How to trans­late suc­cess into growth?

The Washington Post Sunday - - CAPITAL BUSINESS - Look­ing for some ad­vice on a new busi­ness, or need help fix­ing an ex­ist­ing one? Con­tact us at cap­biznews@wash­post.com.

A young ed­u­ca­tion com­pany seeks ad­vice on how much fi­nan­cial risk to take on. — Dan Bey­ers

The en­tre­pre­neur: For­mer English as a Sec­ond Lan­guage (ESL) teacher Ben L. Grim­ley spent the past 15 years in chil­dren’s soft­ware, de­vel­op­ing lan­guage and lit­er­acy mo­bile apps for PBS Kids and Houghton Mif­flin Har­court. He saw a per­sis­tent prob­lem: There weren’t good teach­ing tools avail­able to ad­dress the daily needs of the ele­men­tary ESL class­room. Grim­ley teamed up with other for­mer ESL teach­ers and tech­nol­o­gists to do some­thing about it.

“About 85 per­cent of ele­men­tary stu­dents who are English-lan­guage learn­ers were born here in the United States, and most can speak English col­lo­qui­ally just fine. The prob­lem is, many are be­hind in aca­demic English,” Grim­ley said.

“More than 9 of 10 English- lan­guage learn­ers aren’t hit­ting ba­sic read­ing pro­fi­ciency stan­dards by fourth grade. That’s why we went into the busi­ness of sup­port­ing English-lan­guage learn­ers in 10 sub­ject ar­eas at the ele­men­tary level — to catch them up be­fore the prob­lem mush­rooms.”

The pitch, Ben Grim­ley, chief ex­ec­u­tive of Speak Agent: “Speak Agent is a Rockville, Md.-based ed­u­ca­tion com­pany ded­i­cated to clos­ing the aca­demic achieve­ment gap for at-risk and spe­cial pop­u­la­tions. Our ini­tial mar­ket is English-lan­guage learn­ers. We of­fer an on­line so­lu­tion for teach­ing aca­demic English vo­cab­u­lary through games and ac­tiv­i­ties. It’s the only aca­demic vo­cab­u­lary so­lu­tion that aligns with the spe­cific daily needs of in­di­vid­ual K-12 school dis­tricts, giv­ing cus­tomers full con­trol over the con­tent.

“Our cus­tomers are K-12 school dis­tricts, and the teacher is a very im­por­tant sales in­flu­encer. We need to get their buy-in first, so our sales strat­egy is both bot­tom-up and top-down. We of­fer a free ver­sion for teach­ers to try the prod­uct, but our ba­sic busi­ness model is a $20 per stu­dent per year li­cense fee for the school dis­tricts.

“We just started mar­ket­ing our so­lu­tion at the Teach­ers of English to Speak­ers of Other Lan­guages An­nual Con­fer­ence in Seat­tle after pi­lot­ing the soft­ware for the past year. We serve ele­men­tary schools from Mont­gomery County, Md., to New York City.

“Our biggest chal­lenge is de­ter­min­ing how much fi­nan­cial risk we should take on to ac­cel­er­ate our growth. When you are a young en­ter­prise like we are, [you] strug­gle with bal­anc­ing the de­sire to push the busi­ness for­ward ver­sus the fis­cal re­spon­si­bil­ity of main­tain­ing a sus­tain­able com­pany. We’re for­tu­nate to have some grant fund­ing com­ing in the door, but to be at com­plete break-even at our stage would be very dif­fi­cult. We strug­gle with whether to take on debt or in­vestors to push for­ward with sales and mar­ket­ing, hir­ing new [em­ploy­ees] or con­trac­tors, know­ing that at some point we could run out of cash. Beyond prov­ing a prod­uct-mar­ket fit, how do we re­duce the risks of the busi­ness with­out mak­ing huge in­vest­ments?”

The ad­vice, Elana Fine, ex­ec­u­tive di­rec­tor of the Ding­man Cen­ter for En­trepreneur­ship at the Uni­ver­sity of Mary­land: “We cat­e­go­rize risk in three cat­e­gories:

Prod­uct risk — does the prod­uct work?

Cus­tomer risk — can you find your cus­tomers eas­ily where you can cre­ate a repli­ca­ble sales process?

Mar­ket risk — can you scale this busi­ness be­fore you run out of money?

You have the first two risks fig­ured out. And since you don’t seem to be in land-grab kind of com­pany, where com­peti­tors are rac­ing with mar­ket­ing dol­lars to snatch up the mar­ket first, you could put on the brakes a bit. When you aren’t go­ing head-to-head with a close com­peti­tor, you can take it slower and in­vest in the busi­ness in the most strate­gic way.

“Fig­ure out your sales process and how many sales­peo­ple you will need to get out to school dis­tricts, know­ing that at some point, the dis­tricts them­selves will be part of your sales chan­nel as in­flu­encers. It will take time to get those first three to five school dis­tricts fully on board with you through pi­lots, then adding stu­dents. Once you prove that out, this busi­ness should grow.

“Do­ing too much now — such as over­spend­ing on trade shows, sales and mar­ket­ing — would be a mis­take. Right now, in­vest in a very good sales/busi­ness de­vel­op­ment team that can nur­ture your ini­tial re­la­tion­ships and make sure the pi­lots go well and lead to full dis­trict roll­outs while putting a good sales pipe­line to­gether. You know where to find your cus­tomers, but as school dis­tricts, they are go­ing to move slowly. So your busi­ness may scale slowly, but you can still build a great busi­ness. Con­sider ways to fund it with­out rais­ing money from in­vestors, who likely will ex­pect a much faster rate of growth than you can pro­vide right now be­cause of the long sales cy­cle with school sys­tems.

“Ex­plore other ways to ac­cel­er­ate your growth. Fig­ure out how many pi­lots you can run at once so you ex­po­nen­tially grow the num­ber of school dis­tricts you have on board within the next three years. Think about ways you can in­crease the life­time value of your cus­tomers, per­haps by in­tro­duc­ing add-on prod­ucts or ad­di­tional soft­ware op­tions. Also look for other sales chan­nels.

The re­ac­tion, Grim­ley: “We’re ex­plor­ing ways to reach more cus­tomers, such as part­ner­ing with learn­ing cen­ters, on­line chan­nels and in­ter­na­tional dis­trib­u­tors, in ad­di­tion to our di­rect sales to school sys­tems. This could help us scale up faster.”

Ben Grim­ley is a founder and chief ex­ec­u­tive of Speak Agent, which serves English lan­guage learn­ers.

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