Bright Eyes Daycare’s Business Plan

Executive Summary

Bright Eyes Daycare aims to prepare its students to prosper as young leaders of the future generation by combining an entire competency-based curriculum tailored to children with enhanced first-class childcare services. Bright Eyes will offer after-school tutoring and extracurricular activities such as gymnastics, arts, dance, craft, and theatre to differ from the already established competitors (Batsaikhan et al., 2021). The best thing about Bright Eyes is that all services offered will be at one location.

Bright Eyes Daycare will be a limited liability partnership business that three partners own. Ginette Fleury is the Daycare founder and has many years of running a childcare facility. Erla Pierre and Jackie Dubois are the other two partners in the partnership. They are close friends of the founder, and they have experience running a business and childhood education (Blanden, Del Bono, Hansen & Rabe, 2021). Due to the complementary skills that allow them to share the goals and values of the Daycare, they will be involved in the management of the facility. However, they will be operating under the supervision of the founder.

The continuous increase in inflation annually has led most families across the United States to need supplemental or dual incomes. In addition, the break out of the Covid-19 pandemic has increased the number of hours and shifts for people working in the medical field. These unprecedented times have increased the demand for quality childcare services. It is approximate that the population growth rate in South Orange Ave. Orlando is at 30%, which leads to anticipated expanding market potential for the industry in this area (Batsaikhan et al., 2021). In the Childcare industry, critical factors that lead to success are reputation, price, certification, and service. Bright Eyes will compete in the local childcare industry by offering competitive prices, high-quality childcare services, and leading-edge educational programs, as well as maintaining a perfect reputation with the community and parents.

The Daycare will open for business on 1st August 2022, and the initial enrollment will be 20 children. Due to an increase in demand for childcare in the area, it is expected that the facility will have healthy revenue by the end of the first year and is expected to be almost 16 times by the end of the fiscal year in 2024 (Crum & Rayhorn, 2019). The facility’s most significant operating expenses will be rent for the building to be used, customized to fit the required standards for a daycare, and compensation at national industry-standard rates for highly qualified personnel.

Background

Currently, there is three commercial Daycare in South Orange Ave. These daycares usually offer after-school programs, which indicates that they do not provide daycare services for infants and toddlers. Some daycares have been closed due to possible child abuse in the past. Due to this, it has been challenging to find a suitable location for a Daycare (Felin, Gambardella, Stern & Zenger, 2020). After numerous licensing attempts, the building itself has always been the issue. To obtain a license, the requirements are level entry to the building, 35 sq. feet per child inside the building, and 38 sq. feet per child of fenced outdoor area.

Objectives

1. Increasing sales to almost three times by the end of the fiscal year in 2023.
2. Maintaining a high gross margin by the end of 2022.
3. Providing a nurturing, fun environment for daycare children.

Mission

Spending more time with children is considered by most individuals as the best years in life. However, this notion has changed in the current society because people are concentrating on working to satisfy their skyrocketing demands. In this perspective, imagine an alternative to the traditional infant, day, and after school care that meets child care needs and activity-based learning environment similar to those used in vocational centers, colleges, and universities around the nation. In addition to that, a college community of professional caregivers qualified to enhance children’s motor and social skills as well as teach them advanced studies in sciences and arts (Grönlund & Öun, 2020). This sounds expensive, but what if it costs less than a combination of average Daycare and particular interest-based children programs.

Bright Eyes Daycare is a startup comprehensive community daycare that will focus on babies, toddlers, and young children up to 12 years old. The Daycare will be dedicating its efforts and resources to offer top-rated caregiving services combined with high-quality activity-based learning for children in this age group (Nystrand, Hultkrantz, Vimefall & Feldman, 2020). The Daycare will also respond to the demands of children and their parents with perfect quality services and instructions, business partnerships, flexible programs, and local community involvement.

The Daycare will have a solid commitment to diversity and accessibility. In addition, the Daycare will have policies that embrace all who are willing to provide a better quality of care, education, and preparation for their children (Romero Starke et al., 2019). The set prices by the facility will be affordable to all to ensure no discrimination due to social classes.

Keys to Success

The most important factors needed to achieve for Bright Eyes Daycare are:

• Quality services- Educational programs and caregiving will be offered by tutors, childcare workers, degree graduates, certified educators, and the most experienced childcare industry.
• Marketing- Ensuring that the Daycare strictly offers its highlighted services to prevent mixing its services to those provided by normal daycares.
• Profitability- Managing budgets and controlling costs while focusing on the company’s goals, reinvesting in the business and its employees, and adhering to a business strategy that will lead to expansion and growth.
• Reputation- Maintaining high levels of a reputation for excellence in caregiving, education, and involving community and ensuring it is the employer of choice and tapping on the talented employee.

The Business

Business Description

Bright Eyes Daycare will provide education and care to young children whose parents either are working or want to socialize with their children at a young age. The Daycare will tend to focus its services on parents working in the medical field (Roslund et al., 2020). The facility’s operations will be appropriate to ensure that it contributes significantly to children’s emotional, intellectual, and social growth.

Set up and safety rules. Bright Eyes will be designed to support children’s entertainment, education, and health brought into the facility. Toys will be readily available, cribs and cots will be offered during rest time, and tables will be there for food storage and service (Skorge & Rasmussen, 2019). In addition, the facility will have strict safety rules that will protect staff and children. Rules will include behavioral directives to control outdoor and indoor plays, sanitary procedures and standards, and physical health necessities.

Education, relationships, and operation hours. Bright Eyes will contribute to children’s education by presenting age-appropriate lessons, games, and crafts. In addition, the facility will encourage the healthy development of the relationship between children, assisting children in appropriating ways learning appropriate ways to socialize and interact with each other (Souto & Rodríguez-López, 2021). The Center will operate on a schedule convenient for working parents (especially in the medical field), it will offer 24 hours services six days per week, and it will always be closed on Sundays.

Services

Bright Eyes Daycare aims to provide a conducive environment for physical, intellectual, and emotional growth for children left under the facility’s care. Parents enrolling their children in a childcare facility usually consider the type of the vicinity and its services. Considering this perspective, Bright Eyes will offer four essential services in a community: drop-in care, full-time Daycare, part-time, and after-school tutoring. These services will be provided to infants, toddlers, and preschoolers up to 12 years old. In addition to the essential services, the facility will ensure that children are well-fed and clean and keep them active with extracurricular activities (Watson, McGowan & Cunningham, 2018). Other additional services are transportation for elementary schoolers, tutoring, and some short-term childcare arrangement (drop-in), especially for parents who have enrolled their children in the facility and are not working.

Market Analysis

Bright Eyes Daycare will offer vital services in the current fast-paced, dual-income world. The number of families that depend on two incomes has tremendously increased, skyrocketing the need for quality daycare services in the contemporary world. A study conducted by Florida Business Statistics revealed that over 80 percent of licensed daycares become successful and profit the first year of operation (Souto & Rodríguez-López, 2021). Since Bright Eyes Daycare is putting all the required measures for complete operational daycare services, it is expected that the facility will follow the suit of licensed daycares of making profit the first year of operation.

Market segmentation. Bright Eyes will satisfy the local community demand for quality childcare services within South Orange Avenue and its environs. Children will be involved on either a part-time or full-time basis.

• Part-time workers/drop-ins. Part-time workers and drop-ins from the local businesses and fitness centers will make up less than 2% of the revenues. However, this market is not a primary focus; sufficient flexibility to address this market is crucial to local ‘word-of-mouth’ marketing strategy.
• Full-time working. The facility will establish a significantly large, full-time regular client base to develop healthy and consistent revenue to ensure business stability. Community and customer relations are critical because they guarantee parents are satisfied to keep their children in a childcare facility.
• After school care. This will be another large segment contained in the facility’s business. This will be a client-based service that will provide a higher profit because the instructor-to-children ratio is more elevated, and children need more education services, which are the main focus of the Daycare (Skorge & Rasmussen, 2019). Offering tutoring and advanced studies in technology, arts and science will attract more profitable business clients, which will be supplemental to the business’s revenues.

Marketing Plan

Marketing in the childcare industry mainly depends on the referral and reputation of the facility. For Bright Eyes to reach its market, it will use direct-mail campaigns and community activities to maintain and enhance the facility’s reputation with the families and the market community.

Positioning statement. For parents who value the importance of quality childcare service, Bright Eyes will be a perfect place to enroll their children because the facility will offer quality childcare services combined with specified interest-based programs.

Pricing strategy. Bright Eyes will be strict on charging appropriately for the high-end, high-quality services it will show. The Daycare’s revenue structure will support cost structure; therefore, the salaries paid will assure quality services are balanced by the revenue charged (Roslund et al., 2020). The pricing will be competitive to the Daycare community; however, the company will not be forced to “low price leader” ideology. The quality of services offered by the facility will support the prices charged.

Promotion strategy. Bright Eyes Daycare will depend on direct mail campaigns and community activities to reach new customers. These methods of getting customers are discussed below.

1. Direct mail campaigns- The Daycare will send direct mail to households within South Orange Ave. Orlando and its environs. The facility will also offer monthly calendars to the community and families, noting weekends, family days, and days when the facility is closed.
2. Community activities- The facility will participate in active community activities such as sponsoring communal events.

Marketing programs. The facility will have programs such as weekend movies, catered open houses clubhouse pool parties, and parents’ survival nights to reach out to the community within. The Daycare will also partner with local businesses to ensure the needs of children are handled.

Location

Bright Eyes Daycare will open in August 2022, and it will be fully operational with all its services. It will start with one location, located on South Orange Ave. Orlando, near Orlando Regional and Arnold Palmer Hospitals. The Childcare will be in a newly constructed 4900 square foot building near Orland Regional and Arnold Palmer Hospitals. This location’s main reason is that the target audiences are children living in South Orange and its environs.

Competition

In the childcare industry: reputation, price, service, and certification are critical factors determining success. Bright Eyes will compete perfectly in the industry by offering competitive prices, high-quality childcare services, leading-edge educational programs with certified college-educated instructors, and maintaining an excellent reputation with the community and parents being served by the facility.

The main competitors that have already established themselves in the area are:

St. Mary’s Academy

• Strengths: it is an Already established facility in the area and a large church congregation
• Weaknesses: it may not attract customers from different religious beliefs, is Non-accredited, and is an unlicensed facility.

Martial Arts

• Strengths: it offers martial arts combined with childcare services, and it is already established in the area.
• Weaknesses: it is not easily accessible due to its location, non-educational services, and poor building conditions (making it vulnerable to flooding).

Family Childcare Homes

• Strengths: personal service and established in the industry
• Weakness: it has a limited number of children it can hold non-professional stigma.

Management and Operations

Bright Eyes opening management will consist of the Founder, two partners, a Director, and an Administrative Assistant. More staff members will be added to the business because it is projected to grow gradually after it is launched (Bocken & Snihur, 2020). The founder will be on the top of the organizational structure, followed by two partners, the Director and VP of Education operations. The roles of each member of the management team will be as follows.

• Founder. The founder’s responsibility will be general fiscal responsibility, ensuring that the business’s financial status is stable and achieving the facility’s goals.
• Industry Consultant– The business will rely on Industry Consultant expertise to provide essential insight into rules, regulations, and governmental programs that will benefit the Daycare business.
• Director– The Director’s responsibility will be to ensure daily operations, oversee curriculum activities, and manage all caregivers, tutors, and instructors.
• VP of Education Operations– the VP will be responsible for maintaining the business’s public image.

Personnel

The table below shows the summary of Bright Eyes’ project personnel expenditure for the first three years of operations. The compensation increases from $94K in the first year to about 102K for the third year. This is a clear indication that the plan is a fair compromise between expedience and fairness, and it meets the national standards as required by the federal government.

Table 1: Personnel Expenditures for the First Three Years

Application and Effect of Loan or Investment

Since Bright Eyes is a new entrant in the childcare industry, it has numerous business needs that need cash. A business loan will help the business grow because it will cover all the upfront costs for starting a business to allow Bright Eyes to pursue profitable growth within the first year of its launch (Nystrand, Hultkrantz, Vimefall & Feldman, 2020). The business loan will be applied after completing to draft of this comprehensive business plan which shows lenders the financial stability of Bright Eyes Daycare.

Financial Data

Projected Financial Statements Income Statements

Cash flow statement. The cash flow statement will be prepared using projected cash inflows and outflows that will be used to manage Bright Eyes Daycare. The projected cash flow statement also evaluates cash inflows and outflows to determine when, how much, and prolonged cash deficits will exist for Bright Eyes Daycare during an upcoming three-year period (Felin, Gambardella, Stern & Zenger, 2020). In addition, the statement will be used to justify loan requests, determine repayments schedules and plan for short-term investments.

Table 2: Summary of Three-year Projected Cash Flow Statement of Bright Eyes Daycare

Cash flows from operating activities. The main points in the summary of the three-year project cash flow statement of the Daycare are as described below.

1. The Daycare is expected to generate an increasing net income through its trading operations. In addition, the projection shows that the business is making huge profits.
2. Depreciation of $36,550 is generated from non-cash items, and it is added back to net income because it was initially deducted as an expense to calculate net income.
3. Amounts due to business are projected to increase annually for the three years, increasing working capital and cash flow.
4. All the trading operations of Bright Eyes Day are expected to lead to an increase in a cash outflow for the three years.

Cash flow from investing activities. These are amounts invested in the Daycare in capital assets such as property, plant, and equipment. In this case, Bright Eyes Day is a new entrant in the childcare industry; the vital activity of the company will be to purchase property, plants, and equipment.

Cash flow from financing activities. This is the final part of the cash flow statement, and it is used for financing purposes. This section relates to amounts of cash received from equity and debt. Since Bright Eyes is a new entrant, it will not have any equity, but it will be obligated to fund the business.

Balance Sheet. The table below shows it projected sufficient growth of Daycare’s net worth (equity) and its gradually good healthy financial position. The balance sheet below has three categories assets, liabilities, and equity.

Table 3: Summary of Three-year Projected Balance Sheet of Bright Eyes Daycare

Assets. These are projects of anything that Bright Eyes Daycare will owe in monetary value. There are two categories of assets which are discussed below.

1. Current assets- include cash and other assets that can be easily converted to liquid currency. They will consist of the amount of money owed to the Daycare for its services (Crum & Rayhorn, 2019). Since there is no account receivable for the projected three-year period, it is clear that the customers will be paying their fees on time.
2. Fixed assets- are all resources owned by Bright Eyes Daycare that are expected to remain in the business’s non-cash form for more than one year. Apart from Land, all other fixed are listed at cost less depreciation.

Liabilities. These include all debts owed by the Daycare to any of its creditors. Bright Eyes. The Daycare has current and long-term liabilities, which are discussed below.

1. Debt- This is the principal outstanding balance credit and debt financing. Long-term liabilities are debts that do not need to be repaid within the projected three-year period.
2. Accounts payable- These are amounts owed to suppliers for goods and services purchased in connection with business operations, for example, toys suppliers.

Assumptions to Projected Financial Statements

Breakeven analysis. This is a crucial financial calculation that will determine the practical application of cost functions in Bright Eyes Daycare, especially in the balance sheet. The measure is a function of three factors: profit, cost, and sales volume (Bocken & Snihur, 2020). The main aim of the analysis will be to classify the dynamic relationship between sales volume and the total cost of the Daycare. The breakeven analysis of Bright Eyes is based on the following assumptions.

1. The total cost will be classified as current and fixed costs
2. The cost and revenue functions are linear
3. The price of the services offered by the Daycare is assumed to be constant
4. The volume of production and sales are equal
5. The rate of increase in variable cost is not constant
6. The fixed costs are constant over the volume under consideration
7. The technology is constant, and labor efficiency is not improving.

Sources and Uses of Funds. This is also called a cash flow statement, and it will contain a summary of the Daycare’s changes in financial position annually for three years. Starting Bright Eyes Daycare is at the risk of owing more than it can pay annually (Crum & Rayhorn, 2019). Therefore, spending less on the cash flow projection will help determine potential cash shortfalls annually. During creating cash flow for the Daycare, the assumption below was identified about how cash flows in and out of business.

1. Receivables determine how quickly the Daycare will receive payment from the customers. In this case, most Daycare’s customers will pay within a month; the critical assumption is that: 95% of sales are collected a month after they are sold.
2. Payables are used to determine when the Daycare’s payments are due. In this case, most vendors will require payment within two weeks of delivery; the critical assumption is: Payables are due within 14 days of purchase.

References

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Bocken, N., & Snihur, Y. (2020). Lean startup and the business model: Experimenting for novelty and impact. Long Range Planning, 53(4), 101953.

Crum, M., & Rayhorn, C. (2019). Using Monte Carlo simulation for Pro forma financial statements. Journal of Accounting and Finance, 19(5).

Felin, T., Gambardella, A., Stern, S., & Zenger, T. (2020). Lean startup and the business model: Experimentation revisited. Long Range Planning, 53(4), 101889.

Grönlund, A., & Öun, I. (2020). Minding the Care Gap: Daycare usage and the negotiation of work, family and gender among Swedish parents. Social Indicators Research, 151(1), 259-280.

Nystrand, C., Hultkrantz, L., Vimefall, E., & Feldman, I. (2020). Economic Return on investment of parent training programs for the prevention of child externalizing behavior problems. Administration and Policy in Mental Health and Mental Health Services Research, 47(2), 300-315.

Romero Starke, Kofahl, Freiberg, Schubert, Groß, & Schmauder et al. (2019). Are Daycare workers at a higher risk of parvovirus B19 infection? A systematic review and meta-analysis. International Journal of Environmental Research and Public Health, 16(8), 1392.

Roslund, M., Puhakka, R., Grönroos, M., Nurminen, N., Oikarinen, S., & Gazali, A. et al. (2020). Biodiversity intervention enhances immune regulation and health-associated commensal microbiota among daycare children. Science Advances, 6(42).

Skorge, Ø., & Rasmussen, M. (2019). Volte-Face on the welfare state: Social partners, knowledge economies, and the expansion of work-family policies. Politics & Society, 003232922110143.

Souto, J., & Rodríguez-López, Á. (2021). Entrepreneurial learning in an experiential and competences training context: A business plan in Bachelor thesis. The International Journal of Management Education, 19(3), 100513.

Watson, K., McGowan, P., & Cunningham, J. (2018). An exploration of the Business Plan Competition as a methodology for effective nascent entrepreneurial learning. International Journal of Entrepreneurial Behavior & Research, 24(1), 121-146.