Business Plan of Family Services

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XYZ will provide a full range of services, including parenting and child birthing classes, children's play programs, "Mommy & Me" classes, fitness and yoga pre-natal classes and coordinated birthday parties, to help meet the daily emotional, physical and social well-being needs of mothers, young children and other family members.
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Business Plan of Family Services
XYZ will provide a full range of services, including parenting and child birthing classes, children's play programs, "Mommy & Me" classes, fitness and yoga pre-natal classes and coordinated birthday parties, to help meet the daily emotional, physical and social well-being needs of mothers, young children and other family members.
o o o
To create a family-friendly space that provides pregnancy resources, parenting classes, playgroups and fitness programs.
The first year of operation will bring in total revenue of $510,000. Second year of operation will bring in total revenue of $665,000. Third year of operation will bring in total revenue of $860,000.
In order to achieve these objectives, XYZ has the following goals:
To demonstrate how quality juvenile products will benefit new mothers and families.
1.1 Objectives
Gross Margin
4.
1.2 Goals
5.
In retail sales: to have a customer return rate of 60% by the end of first year.
Chart: Highlights
With a strong and viable business:
The objectives for XYZ are outlined below:
Year 3
Highlights
to obtain revenue of $860,000 by the end of third year of operation.
To increase sales by 20% per year through superior customer service and word-of-mouth referrals.
Year 2
Sales
Net Profit
1.
2.
2.
1.
Year 1
3.
$900,000
$800,000
$700,000
$600,000
$500,000
The company will provide services and products that have been rated as "top of the line", and highly recommended by experts in the child development field.
$0
$100,000
$300,000
$400,000
$200,000
Other Current Assets Long-term Assets Total Assets
Total Requirements
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required
Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets
Liabilities and Capital
Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities
Capital
Planned Investment
Owner other Additional Investment Requirement Total Planned Investment
Loss at Start-up (Start-up Expenses) Total Capital
Total Capital and Liabilities
Total Funding
$47,360 $0 $112,360
$233,000
$120,640 $112,360 $233,000
$112,360 $0 $0 $0 $112,360
$0 $163,000 $0 $0 $163,000
$70,000 $0 $0 $70,000
($120,640) ($50,640)
$112,360
$233,000
Each product must receive high ratings from reviewers (parenting magazines, internet reviews, Baby Products books) in order to be sold at XYZ.
1.
2.
3.
4.
5.
6.
7.
8.
Juvenile Equipment: Car seats, strollers, swings, joggers, exersaucers and high chairs will be among the selection of juvenile equipment available.
Juvenile Feeding & Bathing Products:Bottles, diapers, sippy cups, bathing toys, stain removers and other feeding related products will be sold.
Breastfeeding Products:Breast pumps, nursing pads, nursing creams, nursing bras and nursing pillows will be available.
Young Infant Toys & Mobiles:A selection of developmentally appropriate infant toys and hanging mobiles will be available. In addition to meeting the highly rated criteria, toys will be selected by the owner, who has a Masters degree specialized in Infant/Child Development, for their ability to serve the growing intellectual needs of infants and young children.
Books:A selection of board books will be provided. This will also help promote the importance of early reading for young infants and children.
Layette clothing and blankets:A small selection of layette sets will be available for customers who would like to purchase layettes for baby shower gifts, or other gifts.
Baby Gift Baskets:A variety of baskets will be available, filled with an assortment of baby products.
Gift Items:A selection of photo albums, picture frames, handprint kits, and art prints will be available.
4.0 Market Analysis Summary
XYZ will focus on pregnant women, new moms and families with young children under age five in the community. In Santa Cruz county, there are currently a total of 21,670 children aged 0 -5 years old with a 3.7% growth change from 1998 - 2003. In addition, in this same time period, the median family income increased 17.5% up to $69,000. This increase in the socioeconomic status can be reflected in the increases of retail sales. In the past five years, retail sales have climbed consistently with a net increase of 40%. There has been a steady increase in the number of people residing in Santa Cruz county who are also employed here, 1 indicating that fewer residents are commuting to Silicon Valley.
Overall, there has been a steady increase in the population of families with young children, and a steadily rising median income in Santa Cruz county. In addition, with more residents employed in Santa Cruz County and not commuting to Silicon Valley, more families are opting to shop for their household needs in Santa Cruz County.
It was reported at the Juvenile Products Manufacturing Association (JPMA) trade show in Dallas (May 2004) that there is growing interest in juvenile products, with an increase in sales of 5% to 6% percent annually. The president of a large juvenile product organization stated, "the industry is very healthy and birth rates are strong," and "parents also are spending more than 2 ever."
1 Comprehensive Economic Development Strategy, Prepared for the County of Santa Cruz County December 2002. Applied Survey Research, Watsonville, December 2003.
2.
3.
o
o
Competitive Prices: Diapers and baby wipes will be offered at the lowest price among all competitors (including local supermarkets, drug stores, Costco, Target, and KMart). These items are not intended to make large profit, only as a marketing strategy to draw customers to the store. "Review & Save Program": This program will allow customers to "rate" the products they have purchased, and receive a promotional coupon towards their next shopping trip at XYZ. All of the reviews will be posted, to help provide customers with additional information on the products, and to promote sales.
Classes: The classes (Yoga Pregnancy, Parenting classes, StrollerFit, Playgroups) will also be an incentive to draw mothers into the store and enroll in additional classes.
Environment:oThe nurturing and comforting environment of this room willNursing Room: contribute to our family-friendly atmosphere, and the resultant high return rate of our customers. oAll products will be displayed in an organized andUpscale and inviting presentation: inviting fashion (i.e. there will be a "nursery room set up" with cribs fitted with coordinated beddings, pillows, art prints, mobiles and rugs), that will provide ideas for the customers, thus increasing sales.
5.5 Sales Forecast
The strongest revenue during the first quarter of operation will be retail sales, until the classes begin to build enrollment by the second quarter of operation. In addition, we estimate that the birthday parties will begin to bring in stronger revenue during the holidays, with "holiday parties" offered.
Note: The financial assumptions can be found in section 8.0 of this plan, below.
Chart: Sales by Year
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
Year 1
Sales by Year
Year 2
Year 3
Retail Baby Products
Birthday Parties
Pregnancy Classes
StrollerFit
Children's Classes
Other
6.0 Web Plan Summary
XYZ will provide an informational website that will serve primarily as a resource for mothers, families and the community. The website will be developed by Erik Gundersen at EDesigns. The website will provide the following resources:
Class Schedules & Registration Form: The website will provide a current schedule, detailed class descriptions and a registration form for each of the classes provided:
Yoga Prenatal Classes StrollerFitâ Classes Children's Play Classes (Jr. Jumpers, Jumper Time, Art Time) Winter Play Groups (Infant, Young Walkers, Older Walkers) Childbirthing Classes "Mommy & Me" Classes
Birthday Party Packages: The website will provide detailed information on the packages available for the birthday parties. It will include the different themes, party bags, events and other birthday party options that families can choose.
Car Seat Installation Program: We will provide information on our car seat installation program intended to promote safety for the children, and convenience for their families.
Baby Shower/Gift Registering: Families and friends will be able to access baby shower/gift registering directly from our website.
General Information: In addition to providing information about all of our services, the website will provide directions on how to get to XYZ, post the hours of the company, and also provide an email link to allow customers to ask any questions regarding our services, our products or our company.
7.0 Management Summary
Emili graduated from Harvard with a Master's Degree in Education & Child Development. She has 15 years experience as an administrator in the child development field. Most recently, she was Chief of Operations for a local, family owned childcare management company in the Silicon Valley. In this role, she was responsible for the day to day operations, including finance management, employee relations and customer service, for each of the 15 childcare centers.
Prior to this position, Emili had the opportunity to gain valuable fiscal management experience as the Director of Finance/Account Manager for the Cisco Systems corporate sponsored childcare center. This center was a start-up project to serve over 500 children, and employed 125 teachers and administrators. At this largest childcare center of California, Emili was responsible for the fiscal management, fiscal reporting, human resources and payroll and overseeing the day to day operations of the services the center provided. In addition, she has been a child development instructor at San Jose State University. She is also the proud mother of a young infant, which has taught her a great deal about purchasing juvenile products and parenting services.
$0
$14,000 $28,000 $42,000 $56,000 $70,000 $7,000 $21,000 $35,000 $49,000 $63,000 $77,000
Average Percent Variable Cost Estimated Monthly Fixed Cost
Monthly Revenue Break-even
Break-even Analysis
Break-even Analysis
Year 2 2 8.00% 8.50% 30.00% 0
Year 3 3 8.00% 8.50% 30.00% 0
$4,000
$12,000
$8,000
General Assumptions
Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other
($20,000)
$0
($4,000)
($8,000)
($12,000)
($16,000)
$20,000
$16,000
Chart: Break-even Analysis
Table: General Assumptions
The following table and chart show our Break-even Analysis.
Year 1 1 8.00% 8.50% 30.00% 0
$41,323
Table: Break-even Analysis
44% $22,983
Assumptions:
8.1 Break-even Analysis
Year 3
Month 1 Month 3 Month 5 Month 7 Month 9 Month 11 Month 2 Month 4 Month 6 Month 8 Month 10 Month 12
Profit Yearly
Year 2
$10,000
8.3 Projected Profit and Loss
$40,000
$50,000
$20,000
$6,000
$30,000
$0
$4,000
$2,000
$70,000
$60,000
($10,000)
$80,000
$0
Chart: Profit Yearly
Year 1
($2,000)
Chart: Profit Monthly
Profit Monthly
The following table and chart show the profit and loss projections for the first three years of operation.
($8,000)
($4,000)
($6,000)
8.4 Projected Cash Flow
The following table and chart show the projected cash flow for the first three years of operation. Please note that XYZ will receive cash for all purchases and services. All classes and birthday parties will be paid in advance upon registration.
Chart: Cash
$50,000
$45,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
Cash
$0 Month 1 Month 3 Month 5 Month 7 Month 9 Month 11 Month 2 Month 4 Month 6 Month 8 Month 10 Month 12
Table: Cash Flow
Pro Forma Cash Flow
Cash Received
Cash from Operations
Cash Sales Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending Bill Payments Subtotal Spent on Operations
Year 1
$513,375 $513,375
$0 $0 $0 $0 $0 $0 $0 $513,375
Year 1
$123,038 $316,884 $439,922
Net Cash Flow
Cash Balance
Year 2
$669,718 $669,718
$0 $0 $0 $0 $0 $0 $0 $669,718
Year 2
$172,916 $503,546 $676,462
Year 3
$863,541 $863,541
$0 $0 $0 $0 $0 $0 $0 $863,541
Year 3
$185,891 $602,022 $787,913
23.31% 36.66% 100.00% 0.00% 100.00%
Year 1 n.a.
8.6 Business Ratios
35.21% 25.90% 100.00% 0.00% 100.00%
The following table lists our business ratios, and includes a comparison with standard ratios from the "Children's Goods," Industry (SIC Code 5137.05). These industry ratios obviously reflect only the retail side of our operations.
34.08% 27.86% 89.32% 10.68% 100.00%
Industry Profile 3.65%
Year 3 28.94%
Sales Growth
Percent of Total Assets
Ratio Analysis
Table: Ratios
XYZ does not fit neatly into any one existing industry. We are a fitness and educational center; we offer children's entertainment (birthday parties, playgroups), and social space for mothers; and we have a retail component, in our gift store. It is, therefore, difficult to compare our projected overall business ratios to any one industry standard, because our revenue stream and costs are mixed.
Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets
3.47 0.35
Year 3 9.26% 195.58%
6.72 12.17 27 4.72
2.90 1.66 132.61% -53.68% 17.51%
3.10 2.38 141.62% 5.81% -2.42%
0.00 0.23
$87,478 0.76
7.78 8.60 27 3.97
Year 1 -0.61% 0.00%
3.64 2.36 77.64% 279.40% 62.46%
42.73% 39.52% 100.00% 0.00% 100.00%
Year 2 30.45%
Additional Ratios
Net Profit Margin Return on Equity
Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover
n.a n.a
n.a n.a
n.a n.a n.a n.a
n.a n.a
37.41% 9.72% 47.13% 52.87%
Percent of Sales
Current Liabilities Long-term Liabilities Total Liabilities Net Worth
Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes
Activity Ratios
Debt Ratios Debt to Net Worth Current Liab. to Liab.
Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets
100.00% 55.62% 56.23% 0.00% 1.89%
32.28% 109.35% 141.62% -41.62%
34.51% 98.10% 132.61% -32.61%
27.45% 50.19% 77.64% 22.36%
100.00% 55.00% 45.74% 0.00% 14.26%
100.00% 55.00% 52.81% 0.00% 4.78%
Net Working Capital Interest Coverage
Liquidity Ratios
2.16 0.95 52.09% 3.86% 8.05%
Year 2 2.19% 0.00%
$132,683 13.84
7.41 12.17 30 5.59
$78,487 2.91
0.00 0.26
100.00% 26.48% 16.06% 0.69% 1.40%
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