Know-How Exchange : Strategy

Chicken first -so it can lay eggs for you. I believe they need to focus on getting the clothing line up and running and getting some income before they can worry about the horses, property, etc.

If done right, the at-risk kids could be involved in the business in ways that help the revenue.

My first thought is that they're trying to start a second business to fund the first, and each of these businesses are hard enough in their own right.

In the past, when I've talked with non-profit clients, I suggest that they create a strategy for achieving their primary goal first. For example, how much $$$ do they really need? Can they find someone to bequeath the ranchland to them? Do they need to own it, or can they get a 99-year lease? Do they need 50 horses, or can they get local riding clubs to keep their horses on-premises, etc. Having $ is one way to achieve their goals, but there are many other ways.

Unless they have the funds to start a clothing line, they're risking the chance to lose money in the startup attempt. If they're wed to starting a clothing line, start that business as a non-profit that donates 100% profits to the associated charity. Don't comingle the funds, nor staffing.

A building as they describe is going to cost $15 to 20Mil. I take that # from various HS, middle schools and jr highs I have bid on. Not including staff, horses, insurance (which is going to be very high), promotion of the school and accreditation. Remember that when you are doing a building project housing kids, even privately, you'll be swimming in building codes and other regs.

I am sure there will be grant $ for this, but it's going to have to be ongoing. They can charge tuition but it won't be enough with this demographic to keep the lights on.

An alternate is to find an existing school (lots of churches here for sale) with land suitable. You can hire an architect, I think these numbers are accurate, but kind of on the low side from my experience.
https://www.reedconstructiondata.com/news/2009/09/rsmeans-dollars-per-squar...

This is without land and furnishings, lockers, etc etc-- as well as the items I listed above.

First, do biz plan (with extreme attention to financials) on clothing line. See where the break even will be and funds available for school. you'll probly find, as most startups, they're going to be red for a couple years. Then run one on the school, to see how much it'll take to fund this. See if the lines cross together anywhere.

Non profits are so much fun to work with. Those board meetings kept me a loyal customer to Lady Clairol....

Nothing is impossible, but I think the NFP folks are smoking something strong if they really think they can launch a clothing line, hit those volume targets and make enough money to fund a ranch in the next 10 years.

Challenge them to create a rough business plan for the clothing line, make reasonable assumptions (along with best-case and worst-case scenarios), and see if they still want to do this.

I've had experience with launching clothing lines, and that's a very competitive business with tight margins and stressed-out buyers who know what it costs to cut-and-sew in China. Even if they spend enough on up-front marketing, get the funding for manufacturing and distribution, it's going to take a while to payout that investment -- let alone generate enough profit to fund a ranch! (Maybe a few acres in the middle of a desert somewhere ...)

If they have the funding for such a [risky] venture, and the expertise and connections to get the clothing line into retail distribution quickly, they might be better off just putting that money right into the ranch. At least that way it's not totally lost; the kids will get some benefit. If the clothing venture loses money, the investment will be gone AND they won't have helped anyone except a few laborers at their sewing machines.

This is a joke, right?

Randall,

I recommend they create a cold fusion power plant, sell the electricity which fund the clothing line launch which will fund the ranch.

Do these folks have experience in the clothing business besides having visited Target once in a while?

Wayde

none of this is my area of expertise, but you asked for opinions, so here goes...

I can not see any synergy whatsoever between a clothing line and a camp for troubled teens. I would begin by providing scholarships to existing camps and programs rather than building my own, and I would not limit my fundraising attempts to a line of clothing. If I felt my best approach to fundraising was selling a consumer product, I guess I would try something like perfume which is a high margin product sold to upper income people... but wouldn't it be easier to organize some fundraising balls and other charity events?

Few Fundraiser balls will generate this kind of income

First, I second everything Carol and Michael said.

I think the NFP is in the grip of a grand, glorious idea with little clue how to execute it, or if anyone will be interested once they do.

I'm not an expert on either clothing lines or schools, but a few thoughts anyway.

I do know that whether it's clothing or anything else, they'll need a good "hook": get the kids to design the clothes? hold a contest? t-shirt of the month club? adopt a design? get higher privileged kids to pitch in somehow?

Why clothing? Is there something with a higher margin they could do?

Randall

I have a good idea of the challenges your client faces, because I'm just concluding a stint of around 30 months running a series of key projects for a 130+year old NFP that cares for abused and neglected children.

First off, the clothing idea might very well fly. It's just really, really unlikely based on all the reasons fellow KHE members have provided above.

What your client really needs to do is establish a very strong strategic plan around how it expects to be able to deliver its services.

Then it needs to find funding - starting with some cornerstone philanthropic benefactors - not investors - who are interested in improving the lot of these abused and neglected children.

One potential benefactor is Government. State or Federal - they may not know it but they have a vested interest in getting these young people to complete their education so they can pursue a rewarding career, not devolve to a life of abuse and crime. (Statistics show the abused tend to become abusers unless specific and long-term interventions are put in place to break the cycle of abuse, neglect and poverty.)

Government can be benefactors without becoming philanthropic. By deciding to fund this 'teen-ranch' program they will be funding a private (NFP or third-sector) delivery of services they might otherwise have to provide themselves. $5M a year sounds like a steal - what government can provide any quality programs of substance for this kind of money?

With government providing the bulk of the required funding you can go to philanthropic benefactors for more funds to top-up or add services to the programs the government is funding. A well-designed marketing program highlighting successes with teen-clients (you'll have to use made-up names, actors and models as the client's confidentiality and privacy will have to be preserved) must tug at the emotional heart-strings but also highlight the economic and other qualitative benefits to society.

So, in order, your NFP client needs:

1. Strategic Plan
2. Business Plan
3. Lobbying Plan - a special marketing plan directed at government
4. Marketing Plan - targeted at philanthropic donors - givers of gifts in cash or kind.

Hope that helps.

Cheers

ChrisB