The Child Care Center Business Plan Workbook A Tool to Assist You in Designing Your Business Plan Funding provided by Frey Foundation, the Nokomis Foundation and the Steelcase Work/Life Strategies. 2 3 INTRODUCTION This booklet is designed to be used as a workbook. There is a two-page business plan overview, followed by workbook pages highlighting each section of the business plan. The intent of this booklet is to help you collect all the information you will need to create a final business plan. This document was created by a collaborative team to help current and potential child care center owners/managers/directors start up and continue to provide stable and quality child care. The team brought together business consultants and early childhood specialists to develop a plan that will combine best business practices with appropriate care and education of young children. This booklet is designed to be used as a workbook. There is a two-page business plan overview, followed by workbook pages highlighting each section of the business plan. Members of the collaborative team are: Consumer and Industry Services; Child Day Care Licensing Lynn Smith, Licensing Consultant Grand Rapids Community College; Child Development Program Pat Missad, Individual Professional Development Plan Coordinator Grand Rapids Opportunities for Women (GROW) Rita VanderVen, Executive Director Kent County Child Care Team, Joining Forces Christine Nelson, Project Manager Kent Regional Community Coordinated Child Care (4C) Laureen Kennedy, Executive Director Jennifer Griffith, Director of Education Small Business Development Center Nancy Boese, Regional Director LaToya Staten, General Business Counselor December, 1998 Last revised: May, 2001 4 THE CHILD CARE CENTER BUSINESS PLAN AN OVERVIEW Introduction The Child Care Center Business Plan provides a description of the center, tells who the center serves, and outlines its competition. In addition, it lays out the center’s marketing strategy (how the center will maintain full occupancy), and explains the financial operations of the center. The Plan should provide the reader the ability to understand the child care industry itself, as well as the details about YOUR specific center. Developing the Child Care Center Business Plan is a process which includes: • Outlining the general concept of your center • Conducting research • Refining your ideas based on your research • Developing specific components of the Plan The Child Care Center Business Plan that you develop through this process: • Explains WHO specifically you will serve and WHAT services you will provide • Describes why your child care center is a needed service • Describes in detail how the center will operate Your Child Care Business Plan has four functions: • It forces you to define the “mission” of your center, your center’s goals, and your action plan to meet these goals • It compels you to look at your center objectively to determine its feasibility • It communicates your center’s ideas to friends, family, investors, bankers, supporters, and others within your management team • It serves as an operating tool to help you run your center The Body of the Child Care Center Business Plan The Plan must be credible, clear, and authoritative. Although intuition, educated guesses and gut instinct are very important to small business owners (who may be child care center operators), the Plan should cite specific “sources” of information that are within in the Plan. The Plan should be 10-15 pages in length (excluding the introduction and any supporting documents) and it should be typed (single or double spaced) without grammatical or typographical errors. Readers of your Business Plan may view mistakes or sloppy presentations as examples of poor business skills Be sure to write in the third person. Don’t say “I’, “me”, “we” or “our”, instead, say “Castle Child Development Center”, “the owner” or “Jane Doe”. Be positive and write in the present tense. Don’t say, “I hope to care for...” instead, say “The owner cares for 75-90 children between the ages of ....” The Sections of the Child Care Center Business Plan 5 • The Business Introduction • The Business Organization Section • The Management/Operations Section • The Marketing Section • The Financial Section • Supporting Documents These sections are interrelated. The marketing section, for instance, cannot exist without the financial section, and visa versa. This means that when you are writing the marketing section (how you will communicate about your center to the public), you must keep track of any financial implications (costs involved in communicating, for example: brochures, media, etc.) When presenting a Child Care Center Business Plan to a bank or investor, include a cover letter stating how much money you are requesting, the type of loan (equipment, line of credit, etc.), and a specific description of how you will use the money. It is important that you include financial spreadsheets showing your method of intended repayment. The Plan must be viable, and must satisfy the loan officer’s or investor’s most basic questions: • Does the Plan make sense? • Is there sufficient need for a child care center in the proposed location? • Are the financial projections healthy and realistic? • Is the child care center manager experienced and capable of • providing the child care service AND • operating the center as a business? • Will the bank get their money back or will an investor receive a healthy return on his/her investment? Final Thoughts on Creating a Child Care Center Business Plan Simply stated.....In developing a Child Care Center Business Plan, you are developing a “road map” for your center. You are defining WHERE you are going, and HOW you will get there. 6 EXECUTIVE SUMMARY Provide a brief overview (highlight and summarize primary elements) of the business plan's contents. NOTES: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 7 BUSINESS INTRODUCTION ◊ Provide a history and description of the business • How and why did you enter the child care field? ◊ Mission statement • Who are you and what do you do? • What services do you offer? • Who do you serve? ◊ Research market feasibility • Is there a need for child care in the area where you business will be located? • How much of a need is there and how much of it will you serve? ◊ Competition • Who are your competition? • What services do they offer; what are their strengths and weaknesses? • Are they a threat to your business? ◊ Industry trends • What does the child care industry itself look like at this time: is it stable or declining? ◊ Potential market • Given what’s know about the above issues, what is the potential demand/need for your facility? NOTES: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 8 NOTES continued: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 9 BUSINESS ORGANIZATION ◊ Legal • Will the center be a sole proprietorship, a partnership, or a corporation? • Will it be profit making or a non-profit organization? • Will it have a board of directors? • Will it be employer sponsored or supported, or funded by state or local agencies? • Who will determine the policies and budget? ◊ Insurance • What types of insurance will you carry (liability, fire, theft, health, accident) and through whom? ◊ Tax and bookkeeping system • What records do you need to maintain? • What system will you use? ◊ Regulation, licensing, and/or government issues • What licensing regulations are there for your industry? • What are the zoning regulations for your location? • What local building code requirements must you adhere to? NOTES: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ NOTES continued: 10 ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 11 MANAGEMENT/OPERATIONS ◊ Personnel/management team • Who are they? • What are their qualifications? • What education have they had? • Are they competent, capable, and experienced? ◊ Benefits • What benefits are being offered to employees, if any? ◊ Employee requirements and job descriptions • What are your hiring practices? • What is your wage scale? • What are your staffing patterns? • What will specific employees be expected to do? ◊ Business operations • How will you actually run your business? • What are your major business policies? • What is your schedule of daily program activities and how will they provide you with a competitive edge? ◊ Suppliers • What equipment and materials do you need? • Where will they be obtained? • Provide breakdown of costs by supplier. ◊ External partners • Will a lawyer, accountant, or early childhood specialist’s served be used? ◊ Technology needs • Do you need or will you need any technology to help you, such as computers, telephone add-ons, etc.? NOTES: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 12 NOTES continued: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 13 MARKETING ◊ Describe your services • What do you offer and to whom? • Do you offer any special services that may not be offered elsewhere? ◊ Describe the target market for you facility • Who will be served? ◊ Identify your location • Where is your facility located? • Has is met local and state inspections and zoning requirements? • Does it accommodate special needs? • What features about your site are desirable for child care and families? ◊ Pricing strategies • How will fees be determined? • Will there be late fees, paid holidays and vacations, sick days, etc.? • Will you charge for special services, i.e., transportation? ◊ Promotional strategies • How will you reach your customers? • What advertising methods will you use? NOTES: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 14 NOTES continued: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 15 FINANCIAL ◊ Start-up costs • If applicable, what will you need to purchase to begin? • What operating funds will be needed? • Where will this money be obtained? • How much, totally, is needed to successfully cover all start-up costs? ◊ Cash-flow projection • Where will your income come from and where will it go? • Anticipate your income and expenses for a two-year period, month by month and by year. ◊ Income statement ◊ Balance sheet: assets, liabilities, net worth ◊ Break even analysis • Revenue versus expenses: how much money do you need to break even? • Can you make a profit? ◊ Financing plan • Will you need to borrow money? How much? • How will you use it and how will it be repaid? ◊ Identify sources of funds • Determine how the program will be funded. • Will you seek a bank loan? • How much money can you provide? 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