The Toddler Warehouse
Executive Summary
Opportunity
Problem
The education of our children needs to start earlier and earlier. The school system is failing. Those who can hire private teachers and tutors to help with their children’s education should.
Solution
The Toddler Warehouse is a full-service child care/development facility that cares for toddlers from age three to five. The Toddler Warehouse will be concentrating on the upper end of the market: double-income professional parents. These personally ambitious parents are typically eager in terms of their children’s development and will be willing to pay to have their children attend the best facilities.
Market
The Toddler Warehouse will be offering child care/development for toddlers age three to five. The Toddler Warehouse will be targeting double income professional families who, because of work obligations, do not have the time during the day to care for their child. The Toddler Warehouse will be targeting families that are interested in something more than simple baby-sitting facilities, they would like the children to be enrolled in a program that offers development of many different skills including: socialization skills, arts and crafts, large muscle group workouts, reading, numbers, etc. Parents who are professionals, who are ambitious by nature themselves, are typically eager for their children to move ahead and are willing to pay for the best development care services for their children.
Competition
The Toddler Warehouse will be competing in the child care industry. This industry is fairly broad and populated, there are companies at all levels, from the basic baby sitter services, to competitors of The Toddler Warehouse. There are service providers that offer standard business hours as well as services that offer night and evening hours. There are scheduled services and no reservation drop off services. Price, quality, and gut feeling drives a lot of parental choices. The Toddler Warehouse believes the secret to success is to 1) concentrate on only a portion of the market, and 2) choose a portion of the market that is growing.
Why Us?
The Toddler Warehouse’s mission is to provide top level child care. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers.
Expectations
Forecast
We will be profitable in the first year. By year 3 we will be able to hire more general help which focuses on care since we are all set for teachers
Financial Highlights by Year
Financing Needed
Matt will invest $85,000
Opportunity
Problem & Solution
Problem Worth Solving
The education of our children needs to start earlier and earlier. The school system is failing. Those who can hire private teachers and tutors to help with their children’s education should.
Our Solution
The Toddler Warehouse is a full-service child care/development facility that cares for toddlers from age three to five. The Toddler Warehouse will be concentrating on the upper end of the market: double-income professional parents. These personally ambitious parents are typically eager in terms of their children’s development and will be willing to pay to have their children attend the best facilities.
Target Market
Market Size & Segments
The Toddler Warehouse is targeting one specific customer group, the middle to upper class, two income professional family. This group of families have both parents working, not allowing them time to raise their child during the day. This group has the money for child care, and are willing to spend a little extra to get a higher level of care.
This customer segment has already begun teaching it’s child advanced concepts like reading, singing, socialization, etc. The Toddler Warehouse will continue to develop the children’s skills.
This customer group is typically made up of two professional parents. This would explain why the parents 1) have the money for more sophisticated child care, and 2) are ambitious in terms of their children’s learning and development.
Competition
Current Alternatives
There are many different competitors in the child care space. The Toddler Warehouse 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:
- 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.
- 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.
- Medium sized companies. These are typically independently owned facilities. Some of theses will handle a wide range of ages, others will specialize with a specific age group.
Our Advantages
The Toddler Warehouse’s competitive edge is two-fold:
- Specialized training– The facility can only be as good as the teachers and assistants. With this in mind, The Toddler Warehouse has a specialized training program that all teachers and assistants are put through so they are proficient at teaching the specific programs that The Toddler Warehouse has developed for toddlers age three to five. The employees are put through an intensive week long course and only after they pass the intensive training will they be allowed to work with the children.
- Innovative learning programs– Typical learning programs for toddlers this age focus on specific traits and only work on one trait/ skill at once. While this is successful in reinforcing the skill, it is often very difficult for the child to appreciate the interrelationships of the different skills. Consequently, the child can learn the skill, but has difficulty applying the skill when faced with multiple stimuli. When the child is unsure of what to do because of the multiple stimuli and these several skills that they have learned independently, the child tends to shut down out of confusion. Matt’s Master’s thesis was based on Intertwined Learning Systems that teaches skills not in isolation from each other, but taught together. Matt’s research strongly supports the assertion that when the skills are taught together, just as you would expect to encounter them in real life, the children are able to assimilate the new task into their skill set much quicker.
Keys to Success
Keys to Success
Our keys to success are:
- To create a service based operation whose primary goal is to exceed customer’s expectations.
- The utilization of The Toddler Warehouse by at least 40 different families in the first eight months.
- To increase the number of client’s served by 20% each year.
- To develop a sustainable, profitable, start-up business.
Execution
Marketing & Sales
Marketing Plan
The Toddler Warehouse intends to concentrate on the double income working professional families because they are the segment that can most readily afford day care, are the ones who need day care because of their work obligations, appreciate the advanced learning and development The Toddler Warehouse has to offer, and lastly are a growing segment of our society.
With both parents working, this segment needs some sort of provisions for the care of their child. While the Department of Labor indicates that over 50% of children are cared by relatives compared to 29% for a commercial day care center, our targeted group prefers a more structured learning environment. Relatives are great for nights out or weekends, but they do not compare to a structured program when it comes to the learning and development that occurs at The Toddler Warehouse. Having both parents as professionals, they are ambitious with the development of their child and are willing to pay to get the best program for their prodigy.
As America continues to be a society of people working long hours, there will always be the need for child care. The trend of longer work weeks is increasing and this drives The Toddler Warehouse’s business.
Sales Plan
The Toddler Warehouse’s sales strategy will be targeting double income working professional families. These families have the money to spend on child care and these parents are much more likely to appreciate the advanced learning systems taught at The Toddler Warehouse based on Matt’s thesis.
The sales strategy will be based on a communication effort to explain the virtues of the program and how time at The Toddler Warehouse can speed up the children’s development considerably. In addition to one on one explanations of the program and its merits, the prospective parents will be given tours of the facilities. The tour of the facility will serve two purposes:
- The tour will be used as a way to impress the prospect of the facilities that The Toddler Warehouse has. These facilities were custom designed to achieve very specific educational goals and The Toddler Warehouse is immensely proud of the facilities.
- The tours typically occur during the day and this becomes a perfect opportunity for the potential customer to view the care as it is occurring. This will serve to build a trust bond between The Toddler Warehouse and the parent who naturally is cautious about leaving the child with strangers to have the child cared for and taught the entire day.
In essence, The Toddler Warehouse is letting the facilities and teacher/student interactions speak for themselves. Because of the high level of service, this is entirely possible.
Operations
Locations & Facilities
The Toddler Warehouse, soon to be located in Salem, OR, will offer child care services for kids between the ages of three and five. The Toddler Warehouse will offer services from 6 a.m. to 7 p.m. The children will be exposed to a wide range of activities including arts and crafts, socialization, large muscle group activities, and general learning. The Toddler Warehouse will be priced out of some people’s budget, but will offer a low student to teacher ratio and well trained staff. The Toddler Warehouse will be located in a recently purchased and converted home that now is solely a child care center.
Equipment & Tools
Services
The Toddler Warehouse offers Salem an upper-end child care facility for toddlers age three to five. The Toddler Warehouse offers a low teacher to student ratio, custom facilities, and innovative learning programs. The Toddler Warehouse hours will be a bit wider rage than normal business hours to accommodate the working parents, the target customer.
The two income families have children, yet both parents work. The Toddler Warehouse is an innovative solution that acts as virtual parents, broadening the children’s skills during the day. This is not a baby sitter facility. The children are engaged throughout the day, learning new skills and reinforcing already acquired ones.
Milestones & Metrics
Milestones Table
| Milestone | Due Date | |
|---|---|---|
|
Q1 review
|
Mar 06, 2018 | |
|
Q2 Review
|
June 08, 2018 | |
|
Q3 Review
|
Sept 04, 2018 | |
|
Q4 review
|
Dec 10, 2018 |
Key Metrics
Key metrics are:
- The # of families paying fees to breakeven
- increase the # families paying fees by 20% year over year
- training teachers and assistants
- keep on top of the educational tools
Company
Overview
Ownership & Structure
The Toddler Warehouse will be an Oregon Corporation, founded and owned by Matt Ernal.
Team
Management Team
Matt Ernal, the founder and owner of The Toddler Warehouse will be running the daily operations. Matt got his undergraduate degree in English from the University of Oregon. Upon graduation, Matt was unsure of what he wanted to do so he travelled to Indonesia and taught English for three years. For the first year, Matt lived with a local family. In exchange for room and board, Matt cared for the family’s two children. Although he had never done any child care before, Matt found this very satisfying.
Upon returning to the US, Matt was contemplating pursuing something with teaching. His experience in Indonesia was quite positive, both the English classes and caring for the young children. Ultimately, it was the experience with the young children that led Matt to consider a career teaching young children. Matt entered Western Oregon University’s nationally recognized Master of Education Program to pursue toddler development. After graduation, Matt was confident of his abilities and decided that he would appreciate the autonomy of running his own business. He purchased a house for the facility has been working hard on this project ever since
Personnel Table
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Matt | $43,200 | $44,496 | $45,831 |
| Teachers (1.28) | $40,000 | $48,960 | $99,878 |
| Teaching Assistant (1.17) | $19,200 | $39,168 | $79,902 |
| General Office help | $36,000 | $36,720 | $37,454 |
| Totals | $138,400 | $169,344 | $263,065 |
Financial Plan
Forecast
Key Assumptions
Our key assumptions:
- Kids need to have a place that caters to the way they learn
- Kids need somewhere that teaches them life skills
- Education starts at a very young age
- Parents need somewhere safe and nurturing to leave children while they finish their workday.
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Use of Funds
The Toddler Warehouse’s start-up costs include:
- Legal: $1,000
- Stationery etc: $100
- Brochures: $350
- Art supplies: $150
- Kitchen supplies: $200
- Cleaning supplies: $100
- Medicine kits: $100
- Matts and pillows: $150
Total $ 2150
Sources of Funds
Our founder will invest $85,000 to get the operation up and running.
Statements
Projected Profit & Loss
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Revenue | $266,700 | $330,000 | $402,000 |
| Direct Costs | $5,334 | $6,600 | $8,040 |
| Gross Margin | $261,366 | $323,400 | $393,960 |
| Gross Margin % | 98% | 98% | 98% |
| Operating Expenses | |||
| Salaries & Wages | $138,400 | $169,344 | $263,065 |
| Employee Related Expenses | $27,680 | $33,869 | $52,613 |
| Rent | $30,000 | $30,000 | $30,000 |
| Licenses | $1,440 | $1,440 | $1,440 |
| Utilities | $1,800 | $1,800 | $1,800 |
| Insurance | $3,600 | $3,600 | $3,600 |
| Marketing | $18,000 | $18,000 | $18,000 |
| Total Operating Expenses | $220,920 | $258,053 | $370,518 |
| Operating Income | $40,446 | $65,347 | $23,442 |
| Interest Incurred | |||
| Depreciation and Amortization | $2,800 | $2,800 | $2,800 |
| Gain or Loss from Sale of Assets | |||
| Income Taxes | $5,647 | $9,382 | $3,096 |
| Total Expenses | $234,701 | $276,835 | $384,454 |
| Net Profit | $31,999 | $53,165 | $17,546 |
| Net Profit/Sales | 12% | 16% | 4% |
Projected Balance Sheet
| Starting Balances | 2018 | 2019 | 2020 | |
|---|---|---|---|---|
| Cash | $49,250 | $97,888 | $150,866 | $171,444 |
| Accounts Receivable | $0 | $0 | $0 | |
| Inventory | ||||
| Other Current Assets | ||||
| Total Current Assets | $49,250 | $97,888 | $150,866 | $171,444 |
| Long-Term Assets | $33,600 | $33,600 | $33,600 | $33,600 |
| Accumulated Depreciation | ($2,800) | ($5,600) | ($8,400) | |
| Total Long-Term Assets | $33,600 | $30,800 | $28,000 | $25,200 |
| Total Assets | $82,850 | $128,688 | $178,866 | $196,644 |
| Accounts Payable | $259 | $256 | $262 | |
| Income Taxes Payable | $4,190 | $2,346 | $772 | |
| Sales Taxes Payable | $9,390 | $8,250 | $10,050 | |
| Short-Term Debt | ||||
| Prepaid Revenue | ||||
| Total Current Liabilities | $13,839 | $10,852 | $11,084 | |
| Long-Term Debt | ||||
| Long-Term Liabilities | ||||
| Total Liabilities | $13,839 | $10,852 | $11,084 | |
| Paid-In Capital | $85,000 | $85,000 | $85,000 | $85,000 |
| Retained Earnings | ($2,150) | ($2,150) | $29,849 | $83,014 |
| Earnings | $31,999 | $53,165 | $17,546 | |
| Total Owner’s Equity | $82,850 | $114,849 | $168,014 | $185,560 |
| Total Liabilities & Equity | $82,850 | $128,688 | $178,866 | $196,644 |
Projected Cash Flow Statement
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Net Cash Flow from Operations | |||
| Net Profit | $31,999 | $53,165 | $17,546 |
| Depreciation & Amortization | $2,800 | $2,800 | $2,800 |
| Change in Accounts Receivable | $0 | $0 | $0 |
| Change in Inventory | |||
| Change in Accounts Payable | $259 | ($3) | $6 |
| Change in Income Tax Payable | $4,190 | ($1,844) | ($1,574) |
| Change in Sales Tax Payable | $9,390 | ($1,140) | $1,800 |
| Change in Prepaid Revenue | |||
| Net Cash Flow from Operations | $48,638 | $52,979 | $20,578 |
| Investing & Financing | |||
| Assets Purchased or Sold | |||
| Net Cash from Investing | |||
| Investments Received | |||
| Dividends & Distributions | |||
| Change in Short-Term Debt | |||
| Change in Long-Term Debt | |||
| Net Cash from Financing | |||
| Cash at Beginning of Period | $49,250 | $97,888 | $150,866 |
| Net Change in Cash | $48,638 | $52,979 | $20,578 |
| Cash at End of Period | $97,888 | $150,866 | $171,444 |
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