Clement Erbmann 
Anyone who has tried to sell a product to a school district learns quickly that the calendar matters as much as the pitch. Budgets are planned months ahead, decisions pass through several offices, and the money for something new may not exist until the following fiscal year. For a young education company with limited funds, that timeline can decide whether it survives long enough to prove its product works.
In this 2015 conversation, five education business leaders were asked what makes the education sales cycle so challenging, and how entrepreneurs can work within it. Their advice describes how K-12 purchasing worked when they spoke.
Plan for a longer cycle from the start
Clement Erbmann, Managing Director, First Analysis, began with money. “An entrepreneur has limited capital and so has to plan at the outset for a longer sales cycle,” he said, adding that the length of that cycle depends on the product. “Some products are annual purchasing, those that have to find their way into the budget and then be purchased in the following year.” Others can be bought almost immediately.
Whatever the product, his conclusion was the same: a company has to make sure there is enough capital to last “over the period that will certainly encompass a couple of sales cycles.” A founder who budgets for one year of selling may run out of money just as the first district is ready to commit.
Ways to work through the cycle
Bill Bavin, Partner, Chessiecap, listed several ways entrepreneurs can manage the wait. Grant programs and investors can supply capital, and “it helps to set up pilot programs” with districts. His other advice was about restraint: “Try not to get too big too fast. Work as you can in a fairly tight geographic area.” He encouraged founders to “spend a lot of time on site making sure that you’re refining the solution,” and to keep costs low wherever possible: “Fly Southwest, plan early, things like that.”
Pilots deserve a careful word for both sides. A well-designed pilot gives a district evidence before a larger purchase and gives a company the classroom feedback it needs. A pilot without clear goals, timelines and a decision point can drift for a year and leave both sides where they began.
A price that pays for quality
Idit Harel, CEO, Globaloria, spoke about new publishers whose products offer an alternative to existing courses and curriculum, especially in STEM and computer science. A major challenge for a new publisher, she said, is “to create a pricing model that will allow the company to deliver quality training, quality service every step of the way,” along with “data systems that can report to principals and superintendents” what is happening for teachers and students, whether in one school or many, in small counties or larger districts, rural or urban.
All of that costs money. The difficulty, as she described it, is finding a price that principals and superintendents find attractive enough to buy while still paying for the training and support that make the product work for teachers and students. In practice, a price set too low can win the contract and then fail the classroom.
Working backward from the first day of school
Joseph Olchefske, CEO, Flex Academies, laid out the timeline most clearly. “If the school year starts on Labor Day, all of the major purchasing decisions for a school system probably got made April or May prior to that,” he said. Because a district is a bureaucracy that takes several months to reach a decision, the real decision-making process begins around January or February. Before that, a company needs several more months to talk with people and identify the key decision-makers.
His conclusion: “to get a sale that actually occurs in September, your first contact probably has to be in October of the prior year.” In practice that means the conversation with a district begins nearly a full year before students ever see the product.
Timing, budgets and federal dollars
Jim Kohlmoos, Principal, EDGE Consulting, noted that the sales cycle follows the school year, running ahead of it, and that there are always open questions about the next year’s budget and appropriations, including federal appropriations. He pointed out that “there’s a lot of flexibility dollars in the federal appropriations for education,” adding, “A lot of people don’t realize that, by the way.”
For entrepreneurs, he said, “timing is everything.” A product may be ready to test in the marketplace when “the dollars aren’t there yet,” and he described finding startup funding that carries a company into the regular cycles of school funding as a real challenge.
What the cycle means on both sides of the table
The five answers point to a few lessons. Companies should budget for at least two buying seasons, start conversations close to a year before they hope to see a purchase, stay close to a manageable number of districts while the product matures, and set prices that cover the training and support schools will expect. District leaders, in turn, can help good products reach students by being clear about when budget decisions are made, who makes them and what evidence they need to see.
How districts buy has changed since this conversation was recorded, with more digital purchasing systems, more subscriptions and more scrutiny. edCircuit has looked at how buying has shifted in K-12 procurement trends over the last 10 years and at how education vendors can talk with educators at conferences.
Subscribe to edCircuit to stay up to date on all of our shows, podcasts, news, and thought leadership articles.
Related reading
More on Education Industry Questions
