of
elementary, primary, and secondary education will
directly impact the U.S. job market and economy.
“An estimate of $1.15 trillion has been spent nationwide on education at all levels for
school 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 will
remain a high priority for developing the next generation workforce.
Technology devices are creating the classroom of the 21st Century. Many schools
have implemented tablet pilot programs and are discovering many advantages, including a
faster rate in which students learn, the ability to use the Internet as a resource, and
eliminating the inconvenience and experience of curriculum textbooks. (Personal
communication, August, 2012)
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25. Competitive Environment
There is no other company designed exactly like eK-12 that focuses on both
technology delivery via a custom software interface and offering assessment of student
learning. Yet, other competitors have relationships within the target market. It will be the
task of eK-12 to gain the trust and confidence in the educators and curriculum provides to
displace the competition. The sales approach, much like the learning approach, will be
hands-on with integration of the software to allow for the ability to drive to the individual
need of the prospect. A tradeshow is an example of this process as eK-12 would use the
face-to-face opportunity for teachers to interact with a tablet and Momentum, while a
system 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 the
course to evolve just as fast as their learners. By using classroom data, collected through
the Momentum product, eK-12 will be able to identify effective and ineffective components
within current curriculums and build software programs that are best in breed that allows
for learners to achieve their very best. Additionally, teachers and students will benefit from
the electronic lesson plans and individualized learning plans for a broad range of class skill
levels. Because of the software learning platform, updates and modifications to content can
easily be implemented by sending revisions through a program update, a much more cost
effective solution than investing in text books year after year. Lastly, eK-12 believes the
technology capabilities of the company will be a valuable resource for education and
curriculum programs.
Definition of Strategic Position
The difference between eK-12 and its competitors is that they were founded as
companies publishing textbooks, other publishing materials and assessments, and just
recently started offering technology solutions. eK-12 is based first and foremost on
technology, and thus, will launch the company with the foundation of technology, research
and processes critical to the success of students in the 21st century classroom, rather than
be tied to mediums of the past. The data gathered from the system will give the company a
significant head start, should imitators attempt to replicate the program. It will require
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26. several years to acquire datasets and competitors will always operate in a data deficit
compared to eK-12. eK-12 intends to measure far more than just test scores allowing for
potential licensing of curriculum data in the future. This makes changes to curriculum
relevant and applicable.
eK-12 believes this will be a highly profitable business solution and expects a return
of investment in three years (see P&L statement in Appendix 7). The complexities of the
approval process will cause for a long sales cycle that will need to be factored into the
strategic objectives of the marketing and sales plan. This technology based delivery and
assessment system improves in time as the foundational pool of data becomes larger, which
betters 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, product
and services. This meaningful information is used to maximize elements both in and
outside the marketplace, so eK-12 has the opportunity to market with a clear
understanding 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
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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
 Competition
Momentum Support – Services & Hardware
eK-12 understands that multiple streams of revenue are essential to the success of
the business. Therefore in support of Momentum, eK-12 will have service and hardware
revenue streams, as well as curriculum licensing fees that will be discussed in greater
detail in the strategic partnerships section of this business plan. eK-12 will provide
technical support, repair and maintenance of existing technology and all aspects of its
product offering. The services will ensure that educators spend their time focused on
learners, 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 the
technology used in the classroom. Tablets like the Apple iPad and Microsoft Surface,
software licensing, low voltage wiring, wireless access points, switching gear, servers, and
other 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
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28. distribution will be cost neutral proposition. eK-12 assumes they will realize a 5% profit
margin on all hardware sales.
By developing these ancillary revenue streams, eK-12 can help fund its growth into to
the educational market and deliver $13,230,750 in additional revenue support over the first
five years in operation.
Financial Plan
eK-12 realizes in order to become a successful startup that some key assumptions
need to be made and explained in realizing the full potential of profits.
Salaries
Each principle member of eK-12 will receive a salary of $50,000
starting out for the first three years with a 3% increase for inflation. In year
four, 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 the
start, 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/year
base will provide eK-12 with a very competent programmer, which is essential for the initial
development work. In years three through five, there will be two additional programmers
added 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 financial
projections.
Revenue Growth
eK-12 will focus on growth upon incorporation. The plan’s revenue growth comes
from a “conservative” estimate on what could truly be attained. The largest source of
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29. revenue growth is from the Momentum platform. eK-12 projects moving into two new
schools in 2014 and three new schools each year from 2015-2017. eK-12’s pilot program
will begin with one class (750 students) in each grade. The price of Momentum software
per student starts out at $15per seat. That will increase by 10% in year two and 25% in
year 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 adopters
will 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 be
interested in Momentum software. For financial projects, it is assumed that hardware sales
will be included in 75% of the new schools added annually.
Residual revenues will increase exponentially for
Momentum, while hardware is only a one time sale. eK-12
will negotiate a 5% distributor discount on hardware to
justify the sale. This will allow ek-12 to recoup costs for
handling 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. The
numbers of units projected are directly correlated to the number of Momentum units sold
per month.
The final revenue stream is content licensing. eK-12 believes that introducing one
medium 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 being
replaced (Personal Communication, 2012). The average student will have six classes and
books 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 textbook
provider, but instead will be channeled through eK-12 as a residual revenue stream. eK-12
will be taking a 30% fee on licensing content. The licensing fee is projected at $16 a
month per user. That number is derived from assuming six textbooks at $100 each, lasting
36 months. eK-12’s 30% fee equates to a $5 profit each month per user. Just as the
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30. service contracts stated above, this licensing fee will also be directly correlated to the
number of Momentum units sold monthly.
Loans/Capital Required
The loan assumptions are as follows:
SBA Advantage
eK-12 will pursue a $250,000 SBA Advantage loan through US Bank. This type of
loan allows financing for startup businesses. The note can be extended to seven to ten
years, but eK-12 believes the note will be paid off in full within 5 years, while carrying an
interest 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 private
investors. The rate will be 15% APR as normal market conditions support. These loans are
planned to be paid off first within three years. eK-12 will do this because it’s the highest
interest rate and therefore the largest expense in interest paid. The amount of $250,000
came into play for startup capital as eK-12 develops its product and takes a loss for the
first two years. After year three, eK-12 will show a profit and the remaining money
requested that hasn’t been fully used (SBA NOTE) will provide 6-9 months of liquidity in
reserves that support all operating expenses, with the assumption of no revenue being
generated. While a conservative approach, this practice will help alleviate liquidity
concerns and ensure free cash flow for the startup phase of the business.
ALL RELATED FINANCIAL DOCUMENTATION CAN BE FOUND IN APPENDIX 7
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31. Milestones
Below 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.
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32. Management and Organization
Organization - Members
As an LLC, management will consist of eK-12’s five founding members. Each member
will be responsible for key components within the organization, although all members will
share in sales and as needed areas of responsibility within the company structure. Key
aspects such as software development and accounting will be an outsourced activity
performed under contractual guidelines.
Leadership
Peter Meyers (President): Peter is currently the Vice
President of Client Engagement and Service Delivery for SIRVA Inc.
His background includes nearly 20 years of professional experience
ranging from corporate America to entrepreneurship that enabled
him to participate in the creation of three different companies.
Peter’s main skill sets range from leadership, operations, marketing
and account management. Peter has been involved in multiple industries, but has always
focused on the transference of data to meaningful information for customers. He brings
strategic simplicity to complex business matters. For eK-12, Peter will serve as President
and be responsible for overall management and strategic direction of the company
Andy Sorenson (Vice President): Andy is currently an
Engineering Manager for Donaldson Company, Inc. His
professional experience consists of over ten years in engineering for
the Donaldson Company and Stratasys Inc. With that experience,
Andy has always been focused on leadership, productivity, and
efficiency. Andy is critical to the success of this company in
ensuring all deadlines are met and time is well spent, while always
keeping a strong focus on the customer and ensuring satisfaction. For eK-12, Andy will
serve as a Vice President and be responsible for overall management of operations and
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33. overall project management. His main goal is to ensure company values and goals are
constantly moving forward and always on task.
Robert Schmaltz (Vice President): Robert is currently the
Director of Information Technology for Roxbury Capital
Management. His experience consists of over 18 years as an IT
professional. Robert’s skill set ranges from network architecture,
enterprise deployment technologies, software development, server
and infrastructure support; followed with budgeting and data
management. Of those 18 years Robert has worked for Rockwell-Collins, Best Buy,
Stratasys, Metro Machine and Engineering, and Roxbury Capital Management. During his
professional career Robert has over 10 years of leadership experience. With eK-12 being a
tech company mixed with education, Roberts experience is critical in all product life cycles
and company goals. For eK-12, Robert will serve as a Vice President and be responsible for
all data management, software development, and ongoing IT support.
Amanda Klein (Vice President): Amanda is currently the
Director of Marketing and Strategy for Star Exhibits. Amanda’s
professional experience consists of over 10 years of advertising,
marketing, sales, idea generation and public speaking. Amanda
has worked with a variety of technology consulting and advertising
firms across the Twin Cities ranging including N’compass,
Touchpoint Media, and Star. Amanda brings essential creativity, innovative and marketing
acumen that will help drive eK-12 into the future. Her presentation and relationship
management 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 include
marketing campaigns, ensuring that eK-12 is on the leading edge of technology. Amanda
will also be responsible for customer service and account management.
Ryan Jaeger (Vice President): Ryan is currently a Business Banking officer for US
Bank. Ryan’s professional experience consists of over four years in the corporate banking
world ranging from account management, sales, and finance. In the four years of his
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34. development, he has worked for Aerotek and US Bank NA. Both
areas constantly being promoted at a rapid pace and truly
understanding the business goals and needs. Ryan is a true
relationship builder/provider for all clients and internal employees.
Ryan brings a level of expertise in finance that many people don’t
have. His knowledge of key ratios, business leverage, and cash flow
calculations 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 account
management and overall sales. His goal will be to have a balanced focus on bringing in
new clients and growing existing ones. Responsible for all customer service requests as
needed in the initial stages of the business, as Ryan will later shift his focus to full financial
oversight.
Advisory Board
The main deficiency in the eK-12 founding member’s strengths and attributes is their
lack of knowledge and involvement in the educational process and system. To buttress
these weaknesses, eK-12 will form an advisory panel that will help drive these initiatives
and bring credibility to the process. eK-12 envisions that this advisory panel would be
comprised 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 provider
Marketing Plan
Company Message
“Maximizing genius through technology infused education”
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35. The eK-12 Brand
The eK-12 brand is the visual look and feel that reflects the tactical attributes of the
company. As a technology-based company that interacts with the creative minds within
school systems, the brand will be simple, colorful, and reflect excellence and aspirations of
educational institutions. This technology made simple approach will be easy to understand
by the use of visual diagrams, touch screens, and large engaging images that appeal to the
end-user.
The eK-12 Approach
This idea for a company started with a group of colleagues that were impacted daily
by the school system, be it teachers, parents, or students themselves. Concerned for the
future of education, and feeling trapped with the desk and lecture approach, eK-12 asked
this 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 make
a difference and change the way of thinking about education. This new approach includes
the following points of differentiation in thought leadership, offerings, and technology and
data supported curriculums.
Thought Leadership
The more eK-12 can teach the smarter eK-12 looks. The smarter eK-12 looks, the
more 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 decisions
and challenges. To obtain thought leadership, marketing content will utilize white papers,
case studies, webinars, and mobile learning centers that feature the proprietary Momentum
system.
Expansion of offerings
eK-12’s on-line product catalog enables districts and schools to confidently engage
the company from beginning to end on a project. With IT services and technology based
curriculum delivery, the company has the ability to not only implement the software, but
customize the use for maximized efficiency. eK-12 can advise schools on smart and
innovative hardware solutions that will meet the need for the school, grade, or classroom.
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36. Technology & data supported curriculums
The method and approach at which people learn
best varies amongst students. The traditional teaching
model does not maximize technology in the classroom.
Often times, tablets such as Apple iPad’ s or Microsoft
Surface’s are tested in the classroom environment, by
simply having a few available to use. They are not tied
to the curriculum or individual lesson plans as
subsequent devices. eK-12 believes in introducing
technology early, as it will be something the learner will
experience throughout their entire life. The proposed technology uses electronic lesson
plans and individual assessment software on a tablet of another device to participate in
classroom learning. The results and feedback of the individual learning is then logged,
stored, and kept for further development. This research brings assurance and assistance
to methods of teaching as the data will indicate the level of comprehension of the student
for all those who play a role in this person’s educational future.
Marketing Tactics
eK-12 distinguishes itself from its competitors with a better understanding of the needs of
the end user. The selected marketing activities were chosen with purpose, as the company
believes the following identified methods and mediums reach our audience and target their
needs as a potential consumer of Momentum. The previously highlighted points of
differentiation and usability examples will be the motivation of the company’s marketing
tactics. eK-12’s marketing will target the largest selling points of teachers, administrators,
and students utilizing insights that were gained through interview research. (Personal
communication, 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
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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 used
Offline Marketing Tactics
eK-12 has identified several tactics to market the product and service offerings. In
the first two years, sales and marketing will drive to expand into the marketplace through
multiple channels of communication. Content, collateral, and PR will be the responsibility
of the CMO. An annual marketing budget of $27,805 has been accounted for in the
financials 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 refresh
traffic measured in terms of monthly clicks. The web site will
web site content on a
serve as the hub of information from other social sites,
daily basis by
videos, and training materials. The company believes a high
displaying case
percentage of clients can be found on the web, and for that
studies, testimonials,
will maximize online capabilities. Even though teachers are
white papers, and
actively 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 will
sources and ideas through sites such as the school websites,
be pushed through
blogs, Twitter, and Pinterest. eK-12 will refresh web site
an electronic
content on a daily basis by displaying case studies,
newsletter sent to
testimonials, white papers, and webinar recordings. This
clients once a month.
information will be pushed through an electronic newsletter
sent 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
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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 inclusive
of a search engine optimization plan. These plans run anywhere from $15,000-$25,000 a
year depending on their complexity. Online strategies will allow eK-12 to rank high in
search systems such as Google, Bing, and Yahoo when key words are used as a search
such 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 and
content as a way to control costs and utilize the latest in available technology. In the
technology space, Microsoft Bizspark is an outstanding strategic partner. Microsoft
Bizspark is a free program for startups that offers software, support, and visibility. The
global program helps software startups by providing software development tools, technical
support, 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, Windows
7, Windows Azure, and Windows Server. The program offers three free years of software
access based upon criteria that eK-12 easily qualifies for. The program requires partners to
be developing software, privately held, be in existence less than 3 years and make less than
$1 million in annual
revenue. This partnership
will function like a free
licensing arraignment for
mutual advantage.
While Bizspark provides access to software and other technology partners, eK-12 will
also pursue a strategic partnership with Microsoft Corporation. Microsoft is attempting to
make in-roads into public education. eK-12 can partner with Microsoft on hardware to test
and implement during its pilot program.
Lastly, in regards to technology strategic partnerships, eK-12 will make significant
efforts to partner with the major players in educational curriculum. These partnerships are
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39. critical to the success of eK-12, as part of the proposition we will make to those curriculum
providers. Essentially our business model, if successful, will drastically change the way
that curriculum providers generate content. Shifting to an electronic delivery medium will
result in a loss of revenue by selling textbooks. We will be able to provide curriculum
providers a steady residual revenue stream by converting textbook revenue to digital
licensing agreements. eK-12 will collect on this revenue and make a monthly payment to
each curriculum provider, while marking up and retaining a 30% profit margin.
Sales Strategy
Sales Force
During the pilot phase, the five founding members of eK-12 will serve as its initial
sales force. Each brings a relationship building orientation and sales experience that will
allow eK-12 to control costs and direct funds at initial software development. As the
members are equity focused and will not draw sales commission, the sales efforts will not
be incentive based beyond agreed upon compensation and actual ownership. The sales
activity will be closely tied to the previously described marketing elements. The members
will work tradeshows, network with school boards, and attend educational events to spend
time 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 Wayzata
Middle School system, the US school system in general makes the majority of system
changes and upgrades during the summer months to avoid disruption to the educational
schedule. Maintenance, lesson plans, and related technical processes will occur mostly
during the standard September through June period when there is the majority of usage
among students.
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40. Operations Plan
eK-12 estimates that the initial software development work and
accompanying viable prototype program elements will be completed in
approximately six (6) months after launching the business in January 2013.
This timeline projection is based upon prior experience in software
development cycles that multiple founding members have participated in.
The prototype is imperative to have as a sales tool and will be a critical
building block in the sales process to help convey the impact that our
Momentum system will have on the educational process and system. To
reduce risk in the development process, the leadership team decided to provide a physical
working space to house its initial development work. The most obvious concern is around
protecting the intellectual property of the proprietary software system, and the membership
believes 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 MN
55378 to house necessary computer servers in a temperature and humidity controlled
environment. This installation will create a scalable solution from which eK-12 can deploy
their data center and some small office space. Renovations would require the installation of
some 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 easy
access to the southwestern suburbs, but at significantly less expensive pricing than would
be 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 maintains
flexibility.
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41. Exhibit 7: Proposed floor plan in rental space (after renovations)
Exhibit 8: Waconia location in relation to Minneapolis Metro
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42. :
Exhibit 9: Rental space in downtown Waconia
Exhibit 10: Business front at 36W Main Street Waconia, MN
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43. The first six (6) months, projected to start January 1st, 2013 and commencing June
30th 2013, will be devoted to software development. The leadership team will implement a
stage gate process that will allow clearly defined goals and established milestones along the
way, to ensure that the progress is directed properly at the desired end result. The goal is a
functional 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 ensure
custom projects and needs for schools are attended to, without any surprises at the time of
delivery. Upon future expansion, it is understood that each and every installation will be
unique. This stage gate process provides a development tool and establishes deliverables to
reduce rework. Once a purchase order is received and Momentum is installed, key members
from the respective school boards that eK-12 is doing business with will join in the stage
gate process. It is assumed that most of the project definition work will be done during the
sales 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 are
expected within each stage.
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44. Stage Gate Layout
Since eK-12 does not physically manufacture a product, issues surrounding
inventory, production control, manufacturing capacity, supply, and distribution are
minimal. However, part of the technology development plan will contain a rigorous quality
control plan and ensure that the testing performed on individual development projects are
adequate to fully qualify a product for release. Ongoing testing throughout all phases of
product development and installation will unveil answers to processes that may need
attention or improvement
From a lights-on perspective, the Vice President of Operations will handle all of the
day-to-day activities associated with maintaining the physical facility. For the first one to
three years, this office will support software developers and computer servers. Activities
such as building maintenance, cleaning, and upgrades will be handled by internal
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45. personal. Once the space expands and revenues can support additional resources, they
will be handled either by additional direct hires or outside contractors. Those decisions will
be made based on the current financial position, when deemed warranted by the leadership
team.
In addition to the duties stated above, the Vice President of Operations will also take
on the role of directing our field service and installation employees. Activities surrounding
these individuals will include: taking and fielding technical service calls, scheduling and
coordinating on-site installation, and troubleshooting activities. Additionally, coordination
of any warranty claims on both the software and the service side of the business will be
handled by the operations team.
From an order fulfillment standpoint, the Vice President of Finance will serve as the
head of accounting. Within those departments would be accounts receivable and accounts
payable. Initially, the Vice President of Finance will act alone in these roles dealing with
both our suppliers and customers in terms of payment. The books will be kept using a
product such as Quicken, or something similar, until a more rigorous ERP system such as
Oracle is required to do business. In all actuality, these functions will be limited at the
start, and will further expand as the business grows. As the need requires, additional staff
will be brought in to help fill these roles.
The Vice President of Technology will be directing and managing the custom software
development process. The initial plan is to bring on a seasoned software developer as a
contract employee to assist in the first generation of software. While the Vice President of
Technology takes on the task of developing the mobile applications, the other developer will
begin the web development and desktop application that will be necessary to house the
data. If additional capacity is needed, eK-12 will use tightly managed contracts and
outsourced 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 contract
employees to maintain our competitive advantage. It will be up to the leadership team to
determine what work can be outsourced, without compromising the IP position.
The last piece surrounding the operational plan would be centered on contingency and
pandemic planning. The Vice President of Technology will be responsible for developing
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46. and deploying a contingency plan that will allow eK-12 to remain operational should a
catastrophic event occur and wipe out the facility. Insurance quotes have been obtained
and are located in the financial section of this business plan to replace the physical
inventory of servers and office equipment. Additionally, a nightly backup to the Amazon S3
cloud will be utilized to ensure that server storage remains intact.
Technology Plan
eK-12 is a technology delivery, assessment, and
data company. This hybrid state means that it needs to
exist at the forefront of the industry to be successful. In
order to support their education enhancement mission,
the technology plan will seek to keep eK-12 constantly
innovating while refreshing infrastructure on a regular
basis. Additionally, the assessments conducted will be
used to further new avenues of inquiry, build evidence-
based curriculums, and enhance the digital delivery
system (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 the
technology budget. This is why eK-12 has broken our technology expenses into
infrastructure and employee issued equipment.
Infrastructure
The infrastructure represents both direct revenue generating production equipment
as well as non-revenue generating internal use technology. eK-12 believes it is important to
operate 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
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47. have a reduced physical footprint with a small number of servers, hardware, and software
with 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 scalable
solution from which eK-12 can deploy their products. Due to the controlled environment
requirements of a datacenter, a suitable physical location has been identified to meet those
needs and is further discussed in the operations section of this plan. The space identified
is of sufficient size that can host both a datacenter and some small office space at a
monthly rental rate of $1,200. Some renovations will be required, including the installation
of some additional walls, A/C units, and some additional power and backup generators to
ensure uninterrupted server functionality.
Employee Issued
Aside from the datacenter hardware needs discussed earlier, each employee will be
issued a phone, PC, and tablet for their professional work use. At all times, eK-12’s staff
will 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 and
software specific integrated-development-environment (IDE).
Intellectual Property and Contracts
eK-12 will construct the company to reduce risk and likelihood of legal issues in
intellectual property and contracts. Momentum will become a registered trademark of eK-
12, LLC. As the delivery and assessment software represents unique intellectual property
and is key to eK-12’ s lasting competitive advantage. Additionally, eK-12 will utilize written
contracts with schools (customers) and suppliers (vendors) and clearly identify the
expectation of all parties involved in the business relationship. eK-12 estimates that this
legal protection will require a $15,000 investment and provide lasting value to the
enterprise.
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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 is
already a year or two into a very similar development process. First mover advantage is
critical with this business venture and someone else that launches a similar idea prior to
eK-12’s could trump the work. That is not to say that there is no room for multiple
solution providers in the industry, but a huge competitive advantage will be awarded to the
company 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 by
the founding members will give eK-12 a good start to begin the development work. A
business model that does not immediately start generating revenue is of high concern, but
that work is necessary to build excitement and interest within the industry. That prototype
tool will not only generate excitement amongst the customer base, but will also be
extremely valuable within the investment community.
Finally, since this change is so dramatic in relation to the historical model, there will
be opposition from the current generation of parents. There is a risk that too much
technology integration could hinder a learner’s social interaction with others, and obstruct
their natural creativity. This risk and concern needs to be taken into account during the
sales process and other developments eK-12 is prepared for, to ensure there is a “balancing
act” of developing a healthy mix.
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49. An Overview of the Competition
eK-12 completed a thorough competitive evaluation to understand their product and
service capabilities. For the purposes of this business plan, eK-12 primarily focused on
education software. The top companies were selected to compare and analyze with as eK-12
believe 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 Tom
Snyder Productions. As a whole, the company capacities include a comprehensive system
of 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, SuccessMaker
Enterprise, KnowledgeBox and NovaNet, they offer a variety of services to school systems.
They invest in computer-based instruction, development in preparation for high-stake
testing, 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’s
tools provide daily formative assessment and periodic progress-monitoring technology to
enhance core curriculum, support differentiated instruction, and personalize practice in
reading, writing and math (Renaissance Learning, 2012).
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50. Archipelago Learning is a subscription-based software as a service
provider of education studies used by over 14 million students in
nearly 38,700 schools throughout the United States, Canada, and United Kingdom. Their
digital supplemental product suite uses technology to transform education. Their goal is to
make rigorous learning fun, engaging, accessible, and affordable. The company's core
business, Study Island, provides standards-based instruction, practice testing, and other
tools for students in Kindergarten through 12th grade. As of July, 2012 they purchased
another education technology solutions known as PLATO Learning. PLATO was known for
online courses and standards-based assessments that accurately identify student needs
and 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 by
improving processing efficiency of the brain. Scientific Learning uses technology to teach
language, reading, and comprehension skills in public and private schools in the US and 45
other countries. Flagship products include FastForWord, FastForLanguage, and
FastForLiteracy software. This company is different from the rest, as it also sells directly
to 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 based
training, and remote technical consultants (Scientific Learning, 2012).
Compass Learning is an expansive curriculum that covers every
grade, and every course, including advanced placement, college
readiness, ELL/ESL, gifted and talented to response to intervention students. They focus
on empowering teachers by providing a wide range of support services to provide a
personalized learning experience (Compass Learning, 2012).
See Appendix 1 for more specifics on the competitive landscape.
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51. Competitive Position
eK-12 will offer the ability to integrate technology and improve learning opportunities
through a unique delivery system, assessments model and data driven results for to better
the learner of today and tomorrow. This platform combined with established curriculums
provides the flexibility for real time electronically delivered product updates. Through the
Momentum delivery system, teachers and students will willing adopt technology as more
than 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 of
the drastic shift from traditional paper delivery system to a technologically rich delivery
system. Through eK-12’s marketing and sales efforts, the company will first strive to be
involved in a pilot program in schools and eventually become a necessity that compliments
the learning style of students today. Competitors that are expected to be encountered most
often include Scientific Learning, for the similarity of services, and Renaissance Learning as
a Midwest regional company.
APPENDIX 2 CONTAINS SPECIFICS ON THE COMPETITIVE REVENUE LANDSCAPE
Future Competition
eK-12’s competitors are constantly evolving and expanding through investment by
acquisition of other education programs and companies. A reasonable prediction of future
competition will be the company’s dependence on technology not textbooks to teach
curriculum. The companies who align themselves closely with a technology by partnering
with eK-12 will improve standardized tests and stand out amongst the rest. By focusing on
individual’s year over year performance, students are compared to their own progress and
not a “typical” classroom or school standards.
Exit plans
A predetermined exit plan is a crucial element to consider up front. The founding
members of eK-12 mutually agree that the initial $50,000 investment is critical to starting
this business. The first three years of major development and establishing the business
does not leave room or cash flow for an exit of any one individual. That original investment
may not be recouped in any way shape or form during the first three years of business,
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52. unless there is a majority agreement decision to sellout to an interested party. If that
situation happens to become a reality, a legal team would be involved to equally split the
proceeds, and any opportunity to remain a part of the business would involve an individual
personal negotiation with the buyout entity.
Regarding investments made by outside venture capitalists, a percentage ownership
option would be made available, taking into account that the founding members will always
maintain a 51% majority ownership stake. An outside party, when warranted by investor
interest, will perform an annual valuation process as necessary. A legal team will also be
brought into the mix when that scenario comes up, to take into account current economic
conditions, 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 and
innovative breakthrough in technology will trigger high interest from the industry, and
become a takeover target by a larger competitor. In the future, after the business is
established, the founders of the business would be open to a long-term strategic
partnership. eK-12 would consider the financial windfall that could come as a result of a
major player takeover and complete buyout.
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53. Appendix 1
List of Main Education & Training Services
Company Products Headquarters/ Year On what Basis
Locations Founded does
Momentum
Compete?
Scholastic  System 44 New York, 1920  Reading, Math
 Read About and Language
NY/Worldwide
 Read 180 Assessments
 New Connection
 Reading Counts
 TomSnyder
 Wiggle Works
 Text Talk
 Math Solutions
 SAM
Pearson  Curriculum, Chandler, AZ/ 1844 –  Curriculum
testing and (Math,
60% of sales in Part of
Multimedia Science,
learning tools. N. America. In Pearson Reading)
 Waterford  Improvement
a total of 70 PLC.
 SuccessMaker Programs
 NovaNet countries 1998  Digital
 CourseSmart platform
Education
 eTextbooks  Individualized
Co. learning
Renaissance  Accelerated Wisconsin 1985  Reading and
Reader Math
Learning Rapids, WI/
 Accelerated Math Assessments
International  Interactive
Hardware
Archipelago  Study Island Dallas, TX/ 2000  Web based
 Education City solutions
Learning US, Canada,
 Reading Eggs  Benchmarking
 ESL UK  Test
ReadingSmart Preperation
 Northstar
Learning
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