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Business Plan for San Antonio TX Day Care Centre

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by: nakuru
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Date: Wed, 17 Feb 2010 Time: 12:46 AM

Executive summary

The report looks at the opening up of a new business in San Antonio TX. The day care center will have some additional features that will make it stand out from the rest. Some of these additional features include; computer classes, Spanish classes, an outdoor water park and indoor bowling alley, out door play ground, an indoor playground and a gymnasium.

The report also looks at SWOT analysis where the main strength of the company will be the fact that it is new in the city and that it has exceptional facilities. Its main weakness will be that there are numerous day care centers already in San Antonio but it will cope with this by ensuring that it markets itself aggressively.[1]

The business will have fourteen members including a general manager, an accountant to take care of financial issues, a legal counsel to advice the company regarding rights of members of staff and lease agreements. It will also have eight attendants to cater adequately to the children. Lastly, it will also have shareholders who have the right to make decisions on behalf of the company. Besides this, the business will also have limited liability.

A financial plan for the company indicates that the company will have operating costs of $385,000 and fixed costs of 400,000 for the first year. But these will be offset by the profits registered.

1.0 introduction

San Antonio is a place that has its fair share of day care centers. This means that when one chooses to open up another one, it must have some exceptional qualities that make it stand out from the rest. This factor will be used during the set up of the business plan which shall be examined in detail below.

But before that there will be a brief description of what the business will involve as follows; it will be a day care centre with many additional facilities like computer classes, Spanish classes, outdoor water park, indoor bowling alley, outdoor playing ground, indoor playing ground and a gymnasium. The day care centre will be aimed at a vast age of children from infants to twelve year olds

It is vital for a new business to consider all the macro and micro environmental factors that will affect it during its operation. These factors will be analyzed by a SWOT analysis. Industry trends and targeted markets will also be examined in detail so that the business can have a general direction which it will follow. Besides this, the business should consider all the legal and financial issues necessary to run the business. Perhaps the most important aspect of a business is a budget which will all be incorporated in the business plan below. .[2]

2.0 Strategic analysis

2.1 Industry description and scope

The day care industry is characterized by provision of care to children whose parents for one reason or another are not able to give this care to them directly. Day care centers have become a common phenomenon and are slowly but surely replacing nannies and other forms of hired help for children in the United States and especially in San Antonio

The day care industry falls under the services sector. This industry has become a very attractive area of investment. Reason being that the service offered is in high demand and that there are opportunities for the company to grow. The industry has seen a steady increase from the past decades. This can be attributed to the fact that most mothers are busy attending to their careers. This may not have been common around fifty years ago because at that time, mothers were seen as the primary caregivers.

Daycare normally involves offering a conducive environment in which children can socialize, grow and learn. In line with the latter mentioned three factors, day care centers need to incorporate additional features that help children achieve those three objectives. Actually all the extra features are found in any day care centre are integrated in order to help children learn more, socialize more and stay healthy.

The industry is characterized by the incorporation of other industries like sports – since there may be sports equipment for children to play with, the education industry – since some tutoring is essential in languages, computers and other skills, the technology industry-since some may have video monitoring and information distribution within the company which can only be achieved with application of technology.[3]

Day care centers are found all over the country but there are several that may be found within a particular city. However, most day care centers apply to parents that come from nearby locations because it can be quite cumbersome for them to drive for long distances just to reach a certain day care center yet there may be plenty that are available near their homes.

2.2 Industry trends

Day care services have improved with the advent of technology and also because of increased competition. During the early days when day cares were just getting started in the late twentieth century, most day cares simply hired few attendants to feed and change children’s diapers. But this is not the case today. In the years 2006, 2007, and 2008, most day care centers offer classes that can help improve a child’s talents. This is why there are music lessons that teach children how to play the piano, violin etc. The industry has also incorporated dancing classes or even lessons in drama. Another common feature these days is improvement of a child’s education through offering computer classes, French, Chinese or Spanish classes. The day care industry has a number of recreational facilities these days like water parks, bowling alleys, playground facilities. There are also some security issues that have been incorporated into the industry after the increase of child abductors. Most centers now monitor activities through videos and also allow parents to drop in at any time to check on their child.[4]

2.3 Customer profile

Most consumers of services offered by day care centers are working mothers who may not have time to stay at home with their children. These children may be less than one year or more. Most of them may not have reached school going age i.e. they usually fall between the ages of six weeks to two and a half years.

Other customers may be single fathers who may be available but lack the skills to take care of a child. This is normally applicable to fathers who have been left with infants. The child may be to young to be handled by their father.

Day care centers also take care of children whose parents may be off on holiday. These children are usually older and may be any where between 4years to 12 years. These children are usually the ones who are ideal for some of the extra activities offered like music classes and language classes.

2.4 Internal and external analysis-strengths and weaknesses

2.4.1 Strengths

The business will be dealing with service provision. This implies that initial investments may be high but running costs may not. The bulk of expenses will be in payment of labor rather than in equipment operation. This is especially in comparison to other product oriented businesses. Besides, there are very many customers available since any town can’t lack working parents. This means that the business will be serving a ready market.

2.4.2 Weaknesses

Handling children is a very sensitive because parents may accuse the day care when a child displays odd behavior yet it may not be the latter’s fault. They may even go ahead and sue them thus ruining business for them. Also, the new business will have challenges when trying to hire staff members especially those who come into direct contact with children. This is because some applicants may be well trained but very poor with children practically.

2.4.3 Opportunities

The business has the opportunity of forming other day care centers with a similar theme in other areas other than San Antonio. It could take the example of Phoenix day care centers; these are run in different parts of the country. .[5]

2.4.4 Threats

There are other day care centers in San Antonio that offer unique facilities and these may prove to offer stiff competition. Some examples of such companies include ‘Kool kids learning centre child care’, ‘Destiny child care learning centre’ – this company offers video monitoring and ‘Michael’s child care’ - this company offers free transport for the child to and from home.

2.5 Recommendations based on SWOT

The new company should offer exceptional features to deal with the competition. It should let the parents of San Antonio realize that it has exceptional facilities it can offer parents as compared to other day care centers in the area. It can achieve this by aggressive marketing. It should also have a reputation for quality through long staff retentions and caution when handling children. It should tackle the issue of wrongful accusations through camera installations. .[6]

3.0 Organization plan

3.1 Description of the business, services, location

The new Company will be located in San Antonio TX at Fountain Wood Street. This area was chosen because it is strategic and there are lots of businesses near there. This implies that customers/parents can access the day care easily while going to work and they will also have the option of checking on their children whenever they have some spare time.

The business will mainly deal with the care of children from as early as 6a.m. till 10.30 pm. The main service will be ensuring that children’s welfare is adequately taken care of. There will be attendants in each and every segment of the center. There will be about two attendants in the playground areas, water parks and bowling alleys because these areas may be hazardous to children if they are inadequately supervised. Besides this, there will be tutors for Spanish language lessons and computer classes. However, these tutors will only report for two hours daily since children have low concentration spans. Then the rest of their day will be dedicated to meals and playtime. The children will be provided with three meals and two snacks daily. There will also be a programme that will schedule all play activities such that children can get a feel of all the facilities available in the center. Besides this, there will be adequate monitoring to ensure that only utmost care is provided.

The environment will be just like home.  This is because attendants will be very receptive and warm towards the children. The children will also get used to them because the Company will endeavor to retain the staff members.

3.2 Legal structure

The day care center will be a Limited Liability Company. The benefit of such a legal structure is that shares within the Company are limited to shareholders contributions. This implies that if there are any losses registered by the Company, shareholders will only be affected to the extent of their contribution of shares in the Company. Another advantage of such a method of structure is that taxation is ‘passed through’. This means that the Company will not have to pay income tax directly. What happens is that when the Company has recorded a profit, this is included on the shareholders’ tax returns. They are therefore spared from paying taxes twice i.e. first as a Company and again as shareholders. .[7]

3.3 Management and Personnel- Key roles and responsibilities

The company will have one general manger whose main responsibility will be to oversee the efficient running of the facility. Besides this, this same person will make financial plans for the Company; draw Company budgets for day to day running of the center and also on an annual basis. The person will also be responsible for firing and hiring members of staff and will also schedule meetings to communicate to members of staff about their progress and any changes that need to be made. There will be an accountant whose main responsibility will be to balance finances in the Company and to monitor financial progress. He will also take care of payments to staff members. There will be a legal counsel who will take Care of all the legal issues. He will advice the Company regarding trusts, what insurance cover to take, what rights do members of staff have and rights of customers too, he will also approve tax returns and issue advice concerning joint ventures or expansion programs for the Company. There will be attendants whose key responsibilities will be to play with the children, change children’s diapers, feed the children during meal time and to ensure that they are safe; the Company will hire eight of these attendants so that there are always representatives at each segment in the center. There will also be tutors for all the classes available. The company will hire three of them such that there will be one in the computer class, another on the Spanish class and another one in the gymnasium. The Company will allocate $30,000 per month towards the payment of salaries. The manager will receive $7,000, the accountant will receive $4,000, the legal counsel $ 5,000, attendants will each receive $1,000 and tutors will each receive $ 2,000

3.4 Insurance

There will be need for insurance against injuries that will occur to workers, there will also be the need for insurance against injuries that can occur to children, and this will fall under the service liability section. .[8]

3.5 Security

In the wake of increasing case of child abductions and disputes concerning children’s custody, there is a need for any day care center to step up its security system. This will be achieved in the business by an open door policy such that parents can come in at any time and check on their children. In addition, when anyone comes to pick up a child, they must be on the registration list and their identification will be checked to see if it corresponds to names written in the list. This will prevent strangers who may falsely claim that they are responsible for children.

4.0 Marketing Plan

4.1 Market Overview

The Company will deal with any type of Parent as long as their child falls between the specified age ranges; from infants to twelve year olds. Most of these parents will be coming from San Antonio TX because they will need a convenient place. Marketing strategies ought to focus on the people of San Antonio. But this will not mean that others should be excluded during marketing because there may be some parents that are located outside San Antonio but may soon be moving into the area; therefore, they will need to access information regarding what day care centers are offered there. Parents have also been known to spread information about a good day care centre when they hear about it. Therefore, the business will identify areas that parents and their children spend most of their time. This is mostly in public parks, children’s events and other recreational centers. This is mostly where the marketing tools will be placed. .[9]

4.2 Marketing strategy

4.21 Product

It is a well known fact in marketing that innovation adds value to a product, where a product in this case may include either a service or a tangible good. The service will involve a day care centre with additional elements. These additional elements will be the reason why the day care centre will stand out from all others in San Antonio and in the industry generally. The day care center will have top of the range facilities. First of all, it will have a gymnasium to develop children’s sporting talents, it will also have Spanish language classes that will improve children’s language skills, in addition there will be computer classes to give children an early start in this crucial aspect of our world. Besides this, there will also be a bowling alley for children to play in. There will be a lot of space both indoors and out doors for them to spend their time. This will include an indoor playground, outdoor playing ground and an outdoor water park. Besides this, there will be constant monitoring of the children at all times since there will be no less than two attendants at all areas of the day care center. The center will also provide flexible operating hours that is from six in the morning to ten thirty in the evening. The center will have an open door policy for parents and will also ensure provide security through consistent checks of identification for anyone who comes to pick their child up. .[10]

4.22 Pricing

The pricing decisions made by the Company will be such that they strike a balance between achieving the Company’s objectives and attracting customers. Because the business is new, it will make use of tactful introductory pricing. This means that the Company will offer low prices initially to lure customers and to expose them to what the Company has to offer. After the company has stayed in operation for long and has established itself, it will increase its prices such that it can be able to offset some of the costs incurred during operation and in order for the Company to achieve their profit targets. The Company will make a survey of what other day care centers in San Antonio are offering and will use this as a sort of benchmark for what they offer in the business.

4.23 Advertising

This will be the most crucial aspect of the marketing plan. This is because it will be the pathway used to let people know about the existence of the business and the services that the day care center can offer. Advertising has the advantage of reaching a vast number of people and allows the Company to penetrate into different market segments

The Company will choose a number of marketing tools available to place their advertisements. The first one will be through the internet. The day care centre will have its own official website where parents can visit and asses all the services offered. It will have colorful pictorial representations of children from different backgrounds playing with teachers who seem very interested in them. The website will also have displays of different sections of the day care center so that parents can see for themselves all that the day care center has to offer at a glance. Besides this, it will also choose websites frequently visited by online viewers and post a short advertisement there. It will select yahoo’s home page and also Gmail’s homepage.

The Company will also place posters in various areas around San Antonio. These posters will mostly be placed in areas where children frequent thus implying that there will be a direct market there. The posters will be simple and illustrative containing a short message about the day care center’s name, services and location, and then the rest of the poster will have pictures similar to those ones displayed at the website. .[11]

 The Company will also place advertisements in parent’s magazines with the same information as that placed in all other marketing media.

4.3 Implementation strategy

The company will use what is called a ‘leapfrog strategy’. This kind of strategy involves assessing what competitors are offering and then creating a better offering than what they have. This kind of strategy is normally achieved through the employment of improved business models and adoption of technology in service provision. This kind of strategy is dynamic in nature and does not stand still. There are a lot of changes that need to be incorporated such that there will be a difference when the consumer compares what the business has to offer and what is present in other similar businesses.

Most of the day care centers present in San Antonio have one or two additional features that make them stand out from the rest. But none of them have all the aspects that will be offered by this new Company under one roof. This implies that the company will use all these elements of its service provision to out compete other players in the industry.

The latter mentioned reason will also be incorporated in pricing strategy because prices will be based on what competitors are currently offering i.e. they will be an improvement of competitors’ offering. Lastly, advertisements will be used continuously and consistently because the company will always strive to improve its product offering and methods.

4.0 Operating plan

4.1 Physical equipment/capital equipment

There company will require numerous facilities and equipment before start up. It will obtain capital from a lending institution and the interest of the loan will be paid off after a period of one year. .[12]

The company will be in need of land that is wide enough to accommodate all the additional features contained in the day care center.

It will be in need of buildings for all classes offered by the center. It will need to purchase computers for the classes offered, it will need installation of the water park. Besides this, there will be need to incorporate al the aspects that make up an outdoor playing ground facility. These include bouncing castles, slides and swings. The bowling alley will have five bowling lanes, a waiting area, score notices and a store area for the balls. Besides this, there will also be furniture in most rooms within the center: Classrooms will have blackboards, chairs and desks while other areas will have small sized chairs and tables with the exception of the indoor playing area as these could injure the child accidentally. There will be lots of games that the children can play with in the indoor playing area, these include puzzles. The gymnasium will also contain many sporting equipments that children can use to enhance their sporting talents.

4.2 Suppliers

The company will need suppliers of equipment to be used in the gymnasium and also in the bowling alley. The company will also need suppliers of equipments to be used in installation of the water park. It can secure good suppliers by doing a thorough research of what is currently being offered in the market then selecting the best offering. The organization should put in mind that not all cheap products are the best value for money. Instead, the company should assess supplier’s credibility and after sale services. Issues like warranties should also be top on their lists.

Because this is a service that is being provided, there are some suppliers will be offering services to the new Company too. For example training schools that train tutors can be considered as suppliers because they will be contributing towards care offered to the children.

4.3 Labor supply

4.31 Types and numbers of workers 

The company will be in need of a total of fourteen employees at the onset of business. This will be done by a massive recruitment exercise. .[13]

The company will have three tutors who will take care of Spanish classes, computer classes and gym classes respectively. The tutors must have a minimum of two years experience in their respective fields of training. These two years experience must also involve working with children. They should also have a strong recommendation from their former employers.

The company will also hire eight attendants. These attendants will need to be educated to post high school level and will also need a minimum of two years experience with children backed up with strong recommendations from their previous employers. The attendants must also have a natural liking for children and must appear enthusiastic about working with them. This will be assessed during an interview to be conducted prior top start up of the company. Two of the attendants will be chosen as receptionists to deal with the inflow and outflow of parents and to register new customers.

The company will also have one accountant, who will deal with payments that will be made once a month by each parent. The accountant will also be responsible for ensuring that all the sales are recorded, he will also distribute salaries to employees after the general manger has given him a go ahead. He must have a minimum of three years experience in a busy environment and a CPA diploma.

There will also be a legal counsel. This worker must have a minimum of a law degree from a reputable university. The lawyer should also have experience in a day care environment similar to the one in the new company. .

A general manger will be needed to perform managerial tasks found in the day care center. This person will need to demonstrate that he has solid experience in the sector. This position will receive a lot of attention by the company because the manager’s decisions will be the overall determinants of the goings on in the company. Applicants to this position must have two or more years experience in the position named above. This means that there ought to be a strict criterion used to asses this. Applicants will be subjected to both written and oral interviews. Their leadership qualities and capabilities will also be assessed and a number of situational questions will be asked to confirm this. [14]

4.32 Compensations and benefits

All workers in the company will be provided with the following benefits.

• Health benefits-the company will offer health insurance to its workers after it has been in operation for one year.
• Pension plans- this will be offered to workers who complete one year in the company and will be rewarded during retirement
• Life insurance-it will offer life insurance and disability insurance to all its workers at the onset of their employment
• Loan schemes- it will be provided to workers in case the want to purchase a house or pay for their child’s education

4.4 Operating advantage of business over others

The business is new and will therefore not be judged from other mistakes that had been made in the past. Besides, the company has numerous extra features that other competitors in San Antonio do not. And those who have these features do not have all of them under one roof, i.e. they only have a few of these

4.5 Competitors

There are numerous day care centers in the city of San Antonio. This means that the company has a lot of competition it has to deal with. Some exceptional facilities in the area include destiny child care learning centre found in Donore place and offers video monitoring, another one is Michaels’ child care in Kay ton avenue that offers transportation facilities and there is also Rainbow station in Sinter Boulevard. This company has a get well area. All the above day care centers have advertised themselves in the internet. These strategies will be outdone by the product mix that will be offered by the new company. .[15]

4.6 Detailed break even /cost analysis

The break even point is the point at which the total of all the expenses is equal to revenue generated. This will be useful to the new company so that it can determine what price it will set for its minimum. It is important to remember that this is not the point at which there is a return on investment. That latter period is called the payback period. Break even point analysis gives the minimum sales price or amount of products/services that have to be sold so that the business does not operate at a loss.

Annual variable costs-salaries- $360,000

                              Maintenance-$ 20,000

                              Others-$ 5,000

                              Total-$385,000

Annual fixed costs- $ 400,000

The Break even point (BEP) is given by the formula shown below

BEP= Break even point= [(fixed costs) (1_T)]/ [(Sales Price-Variable Cost)/ (1-T)}

-Where T is called the fraction of fixed costs and profits that will be contributed to taxes by the Company.[16]

-Sales price is the amount charged to parents per month for registering their children with the day care; the parent will pay twice if bringing two children and so on.

-BEP will be the minimum number of children that must be handled by the day care before it can record a loss. This will be 50 per month and therefore 600 children per year

-variable costs have been divided by number of children per year i.e. costs per child

600= [(400,000)(1-0.3)]/[(x-642)) /(1-0.3)]

x=$1309

This is the amount which must be charged for the service every month such that the Company will no operate at a loss.

5.0 Financial Plan

The following people will be included in the financial plan

.[17]

for the first year, this will be the amount spent by the Company