Children’s Recreation Center Business Plan
This plan provides detailed information on the establishment and operation of Cabin Fever – Child Fun Center. The plan outlines business growth, operation procedures, and infrastructure.
Cabin Fever will offer young families in Bemidji, MN and the surrounding area a family recreation center with jungle gyms, soft play structures, slides, and imagination-inspiring play areas for children ages 2 to 5. All equipment is safety-tested and approved, and employees are trained in child safety and first aid. Parents will have seating areas where they can watch their children play actively and safely, even in winter, and can buy snacks and drinks while they wait.
Brian Solum (owner) and Derek Giesbrecht (advisor) are responsible for the design, building, and development of the daily operations. Derek is the President of Soft Play, LLC, a leading indoor playground manufacturer, and has been in the Active Play industry for many years. Brian, a former real estate agent and father of four, has over seven years of experience in the child care industry. Brian will be supported by a team-oriented and customer-focused staff. Cabin Fever will retain a CPA firm for company audits, taxes, payroll, and business consulting.
Based on current market prices, Cabin Fever has the potential to make sales of $158,000 in the first year. With good management, we expect revenue growth of five percent annually. The following ratios apply in the first year:
– Gross Margin above 95%
– Net Profit Margin above 12%
– Pre-tax Return on Assets over 20%
– Net Worth over $76,000 by year three
We will minimize risk factors to Cabin Fever’s success by:
1. Obtaining sufficient capital to build and cover initial expenses. All investor capital will be held in escrow until the project is fully funded.
2. Minimizing overhead costs to increase profit.
3. Building a customer base through an excellent location and aggressive marketing.
4. Establishing community involvement to show how the business contributes to a better quality of life.
5. Accepting cash or check payments to eliminate invoicing and collections.
1.1 Mission:
– Provide a safe, fun, and exciting child entertainment facility for children ages 2-5 and their parents.
– Help children grow physically, emotionally, and mentally through interactive play with parents, peers, and the facility.
– Listen to customer needs regarding entertainment, activities, and facilities and act accordingly.
– Develop a system of safety, security, and accountability on the property.
1.2 Keys to Success:
– Location
– Service
– Safety
– Cash
1.3 Objectives:
– Attract 30% of the target market to use "Cabin Fever" 1.5 times per month in the first year.
– Gain a market share of 40% by the third year.
– Reduce debt load by 37% by the end of the third year.
Cabin Fever – Child Fun Center is a start-up business owned, operated, and managed by Brian Solum. It is an adult-supervised children’s play center that offers parent/child activities to promote physical, emotional, and social development. The center features a large play structure for children and a smaller one for toddlers. Vending, snacks, and beverages are available. The goal is to entertain, exercise, and stimulate children while fostering good social skills in a group play environment.
Cabin Fever is the only program of its kind in Bemidji and surrounding areas. While the city has a restaurant with a small-scale facility and offers some children’s classes through their parks and recreation department, as well as a public gymnastics facility, there is no comprehensive program for kids and parents. Cabin Fever aims to be a year-round, indoor facility located in the northwest commercial center of town.
The Bemidji area has experienced significant housing growth in recent years, with many families with young children moving in. Brian Solum, a parent of three boys, saw an opportunity to provide a safe and exciting environment for parents and children to spend time together and play. With over seven years of experience in the child care industry and four years in real estate sales, Brian is capable of handling sales, management, finance, administration, and safety and customer relations.
Key Information:
– Working Name: Cabin Fever – Child Fun Center
– Location: Hoping for a northwest Bemidji location near major shopping areas, motels, and the airport.
– History: Start-up business for Bemidji, MN, but this type of business has been successful in over 8,500 cities in the US and internationally.
– Services: Active Play = Fun, physical, social, and mental entertainment for kids and parents, along with modest food and beverage sales.
– Customers: Children ages 2-5 and their parents.
2.1 Start-up Summary:
The start-up expenses for Cabin Fever include play equipment, payroll, utilities, legal services, debt service, and office materials. Brian Solum will invest $32,000 and secure up to $100,800 in long-term financing. An additional $8,000 in short-term debt will be incurred to complete financing.
Long-term assets include most play equipment and a larger service counter for the cafe area. Current assets include furniture, lighting fixtures, some less durable play equipment, and appliances for the cafe area.
Start-up Funding
Start-up Expenses to Fund: $17,800
Start-up Assets to Fund: $123,000
Total Funding Required: $140,800
Assets
Non-cash Assets from Start-up: $115,000
Cash Requirements from Start-up: $8,000
Additional Cash Raised: $0
Cash Balance on Starting Date: $8,000
Total Assets: $123,000
Liabilities and Capital
Liabilities
Current Borrowing: $8,000
Long-term Liabilities: $100,800
Accounts Payable (Outstanding Bills): $0
Other Current Liabilities (interest-free): $0
Total Liabilities: $108,800
Capital
Planned Investment – Brian Solum: $32,000
Other: $0
Additional Investment Requirement: $0
Total Planned Investment: $32,000
Loss at Start-up (Start-up Expenses): ($17,800)
Total Capital: $14,200
Total Capital and Liabilities: $123,000
Total Funding: $140,800
Start-up
Requirements
Start-up Expenses
Legal: $2,000
Stationery etc.: $250
Brochures / Advertising: $1,500
Insurance: $1,200
Payroll: $2,400
Utilities / Phone: $1,450
Research and Development: $2,000
Expensed Play/Operating Equipment: $5,000
Office Supplies: $2,000
Total Start-up Expenses: $17,800
Start-up Assets
Cash Required: $8,000
Other Current Assets: $25,000
Long-term Assets: $90,000
Total Assets: $123,000
Total Requirements: $140,800
2.2 Company Ownership
Ownership and legal establishment is anticipated as a Sole Proprietorship and will be owned, operated, and managed by Brian Solum with financial backing from a silent partner.
Products and Services
The service I am selling is called "Active Play."
Physical Active Play for children
Playing is fun at any age. Consider how you relieve stress or spend leisure time. For children, play is crucial for their development in various areas.
Vicarious Active Play for Parents
Parents need time to relax and socialize while knowing their children are engaged in a safe and enjoyable environment. Parents are encouraged to participate with their children.
Coffee, tea, juice, and snacks
We offer a small cafe area with a limited menu of healthy and appropriate snacks, as well as coffee and tea options.
Market Analysis Summary
My market research is based on data from the 2000 US Census, 2002 NARC Census, and the BASC 2000 Demographics Study. The target market consists of families with children aged 2-5 in the Bemidji area.
4.1 Market Segmentation
My target market is families, specifically households with children aged 2-5 in the Bemidji area.
Market Analysis:
Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Potential Customers Growth CAGR
Children 1% 4,000 4,052 4,105 4,158 4,212 1.30%
Parents 1% 1,200 1,216 1,232 1,248 1,264 1.31%
Other 0% 0 0 0 0 0 0.00%
Total 1.30% 5,200 5,268 5,337 5,406 5,476 1.30%
4.2 Target Market Segment Strategy
Our research shows that a concentrated target marketing effort will yield the best results. We are focusing on 1,200 households surrounding Bemidji with 4,000 children aged 2-5. Children in this age range are in need of diverse means of recreation, including "play groups" with their parents’ friends. As members of this demographic, we understand the need and benefit of offering diverse recreational and physical outlets for children. This demographic actively seeks recreational opportunities for their children and themselves. Out-of-home facilities that can entertain kids and give parents respite are in high demand.
This market is under-served with respect to the services Cabin Fever plans to offer in the greater Bemidji area. The school system and some businesses provide recreation to some extent, but similar facilities are either too small, seasonal, have health hazards, or are not geared towards younger children and their families. Winter is long and weather is unpredictable here. Cabin Fever will be a preferred destination for families looking for something new, fun, and exciting for themselves and their children, especially if it promotes physical and social growth.
4.3 Service Business Analysis
About Soft Contained Play Equipment (Soft Play)
Soft Contained Play Equipment is a visually stimulating and mentally exciting configuration of tubes, slides, ladders, nets, and mazes. It incorporates devices that mechanically move, like a sign or a front-end loader or a fire truck steering wheel. Some equipment stimulates the child’s playful creativity, such as the double-sided Fantasy Role Play Panel and the Magic Ball Popper. Soft Contained Play Equipment is designed through the eyes of a child, developed with input from child development experts, and adheres to ASTM F1918-98 safety requirements.
The Business
Cabin Fever is all about family recreation, specifically child development and fun. FECs have become popular among parents looking for fun and exciting activities for their kids. Soft contained play equipment is a major draw at recent FECs. Kids love the fun and interactive play they provide, while parents appreciate the increased safety measures.
Local Competitors
There is a competitive market in the Family Recreation industry in Bemidji. Currently, there is a roller-rink, seasonal water park, bowling alley, Gym-Bin, BSU Rec-center, and a few city-organized activities on a seasonal basis. However, there is no facility exclusively dedicated to building the social, physical, and mental interactions of children aged 2-5 and their parents in an exciting and stimulating environment.
4.3.1 Competition and Buying Patterns
Families make choices for family recreation activities based on cost, availability of activities appropriate for the whole household, and fun. Currently in Bemidji, activities for children under 5 are limited. This discrepancy is felt by parents in the winter when outdoor activities are curtailed. Parents of small children must choose from a small array of limited activities on a schedule not of their choosing if they want any out-of-home play.
Safety is a major concern for parents of young children. Activities and venues safe for 10-year-olds may be extreme hazards for very young children. The need to be right next to their child during every moment of play in any of the existing offerings does not allow parents any respite or recreation.
Strategy and Implementation Summary
Emphasize Customer Service: Cabin Fever will establish itself as a clear and viable alternative for our target market by providing excellent customer service.
Build a Relationship-Oriented Business: Develop long-term relationships with clients. Make them understand the value of our services.
Focus on Target Markets: Offerings will be focused on young families who want a place outside the home to have fun, relax, and experience top-quality play equipment services.
Differentiate and Fulfill the Promise: Deliver on the promise of a service-intensive business.
5.1 Competitive Edge
Cabin Fever differentiates itself as a strategic ally with our customers. By building long-standing relationships, we build defenses against competition. Reputation and word-of-mouth advertising are extremely important. Our competitive edge comes from the prime location at the intersection of Interstate Highways 2 and 71 in the business district, and the diverse services and facilities we offer under one roof.
We believe that Soft Play equipment will be the facility of choice for play groups, birthday parties, and child recreation in the Bemidji area. There is also the potential for Social Government Services and other health professionals to direct their clients to the facility for potential therapy issues.
Our marketing plan will start during the construction phase by demonstrating that Cabin Fever is a fun place where people can enjoy themselves. Initially, customers will likely be more educated and affluent, as they are generally the most concerned with stimulating their young children appropriately. Flyers and advertisements will be targeted towards this group.
By being on site full-time for the first year, we can ensure customer satisfaction and gather information about their preferences. This market research will attract more customers and retain existing ones. A good experience for parents and children will produce word-of-mouth recommendations.
We will supplement informal marketing with print advertising in the local newspaper, direct mailing, signage along major roads, and partnerships with other local businesses.
5.3 Sales Strategy
Cabin Fever provides a venue for young children to enjoy fun and exciting activities. With great service and competitive prices, we believe we have the winning combination.
Once customers choose to visit our location, we aim to offer high-quality, safe, and fun experiences for their young children to keep them coming back. We will conduct informal surveys to gather feedback from parents and make changes as needed.
5.3.1 Sales Forecast
Based on market data, we project that, on average, 37% of the target market (1,465 children out of 4,000) will visit 1.5 times per month, at an admission price of $4.75 per child. Parents are expected to spend an average of $4 per visit on food and beverages. Sales will be higher in winter months and lower in summer. Our goal is to reach 40% of the market by the third year.
Sales Forecast
Year 1 Year 2 Year 3
Child Admission $125,222 $131,483 $138,057
Additional Parent Spending $33,170 $34,829 $36,570
Total Sales $158,392 $166,312 $174,627
Direct Cost of Sales
Year 1 Year 2 Year 3
Child Admission $0 $0 $0
Additional Parent Spending $6,634 $6,966 $7,314
Subtotal Direct Cost of Sales $6,634 $6,966 $7,314
Web Plan Summary
We are developing a website for Cabin Fever. A friend of the family is doing the design work for free, and Brian’s wife, who has thorough knowledge of HTML, will update the content regularly. We do not plan on including any e-commerce capabilities, as the website is primarily a marketing tool. The website will be launched in early 2005.
Management Summary
Management: Initially, and for the first year of operation, I anticipate acting as owner/operator/manager. In the future, depending on cash flow or identified service gaps, a full-time manager would be implemented to work alongside me and the rest of the team. Management will oversee all business aspects including deposits, marketing, safety, scheduling, customer service, staff support and training, cleaning, general maintenance, food prep, and service. Minimum qualifications are:
1. Child Safety, First Aid / CPR certified
2. Three years management experience
3. Mature, responsible adult
4. Enthusiastic, flexible, and self-motivated
5. Knowledge of marketing
6. High sense of professionalism
FT Employees: Based on assumed hours of operation, I anticipate hiring one full-time employee working a 45-hour week. I will look for adults experienced with children who are child safety CPR and first aid certified. Responsibilities will include checking in and greeting customers, general cleaning, light maintenance, and food service. Minimum qualifications are:
1. Mature, responsible adult
2. Experience with children in a play setting
3. Child Safety First Aid / CPR certified
PT Employees: Again, based on assumed hours of operation, I anticipate needing at least two part-time employees to fill potential gaps in busy times and work weekends. While the business could be run with one part-time employee, I would hire an extra one in special circumstances such as holidays, parties, weekends, illness, and vacations. Responsibilities would include checking in and greeting customers, general cleaning, and light maintenance. Minimum qualifications would be:
1. Mature, responsible adult
2. Experience with children in a play setting
3. Child Safety First Aid / CPR certified
Personnel Plan
The company will make gradual investments in personnel based on the number of children and parents serviced at the facility with respect to cash flow. Additional full-time paid management will be addressed after the first year of operation, and an additional part-time employee is built into the Personnel Table. As the owner, I plan on being on site full-time and filling the managerial role.
I am committed to paying my employees a fair wage for their hard work and providing benefits such as sick time and vacation time.
Owner/Manager Year 1: $20,000 Year 2: $25,000 Year 3: $30,000
FT Employee Year 1: $24,000 Year 2: $25,000 Year 3: $26,000
PT Employee Year 1: $7,200 Year 2: $7,200 Year 3: $7,200
PT Employee Year 1: $7,200 Year 2: $7,200 Year 3: $7,200
Other Year 1: $0 Year 2: $0 Year 3: $0
Total People Year 1: 4 Year 2: 4 Year 3: 4
Total Payroll Year 1: $58,400 Year 2: $64,400 Year 3: $70,400
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