Preschool Business Plan by International Preschool Curriculum

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Table of Contents

1.0 Executive Summary...............................................................................................................................1 Chart: Highlights..................................................................................................................................1 1.1 Objectives..........................................................................................................................................1 1.2 Mission...............................................................................................................................................2 1.3 Keys to Success..................................................................................................................................2 2.0 Company Summary...............................................................................................................................2 2.1 Company Ownership.........................................................................................................................2 2.2 Start-up Summary..............................................................................................................................2 Table: Start-up.....................................................................................................................................3 Chart: Start-up......................................................................................................................................3 [MULTIPLE PAGES REDACTED FOR SAMPLE]......................................................................4 Table: Sales Forecast.......................................................................................................................4 Chart: Sales Monthly.......................................................................................................................5 Chart: Sales by Year........................................................................................................................5 6.5 Milestones..........................................................................................................................................5 Table: Milestones.................................................................................................................................6 Chart: Milestones.................................................................................................................................6

......................................................................................................................................................................6 7.0 Operational Plan....................................................................................................................................7 7.1 IPC IPI Preschools.................................................................................................................................7 [MULTIPLE PAGES REDACTED FOR SAMPLE]......................................................................8 Table: Profit and Loss..........................................................................................................................8 Chart: Profit Monthly...........................................................................................................................9 Chart: Profit Yearly..............................................................................................................................9 Chart: Gross Margin Monthly............................................................................................................10 Chart: Gross Margin Yearly...............................................................................................................10 8.5 Projected Cash Flow........................................................................................................................11 Table: Cash Flow...............................................................................................................................11 Chart: Cash.........................................................................................................................................12 8.6 Projected Balance Sheet...................................................................................................................12 Table: Balance Sheet..........................................................................................................................12 8.7 Business Ratios................................................................................................................................13 Table: Ratios......................................................................................................................................13 Page 1

Table of Contents

8.8 Long-term Plan................................................................................................................................14 Table: Sales Forecast...................................................................................................................................1 ......................................................................................................................................................................1 Table: Personnel...........................................................................................................................................2 ......................................................................................................................................................................2 Table: Profit and Loss..................................................................................................................................3 ......................................................................................................................................................................4 Table: Cash Flow.........................................................................................................................................5 ......................................................................................................................................................................6 Table: Balance Sheet....................................................................................................................................7

Page 2

1.0 Executive Summary IPC INTERNATIONAL PRESCHOOL OF ISTANBUL is a limited liability company (“Company”) established and operated under Turkish Laws, working in child care and education industry. During its first 5 years of operation, the Company will focus on care and education of children from 0 to under 6 years (preschool). The key for the Company’s growth (as shown is the Chart below) will be its value for money concept allowing a quick expansion of franchising system. The Company will make its initial public offering (IPO) and start expanding its business to other activities from 6th year. Chart: Highlights

1.1 Objectives There are nine major objectives, the first four of which are immediate to short term. Medium and long term objectives have also been highlighted in order to provide a longer term set of goals.

Short term objectives (1-12 months) • • • •

Launch the first 2 IPC schools within 12 months of operation; Achieve a 100% capacity for both schools within 6 months of operation; Offering paid training courses to 100 teachers and sort out 20 of them for the first 2 schools within 12 months of operation; 50 software copies to be sold within 12 months of operation.

Page 1

Medium and long-term objectives: • • • • •

Profitable and self-sufficient by the end of FY2; Achieve the annual growth rate of 20% in terms of profit; Achieve the net profit margin of at least 20% for every school; Launch a school within 3 months from the signing of every franchise agreement; Launch 5 IPC schools with 300 students across Turkey.

1.2 Mission IPC International Preschool of Istanbul Ltd will be dedicated to: • •

providing exceptional tender loving care and qualified bilingual education at an affordable price to 0-6 year old children of the middle class; raising early childhood education standards in Turkey through world class quality consultancy practices and training courses offered to teachers, managers and parents.

1.3 Keys to Success There are four generally accepted keys to success in the early childhood education sector: 1. 2. 3. 4.

Identify and quantify the market; Distinguish a brand, product & service; Recruit and maintain a trained staff complement; Establish a reputation for quality

2.0 Company Summary IPC International Preschool of Istanbul Ltd is incorporated as a limited liability company in Turkey and is headquartered in Istanbul. 2.1 Company Ownership IPC IPI Ltd is owned by its founder and director Samantha Smith and its investment partners. 2.2 Start-up Summary The start-up table takes into account median rent for 6 months, furniture, equipment which includes canteen equipment and computing costs. The cash required row makes the employment cost assumptions at gross salary for 6 months. This is summarized in the table below. All figures include costs for both a single IPC IPI Ltd preschool and the IPC IPI Ltd Headquarters office. Salary expectations reflect the low end of the salary spectrum.

Page 2

Table: Start-up

Start-up

Requirements

Start-up Expenses Legal Stationery etc. Insurance

$1,200 $750 $1,050

Rent

$16,000

Other

$5,000

Advertising &PR Licenses (IPC) IPC Consultancy

$1,250 $45,000 $6,000

Renovations

$11,000

Total Start-up Expenses

$87,250

Start-up Assets Cash Required Other Current Assets Long-term Assets

$129,900 $17,858 $10,000

Total Assets

$157,758

Total Requirements

$245,008

Chart: Start-up

Page 3

[MULTIPLE PAGES REDACTED FOR SAMPLE]

Table: Sales Forecast

Sales Forecast 2012

2013

2014

2015

2016

Sales IPC Schools

$96,800

$434,400

$866,400

$1,395,200

$1,782,400

IPC Software/Curriculum

$2,000

$50,000

$100,000

$175,000

$250,000

IPC Franchises

$7,500

$17,500

$52,500

$92,500

$112,500

5 day Manager/Teacher Training

$324,000

$356,400

$392,040

$450,846

$541,015

Consultancy Services

$120,000

$132,000

$151,800

$182,160

Total Sales

$550,300

$978,300

$1,542,940

$2,265,346

$2,868,075 2016

Direct Cost of Sales

2012

2013

2014

2015

$21,500

$23,500

Teacher Training

$3,600

$3,960

$4,320

$4,752

$5,464

Curriculum & Software

$3,850

$3,000

Consulting License

$6,000

IPC Onsite Training

$60,000

Other

$17,592

$18,556

$17,133

$18,156

$19,306

Local Consultants/Trainers

$81,000

$89,100

$98,010

$107,811

$118,592

$193,542

$204,116

$188,463

$199,719

$212,362

Franchise Fees

Subtotal Direct Cost of Sales

Page 4

Chart: Sales Monthly

Chart: Sales by Year

6.5 Milestones The Milestones Table reflects marketing milestones proposed by IPC IPI Ltd and its strategic partner, IPC. All IPC related expenses are covered by the IPC.

Page 5

Table: Milestones

Milestones

Milestone

Start Date

End Date

Budget

Manager

Department

IPC IPI Branding

7/21/2011

9/1/2011

$1,120

IPC

Marketing

Website & IPC Microsite

9/1/2011

9/12/2011

$3,500

IPC

Marketing

PR campaign

9/1/2011

1/1/2013

$2,750

IPC

Marketing

Local Advertisements

4/2/2012

9/1/2012

$1,000

IPI Ltd

Marketing

12/1/2011

4/2/2012

$250

IPI Ltd

Marketing

Social Media Creation & Promotion Totals

$8,620

Chart: Milestones

Page 6

7.0 Operational Plan The following section will review the operational requirements in order to establish the two major IPC IPI projects. This section will look at the physical requirements, layout options and equipment for the IPC IPI preschool and the IPI/IPC office. 7.1 IPC IPI Preschools

7.11

Location and Facility Type

IPC IPI will identify locations that demographically represent the business intentions of IPC IPI Ltd’s objectives. Therefore, IPC IPI will focus on densely populated residential neighborhoods of Istanbul to establish the first preschool. KOOLKID will identify a space of at least 2,500 sq. ft of indoor space and about 3,000 sq.ft of playground space. 7.12

Facility Layout

The IPC provides 3D rendering layout suggestions based on the floor plan of an identified site. Once IPC IPI has chosen a suitable site, IPC will provide a layout suggestion.

Page 7

[MULTIPLE PAGES REDACTED FOR SAMPLE]

Table: Profit and Loss

Pro Forma Profit and Loss 2012

2013

2014

2015

2016

Sales

$550,300

$978,300

$1,542,940

$2,265,346

$2,868,075

Direct Cost of Sales

$193,542

$204,116

$188,463

$199,719

$212,362

Total Cost of Sales

$193,542

$204,116

$188,463

$199,719

$212,362

Gross Margin

$356,758

$774,184

$1,354,477

$2,065,627

$2,655,713

64.83%

79.14%

87.79%

91.18%

92.60%

Other Costs of Sales

Gross Margin %

Expenses Payroll

$261,300

$328,500

$390,600

$452,700

Marketing/Promotion

$1,200

$5,500

$8,500

$12,000

$18,000

Depreciation

$1,500

$6,000

$10,500

$16,500

$22,500

$48,000

$138,000

$228,000

$348,000

$468,000

Utilities

$3,000

$9,000

$18,000

$30,000

$42,000

Insurance

$1,056

$4,224

$7,392

$11,616

$15,840

$39,195

$49,275

$58,590

$67,905

$355,251

$540,499

$721,582

$938,721

$1,086,945

Profit Before Interest and Taxes

$1,508

$233,685

$632,895

$1,126,906

$1,568,768

EBITDA

$3,008

$239,685

$643,395

$1,143,406

$1,591,268

$24,500

$73,215

$212,938

$385,842

$540,494

($22,993)

$135,970

$395,457

$716,564

$1,003,774

-4.18%

13.90%

25.63%

31.63%

35.00%

Rent

Payroll Taxes Total Operating Expenses

Interest Expense Taxes Incurred Net Profit Net Profit/Sales

Page 8

Chart: Profit Monthly

Chart: Profit Yearly

Page 9

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

Page 10

8.5 Projected Cash Flow Table: Cash Flow

Pro Forma Cash Flow 2012

2013

2014

2015

2016

Cash Sales

$550,300

$978,300

$1,542,940

$2,265,346

$2,868,075

Subtotal Cash from Operations

$550,300

$978,300

$1,542,940

$2,265,346

$2,868,075

$550,300

$978,300

$1,542,940

$2,265,346

$2,868,075

2012

2013

2014

2015

2016

Cash Spending

$261,300

$328,500

$390,600

$452,700

Bill Payments

$286,591

$489,992

$726,776

$1,052,196

$1,363,661

Subtotal Spent on Operations

$547,891

$818,492

$1,117,376

$1,504,896

$1,816,361

$547,891

$818,492

$1,117,376

$1,504,896

$1,816,361

Net Cash Flow

$2,409

$159,808

$425,564

$760,450

$1,051,714

Cash Balance

$132,309

$292,117

$717,681

$1,478,131

$2,529,845

Cash Received

Cash from Operations

Additional Cash Received Subtotal Cash Received Expenditures

Expenditures from Operations

Additional Cash Spent Subtotal Cash Spent

Page 11

Chart: Cash

8.6 Projected Balance Sheet

Table: Balance Sheet

Pro Forma Balance Sheet 2012

2013

2014

2015

2016

$2,529,845

Assets

Current Assets Cash

$132,309

$292,117

$717,681

$1,478,131

Other Current Assets

$17,858

Total Current Assets

$150,167

$309,975

$735,539

$1,495,989

$2,547,703

$10,000

Long-term Assets Long-term Assets

$10,000

Accumulated Depreciation

$1,500

$7,500

$18,000

$34,500

$57,000

Total Long-term Assets

$8,500

$2,500

($8,000)

($24,500)

($47,000)

$158,667

$312,475

$727,539

$1,471,489

$2,500,703

2012

2013

2014

2015

2016

Total Assets

Liabilities and Capital

Current Liabilities

Page 12

Accounts Payable

$23,901

$41,739

$61,347

$88,733

$114,173

Current Borrowing

$122,500

$146,401

$164,239

$183,847

$211,233

$236,673

Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities

Total Liabilities

$146,401

$164,239

$183,847

$211,233

$236,673

Paid-in Capital

$122,508

Retained Earnings

($87,250)

($110,243)

$25,728

$421,184

$1,137,748

Earnings

($22,993)

$135,970

$395,457

$716,564

$1,003,774

$12,265

$148,236

$543,693

$1,260,256

$2,264,031

$158,667

$312,475

$727,539

$1,471,489

$2,500,703

$12,265

$148,236

$543,693

$1,260,256

$2,264,031

Total Capital Total Liabilities and Capital

Net Worth

8.7 Business Ratios

Table: Ratios

Ratio Analysis 2012

2013

2014

2015

2016

n.a.

77.78%

57.72%

46.82%

26.61%

Other Current Assets

11.26%

5.72%

2.45%

1.21%

0.71%

Total Current Assets

94.64%

99.20%

101.10%

101.66%

101.88%

5.36%

0.80%

-1.10%

-1.66%

-1.88%

100.00%

92.27%

52.56%

25.27%

14.36%

9.46%

0.00%

92.27%

52.56%

25.27%

14.36%

9.46%

7.73%

47.44%

74.73%

85.64%

90.54%

100.00%

Gross Margin

64.83%

79.14%

87.79%

91.18%

92.60%

Selling, General & Administrative Expenses

69.01%

65.24%

62.16%

59.55%

57.60%

0.22%

0.56%

0.55%

0.53%

0.63%

Sales Growth

Percent of Total Assets

Long-term Assets Total Assets

Current Liabilities Long-term Liabilities Total Liabilities Net Worth

Percent of Sales Sales

Advertising Expenses

Page 13

Profit Before Interest and Taxes

0.27%

23.89%

41.02%

49.75%

54.70%

Current

1.03

1.89

4.00

7.08

10.76

Quick

1.03

1.89

4.00

7.08

10.76

92.27%

52.56%

25.27%

14.36%

9.46%

-187.46%

141.12%

111.90%

87.47%

68.21%

-14.49%

66.94%

83.62%

74.92%

61.75%

Additional Ratios

2012

2013

2014

2015

2016

Net Profit Margin

-4.18%

13.90%

25.63%

31.63%

35.00%

Return on Equity

-187.46%

91.73%

72.74%

56.86%

44.34%

12.99

12.17

3.47

3.13

2.12

1.54

1.15

11.94

1.11

0.34

0.17

0.10

1.00

$3,765

$145,736

$551,693

$1,284,756

$2,311,031

0.06

9.54

25.83

46.00

64.03

Assets to Sales

0.29

0.32

0.47

0.65

0.87

Current Debt/Total Assets

92%

53%

25%

14%

Acid Test

1.03

1.89

4.00

7.08

10.76

Sales/Net Worth

44.87

6.60

2.84

1.80

1.27

Dividend Payout

0.00

Main Ratios

Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets

Activity Ratios Accounts Payable Turnover Payment Days Total Asset Turnover

Debt Ratios Debt to Net Worth Current Liab. to Liab.

Liquidity Ratios Net Working Capital Interest Coverage

Additional Ratios

8.8 Long-term Plan IPC IPI Ltd anticipates exponential growth over the next five years which takes into account wider brand recognition in FY3 onwards.

Page 14

Appendix Table: Sales Forecast

Sales Forecast Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$2,000

$2,200

$2,600

$4,000

$6,000

$8,000

$12,000

Software/Curriculum

$100

$200

$300

$200

$300

IPC Franchises

$5,000

$2,500

$7,500

$15,000

$20,000

$27,000

$40,000

$35,000

$41,500

Sales IPC Schools

5 day Manager/Teacher Training Consultancy Services Total Sales

Direct Cost of Sales Franchise Fees Teacher Training

$2,500

$3,500

$5,000

$8,000

$10,000

$12,500

$15,250

$18,000

$12,000

$13,300

$22,700

$32,100

$43,100

$50,200

$49,200

$62,200

$59,700

$62,550

$68,950

$74,300

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$3,500

$9,000

$300

Curriculum & Software

$1,000

$1,350

$1,500

Consulting License

$6,000

IPC Onsite Training

$5,000

Other

$1,466

Local Consultants/Trainers

$6,750

$24,016

$13,516

$22,516

$14,866

$13,516

$22,516

$13,516

$15,016

Subtotal Direct Cost of Sales

Page 1

Appendix Table: Personnel

Personnel Plan Jan Vietnamese Teachers

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$900

$1,200

$1,500

$2,100

$2,700

Administrative Manager

$600

Cook

$200

Director

$3,000

Manager

$2,000

CFO

$2,000

Consultants

$5,000

Sales/Marketing

$500

HR/Admin

$600

Foreign Teacher/Manager

Accounts Production Total People

Total Payroll

$500

$3,000

$21,000

$21,300

$21,600

$22,200

Page 2

Appendix Table: Profit and Loss

Pro Forma Profit and Loss Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Sales

$12,000

$13,300

$22,700

$32,100

$43,100

$50,200

$49,200

$62,200

$59,700

$62,550

$68,950

$74,300

Direct Cost of Sales

$24,016

$13,516

$22,516

$14,866

$13,516

$22,516

$13,516

$15,016

$24,016

$13,516

$22,516

$14,866

$13,516

$22,516

$13,516

$15,016

Other Costs of Sales Total Cost of Sales

Gross Margin

($12,016)

($216)

$9,184

$9,584

$28,234

$36,684

$35,684

$39,684

$46,184

$49,034

$55,434

$59,284

Gross Margin %

-100.13%

-1.62%

40.46%

29.86%

65.51%

73.08%

72.53%

63.80%

77.36%

78.39%

80.40%

79.79%

$21,000

$21,300

$21,600

$22,200

$1,200

$125

$4,000

$4,000 $250

Expenses Payroll Marketing/Promotion Depreciation Rent Utilities

$250

Insurance

15%

$88

Payroll Taxes

15%

$3,150

$3,195

$3,240

$3,330

$29,813

$28,613

$28,958

$29,303

$29,993

Profit Before Interest and Taxes

($41,829)

($28,829)

($19,429)

($19,374)

($1,069)

$6,691

$5,691

$9,691

$16,191

$19,041

$25,441

$29,291

EBITDA

($41,704)

($28,704)

($19,304)

($19,249)

($944)

$6,816

$5,816

$9,816

$16,316

$19,166

$25,566

$29,416

$2,042

Net Profit

($43,870)

($30,871)

($21,471)

($21,416)

($3,111)

$4,649

$3,649

$7,649

$14,149

$16,999

$23,399

$27,249

Net Profit/Sales

-365.58%

-232.11%

-94.58%

-66.72%

-7.22%

9.26%

7.42%

12.30%

23.70%

27.18%

33.94%

36.67%

Total Operating Expenses

Interest Expense Taxes Incurred

Page 3

Appendix

Page 4

Appendix Table: Cash Flow

Pro Forma Cash Flow Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Cash Sales

$12,000

$13,300

$22,700

$32,100

$43,100

$50,200

$49,200

$62,200

$59,700

$62,550

$68,950

$74,300

Subtotal Cash from Operations

$12,000

$13,300

$22,700

$32,100

$43,100

$50,200

$49,200

$62,200

$59,700

$62,550

$68,950

$74,300

Cash Received

Cash from Operations

Additional Cash Received Sales Tax, VAT, HST/GST Received

New Current Borrowing

New Other Liabilities (interest-free)

New Long-term Liabilities

Sales of Other Current Assets

Sales of Long-term Assets

New Investment Received

$12,000

$13,300

$22,700

$32,100

$43,100

$50,200

$49,200

$62,200

$59,700

$62,550

$68,950

$74,300

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$21,000

$21,300

$21,600

$22,200

$1,158

$34,355

$23,046

$23,347

$31,837

$24,444

$23,226

$23,526

$31,926

$23,226

$23,276

$22,158

$55,355

$44,046

$44,647

$53,437

$46,644

$45,426

$45,726

$54,126

$45,426

$45,476

Sales Tax, VAT, HST/GST Paid Out

Principal Repayment of Current Borrowing

Other Liabilities Principal Repayment

Subtotal Cash Received

Expenditures

0.00%

Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations

Additional Cash Spent

Page 5

Appendix Long-term Liabilities Principal Repayment

Purchase Other Current Assets

Purchase Long-term Assets

Dividends

$22,158

$55,355

$44,046

$44,647

$53,437

$46,644

$45,426

$45,726

$54,126

$45,426

$45,476

Net Cash Flow

($10,158)

($42,055)

($21,346)

($12,547)

($10,337)

$3,556

$3,774

$16,474

$5,574

$17,124

$23,524

$28,824

Cash Balance

$119,742

$77,687

$56,341

$43,794

$33,457

$37,013

$40,787

$57,262

$62,836

$79,960

$103,485

$132,309

Subtotal Cash Spent

Page 6

Appendix Table: Balance Sheet

Pro Forma Balance Sheet

Assets

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$132,309

Starting Balances

Current Assets Cash

$129,900

$119,742

$77,687

$56,341

$43,794

$33,457

$37,013

$40,787

$57,262

$62,836

$79,960

$103,485

Other Current Assets

$17,858

Total Current Assets

$147,758

$137,600

$95,545

$74,199

$61,652

$51,315

$54,871

$58,645

$75,120

$80,694

$97,818

$121,343

$150,167

$10,000

$125

$250

$375

$500

$625

$750

$875

$1,000

$1,125

$1,250

$1,375

$1,500

$10,000

$9,875

$9,750

$9,625

$9,500

$9,375

$9,250

$9,125

$9,000

$8,875

$8,750

$8,625

$8,500

$157,758

$147,475

$105,295

$83,824

$71,152

$60,690

$64,121

$67,770

$84,120

$89,569

$106,568

$129,968

$158,667

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets

Liabilities and Capital

Current Liabilities Accounts Payable

$33,587

$22,277

$31,021

$23,669

$22,451

$31,151

$22,451

$23,901

Current Borrowing

$122,500

Other Current Liabilities Subtotal Current Liabilities

Long-term Liabilities

$122,500

$156,087

$144,777

$153,521

$146,169

$144,951

$153,651

$144,951

$146,401

Total Liabilities

$122,500

$156,087

$144,777

$153,521

$146,169

$144,951

$153,651

$144,951

$146,401

Paid-in Capital

$122,508

Retained Earnings

($87,250)

($43,870)

($74,741)

($96,212)

($117,627)

($120,738)

($116,089)

($112,439)

($104,790)

($90,641)

($73,641)

($50,242)

($22,993)

$35,258

($8,612)

($39,483)

($60,954)

($82,369)

($85,480)

($80,831)

($77,181)

($69,532)

($55,383)

($38,383)

($14,984)

$12,265

$157,758

$147,475

$105,295

$83,824

$71,152

$60,690

$64,121

$67,770

$84,120

$89,569

$106,568

$129,968

$158,667

$35,258

($8,612)

($39,483)

($60,954)

($82,369)

($85,480)

($80,831)

($77,181)

($69,532)

($55,383)

($38,383)

($14,984)

$12,265

Earnings Total Capital Total Liabilities and Capital

Net Worth

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