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Daycare
Ziggle Zag Zip Daycare/Childcare

1413 Appleby Way
Appleton, Wisconsin 54911

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 × $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 competitors.

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.

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)

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.

Based on a 5% increase in our fees coming in to year two, we will have projected revenue of $492,433 and EBITA of $121,975. This is an increase in EBITA of 246% over year one. We project that years three, four and five will have a 5% increases in revenue also.

One-year cash projection
Sources of cash
 1. Personal funds75,000
 2. Loan proceeds75,000
 3. Cash receipts from business (net)154,000
      Total sources 304,200
Uses of cash
 4. Equipment/Supplies32,000
 5. Vehicle purchase/Lease4,320
 6. Real estate1,200
 7. Fixtures9,300
 8. Security deposits (rent and utility)9,000
 9. Signs9,200
10. Leasehold improvements7,500
11. Cost of goods sold52,360
12. Telephone and utilities4,500
13. Rent43,800
14. Business license fee3,080
15. Insurance premiums6,000
16. Office supplies2,000
17. Legal and accounting6,760
18. Advertising9,000
19. Real estate taxes3,700
20. Miscellaneous expense6,000
21. Payroll taxes and benefits9,240
22. Payroll wages (excluding withholdings)46,200
23. Loan payments (principal and interest)15,000
24. Owner's draw24,840
      Total uses 305,200
Net cash flow for the year (source minus uses) 0

Daycare: Ziggle Zag Zip Daycare/Childcare

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