Read the business plan for a business idea as astart-up business in the Greater Toronto Area (GTA) and answer the below questions. Business idea:- Daycare Centre 1) Target market and their wants/needs

According to a December 2018 report by IBIS World (market research), the daycare market for Canada earned a revenue of $9 billion from 40,881 businesses, implyingeach business to have earned an average annual revenue of $220,151.17 (Ontario Daycare market). Ontario has the highest gross domestic product for early learning and childcare of 6,114.3 million dollars (2016)(Statistics Canada, 2021).

35% of Canadian children aged 4 to 11 years participated in any form of before- or after-school, non-parental child care. Of children in any form of child care, 60% attended a before- or after-school program, 16% were cared for by a non-relative in a private home (mainly due to unavailability of spots in daycare centres) and 12% attended a daycare centre (Statistics Canada, 2021)^.

2) Products/or services offered to the selected market

Ontario is one of the most multicultural places in the world. Many people choose to live there due to the high availability of jobs and education. This creates a demand for childcare services to meet this increasing essential need. Childcare services:

• Daycare for kids aged 6 months to 4 years
• Before-and-after care (age 4 to 11 years)
• School holidays (PA days, Christmas break, March breakage 4 to 11 years)
• Summer Camps (age 4 to 11 years)

3) Competition for the target market (Daycare centers in Toronto)

(a) YMCA Child Care Programs (b) ABC academy

(c) Bright Minds Childcare (d) Bright Path Academy

(e) Boys & Girls Club (f) 100+ Toronto daycares

Questions:- 1. Determine the type of company and explain why you selected this type. In answering this question, you will need to determine the proper legal form of your company and explain why the form you choose is good for your business.

2. Determine the source of funds at the start and in each year. In answering this question, first, read the details about the business revenue and expenses. Then you will need to determine how much money do you need to start the business and cover all expenses until your business starts to make profits.

3. Develop financial projection for the following 5 years including the company's revenues, expenses, and Profit/Loss. A business must make profits to sustain the business in the long term. Profits result from having more revenues than expenses. A business is expected to lose some money in the first couple of years but must be able to recover the losses and make money.

You will also need to develop a financial projection for the first 5 years for all potential revenue and expenses. An example spreadsheet is provided below.

1. To determine therevenueof your company, you have to start with estimating sales for the year. The Sales comprise either or both of the following:
   1. the number of units of your product multiplied by the unit price and/or
   2. the number of hours of service multiplied by the hourly rate
2. To Determine theexpenses of your company, you need to estimate the total cost by determining two categories of costs:
   1. Product/Service-related costs which may include
      1. the cost of purchasing or manufacturing each unit of product multiplied by the number of units expected to sell,
      2. The cost of shipping the products to retail outlets or directly to customers (if ordered online)
      3. the cost of labour per hour multiplied by the number of hours of work
      4. the cost of any benefits offered employees in addition to their wages (usually 18%-25% of the base salary in most small businesses)
   2. Administration Cost
      1. Cost of Marketing the product/service
      2. Cost administrative staff (1 manager for every 8-12 sales people) including salary and benefits
      3. Cost of support staff (1 secretary for every 15 employees) including salary and benefits
      4. Cost of leasing an office and/or store
      5. Cost of accounting, information systems, and legal services (about 10%-15% of Total revenue)
3. The company'sProfit/Loss will be based on subtracting total expenses from total revenue.
   1. If the result is negative, then the company has losses.
   2. If the result is positive, then the company has profits.
   3. For most start-up companies, they experience high losses in the first year, and lesser losses for the following two years. In the fourth year, they may have very small profits or very small losses and in the fifth year, they gain some profits. See the spread sheet to help you create the financial projection
   4. You need to add all the losses over the first 3-4 years as this will determine how much initial capital investment is required.
4. In the first year there must be initial investment that can be used to start the business. The losses of the first year is paid for by the initial investment. At the beginning of the second year, the balance of the funds will become available to cover potential losses in second year, and so on.

An example of financial projection is provided below

		FORECCAST			Year 1					Year 2
	Investment				$ 1,000,000.00					$ 1,000,000.00
	Forward Balance				$ -					-$295,500.00
Net Available						$ 1,000,000.00					$ 704,500.00
Revenue
	Number of Product Units Sold		20,000					30,000
	Price per Unit		$20.00					$22.00
	Total Product Sales			$400,000.00					$660,000.00
	Number of Labour Service Hours Sold		3,000					4,500
	Price per Labour hours		$75.00					$75.00
	Total Service hours Sales			$225,000.00					$337,500.00
Total Revenue					$625,000.00					$997,500.00
Expenses
	Product Costs
		Manufacturing Cost/Unit	$7.50					$7.50
		Cost of Shipping/Unit	$0.25					$0.25
		Cost of Labour/Unit	$6.00					$6.00
		Cost of Labour Benefits/Unit@20% of Labour	$1.20					$1.20
	Total Cost per Unit		$14.95					$14.95
	Total Cost for Products Sold			$299,000.00					$448,500.00
	Labour Service Cost
		Cost of Service Labour/hour	$25.00					$25.00
		Cost of Benefits @20% of Labour	$5.00					$5.00
	Total Service Labour Cost/hour		$30.00					$30.00
	Total Service Labour Cost			$90,000.00					$135,000.00
	Administrative Cost
		Marketing Cost		$200,000.00					$200,000.00
		Staff Salaries (including benefits)		$80,000.00					$80,000.00
		Management Salaries (including benefits)		$100,000.00					$100,000.00
		Leasing Cost		$72,000.00					$72,000.00
		Cost of Accounting		$22,000.00					$22,000.00
		Cost of IT		$37,500.00					$59,850.00
		Legal Services		$20,000.00					$20,000.00
	Total Administrative Cost			$531,500.00					$553,850.00
Total Expenses					$920,500.00					$1,137,350.00
Profit/Loss						-$295,500.00					-$139,850.00