As mentioned above in the market analysis, we have determined that the competitors in the market are working at a maximum. They are either very happy with their market share or can see the need to expand the market share. This is to our benefit as we move forward. Of all the competitors, there are only four that are affiliated with a national chain, the rest are small independent firms. Having said this, when we called each of them to drop into our accountant’s office to offer their services we noted that only the four from the national chain had company vans. The rest of the companies said this was not required. We also noticed that based on their appearance and presentation, we would very quickly be able to take market share away from them.
While we don’t want to underestimate our competition, we do believe that sales presentation and appearance will go a long way in selling our services to new clients. We need to separate ourselves from the competition and by doing so will win the high fee contracts.
CUSTODIAL CLEANING COMPANY
Daycare
C h i l d h o o d D r e a m s I n c.
132 Glenn
West Town, Ohio 44256 Gerald Rekve
Childhood Dreams Inc. was formed in late 2004 by Selma Tramon. Selma had worked in the retail arena for a number of years. After selling her dollar store, Selma realized that she enjoyed children. Selma’s children were grown and she wanted to somehow incorporate her love of children into a new business. She enlisted in the help of a consulting firm to develop this business plan and research the daycare industry.
EXECUTIVE SUMMARY
Market Analysis
West Town is a quiet city of 100,000 people. It is an active vibrant community with six high schools and eight junior and preschools. The population is broken down into the following categories:
• 0–5 = 8,000
• 6–10 = 12,000
• 11–18 = 8,000
• 18–29 = 15,000
• 30–45 = 20,000
• 46–65 = 35,000
• 66 + = 11,000
Currently there are sixty–six daycare/childcare facilities in the city, with an average of twelve children per site. There are 38,000 homes in the region, including single–family and multi–family units. The average income per household is $44,230. Last year the average family spent $560 per month on daycare. There were 792 childcare spaces booked last year, at a rate of $25 per child per day. The daily revenue was $19,800.
We called all sixty–six day care facilities and determined that on average there was only 8% vacancy.
However, most of the owners told us these would be booked up quickly, as the turnover rate was low.
The local state government provides a $5 per child rebate for families under $36,900 per year in household income. Based on the averages, we will be pricing our daily daycare rate in the $33–38 range.
We did notice in our market analysis that only 12% of the child care providers offered service to the mentally challenged. Most of the child care providers explained that due to the high cost of specialized
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staffing, they would not get involved in that area. However, upon further research, we determined this perception was incorrect. After calls to the state department responsible for this area, we determined that the state would offer special grants.
Grants from State and Federal Governments
• For each child that is medically challenged, $12 per day over the rate we charge that parent. We cannot charge more than $38.00 per day total.
• Plus a $120 per month special education training needs grant per child
• Plus a food allowance of $9 per day per child
• Plus a special transportation allowance grant of $4–$18 per day per child (the less children you have who meet the requirements the higher the rate you are paid)
• Plus free medical transport for any one of these special needs children, if they require any medical care or transportation by emergency vehicles.
• Plus a monthly mailing of free children’s books, as long we take care of special care children.
• Plus a wage incentive grant to hire certified staff to maintain these children, the federal government would pay 59% of the wage of these staff. The going rate for these staff is $18.00 an hour. This means we can hire this person for around $8.20 per hour.
Based on our study and as indicated from the available grants, the mentally challenged population is underserved. Most families of mentally challenged children have the children under the care of a family member or have reduced their work schedule in order to insure their children are managed properly.
Based on this specific need, we redirected our efforts from opening a standard childcare daycare facility to creating an office location with typical business hours.
OPERATIONS
Market Analysis
As mentioned in our market analysis, we were able to identify a market opportunity we did not know existed. This allowed us to revise our business planning and direction. In our market analysis we found a few different grants to operate our facility, and we are very confidant that most of the providers in our city were not fully aware of these grants. We feel there is a great opportunity.
Location
We have done a site selection and after reviewing a number of locations, we have made the determina- tion that the best location is the one that follows the this criteria:
• Centrally located
• Free parking
• Ground floor
• Easy walking access to parks, theaters, and other kid–friendly places
• Great lighting for night
• Side area attached to the location, with greenery
• Outside place for gym and play toys
• Large front windows, to generate a lot of light
• Over 3,000 square feet of space at a rate of no more than $1,400 per month DAYCARE
• No unacceptable business types within ten city blocks of the childcare location
• Landlord who will insure the quality of the tenants who share the building. It is important to sign a lease with these protections and understanding of our services, as well the need to offer security to our clients.
Staffing
We will offer child care services six days a week, from 6:00 am to 7:00 pm. This will make it easy for clients to drop of their children as required.
Staff Requirements
• 2 full–time, certified staff
• 8 full–time staff
• 3 part–time staff
• 2 front counter staff (for phone and customers)
• 1 janitorial staff
• 1 accounting staff
• 1 office manager (owner) Customers
Revenue Opportunities
• Standard childcare
• Challenged children childcare, for both mentally and physically challenged children
• Part–time daycare, for parents who just want to drop their children for a couple of hours Security
We strongly believe that security is very important for us and our clients. Therefore we have taken extra steps to insure the security of the location and the children and staff.
We will install a complete video surveillance system. Our clients will be able to view their children at any time via the internet secure video link. The clients will be required to register for this service, but this service will be free.
We will have each client check their child in and out each day. The person who picks the child up at the end of the day will be required to be registered. If they are not, they cannot pick up the child. Each child once checked in the morning will be given an ankle bracelet that will send off a unique alarm and will identify which child’s alarm is ringing.
We will also pay for a security system for the location. Each staff will be given special training on security, and local law enforcement will be notified of our location.
We will continue to review our security systems so they meet our clients’ needs.
Expenses
Furniture/Equipment Needs
• Video surveillance system
• 2 computers
• 1 printer
• 1 fax machine
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• 1 software system to keep kids safe
• Play area toys
• 2 office desks
• 1 refrigerator
• 1 cooking stove
• 1 microwave
• Kitchen cabinets
• 20 kids’ desks
• Accounting and word processing software
• Educational equipment for the children
• 8 bunk beds for children’s nap time
• 10 computers for teaching children
FINANCIAL ANALYSIS
Annual Fixed Costs Annual Staffing Costs:
• 2 full–time certified staff—$79,040
• 8 full–time staff—$122,880
• 3 part–time staff—$24,960
• 2 front counter staff, for phone and customers—$33,280
• 1 janitorial staff—$14,500
• 1 accounting staff—$29,500
• 1 office manager (owner)—$40,000 + profits
Total annual staffing costs: $344,160 + (8%) $27,532.80 = $371,692.80 Retail Location Costs
• Rent—$16,800
• Heating& Lighting—$7,500
• Telephone—$1,885
• Yellow Page ad—$4,200
• Security System& Monitor—$2,300
• Advertising Costs—$5,000
• Food Items—$4,800
• Misc Items—$4,000
Total Estimated Annual operating costs—$46,485
Note, as part of our negotiation with the landlord, the landlord has agreed to pay for a leasehold improvement to the location, in exchange for a 5 year lease.
DAYCARE
Revenue Potential
Based on the market, we have estimated an average of forty–two children per day at $36 per day. This will result in revenue of $471,744 per year. If you factor in the government grants possible for this service, our net profit margin will be higher.
The lease will be signed in March 2007 and it will take approximately one month to complete the necessary renovations. We will be in operation in May of 2007. All applications for the grants have been completed and approved. Our requirement for a $40,000 operating line of credit has already been established. Most of the staff has been hired.
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Daycare
Z i g g l e Z a g Z i p D a y c a r e / C h i l d c a r e 1413 Appleby Way
Appleton, Wisconsin 54911 Gerald Rekve
Our vision and mission is simple: provide high quality childcare to families, single mothers, and single fathers in an affordable manner. Using new ideas in childcare management, we will offer field trips, full day services (7 am to 8 pm), and full weekend hours. We will also provide computers, books and other educational services, all in a fun and safe environment. Furthermore, all of our staff will be trained or will hold a child care certificate from a recognized school or college. While there are a number of competitors in the market, none offer the full range of services that we offer, especially for such a competitive price.
EXECUTIVE SUMMARY
Products &Services Rates
One of the key ingredients to a successful business is understanding our market. We know that we cannot be everything to everyone; however we do feel strongly that when it comes to daycare, we can and will offer services to all income brackets. In fact, government cuts on services to low income people is one of the key motivations for this daycare business.
To this end, we will be the first in this state to offer rates based on income. While it could be argued that this is unfairly biased against higher income families, we would disagree. In fact we are very confidant that higher income families will embrace our approach, because in the long run, we are offering high–
end day care to everyone, not just the families that can afford to pay for this service.
We will use the following formula to determine what we charge for our services. Based on the latest income tax return, we will determine the family’s gross annual income. Using this figure, the rates are determined by the following schedule:
• Under $25,000 per year = $14.00 per child per day
• $25,000–$40,000 per year = $24.00 per child per day
• $40,000–$75,000 per year = $29.00 per child per day
• $75,000 + per year = $36.00 per child per day
In addition, single mothers with an income below $25,000 annually will be eligible for free bus services.
Furthermore, families with more than one child in our care will be eligible for a 30% discount for each additional child off our income–based rates.
Bus service to and from home will be available for a charge of $7.00 per family per day, regardless of the number of children.
MARKET ANALYSIS
Market potential for Ziggle Zag Zip Daycare is based on the number of children in the market. This number is based on the most recent U.S. Census.
According to the census data, there are 2,158 children under the age of 6 years old living in our market area; there is also an additional 2,502 children between the ages of 6 and 12. Therefore there are 4,660 children under the age of 12 years in our area.
Our total market size is 4,660 children x $25 per child per day (an average price point). This means our highest revenue potential is $116,500 per day. In order to determine how much of this market realistically could be converted to our services, we must first understand the market and our compe- titors.
Competition
We have estimated the number of home–based and unlicensed daycare locations to be about 12, with an average of 4 children per house. Each of these daycares charges from $15–$25 dollars per day. The target market for these home–based daycares is low income homes.
Our focus will be to offer competitive rates to these home–based daycares, with all the added benefits of full–time day care and services like computers, an outside play area, and field trips with parent volunteers.
Other daycares that present competition are those that are registered with the state and follow all the required policies. The average prices of these daycares are $29–$38 per day per child.
Most of these daycares have outside play areas; few have computers for children; and none have transportation for picking children up or taking them to field trips.
The average daycare takes care of 14 children on a Monday to Friday basis. Only 2 of these daycare centers offer weekend or evening childcare. We feel this is a dramatically under–served population based on the large retail and manufacturing sectors that work shift–work up to 18 hours per day.
OPERATIONS
Staffing
Staffing is the most important part of a successful day care. Therefore we will make extra efforts to insure all our staff has the proper training. All our staff will be certified child care workers. Additional training will be provided in the following areas:
• Client management
• Child safety while under our care
• Various classes on different educational methods, etc.
The pay rate will vary from $7–$11 per hour, based on the duties of the staff and the training they bring to our company. The cooks and bus drivers will also act as daycare workers when they are not cooking or driving the buses.
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One area we will partner with is the Red Cross. We will have each member of our staff get training in life rescue and other applicable first aid classes.
Our current staff consists of:
• 8 child care workers
• 2 cooks/child care workers
• 2 day managers
• 2 bus drivers/child care workers
• 1 accountant
We will also hire contractors to do various maintenance work as required.
Equipment
Transportation Bus
We will be purchasing a Blue Bird transportation bus. Our research has determined that Blue Bird is the best bus line based on customer satisfaction and safety requirements. Their line of Micro Bird small buses exceeds all requirements of Federal Motor Vehicle Safety Standards for school–bus constructed vehicles and is equipped with safety features such as a heavy–duty steel roll cage, purpose–built child restraint seats, a full–view outward opening entrance door and a special driver–view window. The seating capacity of the bus we will be purchasing is 10–20 people, including the driver.
Indoor Furniture
We will be buying all our indoor furniture from Little Tikes for the simple reason that they offer product warranties and insurance if any children are injured on their products. This is very important for our daycare, as it helps reduce the cost of insurance and provides our children with a safe and fun place to be.
Computers
We will have 12 desktop computers, all with the highest level of security features available from software developers. While there will be internet access, these computers will mostly be used to train children on the use of computers and to play educational games. Classes will be taught by the staff, and other computer use will be monitored by the staff. The computers will be maintained by the lease company as part of our lease agreement.
Outside Playground
We have chosen the Childscape Playgrounds for our outside play area equipment based on quality, price and warranty. We will be contacting them directly once we get financing in place to purchase various pieces.
Location Rental
We will work closely with our commercial real–estate agent to ensure the following requirements are met for our location:
• Centrally located
• Maximum rent of $1,200 per month
• Minimum 2,000 square feet
• 5 year lease, with all lease hold improvements paid by landlord
• Large fenced outdoor area to set up play equipment
• Just off major roads, allowing for easy access
• Low visible location, keeping it safer for children and staff
• Street level space (no second floors or basements)
DAYCARE
Security
We will pay a monthly monitoring fee to a local security company. They will place security cameras throughout the childcare facility and will outfit the bus with wireless cameras. This will allow for management and staff to monitor all activity at the daycare. This will also allow parents to view their children remotely though a secure server they only have access to when their child is in care. When the child no longer is in our daycare, the parent’s password will be disabled.
With the recent advances in technology, we will place a GPS watch on each child. The watch looks like a watch and keeps time like a watch, but it also acts as a tracking device so that we and the parents can know where their child is every minute of the day. These watches are safe for the child and can only be taken off by staff or remotely by the GPS tracking company via local or state police. This is included for all children in our care at no additional cost to families.
In–depth background checks will also be done on all potential staff.
Field trips will always be managed by one staff member per 8 children, in addition to the bus driver and one day manager. While this is not required by state laws, we will provide this for extra security for our children.
GROWTH STRATEGY
Our mission for the type of daycare we are opening is to have word of mouth transcend our success for future years. We are also of the mind that to start a business, you must first get the word out to potential clients.
To accomplish this task, we will offer free child safety classes where we will teach parents what they can do to keep their children safe. Local law enforcement and local media will be in attendance and this is where the parents will discover our new approach to running a daycare.
We will also try the traditional methods of advertising:
• Yellow pages advertisement
• Daily ad in classifieds of local newspapers
• Mailers to local businesses and subdivisions
FINANCIAL ANALYSIS
Start–Up Costs
Start–up costs are based on the assumption we will not have any revenue in the first three months of operation. Therefore we have determined that a start–up cost of $304,000 will be required prior to commencing operations. We will invest $75,000 of our own and seek the remainder in funding from banks and other sources.
Income
Based on our market review, we have determined that the size of the market we are entering has sufficient numbers to offer our company an opportunity to take a large market share. We project the first year gross annual sales will be $468,984 and our expenses will be $399,095 before taxes. Thus, our EBITA will be $49,525.
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