IS
THERE STILL ROOM?
By: Lon Woodbury
lon@woodbury.com
Our office frequently receives calls from people
wanting to open a private parent-choice residential program
for high-risk teens. Some are interested in creating a new
school or program. Others already have successful public funded
programs and want to convert to private-pay due to state budget
squeezes. All these conversations come down to a basic question:
Is there room for another program, or is the market saturated?
My answer is always the same; there is still plenty of room
for good programs, and all indications are that the market
is still growing and a long way from being saturated. I base
this on several considerations.
First, since the 2001 stock market slump, every year has had
a record number of new private start-ups. Half way into this
year, we have already received information on more than a
half dozen new start-ups, and we are aware of several more
in the early planning stages. This suggests that a number
of astute people have analyzed the market and concluded that
the potential in this market is sufficient to take the major
risk of undertaking the very difficult task of creating a
new private residential program for high-risk teens. In addition,
several successful schools and programs have been existence
for one, two, or three years, etc. The success of these start-ups
shows that a high percentage of them survive.
Second, there is a widely held perception that teen anti-social
behavior seems more widespread and more extreme than in the
past. Regardless of speculations on the cause or percentages,
the consensus is that increasing numbers of children are in
trouble and are not growing up very well. Many private residential
parent-choice schools and programs have been very successful
in the past serving this perceived problem, and there are
no indications this problem will go away very soon.
Third, there are an increasing percentage of parents willing
to make placement decisions on their own authority. Thirty
years ago, a parent concerned about their child would usually
go to some institution or professional and ask them to do
something to help. Now, an increasing number of parents are
making placement decisions on their own, often bypassing the
professionals and institutions that used to make that kind
of placement decision. This is a reflection of a broad and
profound attitude change in this country. The Medical field
is a good example of this attitude change as shown by the
increasing acceptance of alternative treatment systems and
the boom in the nutritional supplement business. The same
change in parents' attitude is happening in public education
as indicated by the increased popularity of charter schools
and voucher programs. There is no indication we have reached
the end of this shift toward parents taking placement decisions
into their own hands when their child is in trouble. Every
year, it seems more parents are willing to consider this option.
Fourth, there is an increased acceptance of the contribution
private enterprise can make to social problems. The election
of the Reagan Administration in 1980, with its rhetoric on
limited government and support of free enterprise, was a reflection
of a major change in public attitudes toward private enterprise.
Previously, the consensus was only the government had the
money, ability and social conscience to tackle serious social
problems. In addition, the general perception of business
before 1980 seemed to be that its bottom line emphasis on
making money precluded solving social problems. However, educational
visionaries who developed effective private schools and programs
for high-risk teens even before 1980 demonstrated that business
could effectively help children while still succeeding as
a business. As a result, the 1980s saw an explosion of private
parent-choice residential schools and programs for high-risk
teens. This broad shift in attitude toward private business
continues in all areas of the economy.
Fifth, there is a perception by business academics that industries
go through a kind of life cycle. First is the infancy phase
when a few entrepreneurs see an unmet need and develop creative
solutions. This is a very creative and dynamic time with both
outstanding successes and outstanding failures. Consumers
are uncertain whom to trust. The public is mostly unaware
of these new approaches and unfortunately the industry can
attract people who are looking for easy money or do not really
know what they are doing. At this stage, it is very easy for
anybody to enter the industry on a shoestring. This was the
status when I first became aware of this industry in 1984.
In the adolescence phase the 'general public' begins to become
aware of the existence of this industry. Responsible programs
begin to develop 'best practices and standards' and form Associations,
and public institutions start looking for justifications for
regulation and oversight. It is my opinion that the network
of private parent-choice residential programs for high-risk
teens has transitioned into this phrase the last few years.
Entry into the business is still fairly easy, but proper preparation
and solid staff experience is becoming more important, and
success will be less likely for those who try to start a program
with just hope and a shoestring.
Maturity is the phase where the market is pretty much saturated.
Standards and oversight are well accepted and only top quality
start-up programs, with resources and knowledge of the acceptable
ways to provide these services, have a decent chance of survival.
The network of private parent-choice schools and programs
has a long way to go before reaching this stage.
The last phase is aging, where the need has either decreased
or been met. Those businesses that survive are businesses
that are the most efficient, often through the economies of
scale. Educational visionaries have gone elsewhere.
These are some of the reasons I advise those callers it is
still a good time to try a start-up in this industry. At this
time, there is plenty of room for good programs, and there
still is flexibility that would allow a program to survive,
even if they go through the turmoil of first year growing
pains and learning how to be successful.
Copyright ©
2005, Woodbury Reports, Inc. All Rights Reserved.
(This article may not be reproduced without written approval
of the publisher.)
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