Feasibility Analysis

Feasibility Analysis

Kreative Mindz is a daycare business providing care services to children, thus enabling parents to participate in other social, political, and economic activities, especially during the day. The facility offers child care services to children from the age of 6 months to 12 years. Kreative Minds also provides child care services during the weekend and holidays, thus benefitting parents who work non-traditional hours. Even though the facility’s employees are forced to work more than the typical 8-hour day, the satisfaction of seeing the children achieve social, cognitive, linguistic, and mental development is a significant motivation to the staff members. There are diverse factors that need consideration when determining the feasibility of the facility. The paper analyzes the industry, product, and financial feasibilities towards facilitating the determination of whether there is a need to change or modify the idea to ensure that the venture is profitable.

Market/Industry Feasibility

Market analysis forms an essential consideration in determining the feasibility of this daycare business (Lee et al. 77-91). Aspects such as market segmentation, target market segment, market needs, competition, and service business analysis are a crucial consideration in determining the viability of the venture.

1. Market Segmentation

Kreative Mindz has a focus on responding to the needs of child care services within the locality within a radius of about 10 miles. The facility aims to offer such services on either a part-time or full-time basis. Poor decision making concerning market segmentation translate to failed business venture (Scarborough & Cornwall 106). To maximize profits, the facility will establish a significant client base consisting of full-time regular clients. Residents are expected to bring their children on a full-time basis hence constituting the highest amount of the revenue. To maximize on these clients, the facility utilizes good customer relations as an essential strategic move. On the other hand, the facility also intends to tap on revenue by providing part-time child care services. Parents having their children engaged on a part-time basis are expected to constitute 20% of the total revenue. The residents and drops-ins will contribute to the most significant amount of income, as presented in the pie chart below.

2. Target Market Segment

The full-time working couples constitute the significant target market for Kreative Mindz Daycare Facility. The facility will depend on referral marketing to increase the number of couples bringing the children to the institution. Besides, maintained and enhanced reputation is a strategic measure towards gaining additional market share (Saeidi et al. 341-350). The fact that most residents are optimistic about the idea gives an insight into a promising future.

3. Market Needs

Inflation is a significant economic challenge in the locality. Arguably, the persistent increase in prices of various commodities is the primary factor forcing many couples to depend on two incomes for survival hence the need for child care services. This has ultimately translated to an increase in the demand for facilities offering child care services. The facility aims at maximizing the opportunity for financial gains.

Product/Service Feasibility

Being a lucrative business, many facilities are offering similar services in the neighborhood. For example, Home Daycare and Sunshine Daycare are among the significant facilities providing related services. The childcare industry is split between locally-owned centers, commercially-run, and large centers. Kreative Mindz will, therefore, compete with such facilities. Hiring capable Care Staff and qualified managers will enable the facility to outshine such close competitors.

Financial Feasibility

1. Revenue Potential

The revenue potential for the facility depends on the number and ages of children that will register with the facility. Comparing Kreative Mindz with other facilities within the locality, annual revenues would range from $300,000 with an approximately 50 child capacity. Kreative Mindz targets a population of about 100 children, thus the average income of around $600, 000 annually.

1. Estimated Revenue

1. Operating Costs

A standalone kid care center with the ability to accommodate 50 children would require about 5 000 square feet at an estimated value of $310 sq. Ft. As such, the construction of the entire facility would cost a total of about $1.4 million. Such amount is estimated, including the costs inquired in purchasing the land, interior equipment and furniture, and landscaping. Other operating expenses such as wages and benefits to staff personnel, insurance, maintenance, utilities, and additional supplies are catered for by about 20% of the fees paid by parents.

Entrepreneurial Readiness

As briefed earlier, parents within the locality are supportive of the idea. Most of the couples within the region are yearning for such a facility to ease their commitment to participate in other economic activities. The fact that the demand for the facility is high, and there are few investors, the clients are ready and willing to have their children enrolled within the school once it opens.

Summary and Overview

From the analysis, it is evident that the idea is feasible. Market segmentation presents an opportunity for the daycare facility. Many parents are willing to enroll their children to have time to engage in other activities. A few facilities are offering similar services. This presents an opportunity for further ventures into the field. Even though the idea is feasible, it is worth to rethink on the move to integrate computers to outshine close competitors. Such equipment will lead to an increase in operational costs, thus forcing the parents to pay more for their children. An increase in fees may influence many parents to opt for other daycare facilities within the locality. As such, the facility should think of other measures to integrate such advancement rather than through increased the amount of fees charged per child.

Works Cited

Lee, Ahyoung, et al. “Work Engagement Among Child-Care Providers: An Application of the Job Demands–Resources Model.” Child & Youth Care Forum. Vol. 48. No. 1. Springer US, 2019.

Saeidi, Sayedeh Parastoo, et al. “How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction.” Journal of business research 68.2 (2015): 341-350.

Scarborough, N. M., and J. R. Cornwall. “Entrepreneurship and Effective Small Business Management, Eleventh Global Edition.” (2015).