FYI: Critical Numbers
From the Editor
Inside this issue: cutting-edge practices in the education business, what happens when companies move, the new megamarket, and the latest twist in Andrew Raskin's big adventure
This issue features the second in our series of Inc. case studies, which look at the cutting-edge business practices of some of the most interesting growth companies around. In " The ABCs of Profit," senior feature writer Edward O. Welles examines Nobel Learning Communities Inc., based in Media, Pa. It operates 162 schools for K-12 students in 15 states and -- unlike many such operations -- consistently manages not only to produce impressive academic results but to do so at a profit.
What's most interesting is the way the company accomplishes that trick. Nobel does nothing particularly radical or innovative from an educational standpoint. Rather, its success appears to be the direct result of the application of certain basic management techniques, including a relentless focus on three critical numbers: corporate G&A as a percentage of gross tuition, school-occupancy rate, and school personnel costs as a percentage of tuition.
Of course, there's a little more to it than that. Behind the numbers lies a business strategy developed by Jack Clegg, Nobel's chairman and driving force. Clegg is one of those people who have an extraordinary ability to take situations that most of us find hopelessly complex and to simplify them without oversimplifying them. With Nobel, he has formulated a strategy remarkable both for its clarity and for the ingenious way its various elements constantly work to reinforce one another.
Companies on the move
In reading " The Best Cities to Start and Grow a Business in Now," our annual report on America's hotbeds of entrepreneurial activity, I was struck by the dramatic change we're seeing in the way company founders handle the issue of location. It used to be that small growing companies didn't move. Granted, the business environment was always more hospitable for entrepreneurs in some locales than in others. Once a business got started, however, both the founder and the company tended to stay put.
Not anymore. These days a lot of young companies are moving. How many we can only guess, but it's clear that the five companies senior staff writer Emily Barker features in " Best Cities: The Location Advantage" are part of a trend. As David Birch, our longtime "Best Cities" partner and founder of the research company Cognetics, suggests, there's always been a tension between the business reasons and the personal reasons for choosing a particular company location. The new mobility indicates that the balance between the two is shifting.
Why? Judging by Barker's admittedly unscientific sample, it seems to me that entrepreneurs are increasingly reluctant to sacrifice their personal happiness for the sake of the business. Some of them are even willing to go so far as to consider splitting up their companies at an early stage of development. I find that intriguing, although I have to question how it will work out over time. Can a young company survive when key parts of it have no immediate day-to-day contact with the founder? We'll see.
Marketing to teens
As contributor David H. Freedman tells us this month in " What Do Teens Want?" we're all about to be swept under by the biggest demographic tidal wave in our history, namely, the arrival of Generation Y in the form of 25 million free-spending teenagers. All told, they represent a huge potential market -- provided you can figure out how to communicate with them.
Looking for advice on the subject, Freedman sought out two experts, Mark Hoppus and Tom DeLonge, the lead performers of a wildly successful pop-punk trio called Blink-182, as well as the brains behind a popular teenage Web site, Loserkids.com (which is well worth checking out, by the way). Once you hear what they have to say, you may find yourself thinking that the teenagers of today sound an awful lot like ... well, like you when you were their age.
And yet they really are different in some ways. For one thing, they're members of the first post-Internet generation, and they're used to getting what they want when they want it. They're also extremely skeptical of traditional marketing, which isn't surprising when you consider that they've been marketed to pretty much incessantly from birth.
As Freedman shows, that skepticism poses interesting challenges for companies that are trying to sell to teenagers today. I can't help wondering what will happen if they turn out to be equally resistant to marketing when they grow up.
Our man Raskin
There's good news and bad news for fans of our E-Diaries column. The bad news is that our columnist Andrew Raskin is no longer an active participant in the company that he cofounded and has been writing about in these pages for the past year. The good news is that he'll continue to share his experiences with us as he searches for the next big thing.
More than that, I can't tell you without giving away too much of the story Raskin tells in this month's edition of E-Diaries. But do yourself a favor: go to it right now and read it.
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