Day Care Business Plan

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Financial Plan

Safe Kids Child Care expects to raise $40,000 as its own capital, and to borrow $30,000 guaranteed from the SBA as a 5-year loan. This provides the bulk of the current financing required.

7.1 Break-even Analysis

The Break-even Analysis is based on the average of the first-year figures for total sales by units, and by operating expenses. These are presented as per-unit revenue, per-unit cost, and fixed costs. These conservative assumptions make for a more accurate estimate of real risk.

Break-even Analysis
Monthly Units Break-even 222
Monthly Revenue Break-even $23,063
Assumptions:
Average Per-Unit Revenue $104.03
Average Per-Unit Variable Cost $3.10
Estimated Monthly Fixed Cost $22,375

7.2 Projected Profit and Loss

As the Profit and Loss table shows, the company expects to continue its steady growth in profitability over the next three years of operations.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $261,625 $515,025 $674,740
Direct Cost of Sales $7,806 $16,000 $21,600
Other Production Expenses $0 $0 $0
Total Cost of Sales $7,806 $16,000 $21,600
Gross Margin $253,819 $499,025 $653,140
Gross Margin % 97.02% 96.89% 96.80%
Expenses
Payroll $210,000 $332,000 $375,000
Sales and Marketing and Other Expenses $0 $0 $0
Depreciation $0 $0 $0
Leased Equipment $1,800 $2,000 $2,200
Certifications & Inspections $2,400 $2,500 $2,600
Utilities $1,800 $2,000 $22,000
Insurance $3,000 $3,600 $42,000
Rent $18,000 $20,000 $25,000
Payroll Taxes $31,500 $49,800 $56,250
Other $0 $0 $0
Total Operating Expenses $268,500 $411,900 $525,050
Profit Before Interest and Taxes ($14,681) $87,125 $128,090
EBITDA ($14,681) $87,125 $128,090
Interest Expense $2,610 $1,780 $780
Taxes Incurred $0 $25,604 $38,193
Net Profit ($17,291) $59,742 $89,117
Net Profit/Sales -6.61% 11.60% 13.21%

7.3 Projected Cash Flow

The cash flow projection shows that provisions for ongoing expenses are adequate to meet the needs of the company as the business generates sufficient cash flow to support operations.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $261,625 $515,025 $674,740
Subtotal Cash from Operations $261,625 $515,025 $674,740
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $261,625 $515,025 $674,740
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $210,000 $332,000 $375,000
Bill Payments $62,461 $119,606 $203,444
Subtotal Spent on Operations $272,461 $451,606 $578,444
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $7,200 $10,000 $10,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $279,661 $461,606 $588,444
Net Cash Flow ($18,036) $53,419 $86,296
Cash Balance $48,964 $102,383 $188,679

7.4 Projected Balance Sheet

The following table presents the Balance Sheet for Safe Kids Child Care.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $48,964 $102,383 $188,679
Other Current Assets $0 $0 $0
Total Current Assets $48,964 $102,383 $188,679
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $48,964 $102,383 $188,679
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $6,455 $10,133 $17,311
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $6,455 $10,133 $17,311
Long-term Liabilities $22,800 $12,800 $2,800
Total Liabilities $29,255 $22,933 $20,111
Paid-in Capital $40,000 $40,000 $40,000
Retained Earnings ($3,000) ($20,291) $39,450
Earnings ($17,291) $59,742 $89,117
Total Capital $19,709 $79,450 $168,567
Total Liabilities and Capital $48,964 $102,383 $188,679
Net Worth $19,709 $79,450 $168,567

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 8351, Child Day Care Services, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 96.86% 31.01% 9.50%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 26.80%
Total Current Assets 100.00% 100.00% 100.00% 44.70%
Long-term Assets 0.00% 0.00% 0.00% 55.30%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 13.18% 9.90% 9.18% 31.80%
Long-term Liabilities 46.57% 12.50% 1.48% 31.00%
Total Liabilities 59.75% 22.40% 10.66% 62.80%
Net Worth 40.25% 77.60% 89.34% 37.20%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 97.02% 96.89% 96.80% 0.00%
Selling, General & Administrative Expenses 103.63% 85.29% 83.59% 75.60%
Advertising Expenses 0.00% 0.00% 0.00% 0.70%
Profit Before Interest and Taxes -5.61% 16.92% 18.98% 2.60%
Main Ratios
Current 7.59 10.10 10.90 1.27
Quick 7.59 10.10 10.90 1.14
Total Debt to Total Assets 59.75% 22.40% 10.66% 62.80%
Pre-tax Return on Net Worth -87.73% 107.42% 75.52% 5.40%
Pre-tax Return on Assets -35.31% 83.36% 67.47% 14.60%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -6.61% 11.60% 13.21% n.a
Return on Equity -87.73% 75.19% 52.87% n.a
Activity Ratios
Accounts Payable Turnover 10.68 12.17 12.17 n.a
Payment Days 27 25 24 n.a
Total Asset Turnover 5.34 5.03 3.58 n.a
Debt Ratios
Debt to Net Worth 1.48 0.29 0.12 n.a
Current Liab. to Liab. 0.22 0.44 0.86 n.a
Liquidity Ratios
Net Working Capital $42,509 $92,250 $171,367 n.a
Interest Coverage -5.63 48.95 164.22 n.a
Additional Ratios
Assets to Sales 0.19 0.20 0.28 n.a
Current Debt/Total Assets 13% 10% 9% n.a
Acid Test 7.59 10.10 10.90 n.a
Sales/Net Worth 13.27 6.48 4.00 n.a
Dividend Payout 0.00 0.00 0.00 n.a