The Kid's Community College® financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendices. From the beginning, it is recognized that total enrollment is critical, which is a factor that must be influenced immediately. Interest rates, tax rates, and personnel burden are based on conservative assumptions.
The most important underlying assumption is that there is a strong need for the business in the Lake St. Charles community.
The following benchmark chart indicates the key financial indicators for the first three years. We foresee a gradual growth in sales (enrollment) and operating expenses into the second and third year.
It is projected that the raw gross margin will remain stable for the first three years since expenses are relatively indirect in the service based course work industry. Operating expenses increase gradually as enrollment increases.
Enrollment is very important. We must maintain an average weekly enrollment of 34 students for fixed cost coverage.
For the break-even analysis, start-up monthly running costs assumptions are shown in the the table below, including a three person payroll, rent, utilities and an estimation of other running costs. Payroll, at median market averages, was presented previously in the Personnel table.
Based on these assumptions, the chart below shows the enrollment of students per month needed to break-even. This represents about 46% of our allowable monthly enrollment based on state and county course work guidelines.
Our projected profit and loss is shown on the following table, with sales increasing from the first year to the third.
In years two and three, we are projecting full enrollment regarding cost of sales and gross margin. The investment return in these years supports the goal of opening another campus at the end of the second year and begin the franchise offering by the end of the third year. Profit from the additional campuses and income from franchising are not included in this business plan.
The detailed monthly projections are included in the appendices.
The following cash flow projections show the annual amounts only, significant for the first year mainly in the amounts projected in cash sales and payables.
Cash flow projections are critical to the success of Kid's Community College®. The monthly cash flow is shown in the illustration, with one bar representing the cash flow per month and the other the monthly cash balance. The annual cash flow figures are included here and the more important detailed monthly numbers are included in the appendices.
The balance sheet in the following table shows managed but sufficient growth of net worth, and a gradually sufficient healthy financial position. The monthly estimates are included in the appendices.
The following table shows the projected businesses ratios for our industry: Child Day Care services, SIC code 8351. Kid's Community College® expects to maintain healthy ratios for profitability, risk, and return.