Entrepreneurship Project on Business Model
Of
Legacy Academy (Kindergarten & Crèche Centre)
SUBMITTED TO: Prof. Naval Arora
SUBMITTED BY: Swati Gupta Monica Agarwal
INTRODUCTION OF COMPANY AND TEAM LEGACY ACADEMY a Georgia Daycare and Child Care Learning Center seeks to empower children to be the best they can be! It’s the best Georgia infant education and is Georgia's leading infant and toddler education specialist. Legacy academy offers franchisee to investors all over the world. Franchise operation is not for everyone but it is one of the most secure forms of business operation available for those with good business skills and a desire to be successful by following a proven system. At present legacy academy has given franchisees in Georgia, Florida, Tennessee, Texas and North Carolina.
Our company will take
Franchisee of legacy academy and operate it in Jaipur city, India. The company will provide one of the best crèche and kindergarten facilities in the city. Kindergarten
is a form of education for young children which serves as a
transition from home to the commencement of more formal schooling. The goal of early childhood education should not be to fill the child with facts from a preselected course of studies, but rather to cultivate his own natural desire to learn. In the classroom, this objective is approached in two ways: first, by allowing each Child to experience the excitement of learning by his own choice, rather than by being forced; and second, by helping him to perfect all his natural tools for learning, so that his ability will be at a maximum in future learning situations. Crèche is care of a child during the day by a person other than the child's legal guardians, typically performed by someone outside the child's immediate family. Crèche is typically an ongoing service during specific periods, such as the parents' time at work. Day care is provided in crèches or by a nanny caring for children in their own homes. It can also take on a more formal structure, with education, child development, discipline and even preschool education falling into the fold of
services. Some child minders care for children from several families at the same time, either in their own home or in a specialized child care facility. Some employers provide nursery provision for their employees at or near the place of employment. TEAM The school will be formed Mr. Sandeep Gupta, Swati Gupta, and Monica Agarwal. Mr. Sandeep Gupta is in teaching professional since past ten years. He has sales, marketing and management background within the industry having spent seven year at Shemrock School, leading pre- school in Delhi. Swati Gupta and Monica Agarwal have recently completed their Master in Business Administration. Along with these three members two people will come from Legacy Academy, Georgia .they will help the team initially in obtaining necessary finance, choose the best site, build and begin operating the new center. They will also provide training to its teachers and staff so that high standard and quality of Legacy Academy is maintained. Vision Helping kids to develop and enquiring mind and an ability to mix and get along with others so that they are able to enter primary school with confidence Mission statement • To serve our children, families, staff, and communities in a manner that positively impacts their lives. • We believe in so doing, our programs will set the standard for early childhood care and education.
• We are committed to providing ongoing professional development for our staff, for they are a key ingredient in the quality program at LEGACY ACADEMY. The members will take loan from Bank for funding of initial investment. People from Legacy Academy will help the team in getting loan.
MARKET OPPORTUNITY The purpose of the family as a social institution in all societies whether simple or complex is to perpetuate the society by providing it with new members, to protect the child until he is able to take care of himself and to train him in socially acceptable behavior. In Indian societies the duty of taking care of infants usually rests on women. Thus women in the traditional system were by social and physiological make-up responsible for child rearing and home keeping. However With the dawn of modernization, it became difficult or almost impossible for some Mothers to fully cater for their babies as it used to be. These days women role is changing. There are increasing numbers of women in Jaipur who are working. This without doubt makes it important for them to have access to day care centre close to their work place. It appears that reverse is the case as they are still not able to get crèche centers of their choice within the work environment in Jaipur.
The current problems/ need in the market are: Increase in the number of working women Number of working women in Jaipur are increasing and at the same time their concern for quality education and need for day care facilities is increasing.
Increase in nuclear families With the breaking up of joint family system and the increased phenomenon of nuclear families, working women need support in terms of quality, substitute, and care for their young children while they are at work.
Radical change in societal attitude towards preschool education There’s been a radical change in societal attitudes towards pre-school education in the past seven years or so. Now it is valued as a transitional platform which prepares and enthuses children for primary school and lifelong learning. Neuroscience studies have clearly demonstrated that experiences in early childhood have a significant impact on brain development. A child’s earliest experiences impact her ability to think, speak, learn and establish relationships. The quality of a child’s experiences during this critical period establishes the foundation for future cognitive and social development Lack of sophisticated schools in Jaipur There has been slow growth of Crèche/ Daycare facilities in Jaipur resulting in failure to meet the needs of working mothers in terms of extent, content and quality of services. Though there are number of kindergarten in Jaipur, but institutes which provide combination of both school and crèche facility are not available. The current kindergartens in Jaipur do not meet those standards which legacy Academy aims to achieve.
SWOT Analysis The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing the Legacy Academy. Strengths
A sophisticated and effective learning system.
Excellent training programs that all employees must participate in.
An educated customer base that recognize the benefits that the Legacy Academy offers.
No direct competitors in Jaipur providing such facilities
A goodwill and reputation Legacy Academy, Georgia
Weaknesses
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.
Opportunities
A growing market with a large percentage of target customers not yet aware of the Legacy Academy
Increased revenue as more and more people is 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.
Threats
Competition from already established facilities that improve their service offerings to be more competitive to Legacy Academy
Unfounded "public scares" regarding child care.
Legal liability issues, either one large suit against Legacy Academy, or significant increases in premiums due to changes within the operating environment of the industry
OFFERING AND COMPETITION Legacy Academy will offer upscale child care services and an advanced collegiate based curriculum designed for kids ages 4 months to 4 years .Normal operating hours will be 7 am to 6:30pm, Monday through Friday - with observance of all major legal holidays. Early drop-off service will be offered as needed. Legacy Academy exists to 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.
Our
activity
based
collegiate
curriculum
is
specifically tailored for children and mirrors the arts and sciences taught at colleges, universities and vocational schools around the nation. We offer state-ofthe-art technology programs in leading-edge facilities which help prepare students for the technology age in which they live. Our general and "continuing" education programs help mentor and tutor students through "main school" homework assignments and provide a base of understanding and interaction to ensure success in future educational endeavors. Finally, our developmental programs reinforce
basic social, listening, independence and motor skills and prepare students for future related interaction. All of our learning and child care services employ technology, partnerships, professional services and other activities that support and promote higher learning. In addition to the extensive services and curriculum offered, the institute will also offer weekend specialty classes for children and adults and planned family activities in the community it serves. Legacy Academy will also offer children birthday party hosting services, providing great activities for kids and an easy experience for parents. Activity instructors will be assigned for these events and will lead the activities, ensuring a memorable celebration. Service Description Upon its opening legacy academy will offer four basic services in Jaipur:
Full-time Child Day Care
Part-time/After School Care (including drop-off and pick-up)
After School Tutoring
Drop-In Care Additional services
Legacy academy will also provide additional services which include • Canteen • Medical facilities • Pick and drop facilities • Extracurricular activities
Competitive edge The company start with a critical competitive edge in Jaipur : there is no competitor in our market that is offering our concept, quality of educational program and child care services. Our educational approach is unique. Our positioning on these points is very hard to match, but only if we maintain the focus in our strategy, marketing, business development, and fulfillment. We should be aware that the tendency to dilute this expertise with bargain shopping could weaken the importance of our competitive edge, but we must continue to bolster our value proposition. No competitor offering our concept – Custom made services – Innovative learning program – Accessibility – professionalism – safety
MARKET Legacy Academy has a focus on meeting the local need for child care services within Jaipur. Children are taken in flexibly on either a full-time or part-time basis. The Legacy Academy is targeting one specific customer group, the middle to upper class, double income professional families. These groups of families have both parents working, not allowing them time to raise their child during the day.
These groups 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 its child advanced concepts like reading, singing, socialization, etc. The Legacy Academy 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. Target Market Segment Nuclear Families With the breaking up of joint family system and the increased phenomenon of nuclear families, working women need support in terms of quality, substitute, care for their young children while they are at work. High middle income families Price, service, certification and reputation are critical success factors in the child care services industry. Legacy Academy will compete well in market by offering competitive prices, high-quality child care services, and leading-edge educational programs with certified, college-educated instructors, and by maintaining an excellent reputation with parents and the community they serve. Target customers are dual-income, middle-class families who value the quality of education and child care Legacy Academy provide for their children, ages 4 months to 4 years.
On conducting a survey regarding the matter – Full-Time Working Couples The company wants to establish a significantly large full-time regular client base in order to establish a healthy, consistent revenue base to ensure stability of the business. Customer relations are extremely important, as it is imperative to keep the parents pleased in order to keep their children in the daycare center. Part-Time
Workers
/
Drop-Ins Part-time workers and dropins comprise approximately 20% of revenues. While this market is not the primary focus, sufficient flexibility to handle this secondary market is important to producing supplemental revenues.
BUSINESS MODEL A business model draws on a multitude of business subjects, including economics, entrepreneurship, finance, marketing, operations, and strategy. The business model itself is an important determinant of the profits to be made from an innovation. A mediocre innovation with a great business model may be more profitable than a great innovation with a mediocre business model.
The business model is simply a working description that includes the general details about the operations of a business. There are major six components of Business Model: 1) Value Proposition What makes Legacy Academy different from many programs is our decision to limit enrollment to small group size approx.25 with more than adequate staff to ensure a satisfying experience for children and families. For shy or introverted children, it is sometimes a struggle to find a comfort level in a large group. Our staff understands child growth and development and makes a point to adapt their style of interaction to the specific needs of your child. We offer uniquely premium child care services, as measured by the curriculum and activities offered, experience and educational level of the instructors & parents involvement. 2) Market Segments Legacy Academy will compete well in market by offering competitive prices, high-quality child care services, and leading-edge educational programs with certified, college-educated instructors, and by maintaining an excellent reputation with parents. Children’s are taken in flexibly on either a full time or part time basis Full time working couples The ongoing trend of Jaipur reveals that the full time working couples are comparatively less but approximately comprise of 30% of total client base.
Part time working couples Part time working couples will become a major client base i.e. approximately 50%. Others There are some other families also for whom high quality education is important or who what to provide a very strong base education to their children, comprise of approximately 20%.
3) Value Chain structure Value is primarily a combination of quality, service and price. Value Chain Analysis is an organized approach to explore the progress of competitive advantage. The chain consists of a series of activities performed by a firm in the creation, development, marketing & support of its product or services. The product or service offering will be successful if it delivers value and satisfaction to the target buyer who chooses between various market options on the basis of what they perceive to hold most value. Inbound logistics As for the legacy academy, the inbound logistics are children aged 4months to 4 years old who are enrolled to study pre-school education. Operations Legacy Academy exists to 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. Our developmental programs reinforce basic social, listening, independence and motor skills and prepare students for future related interaction. Outbound logistics The outbound logistics of the kindergarten is when the children graduate from basic pre-school education at the age of 4 where they are prepared and trained to be able to cope with primary school education. Marketing & sales Marketing in the child care industry depends largely on reputation and referral. In India, Word of mouth is the best instrument of marketing & promotion strategies as people rely on their neighborhood more rather than print & media advertisements. The company will be giving more emphasizes on providing quality care so that good word of mouth can be spread. Services Basically, Legacy Academy provides education from the level of nursery (age 2) to the level of pre-school education (age 4). Apart from the usual learning modules, the kindergarten also provides activities as arts and crafts, dance,
theatre
and
gymnastics.
We
offer state-of-the-art
technology programs in leading-edge facilities which help prepare students for the technology age in which they live.
Human Resource Management In Legacy Academy, all the employees are appreciated for their services and usually rewarded for their work by giving them quarterly bonuses, annual dinners, group holidays and increment on their pay. The teachers are also sent for special Montessori workshops (if available) to be able to improve on their teaching skills. The administration of the kindergarten is in charge of employing new employees who is seen to have a bright future at the kindergarten and the principal is responsible to keep all the employees in line and also motivated to be able to provide the best learning experience to the children. Technological Development As the public is more aware of the growth of information technology these days, technology plays an important role to gain the competitive advantage. By implementing the use of technology into the business organization, it enables any organization to reduce cost and also maintain a good competitive advantage. Example of existing technology that is currently used at the kindergarten are student management system, using email as a form of communication between the two branches and to parents, having a website as a form of communication between the parents and the kindergarten, the use of a fax machine, photo-copier and also computers for the use of staff, teachers and student. 4) Revenue generation and margins o School fees o Canteen o Medical facilities
o Pick & drop facilities o Extracurricular activities
5) Position in value network Legacy academy is operating on a franchisee model. There are various kinds of services provided by the academy i.e. transportation, food & beverages, medical services and extracurricular activities. Among these, facilities as pick & drop and canteen will be outsourced. 6) Competitive strategy There’s not a single competitor in Jaipur providing specialized kindergarten & crèche services but there are some others who are either providing pre-school education or providing education from primary to higher education. Competitors of legacy academy are Dolphin preschool, Turtles, Bachpan, Euro kids and Subodh School. Legacy Academy’s competitive edge is four-fold: Specialized training The facility can only be as good as the teachers and assistants. With this in mind, The Legacy academy has a specialized training program that all teachers and assistants are put through so they are proficient at teaching the specific programs that the academy has developed for kids age two to four. 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 kids 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 in applying the skill when faced with multiple stimuli. Then the child tends to shut down out of confusion. Therefore skills are necessarily be taught together, just as we would expect to encounter them in real life, the children are able to assimilate the new task into their skill set much quicker. Custom made services Services will be provided to children’s as well as their families according to their needs. For ex. Pick & drop facility will be provided according to their need. Safety One of the goals of Legacy Academy is to provide a safe environment for children and to give parents a sense of security when their children are in our care. We take this commitment seriously and have systems in place to ensure This goal is carried out. Classrooms and common areas are equipped with closed circuit cameras to Allow constant monitoring by parents and management The entry of each school is equipped with a magnetic lock and coded key pad for added security. A staff person is centrally located to Screen visitors upon arrival A fence surrounds all of our playgrounds and gates remain secured.
SALES/MARKETING PLAN The Legacy Academy is targeting a very specialize niche in child care space. With this in mind, The Company must then carefully communicate it's services if the company is to be patronize by this target segment. What will be communicated are Legacy Academy competitive advantages: specialized training of the staff and innovative learning programs. If the targeted parent hears and understands these advantages, they will more likely be willing to switch to Legacy Academy services. Company’s sales approach would preferably be indirect sales strategy as the main focus is to introduce new capabilities & criteria that the competitor may not have and targeting those competitive advantages mainly available for buyer’s evaluation criteria. Marketing Strategy Marketing in the child care industry depends largely on reputation and referral. In India, Word of mouth is the best instrument of marketing & promotion strategies as people rely on their neighborhood more rather than print & media advertisements. The company will be giving more emphasizes on providing quality care so that good word of mouth can be spread. Promotion Strategy We will depend on client referrals, community exposure and direct mail campaigns as our main way to reach new clients. As we change strategies, however, we need to change the way we promote ourselves:
1) Advertising We'll be developing our core positioning message: “Early Child Care Development and Education Excellence” to differentiate our service from the competition. We will be placing advertisements in newspaper and magazines like India Today 2) Sales Brochure Our theme and curriculum will help sell the school to prospective clients. 3) Referral scheme Our main strategy for promotion will be referral scheme. In India we have noticed people get influenced more by what their friends and relative say , rather what is been advertised in newspaper and television. So, based on this belief referral scheme will be used to promote school and to get admissions of more number of students. This scheme will include providing 10 percent discount on monthly fees of students, whoever gets 2 students as referral for admissions. 4) Direct Mail We will send quarterly direct mail campaigns to the working women in Jaipur and we will also offer monthly calendars for parents. Marketing Programs Our marketing effort will include an application fee waiver, free children ID cards, T-shirts and a welcome party sponsored and hosted by Legacy Academy.
Positioning Statement For families who value the importance of higher education and quality child care services, Legacy Academy offers a great alternative to traditional child care services and specific interest based programs. Unlike those programs, Legacy Academy combines child care services with a modified collegiate level curriculum, just for kids! Pricing Strategy Legacy Academy must charge appropriately for the high-end, high-quality educational and care giving services we offer. Our revenue structure has to support our cost structure, so the salaries we pay to assure quality services must be balanced by the revenue we charge. Basically value based pricing will be followed i.e. how customers perceive or value or product. We will be price competitive in the market we serve; however, we will not subscribe to the "low price leader" concept. The quality of our service will support the prices we charge. Sales Strategy Legacy Academy will sell its standard theme, services and offerings, separating itself from traditional daycare-only offerings. We will be a one-stop shop for child care services, advanced learning and specialized program offerings. We will also be active in building a solid reputation with parents. By succeeding in these areas, we expect to begin seeing an operational net profit in month nine of the 1st year, while increasing enrollment
by 32% monthly for the first 8 months and gradually thereafter, until our maximum allowed capacity is reached. PRODUCT/SERVICE DEVELOPMENT PLAN Legacy Academy will start-up as a kindergarten & crèche centre which is for the children from age of 4 months to 4 years and as far as future prospects are concerned, the company is planning to make following developments - Increase the number of branches in Jaipur as well as throughout India Legacy Academy will start-up as a single branch in Jaipur. But, within the time span of 2 years company aims to increase its branches in Jaipur as well as throughout India. With the increase in number of working women and growing importance of education the demand for Legacy Academy will definitely enhance
- Start primary school Legacy Academy will initially start up as a Kindergarten & crèche centre but soon after achieving good amount of response, it’ll set up an elementary school so that
ROAD MAP Sales and Marketing Objectives • Grow the number of customers by 25% annually. • Build customer loyalty through superior service and educational/ development systems. • Increase the referral rate by 5% per quarter. Sales Forecast As the following table shows, the company plans to deliver sales of approximately Rs. 36, 00,000 in the first year, Rs.54, 00,000 in the second year, and Rs. 80, 00,000 in the third year plan implementation.
FINANCIAL STATEMENT Break – even analysis The Break-even Analysis is based on the monthly revenue and expenses of operating and managing Legacy Academy Monthly expenses Fixed cost = 2,50,0000 Variable cost = 2, 50,000 Total expenses= 5, 00,000 Monthly revenue Fees per student = 15,000 Total number of students =20 Total revenue = 3, 00,000 Difference 5, 00,000-3, 00,000 = 2, 00,000 Number of students required to break even 2, 00,000/15000 = 13.3 So, Legacy Academy needs at least 14 children to more to break even
Pro forma Profit and Loss:
Sales Direct cost of sales Other production expenses Total cost of sales Gross margin Expense Payroll Sales and marketing expenses Depreciation Leased equipment Certification and inspection Utilities Insurance Rent Payroll taxes Other Total operating expenses Profit before interest and tax EBITDA Interest expense Tax incurred Net profit
Year 1 36,00,000 2,00,000 0 2,00,000 34,00,000
Year2 54,00,000 3,50,000 0 3,50,000 50,50,000
Year3 80,00,000 6,00,000 0 6,00,000 74,00,000
12,00,000 7,00,000 0 2,00,000 1,00,000 2,00,000 2,00,000 12,00,000 1,50,000
16,00,000 4,00,000 0 3,00,000 1,50,000 3,00,000 3,00,000 12,00,000 2,00,000
21,00,000 4,00,000 0 4,00,000 2,00,000 4,00,000 3,50,000 15,00,000 3,00,000
0 39,00,000 (5,00,000) (5,00,000) 80,000 0 (5,80,000)
0 44,50,000 6,00,000 6,00,000 40,000 50,000 5,10,000
0 56,00,000 18,00,000 18,00,000 20,000 1,50,000 16,30,000
Pro forma Cash Flow:
Cash received Cash from operations Cash sales Subtotal cash from operations Additional cash received Sales tax, VAT received Net current borrowings Net other liabilities Net long term liabilities Sales of other current assets Sales of long term assets New investment received Subtotal cash received Expenditures Expenditure from operations Cash spending Bill payments Subtotal spend on operations Additional cash spent Principal repayment of current borrowing Other liabilities principal repayment Long term liabilities principal repayment Purchase other current assets Purchase long term assets Dividends Subtotal cash spent Net cash flow
Year 1
Year 2
Year 3
36,00,000 36,00,000 0 0 0 0 0 0 0 0 36,00,000
54,00,000 54,00,000 0 0 0 0 0 0 0 0 54,00,000
80,00,000 80,00,000 0 0 0 0 0 0 0 0 80,00,000
32,00,000 38,00,000 8,00,000 10,00,000
50,00,000 13,50,000
40,00,000 0 0 0 2,00,000 0 0 0 42,00,000 (6,00,000)
63,50,000 0 0 0 2,50,000 0 0 0 66,00,000 14,00,000
48,00,000 0 0 0 2,50,000 0 0 0 50,50,000 3,50,000
