Table of Content
4.0 Market Analysis Summary. 6
Chart: Market Analysis (Pie) 6
4.3.1 Competition and Buying Patterns. 7
5.0 Strategy and Implementation Summary. 7
8.3 Projected Profit and Loss. 9
8.5 Projected Balance Sheet 11
1.0 Executive Summary
This plan provides detailed information on the initial establishment and operation of Children’s Talent Development Center. The plan outlines the plans for business growth, methods, procedures for operation, and infrastructure. Children’s Talent Development Center will offer young families in UAE, Dubai and the surrounding area a quality family recreation center, with jungle gyms, soft contained play structures, slides, and imagination-inspiring play areas for children ages 2 to 5 (Boone & Kurtz, 2009). All equipment is safety-tested and approved, employees, are trained in child safety and first aid. Parents will have special seating areas where they can watch their children play actively and safely, even in the coldest, darkest months of winter, and can purchase snacks and drinks from a limited selection while they wait.
The management is responsible for the design, building, and development of the daily operations outlined in this plan. Children’s Talent Development Center will retain the services of a CPA firm to perform professional company audits, prepare taxes and payroll, and serve as a business consultant to assist in setting achievable long-range strategic goals.
Chart: Highlights
1.1 Mission
- To provide the greater UAE area with a safe, fun, exciting (and profitable) child entertainment facility for children ages 2-5, and their parents, which will help children grow physically, emotionally and mentally through interactive play with their parents, peers and the facility itself.
- To listen intently to customer needs regarding the entertainment, activities, and facilities relating to safety, environment, and services and act accordingly with respect to those needs.
- Develop a system of safety, security, and accountability on the property between the staff, paying clientele and the general public (West, 1988).
1.3 Objectives
- Attract 30% of my target market to use “Children’s Talent Development Center” 1.5 times per month in the 1st year. Based upon the most recent census and demographic statistics available for this region, achieving this objective would mean attracting 3,600 paying children and 1,080 adults through the door the 1st year.
- Gain market share of 40% by 3rd year.
- Reduce debt load 37% by the end of 3rd year.
2.0 Company Summary
Children’s Talent Development Center – Child Fun Center is a start-up business that will be owned, operated and managed by Brian Solum. Children’s Talent Development Center is an adult-supervised children’s play center that offers a series of parent/child activities devoted to the physical, emotional and social development of children. We plan to offer a large, full-scale play structure for the child and a smaller play structure for toddlers. In addition, we will also offer nominal vending, snacks and beverages for customers. The facilities are designed to entertain, exercise and stimulate children while reinforcing good social skills in a group play environment.
2.1 Start-up Summary
The start-up expenses for Children’s Talent Development Center include play equipment, payroll, utilities, legal services, debt service and office materials needed for the facility. Brian Solum will invest $32,000. In addition, Brian will secure up to $100,800 in long-term financing to fund the enterprise. We will incur another $8,000 in short-term debt to finish financing.
Long-term assets include most play equipment and a larger service counter for the cafe area. Current assets include furniture, lighting fixtures, some of the less durable play equipment, and appliances for the cafe area.
Chart: Start-up
3.0 Products and Services
Physical Active Play for children
Playing is fun at any age. If you don’t believe me, consider what you do to relieve the stress of an active day at work or school, or how you vacation, or what you spend your money on, if you have a hobby or interest. Or, if you have children, just watch how exuberant, carefree and energized they are when they are having a good time. However, there are other benefits to Active Play besides just having a good time. Studies have shown that it is also a major factor in the appropriate mental, social, emotional and physical development of children. When children are engaged in play, they are presented with various situations, interactions, and challenges. As they develop competencies in these areas, they are honing the same social, mental and physical skills they’ll need in other aspects of life.
Vicarious Active Play for Parents
There was a saying in my house when I grew up: “If mama ain’t happy, ain’t nobody happy.” I think what was meant by this was that we could drive her nuts on occasion, and when she was “nuts” we all suffered. Those occasions were typically when, as children, we were bored or stuck in the house. Therefore, I believe that this business is also selling fun, rest, and a social outlet for parents. When the kids are occupied, happy parents can enjoy a book, the newspaper, or a friend’s conversation over a cup of coffee or lunch. However, parents are also encouraged to participate with their children on the equipment themselves. Due to the nature and size of some equipment, it is able to withstand and support adults. The youngest children, in particular, will be happiest and most secure when playing with a parent.
4.0 Market Analysis Summary
My market research was directly retrieved from the 2000 US Census, 2002 NARC Census, and the BASC 2000 Demographics Study. Per the same data, and to get an accurate idea of current (2003) data, my totals incorporated the projected 1.3% annual growth rate to the demographics. My data was then targeted to the selected townships that use UAE for schooling and shopping. They were typically townships within a 24-mile radius around the UAE. My projected income data from this demographic assumes that only one parent of the households will accompany their children to the facility.
4.1 Market Segmentation
My market demographic is 100% targeted to families, specifically, households with children in the 2 – 5-year-old age group in the UAE area.
Chart: Market Analysis (Pie)
4.3.1 Competition and Buying Patterns
Families make choices for family recreation activities based on cost, availability of activities appropriate for the entire household, and fun. Currently, in UAE, activities for children under 5 are an after-thought. There may be a smaller wading pool at one end of the water park or a special roller-skating class for 4 and 5-year-olds. This discrepancy is most keenly felt by parents in the winter when normal outdoor activities are curtailed for the youngest children. At the moment, parents of small children must choose between a small array of limited activities on a schedule not of their choosing, if they want any out-of-home play.
5.0 Strategy and Implementation Summary
Emphasize Customer Service
Children’s Talent Development Center will differentiate themselves from other facilities. We will establish our business offering as a clear and viable alternative for our target market.
5.1 Competitive Edge
Children’s Talent Development Center’s competitive edge is its positioning as a strategic ally with our customers. By building a business based on long-standing relationships with satisfied customers, we simultaneously build defenses against competition. The longer the relationship stands, the more we help our customers understand what we offer them and why they should both frequent Children’s Talent Development Center, and refer it to other families. In close-knit communities like UAE, reputation is extremely important, and word-of-mouth advertising is invaluable.
5.2 Marketing Strategy
Technically, my customers can come from anywhere: male and female, all races, every income level, and can be local residents or tourists to the area. That is why our marketing plan will start at the construction phase; by keeping in mind: if it looks fun, people will come. Thus the main factor to success is demonstrating that a person can enjoy themselves at the center while participating in an activity they choose. Realistically, I expect that initial customers will be more educated and affluent than the area’s average since those types of family are generally the most concerned with providing appropriate stimulation for their very young children. We will, therefore, make sure to post flyers and advertisements where this group can see them.
By being on site full-time for the first year, I can make sure that customers are satisfied and can also gather information from them about the types of entertainment they most desire. This type of first-hand market research will prove invaluable in attracting more customers and retaining existing ones. A good experience for parents and children will produce the best kind of advertising: word-of-mouth recommendations.
Management Summary
Management: Initially, and for the first year, of operation I anticipate acting as owner/operator/manager. In the future, depending on cash flow or if a gap in service is identified, an FT manager would be implemented to work alongside myself and the rest of the team. Management will be responsible for overseeing all business aspects including but not limited to: Deposits, marketing, safety, scheduling, customer service, and staff support and training, cleaning and general maintenance, food prep and service. Minimum qualifications are:
- Child Safety, First Aid / CPR certified
- Three years management experience
- Mature, responsible adult
- Enthusiastic, flexible and self-motivated
- Knowledge of marketing
- High sense of professionalism
7.1 Personnel Plan
The company will make gradual investments in personnel on a need basis, always keeping in mind the number of children and parents serviced at the facility with respect to cash flow. Additional full-time paid management will be addressed after the first year of operation and an additional PT employee is built in to the Personnel Table. As an owner, I do plan on being on site full-time and will fill the managerial role.
Important Assumptions
Commercial lending is currently set at 7% for the long term (20 year) lending.
Table: General Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 7.00% | 7.00% | 7.00% |
| Long-term Interest Rate | 7.00% | 7.00% | 7.00% |
| Tax Rate | 30.00% | 30.00% | 30.00% |
| Other | 0 | 0 | 0 |
8.2 Break-even Analysis
The Break-Even chart assumes fixed monthly expenses of approximately $9,600. The expenses are the total of estimated monthly utilities, phone, payroll, legal, insurance, marketing, and rent figures. Variable monthly costs are shown as a percentage of total sales. Average Monthly Sales for the first year are anticipated around $13,200 and the break-even point would be at $10,069, leaving adequate room and cash flow for possible costs initially overlooked. These figures show a comfortable cushion for operating expenses.
8.3 Projected Profit and Loss
The company will show a profit in the first year of operation. The yearly analysis is indicated in the table below, and the monthly analysis can be found in the appendix. Our most significant operating expenses will be payroll, marketing, and rent. We project a modest net profit increasing gradually over the next three years as we streamline operations.
Table: Profit and Loss
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $158,392 | $166,312 | $174,627 |
| Direct Cost of Sales | $6,634 | $6,966 | $7,314 |
| Other Costs of Goods | $0 | $0 | $0 |
| Total Cost of Sales | $6,634 | $6,966 | $7,314 |
| Gross Margin | $151,758 | $159,346 | $167,313 |
| Gross Margin % | 95.81% | 95.81% | 95.81% |
| Expenses | |||
| Payroll | $58,400 | $64,400 | $70,400 |
| Marketing/Promotion | $12,668 | $13,089 | $13,521 |
| Depreciation | $6,960 | $7,000 | $7,000 |
| Rent | $12,000 | $12,000 | $12,000 |
| Utilities / Phone / Internet | $7,680 | $7,680 | $7,680 |
| Insurance | $4,800 | $4,800 | $4,800 |
| Payroll Taxes | $0 | $0 | $0 |
| CPA | $3,000 | $3,000 | $3,000 |
| Website hosting | $250 | $300 | $325 |
| Office Expenses | $1,500 | $1,500 | $1,500 |
| Total Operating Expenses | $107,258 | $113,769 | $120,226 |
| Profit Before Interest and Taxes | $44,500 | $45,577 | $47,087 |
| EBITDA | $51,460 | $52,577 | $54,087 |
| Interest Expense | $7,105 | $6,202 | $5,259 |
| Taxes Incurred | $11,218 | $11,812 | $12,548 |
| Net Profit | $26,176 | $27,562 | $29,279 |
| Net Profit/Sales | 16.53% | 16.57% | 16.77% |
8.5 Projected Balance Sheet
My Projected Balance Sheet shows that I should not have any difficulty meeting my debt obligations. My Marketing Plan should be sufficient to meet the projections. Most significantly, Children’s Talent Development Center’s net worth will increase to approximately $77,500 by year three.
Table: Balance Sheet
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $31,501 | $48,299 | $65,163 |
| Other Current Assets | $25,000 | $19,000 | $13,000 |
| Total Current Assets | $56,501 | $67,299 | $78,163 |
| Long-term Assets | |||
| Long-term Assets | $90,000 | $102,000 | $114,000 |
| Accumulated Depreciation | $6,960 | $13,960 | $20,960 |
| Total Long-term Assets | $83,040 | $88,040 | $93,040 |
| Total Assets | $139,541 | $155,339 | $171,203 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $3,830 | $5,536 | $5,585 |
| Current Borrowing | $5,335 | $2,665 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $9,165 | $8,201 | $5,585 |
| Long-term Liabilities | $90,000 | $79,200 | $68,400 |
| Total Liabilities | $99,165 | $87,401 | $73,985 |
| Paid-in Capital | $32,000 | $32,000 | $32,000 |
| Retained Earnings | ($17,800) | $8,376 | $35,939 |
| Earnings | $26,176 | $27,562 | $29,279 |
| Total Capital | $40,376 | $67,939 | $97,218 |
| Total Liabilities and Capital | $139,541 | $155,339 | $171,203 |
| Net Worth | $40,376 | $67,939 | $97,218 |
Benefits to the community
The project is noted to the community are several ways such as ensuring it meets the needs and demands of the people. First, it helps in eradication of crime by ensuring the people are busy in activities.
Appendix
Table: Balance Sheet
| Pro Forma Balance Sheet | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Assets | Starting Balances | ||||||||||||
| Current Assets | |||||||||||||
| Cash | $8,000 | $14,199 | $16,814 | $19,141 | $23,154 | $26,815 | $30,192 | $31,396 | $31,177 | $32,416 | $33,727 | $31,622 | $31,501 |
| Other Current Assets | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 |
| Total Current Assets | $33,000 | $39,199 | $41,814 | $44,141 | $48,154 | $51,815 | $55,192 | $56,396 | $56,177 | $57,416 | $58,727 | $56,622 | $56,501 |
| Long-term Assets | |||||||||||||
| Long-term Assets | $90,000 | $90,000 | $90,000 | $90,000 | $90,000 | $90,000 | $90,000 | $90,000 | $90,000 | $90,000 | $90,000 | $90,000 | $90,000 |
| Accumulated Depreciation | $0 | $580 | $1,160 | $1,740 | $2,320 | $2,900 | $3,480 | $4,060 | $4,640 | $5,220 | $5,800 | $6,380 | $6,960 |
| Total Long-term Assets | $90,000 | $89,420 | $88,840 | $88,260 | $87,680 | $87,100 | $86,520 | $85,940 | $85,360 | $84,780 | $84,200 | $83,620 | $83,040 |
| Total Assets | $123,000 | $128,619 | $130,654 | $132,401 | $135,834 | $138,915 | $141,712 | $142,336 | $141,537 | $142,196 | $142,927 | $140,242 | $139,541 |
| Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
| Current Liabilities | |||||||||||||
| Accounts Payable | $0 | $5,482 | $5,392 | $5,456 | $6,928 | $6,528 | $6,238 | $6,054 | $4,663 | $4,714 | $5,576 | $3,766 | $3,830 |
| Current Borrowing | $8,000 | $7,778 | $7,556 | $7,334 | $7,112 | $6,890 | $6,668 | $6,446 | $6,224 | $6,002 | $5,780 | $5,558 | $5,335 |
| Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Subtotal Current Liabilities | $8,000 | $13,260 | $12,948 | $12,790 | $14,040 | $13,418 | $12,906 | $12,500 | $10,887 | $10,716 | $11,356 | $9,324 | $9,165 |
| Long-term Liabilities | $100,800 | $99,900 | $99,000 | $98,100 | $97,200 | $96,300 | $95,400 | $94,500 | $93,600 | $92,700 | $91,800 | $90,900 | $90,000 |
| Total Liabilities | $108,800 | $113,160 | $111,948 | $110,890 | $111,240 | $109,718 | $108,306 | $107,000 | $104,487 | $103,416 | $103,156 | $100,224 | $99,165 |
| Paid-in Capital | $32,000 | $32,000 | $32,000 | $32,000 | $32,000 | $32,000 | $32,000 | $32,000 | $32,000 | $32,000 | $32,000 | $32,000 | $32,000 |
| Retained Earnings | ($17,800) | ($17,800) | ($17,800) | ($17,800) | ($17,800) | ($17,800) | ($17,800) | ($17,800) | ($17,800) | ($17,800) | ($17,800) | ($17,800) | ($17,800) |
| Earnings | $0 | $1,259 | $4,505 | $7,311 | $10,394 | $14,997 | $19,205 | $21,136 | $22,850 | $24,580 | $25,571 | $25,819 | $26,176 |
| Total Capital | $14,200 | $15,459 | $18,705 | $21,511 | $24,594 | $29,197 | $33,405 | $35,336 | $37,050 | $38,780 | $39,771 | $40,019 | $40,376 |
| Total Liabilities and Capital | $123,000 | $128,619 | $130,654 | $132,401 | $135,834 | $138,915 | $141,712 | $142,336 | $141,537 | $142,196 | $142,927 | $140,242 | $139,541 |
| Net Worth | $14,200 | $15,459 | $18,705 | $21,511 | $24,594 | $29,197 | $33,405 | $35,336 | $37,050 | $38,780 | $39,771 | $40,019 | $40,376 |
References
Boone, L. E., & Kurtz, D. L. (2009). Contemporary business 2010 update. John Wiley & Sons.
Brinckmann, J., Grichnik, D., & Kapsa, D. (2010). Should entrepreneurs plan or just storm the castle? A meta-analysis on contextual factors impacting the business planning– performance relationship in small firms. Journal of Business Venturing, 25(1), 24-40.
Mullins, J. (2012). The new business road test: What entrepreneurs and executives should do before writing a business plan. Pearson UK.
Schaper, M., Volery, T., Weber, P., & Lewis, K. (2010). Entrepreneurship and small business.
West, A. (1988). A business plan. Pitman.
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