Daycare
Childhood Dreams Inc.

132 Glenn
West Town, Ohio 44256

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 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 determination 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

• 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

• 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.

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.