Business Plan for a Daycare Center

Comment by Sabina:

I work for one of the fortune 500 companies and most of the employees who work in my organization is very happy with their job. I work in a 10 story building where more than 50% of the offices belong to my organization. There are a few other companies that are located in the same building. I have heard many employees in my company and in the building complaining about having to drop their children off to daycare early before work and then pick them up late after work. They have to pay additional fees if their child is not picked up on time, because they are stuck in traffic. I have been working on a business plan for opening a daycare within the building where I work. In this paper I will discuss the need for this daycare; I will discuss some elements in the business plan, and complete a feasibility analysis for this Daycare center called Little Sunshine’s.

Business Plan

The rental monthly for the space is $2,000.00, the average incidental cost for a daycare this size is about $500.00 – $700.00 monthly. The daycare will accommodate children from six weeks old to five years old from 8am to 6pm. For parents utilizing the daycare five days per week, ten hours per day the fee will be $1,000.00 for children under 2 years and $800.00 for children above 2 years. The state requires children under two to have 4 children to 1 teacher ratio; therefore we will start off by enrolling up to 8 students under the age of 2. Children above the age of 2 years old are a bigger ratio which is 6 children to 1 teacher. The daycare will enroll 12 children for each age range, a total of 44 children, with four rooms to separate the children by age. The children six weeks old to 2 years old will be in the same room. Little Sunshine will give first priority to the employees within the building; however it will be opened to the general public. There are two other buildings nearby that could potentially utilize the daycare as well.

As the owner of Little Sunshine I will need at least $25,000.00 in starter fees. I need to have $6,000.00 for security deposit, first and last month’s rent. I will need money for business start up cost, insurance, money to pay employees, workers compensation fees, and supplies for the daycare. Once the lease is signed the building will design the office space, at their cost, however some money will have to be spent by Little Sunshine for decorations. I will need to take out a bank loan for the majority of this investment, which is a major risk. Little Sunshine will have to set up the play area with a swing and slide, and purchase all toys and supplies.

I have over six years of experience working in daycares, which has equipped me with the working knowledge of the industry. I have also re-entered school again to get additional training on business operation and business management. There are many additional steps involved in opening this business, becoming certified in several areas of childcare. Hiring qualified employees and getting them certified and trained in childcare. Each employee of Little Sunshine will need to become Cardiopulmonary Resuscitation (CPR). Agreements will have to be made with local temporary agencies, where we would be able to get qualified temporary staff if necessary.

SWOT Analysis

One of the biggest strengths of Little Sunshine is the location. According to Gabe (2007) areas with economic stability are great location for new business. There is a need for a daycare in the area. The location in within a professional office park with business offices. Employees within this building and office park would be able to bring their children to a daycare that is close to their offices. The daycare will also allow parents to come and pick up their children for lunch, or to eat lunch with their children in the lunch room. The hours of the daycare is also a great match for the employees in this professional park, since most office open at 8:30am and close at 5:30pm. A weakness of this business is that the rent is a bit higher than other daycare centers rent, mainly because of the location. One great opportunity for this business is that I work in the building; I know a lot of the employees within the building and my company. Marketing your product or service is essential for any business; especially a new business and the marketing must meet the right target population (Constantinides, 2006). I will be able to market the daycare through word of mouth and I already have a many clients lined up for when Little Sunshine is opened. A threat that could be seen for Little Sunshine is that the cost is about 3% higher than some other daycares. This could be a potential threat for the daycare; however it is necessary because the rent is higher.

Market Feasibility

Although some experts argue the economy is looking better (Reich, 2010), others argue there is still an impact on the economy and spending (Congressional Budget Office, 2008). The competitors are the other daycare centers that exist in the community; most of the prices are similar. The competitive advantage that Little Sunshine will offer is location, parents will not have to go out of their way to drop off and pick up their children. Parents can spend more time with their children if they choose; they can have lunch with their children. The location of Little Sunshine will be a great advantage for mothers who breast feed, they can utilize the lunch and breaks to breast feed their children. The potential for Little Sunshine to become a multiple location center is great. Once the initial daycare is established and functioning well, capital will be re-gained and additional funds will be raised new locations can be opened. Potential customers are employees in the building where the daycare will be opened. There is a list of parents who are waiting for Little Sunshine to be opened. Currently there are enough potential clients to get Little Sunshine opened.

Service Feasibility

Little Sunshine will provide daycare service for children six weeks old to 5 years of age. The daycare will provide a loving, caring and educational environment, where the children can spend their days. The children will be allowed to leave for lunch with their parents if that is desired. The day care will offer two tiers of services: 40 hours per week, which is 8 hours per day care and the full service of 10 hours per day. Each tier of service will be charged differently and monthly. The majority of the employees working in this professional park work full time, therefore there is a need for full time daycare services.

Financial Feasibility

The initial invest needed for the business is approximately $25,000.00. Currently I only a portion of the startup cost. I have two other options for attaining the rest of money, a bank loan or getting a partner to invest in Little Sunshine. At this time I see more benefit in getting a partner and I have someone that is willing to become a partner. I believe this will eliminate some of the financial risk that I will be facing. Market analysis was conducted to gather information about the competitors, and to set prices for the daycare. With any new business venture there is a great deal of risk, especially in an unstable economy such as this. I believe my experience in working in this industry, my educational background, my access to potential customers and my desire to make this dream come true will be enough to make Little Sunshine successful.

References

Congressional Budget Office, Congress of the United States. (2008). Effects of gasoline prices on driving behavior and vehicle markets Washington, DC: CBO. Retrieved from http://www.cbo.gov/ftpdocs/88xx/doc8893/01-14-GasolinePrices.pdf

Constantinides, E. (2006). The Marketing Mix Revisited: Towards the 21st Century Marketing. Journal of Marketing Management. 22 (3/4) 407-438.

Gabe, T. (2007). Local Economic Instability and Business Location: The Case of Maine. Land Economics. 83 (3) 398-411.

Reich, R. (2010). 2010 Economic Forecast. Retrieved from http://economistsview.typepad.com/economistsview/2010/03/robert-reich-2010-economic-forecast.html