Term Paper on "Feasibility Study for Establishing a Child Care Facility"

Term Paper 25 pages (10176 words) Sources: 20

[EXCERPT] . . . .

Establishing a Child Care Facility

MSA 685 Project Report

Types of Business Acquisitions

Different Legal Structures of Businesses

Contents of a Business Plan

CHAPTER IV: DATA ANALYSIS

Description of Business

Marketing Strategy and Analysis

Financial Plan and Analysis

SUMMARY, CONCLUSIONS and RECOMMENDATIONS

POPULATION ESTIMATES - WAYNE COUNTY

POPULATION TRENDS for 1-5 YEARS - WAYNE COUNTY

AVERAGE WAGE ($) 2001-2006 WAYNE COUNTY

NUMBER of WORKERS PER INDUSTRY - WAYNE COUNTY

EMPLOYMENT and UNEMPLOYMENT in WAYNE COUNTY

REQUIRED MINIMUM STAFF-to-CHILDREN RATIO, MICHIGAN, CHILD CARE CENTERS 2002

MEDIAN HOURLY EARNINGS of the LARGEST OCCUPATIONS in CHILD DAY CARE SERVICES, MAY 2004

TABLE 9 - RECOMMENDED MINIMUM FURNITURE for a 18-KIDS CLASS and 2 TEACHERS

TABLE 10 - RECOMMENDED MINIMUM FURNITURE for a 18-KIDS CLASS and 2 TEACHERS

TABLE 11 - MONTHLY SALES FORECAST

TABLE 12 - STAR-UP FUNDING FORECAST

TABLE 13 - PROFIT and LOSS FORECAST

TABLE 14 - CASH FLOW FORECAST

CHAPTER I: DEFINITION of the PROBLEM

Background

In the United States, two working parents and single parent households are becoming "the norm." Such an increase of single-parent homes or both parents working outside the home has lead to more and more children going off to spend their day in child care while parents are at work.

Since the demand for quality child care has increased, this type of business has become an ideal starter business for an entrepreneur.

Purpose of the Study

The purpose of this study is to determine the feasibility of opening a child care facility in southeastern Michigan.

Problem Statement

With the growing rate of two parents working and single family homes, there is a need for quality child care in Southeastern Wayne County, Michigan. There are many child care facilities in the current market, but with the demand for a quality child care that stands out from the rest it appears it can be economically feasible.

Research Questions

This paper will answer the following questions about opening a child care facility in Southeastern Wayne County, Michigan:

1) What are the start-up and operating costs for a child care facility?

2) Should this start as an in-home business until it is established and can be expanded?

3) What are the legal implications?

4) What federal, state and local licenses need to be acquired?

5) What are the federal, state and local guidelines for owning and operating a child care facility?

Definition of Terms

Child Care Bureau - the Child Care Bureau supports low-income working families through child care financial assistance and promotes children's learning by improving the quality of early care and education and after-school programs.

Child Care Facility - a licensed child care service that takes place in a school-like setting.

Child Care Home Providers - a licensed child care service that takes place in an individuals' home.

Corporation - an artificial legal which, while made up of a number of natural persons or other legal entities, has a separate legal identity from them. As a legal entity the corporation receives legal rights and duties. Five rights always exist for a corporation: the ability to sue and be sued (this gives the corporation access to the courts); the right to a common treasury (this gives the right to hold assets separate from the assets of its members); the right to hire agents (this gives the corporation the right to hire employees) the right to a common seal (this gives the corporation the right to sign contracts); and the right to make by-laws (this gives the corporation the right to govern its internal affairs). Governments and courts may add other rights and duties. These will vary from jurisdiction to jurisdiction. The granting of additional rights to corporations is often very controversial.

DHS - the Department of Human Services (DHS) is Michigan's public assistance, child and family welfare agency. DHS directs the operations of public assistance and service programs through a network of over 100 county department of human service offices around the state.

Direct Competition - a competitor that fills the same buyer need you fill in the same way you fill it. Direct competitors offer similar products to your customers as you do. Your goal is to recognize your direct competitors, and differentiate your product/service to achieve competitive advantage over the competition.

Market

Customers or potential customers with the need, desire, authority and purchasing power to purchase the product or service you have to offer.

Market Share - the percentage or proportion of the total available market or market segment that is being serviced by a company. It can be expressed as a company's sales revenue (from that market) divided by the total sales revenue available in that market. It can also be expressed as a company's unit sales volume (in a market) divided by the total volume of units sold in that market.

Marketing Analysis - the process of systematically gathering, analyzing and interpreting data pertaining to the company's market, customers and competitors with the goal of improving marketing decisions.

Marketing - the process of identifying and satisfying customer needs.

Partnership - a type of business entity in which partners share with each other the profits or losses of the business undertaking in which all have invested. In most countries, a partnership is a nominate contract between individuals who, in a spirit of cooperation, agree to carry on an enterprise, contribute to it, by combining property, knowledge or activities and to share its profit. Partners may have a partnership agreement, or declaration of partnership and in some jurisdictions such agreements may be registered and available for public inspection. In many countries, a partnership is also considered to be a legal entity, although different legal systems reach different conclusions on this point. Partnerships are often favored over corporations for taxation purposes, as a partnership structure eliminates the dividend tax levied upon profits realized by the owners of a corporation.

Target Market - a fairly similar group of customers to whom a company wishes to sell their product/service to. It is important for the marketer to define and research their target market because it is an essential tool for reaching interested consumers. Once the target market is defined, the marketer can focus their time and resources on a segment of people who will be responsive to that companies' product/service.

SBA - the U.S. Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation. (U.S. Small Business Administration, 2007)

Sole Proprietorship - a type of business entity which legally has no separate existence from its owner. Hence, the limitations of liability enjoyed by a corporation and limited liability partnerships do not apply to sole proprietors. All debts of the business are debts of the owner. It is a "sole" proprietor in the sense that the owner has no partners. A sole proprietorship essentially means a person does business in their own name and there is only one owner. A sole proprietorship is not a corporation, it does not pay corporate taxes, but rather the person who organized the business pays personal income taxes on the profits made, making accounting much simpler. A sole proprietorship need not worry about double taxation like a corporate entity would have to.

Limitations of the Study

Limitations of the study include the comparative literature in regard to child care facilities and the unique nature of each facility. The information and data compiled for this research is limited to demographic and business data specific to Southeastern Wayne County Michigan.

CHAPTER II: REVIEW of the LITERATURE

Introduction

The literature review will include information on acquiring a business, the legal forms and licenses that are required, problems and setbacks of starting a business and how to avoid them. Requirements for writing a business plan will also be reviewed.

Types of Business Acquisitions

Every day entrepreneurs open new businesses, but only a small part of those businesses succeed beyond the first year. For most people, seeking their dream of owning their own business is a huge risk to their own personal financial stability.

Entrepreneurs typically enter into business through one of three avenues: 1) by launching a new business that they have developed; 2) by buying an existing business; 3) by contracting for a franchise outlet. Purchasing a business or franchise can require a large amount of capital. Starting your own business usually requires a smaller investment. There are pros and cons for each choice, but the entrepreneur will have to decide which works best for them.

Opening a New Business

Opening a new business from the ground up is the most difficult way to start a business. It takes a lot of work, sleepless nights and capital but many entrepreneurs feel it is their only way to go. The owner has to provide capital and build clientele. There are also the expenses of starting and the early operation. The business owner… READ MORE

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