Contents

Chapter 1: INTRODUCTION ........................................................................................................................... 4 1.1 1.2 1.3 1.4 1.5 1.6 Background ................................................................................................................................... 4 Problem Identification .................................................................................................................. 4 Idea Generation ............................................................................................................................ 5 Opportunity Assessment............................................................................................................... 5 Data Collection .............................................................................................................................. 6 Company Overview Small Wonder Child Care (SWCC) .............................................................. 6 Vision ..................................................................................................................................... 7 Mission .................................................................................................................................. 7 Goals...................................................................................................................................... 7 Objectives.............................................................................................................................. 7 Logo ....................................................................................................................................... 7

1.6.1 1.6.2 1.6.3 1.6.4 1.6.5

Chapter 2: ASSESSMENT OF BUSINESS ENVIRONMENT ............................................................................... 8 2.1 SWOT Analysis............................................................................................................................... 8 Strength................................................................................................................................. 8 Weakness .............................................................................................................................. 8 Opportunities ........................................................................................................................ 8 Threats .................................................................................................................................. 8

2.1.1 2.1.2 2.1.3 2.1.4 2.2

PEST Analysis ................................................................................................................................. 9 Political .................................................................................................................................. 9 Economic ............................................................................................................................... 9 Social ..................................................................................................................................... 9 Technological ...................................................................................................................... 10

2.2.1 2.2.2 2.2.3 2.2.4

Chapter 3: Defining Services ....................................................................................................................... 11 1

3.1 3.2

Types of services offered ............................................................................................................ 11 Types of programs ...................................................................................................................... 11 Toddler Program (2 3 years) ............................................................................................ 11 Primary Program (3 5 years) ............................................................................................ 13

3.2.1 3.2.2

Chapter 4: MARKET ANALYSIS .................................................................................................................... 16 4.1 Market Needs.................................................................................................................................... 16 4.2 Target Market ................................................................................................................................... 16 4.3 Main Customers ................................................................................................................................ 17 4.4 Keys to success .................................................................................................................................. 18 Chapter 5: Competitive Analysis ................................................................................................................. 19 5.1 5.2 Competition Comparison ............................................................................................................ 19 Competition Analysis .................................................................................................................. 20

Chapter 6: COMPANY STRATEGY ................................................................................................................ 22 Chapter 7: MARKETING PLAN ..................................................................................................................... 23 7.1 7.2 Marketing Positioning ................................................................................................................. 23 Marketing Mix ............................................................................................................................. 23 Product ................................................................................................................................ 23 Price .................................................................................................................................... 23 Place .................................................................................................................................... 24 Promotion ........................................................................................................................... 24 People ................................................................................................................................. 24 Process ................................................................................................................................ 25 Physical Evidence ................................................................................................................ 25

7.2.1 7.2.2 7.2.3 7.2.4 7.2.5 7.2.6 7.2.7 7.3

Sales Forecast.............................................................................................................................. 25

Chapter 8: OPERATION PLAN ...................................................................................................................... 26 8.1 Organizational Chart ................................................................................................................... 26 2

8.2 8.3 8.4 8.5 8.6

Human Resource ......................................................................................................................... 26 Job Description............................................................................................................................ 27 Operation Process ....................................................................................................................... 29 SWCC Layout ............................................................................................................................... 30 Calculation of Operating Expenses ............................................................................................. 32

Chapter 9: FINANCIAL PLAN ........................................................................................................................ 33 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.7 9.8 9.8 9.9 Capital Requirements.................................................................................................................. 33 Fixed Assets ................................................................................................................................. 33 Operating Expenses .................................................................................................................... 33 Income Statement....................................................................................................................... 33 Statement of Retained earnings ................................................................................................. 33 Cash Budget ................................................................................................................................ 33 Projected Cash Budget ................................................................................................................ 33 Projected Balance Sheet ............................................................................................................. 33 Sensitivity Analysis ...................................................................................................................... 33 Projected Key Financial Ratios .................................................................................................... 34 Calculation of Net Present Value ................................................................................................ 34

Chapter 10: CRITICAL RISK AND CONTINGENCIES ...................................................................................... 35 10.1 10.2 Internal Risks ............................................................................................................................... 35 External Risks .............................................................................................................................. 35

Chapter 11: FUTURE PLAN AND EXIT STRATEGY ........................................................................................ 36 11.1 11.2 Future Plan .................................................................................................................................. 36 Exit Strategy ................................................................................................................................ 36

Annexure ..................................................................................................................................................... 37

Chapter 1: INTRODUCTION

1.1

Background Montessori education dates back to 1907, when Maria Montessori opened the Casa dei Bambini, or Childrens House, in a low-income district of Rome. Her unique philosophy sparked the interest of educators worldwide, and in the following decades Montessori schools opened throughout Europe, in North and South America, and, finally, on every continent but Antarctica to provide and introduce the culture of early childhood education based on Montessori principles and philosophy. The Montessori School in Nepal started from 1950. Unlike traditional teaching methods, this style provides students with an interactive approach to learning that focuses on independent problem solving, selfdiscovery, and nature intensive learning. This teaching method has become extremely popular over the last one hundred years, and has proliferated worldwide. There has been a steady increase in the level of education of the Nepalese citizen along with the increase in two income professional parents. This thereby creates an ample market for the full-service child care/ development centers. The proposed child care center is an establishment that will primarily cater to the need of young children. It is an establishment that will look after young children, provide recreational tools and materials, food facilities, entertainment, indoor sports facilities and even transportation facilities. Aimed to provide working parents with the freedom and assurance that their children will be taken care of, the business strictly admits children between the ages of 2 5 years. This center will meet the need of personally ambitious working parents to have their infant children taken care and developed properly while they continue further with their professional life simultaneously.

1.2

Problem Identification The main problem that has been noticed in the area surrounding Gyaneshwor(primary target market) is related to the busy scheduled of the young working couples due to which they are facing a problem in taking good care of their infant children. Moreover,

the existing schools although they have a kindergarten section, do not take good care of the children. Also, the other reason for the existing problem is that the Gyaneshwor area has been growing both in terms of population and economic activity. The major segment of the increased population is young couples who have shifted from other parts of the country to Kathmandu valley due to various opportunities in terms of career and education. Also there are more possibilities for the future due to an apartment building undergoing construction near the Sano Gaucharan area.

1.3

Idea Generation Identifying the existing problem in the area and the possibility of a growing business, to address the problem, I would like to establish a child care/development center by the name Small Wonder Child Care. The child care center would provide a full service in child care and development. The baby sitters would also focus on grooming the children by identifying their innate potential, stimulating their curiosity, guiding them to explore, helping them to acquire different skills and instilling the joy of active learning. Besides the service at the center, the center would also provide the facility to pick up and drop back the children to their home through their own transportation. Hence, the child care center will not only solve the existing problem of the young working couples but also will provide added value by grooming their children.

1.4

Opportunity Assessment The business holds ample opportunity due to the following reasons: The household number has double fold in Gyaneshwor/Nagpokhari area in the last 1 decade. There exists only one major player in the target market. Hence, the competition will not be very intense.

1.5

Data Collection With the aim to know whether or not there really existed demand for the child care center, I conducted an interview with 30 couples having infant child from the Gyaneshwor area. The results of the interview can be summarized as:

Constraint No of respondents

Result 30 couples

Having problem managing children and job 18 couples simultaneously Having helpers at home to look after children 22 couples

Having preference sending child to child 20 couples care/development center Preferred price range Desired services Rs. 6000- Rs 8000 Full time day care, pickup service, interactive discovery, development, learning cognitive through and selfsocial in

development

extracurricular activities

1.6

Company Overview Small Wonder Child Care (SWCC) SWCC will be a private limited Company established under Company Act 1997. The child care center will be registered at the Company of Registrar, Tripureshowr, Kathmandu under the name Small Wonder Child Care Center. It will have its busine ss address located at Gyaneshwor, Kathmandu. It will also be registered under VAT to operate. Companys trade name and logo will be protected under existing patent rights laws and regulations. All the companys assets and liabilities would be under the companys legal name SWCC.

1.6.1

Vision

To establish and develop Small Wonder Child Care as a model early childhood education center in different communities

1.6.2

Mission

The mission is to provide a warm, safe and child-centered environment that encourages positive self-esteem, self-discovery, social interaction and joy of learning for young children. We strive to build a full, rich educational community through respect and mutual understanding among children, staff and families a happy place where childhood is a journey and never a race.

1.6.3

Goals

Encouraging each child in his/her developmental growth by providing an environment that encourages learning through action, inquiry and exploration.

1.6.4

Objectives

1. Open second branch by the end of Year 1. 2. The utilization of SWCC facilities by at least 40 different families in the first eight months. 3. To increase the number of client's served by 20% each year. 4. To develop a sustainable, profitable, start-up business.
1.6.5 Logo

The logo of the company will be as:

Chapter 2: ASSESSMENT OF BUSINESS ENVIRONMENT

2.1

SWOT Analysis The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing SWCC

2.1.1

Strength

A sophisticated and effective learning system. Excellent training programs that all employees must participate in. An educated customer base that recognize the benefits that SWCC offers.
Weakness

2.1.2

A lack of visibility due to the newness of the operations. The ability to attract and keep well trained employees. The inability to perfectly forecast demand of services relative to the number of employees on staff at any one time.

2.1.3

Opportunities

A growing market with a large percentage of target customers not yet aware of SWCC. Increased revenue as more and more people are working, thereby unable to care for their children during the day.

As the number of children served grows, fixed costs are spread thinner over a larger customer base.

2.1.4

Threats

Competition from already established facilities that improve their service offerings to be more competitive to SWCC.

Unfounded "public scares" regarding child care.

2.2
2.2.1

PEST Analysis
Political

There are not so many political factors that can affect the market of day care hubs. The daycare business is favorable in terms of political environment. There is no constraint or straggle about this business in political environment. Laws, government agencies, presser groups and various peoples are favorable to start this business. Our Government, laws, legislation, and political laws will not hinder the business.

The only political factor that can hamper the business is unprecedented strikes, bands, etc called by political parties. It can cause the day care center to shut down for several days and hence hamper the day to day operations.

2.2.2

Economic

The rate of a familys income and the state of economy will greatly determine how much we can charge per child. The living standard of people is increasing day by day. People have started to value the importance of early education and thus their expenditure on this context is also high. The rate of inflation will also affect the rate we charge because if prices go up then it will mean that we have to increase how much we charge for the service.

2.2.3

Social

There are many social factors that can affect the looking after of children. This is because recent topics such as child abuse may put of some people from putting their children in day care hubs because they may lose faith. In todays context there are more and more nuclear families with both the parents working. They realize the value of early child education thus they are more willing to let their children get the benefit of child care centers.

2.2.4

Technological

The technological factors can be the invention of new toys if any new toys or any equipment is being introduced then the day care center has to adopt that because noparent would want their child to be using old fashioned toys or equipment. The advanced technological environment could be exploited in order to provide up to date and sophisticated health care services in the context of child care centers.

10

Chapter 3: Defining Services

3.1

Types of services offered Based on marking research, SWCC will offer the following services:

Full-time care during daytime Nontraditional hours (very early mornings, evenings, overnight care, weekdays and/or weekends)

Drop-in or on-demand care Part-time care Parents' night out (weekend evening care) Age-based care Transportation

3.2

Types of programs Our child care program is dedicated to providing individualized, progressive, and developmentally appropriate curricula that are designed to enhance each childs natural love of learning, independence, and self-discipline. Our approach focuses on the whole child and is designed to promote and optimize their intellectual, emotional, physical, and social development. Whereas the children will be given the freedom to pursue their interests in as much depth as they need, they are also carefully guided to ensure that they are receiving a balanced exposure to all areas of the curriculum. Each child progresses through a traditional threepart curriculum consisting of practical life, sensorial, and academic or intellectual education, which includes mathematics, language, science, and cultural studies such as art, geography, and music.

3.2.1

Toddler Program (2 3 years)

Just prior to two years of age, children begin making great strides toward independence. They become ready to separate from their parents and benefit from experiences that make this separation positive and enjoyable. The child of this age must orient him/herself in an unfamiliar world and establish a sense of trust and in the environment. They need

11

stimulation, logical limits, flexibility, and support. It is a difficult task since the child has no experience or training in the values and expectations of those around him/her. The purpose of the toddler class is to assist the child in this process. The activities offered will be simple, suited for the needs, interests, and capabilities of very young children. The pace will be unhurried and the children will be provided the opportunity to be occupied with an activity for a period of time, uninterrupted. When a child is ready for a new activity, a teacher will be ready to give individual attention to that child. The goals of the program is to foster good learning habits, language development, motor control, social development, how to deal with confrontation in a constructive manner, to respect the worth of another child, and to develop a positive attitude toward school and learning. Emotional Goals

Begins to show empathy for others Feels safe and secure away from parents Shows affection or dislikes Shows pride in new accomplishments Asserts self appropriately Exhibits contrasting moods (stubborn to compliant)

Social Goals

Imitates others Influences or persuades others Helps at clean-up time Tries to please others Exhibits an intense interest in adult language Enjoys "exploring" with others

12

Physical Goals

Sits well in chair Climbs up steps Marches in place Rolls, throws, and kicks ball Stacks blocks Uses a crayon or paintbrush Attempts to put on shoes, socks, jacket Washes and dries hands Uses a spoon Drinks from a cup

3.2.2

Primary Program (3 5 years)

3 - 6 year-old children possess an extraordinary capacity to absorb information from his or her environment. The Montessori Method of education allows children in this sensitive period to learn to read, write and calculate in the same natural way they learn to walk and talk. A typical primary program begins when a child is about 3 years old and is toileting independently. Children in the classroom will have great freedom; however, respect for themselves, for others, and for the environment forms the basis for all classroom rules. They may also choose to complete a work from any of the main areas of the classroom.

Emotional Goals

Displays a sense of security Exhibits self-confidence Has a positive attitude Shows a desire to learn Is willing to try something new

13

Behavioral Goals

Listens attentively Follows directions Focuses on task at hand Is not disruptive Exhibits self-control Uses toys and materials appropriately

Self-Help Goals

Puts on shoes without assistance Takes care of own toileting needs Cleans up after self at snack, lunch Tries to solve problems independently Participates in classroom clean-up

Social Goals

Plays cooperatively Helps others Interacts positively with peers Interacts positively with adults Stands up for own rights Resolves conflicts peacefully Exhibits good manners; courteous

Language Goals

Speaks clearly Has age-appropriate vocabulary Uses personal pronouns correctly Expresses needs and ideas verbally Recites jingles and rhymes Tells event or story in sequence Follows 3-step verbal directions
14

Physical Goals

Displays good balance Exhibits skill on playground equipment (climber, swing, slide, etc.) Pedals tricycle Builds with blocks Throws/catches ball

Cognitive Goals

Demonstrates knowledge of colors/shapes/numbers and letters Can work a 10-piece puzzle Recognizes own name (written) Knows "left" and "right" Displays competence on computers

Personal Information Goals

Knows full names Knows age Knows birthday Knows telephone number Knows street address Knows first and last name(s) of parent(s)

15

Chapter 4: MARKET ANALYSIS

4.1 Market Needs SWCC is providing parents with a full-time child care service that utilizes a sophisticated learning development system. SWCC will fulfill the following benefits that are important to their customers:

Selection: A complete service offering of child care and learning development for toddlers age two to five.

Accessibility: The facility is centrally located and is open from 6 a.m.- 7 p.m. Customer service: Treating the customer like they are the most important customer that The Toddler Warehouse has is reinforced in all employee training programs.

Competitive pricing: The pricing is reasonable relative to the services offered.

4.2 Target Market The business will be targeting all the three market segments. It is because the need is felt in all the segments despite the difference in range of service and price preferred by the customers in these segments. The primary focus will be in the upper-middle class and the middle class as they have a greater market share and volume of profit generated. But we will also provide customized service to the higher income segment as they prefer a high amount package which can generate high revenue through considerably little amount of sales. As mentioned earlier, the business is mostly focused to cater children around the ages of 2 5 years. The infrastructure, activities and constructed facilities inside the center is designed especially for the age-group. A composition of the target group segment (estimated) is shown below along with the summary of estimates of the target market segment.

16

Opportunity Assessment table for Child Care Center Estimated number of families in Gyaneshwor area Estimated number of families with children Average number of children in each family Total number of children estimated (Demand) 250 200 2 400

4.3 Main Customers Full-Time Working Couples The center will establish a significantly large, full-time, regular client base in order to establish the healthy, consistent revenue base which will ensure stability of the business. Customer and community relations are extremely important, as it is imperative to keep the parents pleased in order to keep their children in the college.

Part-Time Workers Another large segment of the center's business will be in the children of part time workers. It is for such situations where one parent is a full time worker and the other has a part time job or commitment. It is a growing trend in Nepal as more and more women have started to become involved in the working population and they tend to opt for a part time job after having a child.

Drop-Ins Drop-Ins from around the locale will comprise less than 1% of the revenues. While this market is not a primary focus, sufficient flexibility to handle this market is important to the local 'word-of-mouth' marketing strategy.

17

4.4 Keys to success The keys to success for SWCC are:

Marketing: Differentiating SWCC's care giving and educational services from traditional daycare offerings and interest activity programs.

Service quality: Care giving and educational programs provided by degreed and certified educators, child care workers, tutors and subject matter industry professionals in a technologically advanced first-class collegiate environment.

Reputation: Maintaining a highly regarded reputation for excellence in care giving, education and community involvement and being the employer of choice in our market for child care and educational talent.

Profitability: Controlling costs and managing budgets in accordance with company goals, adhering to strategic business plans for growth and expansion and reinvesting in the business and its employees.

18

Chapter 5: Competitive Analysis

5.1 Competition Comparison There are many different competitors in the child care space. SMCC will only detail the direct or reasonably direct competitors, and will not detail the myriad of other service providers that offer some sort of child care option. The direct competitors are: o Established, often franchised, child care centers: These are typically larger facilities that offer care to a wide range of ages. The number of children serviced is usually quite large. The child care is adequate, although somewhat impersonal by virtue of its large size. o Small, home-based child care: These competitors are people that have a child care facility based out of their house. The quality of these ranges considerably, some are great, some are sub-par. o Medium-sized companies: These are typically independently owned facilities. Some will handle a wide range of ages; others will specialize with a specific age group. Based on this, there are predominantly three major competitors (similar nature of business) for our business in the market. Some of these competitors are already established and gained valuable experience over time. The four major competitors are; 1. Maria Montessori 2. Euro Kids 3. Mills Berry 4. Malpi Kids From my understanding, Maria Montessori is rated the best among the competitors. It was the first Montessori to operate in Kathmandu and by gaining a first mover advantage it has been able to capture the greatest share of market. The second biggest competitor in the field is considered Euro Kids. The biggest advantage for Euro Kids is the several numbers of its branches operating across the valley. Relative to Montessori, it does not have as greater share of the market, but despite that, it has made its presence across most
19

places in Kathmandu and by doing so, successfully captured significant amount of market shares. The third would be Mills Berry. It has been gaining a lot of popularity in the child care market. The fourth, and by far the largest competitor as it is located in the proposed SWCC location, is the Malpi Kids which is located in Gyaneshwor. Malpi has captured a big share of the market and is not new in the business. The company has over the years been able to continue a very prosperous growth ratio and is becoming a popular choice for many parents to admit their young children.

5.2

Competition Analysis The child care industry as a whole is saturated. Although there are other day care centers who have been here in the market for some time now, there are some limitations. They cannot handle all their clients equally. When people have had the same things for this many years they definitely need a change and SWCC will be that change. Intensity of Rivalry There is fierce rivalry in this business. Some of the major childcare centers like Mills Berry, Euro Kids are the biggest competitors in the market. Surviving in such a tough market will definitely be a struggle in the first year of operation. Threat of New Entrants The success of various child care centers may inspire other to open up similar kind of businesses in the area. This will create more competition in the market and our business will have to invest more to keep ahead of the new entrants. Threat of Substitute Other similar nature of business may also open up in the locale in the near future. People may choose to have a helper in the house instead of sending their children to a child care facility. If organizations come up who can provide trained babysitters to families then it can considerably reduce the inflow of children in the center. Parents may also choose to enroll their children in facilities who provide primary education as well so as to avoid the hassle of searching for a school in just a few years time.

20

Bargaining Power of Customer The bargaining power of customer is very high as they can reject our services due to its high cost involvements. As there are many other child care centers providing similar services at various rates the bargaining power of customers is considerably increased. Due to this very reason SWCC should take extra care while setting its pricing strategies. Bargaining Power of Supplier We require highly skilled human resources at SWCC as it is the most important factor that can attract parents to our business. Knowing this, the bargaining power of the teachers at our center will definitely be high. However, other employees such as our helpers, drivers and kitchen staff will not have very high bargaining power.

21

Chapter 6: COMPANY STRATEGY

1. Any time drop in The center will not only cater to regular children who have been admitted there but will also accept drop ins at any time. Parents who are taking care of their children by themselves may need someone to take care of their children in case of emergencies. Since there are more and more nuclear families in the society, parents will have no option but leaving their children at day care. As most of the other day care centers do not accept drop ins, adding this service will be a competitive advantage for us. 2. Natures classroom At Nature's Classroom, we will attempt to relate our natural environment (the out-ofdoors) to our human-made environment (i.e. school, home, or any other part of a student's daily existence). In the out-of-doors, the student's ability to adapt to a new environment enhances any normal classroom situation, whether it is in their communication skills, concept attainment or personal relationships.Nature's Classroom will offer a unique educational experience by utilizing a process called "motivational education" where students are enriched academically in areas that interest them most: natural, physical and social sciences.

3. Summer Camps Special one- to two-week sessions will engage, captivate and delight the children through:

Art Camp Sport Camp Nature Camp Music Camp Animal Camp Cooking Camp Drama Camp Science Camp

22

Chapter 7: MARKETING PLAN

7.1

Marketing Positioning SWCC will position itself as an advanced day care service that offers unique learning and developmental programs for toddlers. The positioning will be achieved in part by leveraging the centers competitive edge: 1. Specialized training: The facility can only be as good as the

teacher/assistants. With this in mind, SWCC has a specialized training program that all teachers and assistants are put through so they are proficient at teaching the specific programs that SWCC has developed for toddlers age two to five. 2. Innovative learning programs: Typical learning programs for toddlers this age focus on specific traits and only work on one trait/skill at once. SWC will aim to continuously research about newer methods used in child development care worldwide to remain ahead of the competition. 7.2
7.2.1

Marketing Mix
Product

The product that SWCC is offering is actually a service. The center offers upscale child care services and an advanced academic based curriculum designed for kids between 2- 5 years. SWCC will provide premier child care services that are aimed at enhancing traditional day care methodologies and integrating extracurricular interests (such as arts and crafts, dance, theatre and gymnastics) into one comprehensive program.
7.2.2 Price

SWCC believes that the price must be high enough to cover costs and make a profit but low enough to attract customers and remain competitive. The first priority for the center always is complete development of the children satisfying their parents with quality service. The price for each child will be NPR 10,000 per month. It is obviously quite expensive and people from very low income group will not be able to afford our services but the
23

quality of services offeredmakes it necessary for the center to charge as much. Also, while evaluating the competition it was found that other centers offering similar kinds of services charge within the same range as well.

7.2.3

Place

The location of the center is at Gyaneshwor. Several other locations were also evaluated but it was found that the chosen area had very little competition compared to other locations. The only other competition was from Malpi Kids, a major player in the sector. Also being a purely residential area, the location provides lots of potential for the business. In the future, the potential customer base can also increase because of the undergoing construction of apartment buildings in the area. The location we have chosen offers lots of playground for the children and is far from the hustle bustle of the crowd.

7.2.4

Promotion

The promotion of the center will be done with advertisements in local newspapers, Yellow Pages, television media, well known web-portals and word of mouth. Being aware of current trends, SWCC will also focus on marketing through social networking sites like Facebook, Twitter and Google Plus. Well be developing a core positioning message to differentiate our services from the competition. We will be using direct mail campaigns, pre-enrollment drives, etc. to launch the initial campaign. We will send quarterly direct mail campaigns to the housing developments in a 10km radius of the center.
7.2.5 People

The first and foremost thing that will attract parents to the center will be the personnel working there. Only those people will be hired for teaching who come highly recommended. No expenses will be spared in training them with the current developments regarding child care. As this business is very competitive it is utmost

24

essential for us to ensure that the best personnel are hired to ensure complete customer satisfaction.
7.2.6 Process

We will device a path or a process for each department, i.e administration, teaching, kitchen, etc. to follow so as to ensure that all the activities are carried out without a hitch.When dealing with such a large number of children it is necessary to have a certain sense of order so a routine will be developed for every staff to follow so that there are no hindrances in the care of the children. Also have a pre-defined set of standards and rules will help impress the parents and hopefully they will spread good words about the center to their associates.
7.2.7 Physical Evidence

The layout and the designs of the center will be as such that it is appropriate for children. Each room will have different interiors and paintings on the walls to provide the children with an appropriate learning environment. When potential clients walk in to our center the first thing they will notice will be the layout. Thus, the office area and the reception area will be sufficiently furnished to attract the clients and the classrooms and playrooms will be decorated in such a way that it will pique childrens curiosity and make them feel welcome. 7.3 Sales Forecast We are expecting around 70 children in a month for the first year. However as the center starts gaining popularity we expect an increase by 20% every year. The plan is to charge NPR 10,000 per month for every child. We can forecast minimum sales volume in term of monetary values as follows: Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Sales Revenue 8,400,000 10,080,000 12,096,000 14,515,200 17,418,240

25

Chapter 8: OPERATION PLAN

8.1

Organizational Chart Principal, Shubhekchha Neupane

Administrator

Accountant

Teachers/Babysitters

Receptionist

Kitchen Staff

Helpers

Guard/Drivers

To run any business successfully, it is essential to have a plan of action. A day care can especially benefit from an organizational structure to control its often hectic environment and give its employees the guidance they need to operate effectively. SWCC will follow a set hierarchy as shown in the figure above, so as to avoid unnecessary complication in the daily operation of the business.

8.2

Human Resource We will be requiring a lot of human resources to run the child care center. As the expected number of children is 70 and the age group is also pretty low we will require a lot of helpers to carry out the day to day operational activities. SWCC will have a total of 25 personnels. Following is a list of the companys employee:

26

Designation Principal Driver Administrator Guard Helper Teachers/ baby Sitters Receptionist Accountant Kitchen Staff

Number 1 2 1 2 10 4 1 1 4

Salary per month 25,000 10,000 20,000 8,500 8,000 20,000 12,000 17,000 10,000

Amount per year 300,000 240,000 240,000 204,000 960,000 960,000 144,000 204,000 480,000

Total

3,732,000

8.3

Job Description Principal: To oversee the smooth functioning of the center. Moreover, to maintain public relations, hold meetings with the parents regarding the progress of their children, etc. The Principal will serve as the educational leader, responsible for managing the policies, regulations, and procedures to ensure that all children are supervised in a safe learning environment that meets the approved mission of the center.

Administrator: Review and approve new programs, or recommend modifications to existing programs to the principal for approval as necessary. Confer with parents and staff to discuss educational activities, policies, and children behavioral or learning problems. Prepare, maintain, or oversee the

preparation/maintenance of attendance, activity, planning, or personnel reports and records.

Accountant: Maintain the company accounts. Making sure that the company obliges with the accounting rules and regulations also maintaining a good relation with external as well as internal auditors. The accountant will also be responsible

27

for the timely collection of fees, payment of all bills and salary distribution of the staffs.

Teacher:

The

teacher

is

responsible

for

providing

Montessori

classroom/instructional program that supports the individual needs of the children in accordance with the schools mission and vision. The teacher works with students of various abilities assigned to the classroom, including those with learning differences as diagnosed. The teacher may be required to participate in meetings, training, and planning cooperatives to fully meet each childs needs. The teacher is responsible for the safety of the children left in his/her charge until dismissed to a responsible adult. No child should ever be left unsupervised either inside or outside the classroom. The teacher should also complete required Progress Reports in accordance with school policy. Receptionist: The receptionists foremost responsibility will be dealing with the clients who come into the office, coordinating the appointments of the principal and teachers, entertaining any telephone enquiries and updating the social media sites like facebook. He/she will also be responsible for supervising the duties of the guards and the drivers.

Kitchen Staff: Prepare, cook and present food quickly and efficiently, meeting our standards. Assist in keeping the kitchen clean, hygienic and tidy, at all times. Work safely around kitchen equipment and report any maintenance issues to the administrator.

Helpers: Clean up dining area after meal. Perform child related everyday jobs as directed by the teachers. The helper needs to provide a meal or snack for the children and find ways to entertain or engage the kids. Helpers have to master the ability to multitask and manage their time well. Most important, the children's safety and well-being must always be the helpers first priority.

28

Guards: Maintaining the security of the premises. They monitor the flow of people and employees and respond in emergency situations. Monitor points of access in the building to allow entry only to individuals with the correct identification or authorization.

Drivers: Operate the school bus in a safe and efficient way according to all relevant legislation, policies and procedures. Perform daily safety and maintenance checks. Pick up and deliver children as per a set schedule and take attendance on the school bus.

8.4

Operation Process
Interaction with target customer through advertising, phone call and office visit Service package confirmation by the target customer and deposit payment

Payment for the services as per the package

Provide the services as per the package

29

8.5

SWCC Layout The layout of the SWCC facilities will be as follows:

Proposed plan of SWCC

30

Proposed interior and exterior of SWCC

31

8.6 Calculation of Operating Expenses Calculation of Operating Expenses Particulars Electricity Telephone Building rent Salaries Advertisement Depreciation Amortization of Pre-Operating Expenses Amortization of Other Items Maintenance Cost Internet Cost Software Maintenance Charge Annual Day Vehicle cost Fuel Cost Operating Expenses Less: Depreciation Amortization Pre-Operating Expenses Other Items Operating Expenses excluding Depreciation and Amortization Year 1 60,000 60,000 888,000 3,732,000 640,000 334,000 8,000 28,600 100,000 24,000 1,000 150,000 720000 698400 7,444,000 334,000 8,000 28,600 7,073,400 Year 2 60,000 60,000 976,800 4,105,200 691,200 334,000 8,000 28,600 110,000 24,000 1,000 165,000 756,000 754,272 8,074,072 334,000 8,000 28,600 7,703,472 Year 3 60,000 60,000 1,074,480 4,515,720 746,496 334,000 8,000 28,600 121,000 24,000 1,000 181,500 793,800 814,614 8,763,210 334,000 8,000 28,600 8,392,610 Year 4 60,000 60,000 1,181,928 4,967,292 806,216 334,000 8,000 28,600 133,100 24,000 1,000 199,650 833,490 879,783 9,517,059 334,000 8,000 28,600 9,146,459 Year 5 60,000 60,000 1,300,121 5,464,021 870,713 334,000 8,000 28,600 146,410 24,000 1,000 219,615 875,165 950,165 10,341,810 334,000 8,000 28,600 9,971,210

32

Chapter 9: FINANCIAL PLAN

9.1 Capital Requirements SWCC will capitalize on the strong demand for high-quality child care services. Funding for the company will come from two major sources: owners' investments and bank loans. The initial investment from the owner and bank will be NPR 2,415,000.

Source of Investment Equity 50% Bank Loan 50% Total

Amount (Rs.) 2,415,500 2,415,500 4,831,000

9.2

Fixed Assets Thecompany

willinvest

NPR acquiredinthebeginning

1,913,000infixedassets.Mostoftheimportantfixedassetswillbe oftheyearinordertosupportthebusinessoperationsmoothly.

Fixed Assets Office Office Equipment Other Items

Amount (Rs.) 585,000 1,185,000 143,000

9.3 9.4 9.5 9.6 9.7 9.7

Operating Expenses Income Statement Statement of Retained earnings Cash Budget Projected Cash Budget Projected Balance Sheet

For 9.3 to 9.7 Please refer Annexure below 9.8 Sensitivity Analysis In the event of an economic downturn, the business may have a decline in its revenues. However, the demand for parents that want to enroll their children in Montessori Schools

33

is increasing steadily. As such, SMCC will be able to remain profitable and cash flow positive at all times despite certain drawbacks in the economy. 9.8 Projected Key Financial Ratios Year 1 88.38% -10.51% -2.74% -5.51% 2.01
48.77405891 45.72321145 2,536,803 18.25 21.535 65.7 5.417956656 3876000

Financial Ratios Debt Equity Ratio Return on Equity Net Profit Margin Return on Assets Total Assets Turnover Current Ratio Quick Asset Ratio Working Capital A/R Days A/P Days Inventory Days Fixed Asset Turnover BEP in Sales

Year 2 51.66% 17.91% 4.73% 11.65% 2.46

51.84328047 48.34813484 2,827,903 18.25 18.7975 65.7 8.486277151 3393714.286

Year 3 18.23% 34.01% 11.35% 28.37% 2.50

Year 4 0.00% 38.24% 17.22% 37.78% 2.19

Year 5 0.00% 40.44% 22.43% 39.31% 1.75

59.90088557 76.72804432 35.39127547 56.40573994 73.23289869 21.09668256 3,931,281 6,065,271 9,561,985 18.25 18.25 18.25 18.7975 18.7975 54.37824074 65.7 65.7 777.3148148 14.65826466 31.37743191 174.1824 2357714.286 1156500 250000

9.9 Calculation of Net Present Value Year Cash Flow PV Factor @ 15% 0 -4,833,000 1 1 2,007,903 0.8696 2 2,185,123 0.7561 3 3,159,945 0.6575 4 5,139,668 0.5718 5 4,994,708 0.4972 Total PV NCO NPV Discounted Payback Period

Discounted Cash Flow -4,833,000 1,746,002 1,652,267 2,077,715 2,938,622 2,483,253 10,897,859 -4,833,000 6,064,859 2.78

Cumulative DCF -4,833,000 -3,086,998 -1,434,731 642,984 3,581,606 6,064,859

34

Chapter 10:CRITICAL RISK AND CONTINGENCIES

While starting any business, there exist a number of risks that will have direct or indirect influence in survival of the business in the market.

10.1

Internal Risks Unavailability of qualified and skilled workforce in the market. Misunderstanding among the employees as people from various background have to work together. Inabilityto locate suitableofficepremises. Different equipments being used in the center like kitchen equipments; computers, etc. may break down.

10.2

External Risks Delay by the government agencies in the registration process. Political uncertainties and strikes will also hamper the operation of the center. Changeingovernment laws and regulations regardingthis kind ofbusiness. Emergence of other competitors in the market. Business could faceslackness in the domesticmarket due to reasons beyond its control.

35

Chapter 11: FUTURE PLAN AND EXIT STRATEGY

11.1 Future Plan One of the main objectives of SWCC is to achieve higher growth and lead the market. In the future I would like to expand my business by opening up more branches in other parts of the city as well, starting with Lalitpur district. The whole reason for engaging in branding of SWCC is so that in the future when the business is expanded to other parts of the city it will be easier to get customers due to excellent brand image.

11.2

Exit Strategy Fiercecompetitionofthe marketmay notletthebusinessenjoycontinuoussuccess.There is already strong competition in the market in this sector. Soitisnotpossible toensure stable performance.Inworstcondition,if SWCCdoes notworkaspertheplanning

thenwewillhavealternative strategyi.e. wewillexitfrom the business. If the business is not very successful then we can sell the business to a third party for a significant earnings multiple. Most likely, the center will hire a qualified business broker to sell the business on behalf of SWCC. To minimizethe loss wewilltry to selloffthe assets to others and liquidate the company.

Another option would be merging with another similar business to combine resources and remain in the market.

36

Annexure
Pre-Operating expenses Particulars Research Cost Registration Total Amount (Rs.) 15,000 25,000 40,000

Statement Showing Capital Expenditure A. Fixed Assets Office Office Equipment Other Items Purchased Fixed Assets B. Pre-Operating Expenses C. Working Capital 20% of Sales Revenue Total

Amount (Rs.) 585,000 1,185,000 143,000 1,913,000 40,000 2,880,000 4,833,000

Source of Investment Equity 50% Bank Loan 50% Total

Amount (Rs.) 2,416,500 2,416,500 4,833,000

A1.1 Calculation of Setup Cost Particulars Office design Layout (Playground) Electrical Materials and Wiring Painting Hoarding and White Boards Total

Quantity 1 1 1 1

Rate 100,000 300,000 10,000 125,000 20,000

Amount (Rs.) 100,000 300,000 40,000 125,000 20,000 585,000

37

Calculation of Equipment Particulars Furniture Computers Laptop Kitchen Setup Total 2 4 1 18,000 35,000 400,000 Quantity Rate Amount (Rs.) 609,000 36,000 140,000 400,000 1,185,000

Other Items Particulars CC TV Camera Telephone Stationaries Bank Account Internet Installation Total

Quantity 4 2 2 2

Rate 5,000 3,000 5,000 3,500

Amount 20,000 6,000 100,000 10,000 7,000 143,000

Calculation of Furniture Particulars ExecutiveTable and chairs for CEO Teachers Table Teachers chairs Dormitory Bed and mattress Canteen Tables and Chairs set Meeting Table and chairs Classroom tables and chairs Total Furnitures

Quantity 1 4 8 35 4 1 20

Rate 18,000 8,500 4,000 8,000 20,000 45,000 6,000

Amount (Rs.) 18,000 34,000 32,000 280,000 80,000 45,000 120,000 609,000

Calculation of Software Cost Particulars Accounting Software Total

Amount (Rs.) 25,000 25,000

38

Projected Income statement for 5 years Particulars Sales Revenue Less: Cost of goods sold Gross Profit Less: Operating expenses EBIT Less: Interest Expense EBT Less: Tax @ 25% EAT Year 1 8,400,000 900,000 7,500,000 7,444,000 56,000 362,475 -306,475 -76,619 -229,856 Year 2 10,080,000 1,080,000 9,000,000 8,074,072 925,928 289,884 636,044 159,011 477,033 Year 3 12,096,000 1,296,000 10,800,000 8,763,210 2,036,790 206,404 1,830,386 457,597 1,372,790 Year 4 14,515,200 1,555,200 12,960,000 9,517,059 3,442,941 110,402 3,332,539 833,135 2,499,405 Year 5 17,418,240 1,866,240 15,552,000 10,341,810 5,210,190 0 5,210,190 1,302,548 3,907,643

Merchandized Purchase Budget Particulars Sales Revenue Less : Gross Profit Cost of Goods Sold Add: Closing Stock Cost of Goods Needed Less: Opening Stock Purchase Year 1 8,400,000 7,500,000 900,000 162,000 1,062,000 0 1,062,000 Year 2 10,080,000 9,000,000 1,080,000 194,400 1,274,400 162,000 1,112,400 Year 3 12,096,000 10,800,000 1,296,000 233,280 1,529,280 194,400 1,334,880 Year 4 14,515,200 12,960,000 1,555,200 279,936 1,835,136 233,280 1,601,856 Year 5 17,418,240 15,552,000 1,866,240 3,974,400 5,840,640 279,936 5,560,704 Total 62,509,440 55,812,000 6,697,440 Year 6 44,160,000 17,664,000 26,496,000

39

Loan Data Original Principal Loan Term (Years) Annual Interest Rate Payments per Year Payment 2,416,500 4 15.00% 1 846,416.22

Loan Amortization schedule for 4 years Year Payment Interest 0 846,416 362,475 1 846,416 289,884 2 846,416 206,404 3 846,416 110,402 4

Principal 483,941 556,532 640,012 736,014

Balance 2,416,500 1,932,559 1,376,026 736,014 0

Statement of Retained Earnings for 5 years Particulars Year1 Year2 Beginning Retained 0 -229,856 Earning Add/Less: Net Profit -229,856 477,033 Total -229,856 247,177 Less: Dividend 0 0 Ending Retained Earning -229,856 247,177

Year3 247,177 1,372,790 1,619,967 0 1,619,967

Year4 1,619,967 2,499,405 4,119,371 0 4,119,371

Year5 4,119,371 3,907,643 8,027,014 781,529 7,245,485

40

Statement Showing Cash Receipt and Payment Budget for 5 Year Particulars Year 0 Year 1 Year 2 A. Opening Balance 2,880,000 2,007,903 Add: Cash Inflows Equity (Cash) 2,416,500 Bank Loan 2,416,500 Cash Sales (95%) 7,980,000 9,576,000 Credit Sales (5%) 420,000 Total Cash Available (A) 4,833,000 10,860,000 12,003,903 B. Payments Cash Purchase (95%) 1,008,900 1,056,780 Credit Purchase (5%) 53,100 Purchase of Fixed Assets 1,913,000 Pre-Operating Expenses 40,000 Operating expenses 7,073,400 7,703,472 (excluding depreciation and amortization) Dividend Tax paid (76,619) 159,011 Loan Repayment 483,941 556,532 Interest Expense 362,475 289,884 Total Cash Outflow (B) 1,953,000 8,852,097 9,818,779 C. Surplus/(deficit) A-B 2,880,000 2,007,903 2,185,123 D. Minimum Balance 250,000 250,000 E. Borrowing (Repayment) (Interest) F. Closing Balance (C+E) 2,880,000 2,007,903 2,185,123

Year 3 2,185,123

Year 4 3,159,945

Year 5 5,139,668

Remark

11,491,200 504,000 14,180,323 1,268,136 55,620

13,789,440 604,800 17,554,185 1,521,763 66,744

16,547,328 725,760 22,412,756 5,282,669 80,093

870,912

278,035

8,392,610

9,146,459

9,971,210

457,597 640,012 206,404 11,020,379 3,159,945 250,000

833,135 736,014 110,402 12,414,517 5,139,668 250,000

781,529 1,302,548 0 0 17,418,048 4,994,708 250,000

3,159,945

5,139,668

4,994,708

41

Statement Showing Performance Balance Sheet for 5 years Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Fixed Assets: Purchased Fixed Assets 1,913,000 1,913,000 1,913,000 1,913,000 1,913,000 Less: Accumulated 334,000 668,000 1,002,000 1,336,000 1,670,000 Depreciation Less: Accumulated 28,600 57,200 85,800 114,400 143,000 Amortization of Other Items Land Net Fixed Assets 1,550,400 1,187,800 825,200 462,600 100,000 Current Assets: Cash at Bank 1,807,903 1,985,123 2,959,945 4,939,668 4,794,708 Cash in hand 200,000 200,000 200,000 200,000 200,000 Inventories 162,000 194,400 233,280 279,936 3,974,400 Account Receivable 420,000 504,000 604,800 725,760 870,912 Total Current Assets 2,589,903 2,883,523 3,998,025 6,145,364 9,840,020 Pre-Operating Expenses 40,000 40,000 40,000 40,000 40,000 Less: Accumulated 8,000 16,000 24,000 32,000 40,000 Amortization of PreOperating Expenses Fictitious Assets 32,000 24,000 16,000 8,000 0 Total Assets 4,172,303 4,095,323 4,839,225 6,615,964 9,940,020 Liabilities and Equity: Equity (Cash) 2,416,500 2,416,500 2,416,500 2,416,500 2,416,500 Total Equity R/E Loan Payable Accounts Payable Total Liabilities and Equity 2,416,500 -229,856 1,932,559 53,100 4,172,303 2,416,500 247,177 1,376,026 55,620 4,095,323 2,416,500 1,619,967 736,014 66,744 4,839,225 2,416,500 4,119,371 0 80,093 6,615,964 2,416,500 7,245,485 0 278,035 9,940,020

42