February 10, 2025  |  Peter Long

Charting Your Course Through Uncertain Times - Part 1: Smart Money

Welcome to the 1st part of our 3-part series (and soon to be released whitepaper) on Charting Your Course Through Uncertain Times in the K-12 Educational Market.

Change is coming and it is happening extremely fast. This change is impacting all providers in the K-12 market whether they are Trump supporters cheering all this on with shouts of “It is about time!” or Liberal activists screaming “This is all insane!” Both camps have new challenges ahead they need to plan for. So, how do you position your K-12 product or service company to survive, and maybe even thrive, with all the shifts that are happening at breakneck speed? We hope to give you a few things to consider on your unique journey towards accomplishing that.

This series (and our upcoming whitepaper) will not be a political rant for either side. There are hundreds of different outlets for that on both sides of the political isle. Rather this series will work to provide perspective on navigating a new political reality. There are many changes underway, from likely tariffs, changes to K-12 funding, more State focused programs and less Federal focus, potentially new opportunities for private and religious education, and much more. So, what you need to be doing right now is finding ways to set up your company with new plans that will ensure your company has a chair to sit in when the music finally stops (on this very real-world game of musical chairs). Make no mistake, there will be winners and there will be losers in this new reality. But which side of that paradigm your company falls will likely be determined by how willing and able your company is to change, and how much advanced planning and preparation you are willing to invest to make “smart” and productive business pivots.

What Smart Money is Doing Now

I have a friend that runs a large private equity firm. His company has invested billions of dollars into a large and diverse set of portfolio companies. His investment team is comprised of brilliant people with mind-blowing resumes and an incredible number of years’ worth of combined M&A and business consulting experience. His firm also has access to think tanks, industry experts, economists and Ivy league professors on speed dial. So, I decided to ask him what they see happening in their crystal ball? How were they advising companies to approach the dizzying set of Executive Orders coming out of the new administrations and what was their plan on how to manage things like Tariffs, DOGE reviews, withdrawal from the WHO (for their healthcare companies), etc. His first piece of advice: Smart Money Firms are already in planning sessions that are charting new game plans to address every financially significant situation that could be likely.

His firm was already into their second full week of an all-hands-on-deck planning process. They have their entire team taking a hard look at every likely scenario that is financially significant. How can they build a unique plan for each portfolio company that helps each one mitigate any downside risks and capitalize on any upside potential? This is all about business and pivoting to either capitalize or mitigate.

For example, he told me that when they look at the potential tariffs on imports from China, Mexico, and Canada, his firm may ask things like:

• Where are the manufacturing operations for each portfolio company and where are their major suppliers? Where do we have the most tariff exposure and what options are available to mitigate the impact of these?
• What are the product costs and margins and where are sales coming from (domestically and internationally) – what is the selling risks for each portfolio?
• What steps can be taken to minimize any adverse impact on any international sales efforts?

These were just a few examples at the tip of the iceberg of questions being asked and analysis and plans being created for every portfolio company. The ideas and plans they were coming up with were in some cases incredibly creative and bold. For example:

• Can products manufactured in tariffed countries be shipped legally from ports that are in countries not being tariffed? (Spoiler alert - yes, there is a way to do that.)
• Can a new non-American brand be created to help offset sales declines from a brand being protested? (Another yes, there is a plan for that.)

Anyway, his firms’ investments are not necessarily education focused companies. The purpose of all this is not to tell you about the plans or solutions his team created for their portfolio companies. But what I am trying to point out is that a LOT OF PLANNING is happening RIGHT NOW, and it is ALL about being prepared for many different potential situations. He used a football analogy to explain his thinking on all this:

Take the Super Bowl football game as an analogy: The regulation game that the Kansas City Chiefs and Philadelphia Eagles play will be four 15-minute quarters, for a total of just one hour in game time. But game plans, practice and preparations that they create to try and address every possible game scenario they may face have been underway for months. Developing plans, practicing plays, building back-up players, etc. Ultimately, the team that has a better ability to pivot their plans and have players and plays ready to address their opponents’ shifting plans will be the team that most likely comes out ahead. 

Are YOU Smart Money?

Hopefully the point of this blog post is not misunderstood. The specific plans and ideas that my private equity friend has been developing are likely not relevant to 90% of the companies reading this. However, the idea behind why he is creating plans - why they want to mitigate any downside risk, and why they want to identify any new opportunity - should be relevant to 100% of the readers. This same sort of exercise can easily be done for any changes impacting your K-12 product or service company. Take for example, the DOGE efforts at the Department of Education. Does your company’s products or services tap into Title 1 or IDEA funds? If so, what kind of plans do you need to brainstorm as they relate to these? Are there some changes that could potentially open up new opportunities for your company? MCH uses Department of Education collected information that is likely going away – so for us - is there an opportunity to build that information ourselves and supply it to the market instead of the department of Ed? Every company’s planned journey will be unique and there are no easy answers to give anyone. There’s no ‘one size fits all’.

A Final Thought

A quick look at Tariff threats today looks a lot different than it did just a few days ago. At the moment, the tariffs on Mexico and Canada have already been put on pause. So, does that mean that all of my friends planning and strategizing efforts were just a huge waste of time? Doing all that advanced planning and preparation for an event that may now never happen may seem like an exercise in futility, but that doesn’t mean it was a wasted effort. We don’t know what the future holds. Having a team that is well-versed in navigating the changing landscape is essential for future success. If the Kansas City Chiefs coaching staff prepares a game plan for a robust running game from the Philadelphia Eagles and the Eagles instead use a passing attack as the primary threat – was all that running game preparation a waste of time? Is it counterproductive to ask your team to build out plans that may never be used? That can be a hard question to answer, but in this case, knowing that your company has a solid plan in place to tackle almost any situation is empowering.

For your team members that are bullish on the Trump Administration’s changes, they have a chance to shine and showcase ideas on how to capitalize and thrive in this new era. Planning efforts can be an energizing boost that helps drive new opportunities.

For your team members that find themselves worried about how this may impact sales or even the future viability of your company, this type of planning exercise offers them comfort in knowing how you might mitigate the downside risks that they see. By helping understand there is a plan for things whether they go one way or the other, you’ve built a more confident team that walks towards success. The idea here is to be flexible and make sure you look for both the risks and the opportunities.

Check back in next week for part two, where we will cover how your company can help partner with schools and districts to figure some of this out together. Schools and districts all have the same needs to do this exact same sort of planning exercise, but most will not. They need access to good information and partners that want to help them navigate the new opportunities and mitigate their downside funding impacts. How to replace lost funding and how to operate in a new system that has changed so rapidly. When things seem uncertain, leverage your company as more than just a vendor - become a partner and a trusted advisor.
 

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