MONROE, Wash. – Sometimes Thea Heineman cannot quite believe that she and her husband Aaron are owners of the Monroe Montessori School. Founded in 1978 by Allan and Gayle Washburn, the school currently serves approximately 130 families in Snohomish County and has a student population of 150 with classes for toddlers through third grade.
“I have finally found my soap box to stand on,” said Heineman. “I have found a career that challenges me every day and honors my love of children, education and serving the local community.”
Training toward buyout
Heineman says it is her dream job and all of her previous work experience has prepared her for it, but the path to get there was a bit circuitous.
Heineman’s first career was as a bilingual social worker, but she then went back University of Washington for a master’s degree in education and became a high school Spanish teacher. When her first child was born, she decided she wanted more flexibility and time with her daughter, so started her own business teaching Spanish to both children and adults.
In 2008, when her younger child was entering kindergarten, Heineman decided it was time to return to teaching full-time, but the public schools in her area weren’t hiring. When she heard that the Monroe Montessori School was looking for teachers, she decided to apply.
The Washburns were so impressed by her teaching experience that instead of a part-time job, she was offered a full-time job as lead teacher in the lower elementary (1-3) classroom.
The more Heineman learned about Montessori, the more enthusiastic she became. “It was amazing,” she said. “It fit my own teaching philosophy perfectly and I knew it was something I could embrace.” Not only was the school a perfect fit for Heineman, but also for her two children. Daughter Reina enrolled in second grade and son Solomon in kindergarten. “Working in a small, nurturing school environment in which my own children were attending was priceless,” Heineman said.
Fast forward about four years. The school owners approached Heineman to say they planned to retire in about five years and they wondered if Heineman was interested in taking on more administrative duties. If it all worked out, they said, Heineman would have first right of refusal when they decided to sell. “It was a once in a lifetime opportunity,” she said, and she jumped at it.
Very quickly she was deep into the myriad and complicated issues involved in running a private Montessori school, including the knotty problem of making sure that classes at each level have the desired enrollment so that the school can survive and students can thrive. In an effort to diversify and meet changing demands, Heineman spearheaded successful efforts to create an afterschool enrichment program and another to open up a toddler program.
By year three Heineman was handling nearly all of the day-to-day administrative tasks and leading strategic discussions about future growth, but she still knew nothing of the financial side of the business. So, in 2015 when the owners announced that they were moving up their retirement plans, Heineman was both excited and worried.
Steep financial learning curve
The owners named a price, but Heineman didn’t know if it was fair. Even if it was fair, it was more than she could pay, so where did she go from there? She called her brother, who had purchased a mechanic’s shop two years earlier, and he advised her to do what he had done and call the Washington Small Business Development Center (SBDC).
The Washington SBDC provides confidential, one-on-one business advising to entrepreneurs and small business owners who want to start, grow or transition a business. The Washington SBDC receives funding from Washington State University and the U.S. Small Business Administration (SBA) and other state and local institutions of higher education or economic development.
That same day Heineman called Jennifer Shelton the SBDC advisor in Everett. Shelton set up a meeting and asked Heineman to bring in financial spreadsheets so they could do a cash flow analysis. “I didn’t know what a cash flow analysis was,” Heineman said.
Heineman had and continues to have a great relationship with the founders of the Monroe Montessori School, but when it came to negotiating a business acquisition, she quickly realized she was in over her head. She and her husband were both service professionals and steady wage earners, but now they were considering borrowing $2 million or more to buy a school.
From the very beginning, Heineman said, Shelton made her feel that she was up to the challenge and that the school seemed a worthwhile business venture.
As a starting point, Shelton explained what documents and financial statements Heineman needed to obtain from the sellers. With that information in hand, Shelton was able to help Heineman create two valuation spreadsheets, one for buying the business and leasing the property (the owners’ preference) and another for buying both the business and the property.
Over the course of several months, Heineman got a crash course on business valuation and understanding financial spreadsheets which was a huge benefit. She understood how the owner arrived at his original sale price, but she was also able to present and defend her own offer, using past performance and future projections.
Attaining her dream job
It took about three months of negotiations to agree on a price for both the school and the buildings, but at the end of negotiations, both sides were satisfied. So satisfied, Heineman said, that the seller agreed to carry financing on the property, which allowed Heineman to qualify for an SBA 7(a) loan, instead of a more expensive loan that would have covered both the business and property.
“My worries and insecurities are easing now,” Heineman said, smiling, and she is thrilled with the outcome. But, she said, the business acquisition process was the most stressful year of her life. However, Shelton’s on-going advice and support kept her going.
“The bottom line is that I have the utmost respect for the SBDC,” Heineman said. “I could not have done this without the support and help of my advisor. It changed my life.”
Her husband, supportive from the start, became more and more engaged in the process, to the point that in February he will become the school’s finance officer, taking care of bills, payroll and other book keeping and business matters in addition to all building maintenance issues.
Recently Heineman came across an online advertisement for a complete set of Montessori curriculum materials and when she called to inquire she learned that the supplies were being sold because a school had closed. In the back of their minds, Heineman and her husband are already thinking about their succession plan, with the continued help of the SBDC they, like the school founders before them, will have a profitable and sustainable school to sell instead of simply a set of school supplies.
“I hope that when my husband and I are ready for retirement that we will be able to sell the school to someone who will be equally honored and excited to continue the legacy of the Monroe Montessori School,” Heineman said.
By Hope Belli Tinney, Washington SBDC
News Media Contacts:
Thea Heineman, Monroe Montesorri, (360) 913-1291, firstname.lastname@example.org
Jennifer Shelton, Washington SBDC in Snohomish County, (425) 640-1435, Jennifer.Shelton@wsbdc.org