Starting a charter school can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful charter school.
Importantly, a critical step in starting a charter school is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start a Charter School:
- Choose the Name for Your Charter School
- Develop Your Charter School Business Plan
- Choose the Legal Structure for Your Charter School
- Secure Startup Funding for Your Charter School (If Needed)
- Secure a Location for Your Business
- Register Your Charter School with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Charter School
- Buy or Lease the Right Charter School Equipment
- Develop Your Charter School Marketing Materials
- Purchase and Setup the Software Needed to Run Your Charter School
- Open for Business
1. Choose the Name for Your Charter School
The first step to starting a charter school is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your new charter school:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your charter school.
2. Develop Your Charter School Business Plan
One of the most important steps in starting a charter school is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your own charter school.
- Company Overview – this section tells the reader about the history of your charter school and what type of charter school you operate. For example, are you a virtual charter school, magnet school, single-sex school, or a faith-based school?
- Industry Analysis – here you will document key information about the charter school industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your charter school? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your charter school make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Charter School
Next you need to choose a legal structure for your charter school and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the charter school and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a charter school together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a charter school include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a charter school is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your charter school, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Charter School (If Needed)
In developing your charter school business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a charter school to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a charter school that they believe has high potential for growth.
5. Secure a Location for Your Business
When looking for a location for your charter school, you’ll want to consider a few factors.
First, you’ll need to find a space that is large enough to accommodate your students and staff. You’ll also need to make sure that the space is accessible and affordable.
Another important factor to consider is the zoning regulations in your area. Make sure the location you choose is allowed to operate as a school. You’ll also need to check with the local school district to see if there are any restrictions on the type of school you plan to open.
6. Register Your Charter School with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your charter school’s name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your charter school to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
To open a charter school in most states, you will need to obtain a charter from the state authorizing body. You will also need to apply for and receive a license to operate the school from your state Department of Education. In some states, you may also need to obtain a business license and/or environmental permit.
In addition, you will need to comply with the health, safety, and civil rights requirements of your state.
Be sure to check with your state’s education department and local government offices to determine which licenses and permits are required since charter school laws vary from state to state.
10. Get Business Insurance for Your Charter School
There are many types of insurance that are needed to operate a charter school depending on the state in which you are located.
Some business insurance policies you should consider for your charter school include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Auto insurance: If a vehicle is used in your business, such as a school bus, this type of insurance will cover if a vehicle is damaged or stolen.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Charter School Equipment
It is important to note that there are various pieces of equipment that are necessary in order to run a charter school. Some of the most important equipment includes computers, printers, photocopiers, desks, chairs, and textbooks. In addition, a charter school may require classroom shelving and office shelving for storage of reading books, science equipment, math tools, and other items that are relevant to the school’s curriculum design.
In order to create a safe environment for students in the school facility, there are also other pieces of safety equipment required. First aid kits are necessary as well as fire extinguishers, smoke detectors, and emergency lighting.
12. Develop Your Charter School Marketing Materials
Marketing materials will be required to attract and retain customers to your charter school.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your charter school. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional charter school website provides potential customers with information about the services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your charter school.
13. Purchase and Setup the Software Needed to Run Your Charter School
To start a charter school, you need to have the proper software to run the school. This includes software for managing finances, tracking student progress, and communicating with parents. There are many different software programs available for new charter schools, so be sure to find one that fits your needs.
14. Open for Business
You are now ready to open your charter school. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start a Charter School FAQs
No, it is not difficult to start a charter school. There are many resources available to help you get started, and the process is relatively straightforward. However, it is important to understand the requirements and regulations involved in starting a charter school before you begin the process.
The best way to start a charter school with no experience is to do your research. Learn about the process of opening a charter school and what's involved. You can find a lot of information by contacting your state's Department of Education. Attend educator workshops and networking events, and meet with other successful charter school board members to get ideas.
The most profitable type of charter school is the for-profit school. This is because successful charter schools are able to generate revenue from their students. They also tend to have higher tuition rates than nonprofit and public schools.
Charter school startups cost around $200,000-$300,000. This includes expenses such as purchasing or leasing a building, hiring staff, and purchasing curriculum and materials.
The ongoing expenses for a charter school can include the cost of rent, utilities, teacher salaries, administrative staff salaries, textbooks and other instructional materials, technology needs, transportation, and other operating costs. Some charters also have substantial building renovation costs.
Established charter schools make money in two ways: through tuition payments and through government funding. Charter schools receive a per-pupil funding amount from the government, and they can also charge tuition. The amount of tuition charged varies depending on the school's location and the type of charter school.
There is no definitive answer, as the profitability of charter schools can vary greatly depending on a number of factors. However, most charter schools can be lucrative because they are able to charge tuition fees not charged by schools in the public school system. Many states provide financial incentives for charter schools, which can also boost their profitability.
Charter schools fail because they are not subject to the same rules and regulations as public schools. This means that sometimes charter schools are not held accountable for their results, which can lead to lower-quality education for students. Once a school develops a reputation for providing lower-quality education, it can fail quickly. Additionally, most charter schools are funded by private donors rather than through state or federal funding, which can also lead to problems if donations slow or stop.