Macroeconomic Variables

Macroeconomic factors can affect production costs, profits, demand, and the economy. Inflation in Canada and globally has been decreasing. The Bank predicts inflation to remain at 3% over the next year before returning to the 2% aim by mid-2025. According to the forecast, real GDP growth will slow down from 3.4% in 2022 to 0.3% in 2023 before recovering to 1.5% in 2024. This leaves the real GDP level 0.6% lower than expected by 2024. However, annual real GDP growth is expected to increase to 2% on average for the rest of the forecast horizon. It has been suggested that there will be a minor recession this year with a 0.4% decline in real GDP, as the full impact of monetary tightening is yet to be felt. If inflation does not stop rising, parents might face financial constraints and be less willing to pay for additional childcare services during non-traditional hours.

Analyzing macroeconomic variables suggests that while raw material costs will increase, the rise in real disposable income could lead to increased demand. Inflation will affect all businesses equally, but the profit margin from workers will be fixed. Our proposed model includes paying workers a fixed wage that they request based on local data, preventing them from outpricing themselves, and including a profit margin to cover overhead costs and profit, which is then presented to the customer as the final bill rate. Inflation can impact the affordability of childcare services. Higher inflation rates reduce parents' disposable income, potentially affecting their willingness to pay for additional childcare. For instance, if the employment rate in City M rises due to economic growth, more parents may need evening childcare services, increasing demand for the proposed business. On the other hand, if inflation escalates rapidly, parents might face financial constraints and be less willing to pay for additional childcare services during non-traditional hours.

The employment rate in City M and the surrounding region is a crucial factor. As more parents work during non-traditional hours, the demand for evening childcare services would likely increase. The employment rate for City M is 8.3%. If the employment rate in City M rises due to economic growth, more parents may need evening childcare services, increasing demand for the business.

Demographic Variables

Demographic factors, specifically the supportive small business community in City M, suggest that this business's demand, profits, and economic environment would be adequate, if not substantial. Quality childcare, no matter the time of day, is essential for many families as they rely on dual incomes. Single parents often struggle to balance work and raising young children. Fortunately, daycare offers long-term benefits for both children and parents. Therefore, the fact that this business would provide evening and weekend childcare for those who currently work in daycare can help alleviate some stress parents can feel. This business offering a childcare alternative for families may lead to flexibility, which can increase the number of dual-income families in City M. In that case, it could lead to a higher demand for evening childcare services, as both parents would require reliable care while working late or on weekends. With both parents working, the need for evening childcare services is likely higher.

The growth rate of the population, particularly in the age group of 0-12 years, is an essential demographic factor. There are 218,015 children in this age group in City M, forecasted to grow by 10 percent between now and 2026. This age group is expanding rapidly, suggesting an increasing demand for childcare services, including evening care. The city has a comparatively young population, with children representing 16 percent of the total population. Also, 18 percent of the children in City M live in poverty. Also, many couples with children in City M tend to have three or more children compared to neighboring cities). This further suggests a demand for the service this business is looking to offer as it would offer more parents the flexibility to work during hours outside the typical one of a traditional daycare.

In 2011, City M had 600,670 individuals over 15, with a 1.4% increase in families and an average family size of 3.1. 53% of the population is married, while only 4% live in common law, much lower than the Canadian average of 12%. This suggests there is potential for an increase in dual-income families if they had more childcare options. City M's average before-tax individual income is $45,267 compared to the average before-tax household income of $105,462. Therefore, the opportunity costs of not having a dual-income family for some may be high, and having this additional option shows that there will be demand for this service.

Production Characteristics

When considering opening a business for evening childcare in City M, it is important to analyze the characteristics of the local population. Those who qualify to provide childcare through this business would be those working in a licensed daycare. The Ministry of Education regulates licensed childcare and offers programs for infants, toddlers, preschoolers, kindergarteners, and school-age children (Region of Peel, n.d.). Therefore, workers must meet a certain requirement to be employed there. While workers would require a background screening, it helps parents feel more comfortable leaving their children with them. There are 554 licensed daycares in City M; thus, many potential people may be interested in expanding their working hours.

The availability of daycare workers willing to work evenings and weekends is critical to producing the service. The number of workers who can meet the demand for evening childcare services will impact the business's ability to provide reliable care. The business may need more available daycare workers willing to work evenings and weekends to meet the demand. Conversely, if the business can attract many workers, it can expand its operations, increasing production and service availability. Also, there currently needs to be more childcare workers in the region to the point that while some daycares can theoretically have more children, they still need the number of workers required to do so. This has led to some parents being creative in how they work, which will consider the demand that can be anticipated in this business.

Achieving economies of scale can influence production. As the business attracts a larger customer base and more workers, it may benefit from cost efficiencies such as less advertising costs as there would be more word of mouth. This could result in competitive pricing or expansion of services if the business draws in a sizable number of parents and workers.

Mainly looking to make sure that the economic concepts being referred to here are correct. If not, would it be possible to do so? Are there any other economic details that could help make this stronger?

I'm looking for each of the variables I'm identifying, indicating its impact on production costs and potential profit, customer demand, the economic environment the business would exist in, and any other impacts we determine would be important in predicting production costs and demand.

Thank you!!