Educational Leaders Must Strive To Increase Resources Available For Their Schools

Contemporary educational leaders function in complex local contexts. They must cope not only with daily challenges within schools but also with problems originating beyond schools, like staffing shortages, problematic school boards, and budgetary constraints. There are some emerging patterns and features of these complex contexts that educational leaders should recognize. Educational leaders face a political terrain marked by contests at all levels over resources and over the direction of public education.

The vitality of the national economy has been linked to the educational system, shifting political focus on public education from issues of equity to issues of student achievement. States have increasingly centralized educational policymaking in order to augment governmental influence on curriculum, instruction, and assessment. With the rise of global economic and educational comparisons, most states have emphasized standards, accountability, and improvement on standardized assessments. Paradoxically, some educational reforms have decentralized public education by increasing site-based fiscal management.

School leaders in this new environment must both respond to state demands and also assume more budget-management authority within their buildings. Meanwhile, other decentralizing measures have given more educational authority to parents by promoting nontraditional publicly funded methods of educational delivery, such as charter schools and vouchers. Political pressures such as these have significantly changed the daily activities of local educational leaders, particularly by involving them intensively in implementing standards and assessments. Leaders at all levels must be aware of current trends in national and state educational policy and must decide when and how they should respond to reforms.

The many connections between education and economics have posed new challenges for educational leaders. As both an economic user and provider, education takes financial resources from the local community at the same time as it provides human resources in the form of students prepared for productive careers. Just as the quality of a school district depends on the district’s wealth, that wealth depends on the quality of the public schools. There is a direct relationship between educational investment and individual earnings. Specifically, it has been found that education at the elementary level provides the greatest rate of return in terms of the ratio of individual earnings to cost of education. This finding argues for greater investment in early education. Understanding these connections, educational leaders must determine which educational services will ensure a positive return on investment for both taxpayers and graduates. Where local economies do not support knowledge-based work, educational investment may indeed generate a negative return. Leaders must endeavor to support education for knowledge-based jobs while encouraging communities to be attractive to industries offering such work. Educational leaders must be aware of the nature of their local economies and of changes in local, national, and global markets. To link schools effectively to local economies, leaders should develop strong relationships with community resource providers, establish partnerships with businesses and universities, and actively participate in policymaking that affects education, remembering the complex interdependence between education and public wealth.

Two important shifts in the nation’s financial terrain in the past 19 years have worked to move the accountability of school leaders from school boards to state governments. First, the growth in state and federal funding for public education constrains leaders to meet governmental conditions for both spending and accountability. Second, state aid has been increasingly linked to equalizing the “adequacy” of spending across districts, which has influenced leaders to use funds for producing better outcomes and for educating students with greater needs, including low-income and disabled children. Complicating these shifts are the widely varying financial situations among jurisdictions. These financial differences have made significant disparities in spending between districts in urban areas and districts in rural areas common. In this dynamic financial context, educational leaders must strive to increase resources available for their schools, accommodate state accountability systems, and seek community support, even as they strive to increase effective use of resources by reducing class size, prepare low-achieving children in preschool programs, and invest in teachers’ professional growth.

Recently, two important accountability issues have received considerable attention. The first has to do with market accountability. Since markets hold service providers accountable, if the market for education choices like charter schools and vouchers grows, leaders may be pressured to spend more time marketing their schools. The second issue has to do with political accountability. State accountability measures force leaders to meet state standards or face public scrutiny and possible penalties. The type of pressure varies among states according to the content, cognitive challenges, and rewards and punishments included in accountability measures. School leaders can respond to accountability pressures originating in state policies by emphasizing test scores, or, preferably, by focusing on generally improving effectiveness teaching and learning. The external measures resulting from political accountability trends can focus a school staff’s efforts, but leaders must mobilize resources to improve instruction for all students while meeting state requirements. And they must meet those demands even as the measures, incentives, and definitions of appropriate learning undergo substantial change.

Public education is expanding in terms of both student numbers and diversity. An increasingly contentious political environment has accompanied the growth in diversity. Immigration is also shaping the demographic picture. For example, many immigrant children need English-language training, and providing that training can strain school systems. Economic changes are also affecting schools, as the number of children who are living in poverty has grown and poverty has become more concentrated in the nation’s cities.

The shift to a knowledge-based economy and demographic changes accompanying the shift challenge the schools that are attempting to serve area economies. Given such demographic challenges, school leaders must create or expand specialized programs and build capacity to serve students with diverse backgrounds and needs. Leaders must also increase supplemental programs for children in poverty and garner public support for such measures from an aging population. Educational leaders must cope with two chief issues in this area: First, they must overcome labor shortages; second, they must maintain a qualified and diverse professional staff. Shortages of qualified teachers and principals will probably grow in the next decade. Rising needs in specialty areas like special, bilingual, and science education exacerbate shortages. Causes of projected shortages include population growth, retirements, career changes,and local turnover. Turnover generally translates into a reduction of instructional quality resulting from loss of experienced staff, especially in cities, where qualified teachers seek better compensation and working conditions elsewhere. In order to address shortages, some jurisdictions have intensified recruiting and retention efforts, offering teachers emergency certification and incentives while recruiting administrators from within teacher ranks and eliminating licensure hurdles. In these efforts, leaders should bear in mind that new staff must be highly qualified. It is critical to avoid creating bifurcated staffs where some are highly qualified while others never acquire appropriate credentials. Leaders must also increase the racial and ethnic diversity of qualified teachers and administrators. An overwhelmingly White teacher and principal corps serves a student population that is about 31% minority (much greater in some areas). More staff diversity could lead to greater understanding of different ways of thinking and acting among both staff and students. This survey of the current context of educational leadership reveals three dominant features. First, the national shift toward work that requires students to have more education has generated demands for greater educational productivity. Second, this shift has caused states to play a much larger role in the funding and regulation of public education. Third, states’ regulatory role has expanded to include accountability measures to ensure instructional compliance and competence. Educational leaders must take heed of these features if they hope to successfully navigate the current educational terrain.

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Building A New Body Shop

The purpose of this article, and the subsequent follow ups I will be writing, is to share with our customers what we hope will be valuable information in not only starting but running a successful collision repair facility.

When someone decides they are going to start a business, it usually comes from the thought that “Hey…not only can I do that…but I can do it better than the other guy….AND I can make some money doing it.” As such, the entrepreneurial spirit in us kicks in. We put together a business plan, we weigh the options of cost/loss versus profit and we decide to roll the dice, as it were, because we know we can build a better mouse trap. It is this spirit that drives us all in business.

In starting a collision repair facility, there are essentially two schools of thought. The first being the “corporate” path where one looks to build large scale, borrowing heavily either from banks or investors to finance the designing, building, staffing and managing of a larger facility. The second, and far more common is the “mom and pop” approach. Now arguments can be made as to which one is better for the ROI of the investment, but I tend to believe that the smaller shop is a better investment, long term for the ownership. I recently spoke with a long-time customer of mine about his thoughts on a start up body shop. He had successfully expanded and maintained a very large facility over the past 20 years. His annual gross numbers are well above 2 million. When I asked him his opinion on a best case scenario for starting a body shop, I was surprised to hear that his views are very much like mine considering he chose the “corporate” method and it has done extremely well for him.

When my friend Robert went to the bank 8 years ago, he was asking to borrow about one million dollars to build his new shop. He was looking at increasing the size of his operation by over four times its current state. Expanding his operation from a 4200 square feet facility to a building well over 22,000 square feet was a mammoth undertaking. He rolled the dice, borrowed heavily and has since made a very good living for himself as well as his employees. Yet when asked if he would recommend doing the “corporate” start up, he said he would not and that the “mom & pop” approach was a much better decision for a new shop owner. As we discussed the issue over a few phone calls, these were some of the key points we agreed upon.

1. You should not start any business without a business plan and you will not borrow money from a bank for a new business without a business plan, period. My advice is to seek professional help on this. Look to the Small Business Administration to help you with establishing your plan. They have a large library of “how do I’s” for the small business starter. They can recommend advisors, give ideas about money management and in some case help you secure some funding sources to help in the startup process. Additionally, with the current economy having banks scared of lending money to anyone regardless of your credit score, borrowing history or cash flow, they can help you solidify your smaller business plan. Also getting a bank to lend you a smaller amount of money maybe a little easier if you have a well thought out and structured business plan as long as they feel comfortable with the amounts and the diligence you have put into the research of the plan. Be sure to include studies of the surrounding marketplace. How many other shops are in an immediate proximity to your proposed location? Is there sufficient egress to the property via main intersections or other businesses in the area that can generate potential “drive by” advertising for you? Do you plan to build or perhaps lease an existing building?

Have you made any contacts with potential clients such as rental companies, delivery companies, cab companies, or perhaps municipalities for bid work? Getting secured, contracted work will add bottom line receivables to your business that banks like to see. Be sure to approach suppliers and work out some soft numbers for discounts on parts and materials so you know your margins based on percentages. As you are looking for a location or perhaps looking to build, remember that you can always expand if the business calls for it. Avoid going into “building” debt and not being able to afford to install the necessary tools you need for opening day. Try not to over extend your business on Day 1 by over borrowing. Establish the track record with the lender by borrowing what you need to get your shop up and running and perhaps a small operating cushion. Sell them on the fact that you will be profitable quickly.

2. You will need to further decide how your business plan will be incorporated into a complete business model for your shop. A common misconception is that “bigger makes more money”. This can be true as we see in the larger consolidators. It means, however, as we are starting up more cost, higher risk and an inability, far too often, to survive. Start with what you know. Perhaps you are a good painter/body man. You have a good body man ready to come on board. Perhaps another fellow is a frame man. All you need is a small space, perhaps three bays, a small Chief rack and a paint booth to make it all happen. It is as simple as that. Start small and grow. Do not over commit unless you have something you can fall back on. In Robert’s case, he was maintaining his original shop while he expanded and built his new shop. As you establish your business, your customer base and your reputation, you will see opportunities to expand as your bottom line grows.

3. Pay “cash” as much as possible until you have established your cash flow patterns. Many shops I have talked to over the years get strangled in a cash flow net. It is easy to do regardless of the industry but in our collision repair industry, it happens more than most due to the nature of the business. Fronting repair costs of parts and labor, awaiting payment for past repairs, fleet accounts that pay on 30 or 60 notes or getting stuck with abandoned vehicles are only few of the problems shops face. These and many more lead to faster cash out and slower cash in. So do what you can to minimize credit exposure. Pay cash for parts when possible. Try not to give away profits by “financing” deductibles whenever you can. As you establish your profit margins, you could consider this as an alternate revenue source but I caution against it in a start up shop.

4. Try not to bog your shop down with “stall sitters” such as severe hits or restoration projects. If you have the physical space to store them or move them easily from the work areas, it isn’t a big deal but remember, we are looking at a small shop scenario. The longer a car sits on the frame rack or in a tear down stall waiting on another car to come out means higher turn time and less flow through your shop. Try to establish a quick fix mentality. “Hang and Paint” repairs, while considerably less dollar amounts, tend to be as high or higher profit percentage than heavy hits. The turn time for fender benders is obviously less and can lead to attracting clients such as rental companies or service companies that need their vehicles on the road. A faster turn time for repairs on a rental car equates to more money for the rental company. This can obviously lead to more work in volume from the rental company to your shop. So consider keeping a streamlined process to handle smaller hits more efficiently to be more profitable. I am not suggesting you turn work away but rather be a little selective on the scheduling if you can.

5. Work to make sure your customers are the top priority in your business. They are the reason you are here. Go the extra mile. Make them realize they came to your business for a reason. A business man I know is fond of saying “the difference in ordinary and extraordinary is the extra.” When you think about it, it is the extra things one does for the customer that offsets them from the competition. Taking care of your customer is the easiest way to secure another customer. Generations of family member continue to take their vehicles the same shop because they have an attachment to the repair facility by some means. If you can establish that type of relationship by taking care of the extras, you can grow your client base laterally without much cost. Remember, every job we do in a body shop is like a rolling billboard for the next potential customer. Friends know that “Joe Consumer” wrecked his car. When they ask, you clearly want “Joe” to tell them that every aspect of the repair process was handled professionally, quickly and without incident. Since on the average, drivers only come to need repairs done once every 7 years. That is a long stretch if you are not ambitiously going after more customers. You do this by taking care of the details, the extras.

While these steps might seem simplistically drawn out, they are the cornerstone to a thriving business. What needs to be understood is that there are a lot of moving parts to getting a shop open. These are more fundamental practices. In my next article, we are going to get more involved with the actual shop set up, discuss DRP relationship and how we go about marketing to the public for our new body shop.