Here's my business venture ... discuss

[fizzledizzle]

Wife and I have been looking for a long time for a business idea that would allow us to gradually work ourselves out of the corporate slavery we are currently in and build something for ourselves.

We found this place. Basically they have created an entire software cirriculum that will allow the licensee to give computer classes for children ages 3-7. Before you all laugh, let me just say that I am a huge miser - I hate spending money on anything. But when it comes to our kids, I generally am a lot less stingy. Not to mention we have kids, and they are always in activites like dancing, karate, etc. Parents are always looking for new and interesting activites they can participate in with their youngsters.

This is how our business model will go. Initially we have to purchase a license to use the software; really that is our only big upfront cost. The software is 100% proprietary, unlike some other programs that use off the shelf software. Then of course we have to lease 10 laptops since our business model will be all-mobile to start with, roughly $300/mo there. The software is really great and I was amazed how much my little 4 year old learned in like 20 minutes with the software. The support from the parent company is top-notch and they really help you in marketing your service to potential clients and facilities.

We will contact daycare centers, rec centers, schools, YMCAs, etc ... basically anywhere that there is child/parent concentration. The facilites we give the classes at will love it as it gives their facility a differentiating service and if they work it right, they can build some revenue into what we charge to give the classes. Again the initial model is totally mobile so we can give the classes anywhere. There are so many possibilities; daycares can have us come in and offer the class to all the kids there, afterschool enrichment programs, special events, community rec centers, the list goes on and on.

Market research indicates that we can charge roughly $200 per 8 weeks per student. The cirriculum is 5, 8-week sessions. So really each kid is worth $1000 assuming they go all year (retention rate through each 8-week sesssion is roughly 92%). The beauty is that this business model does not have much in the way of fixed cost - almost all of the revenue generated from tuition is pure profit.

We want to gross $50k first year (I think a VERY realistic goal) and 100k our second year (also I think realistic) so for that 2nd year, we basically need 100 students for the year. We can only have 5 kids per class (license agreement requirement) so we need 20 1hr classes per 8 weeks assuming 5 kids per class. This doesn't even account for birthday parties (huge, trust me) as well as other events that we can book for (childrens hoilday parties are huge).

I really think this will fly. Best part is this isn't a franchise; I am simply purchasing a license agreement much like any other piece of software (Windows, Office, etc). No royalties except for $1500 per year to use their scheduling, enrollment and management software which is well worth the cost. We truly will be in business for ourselves.

Once the business is rolling we can expand beyond my wife and hire teachers at $15-18/hr and add more kiddies. Really is a good business model and we have pretty much virgin territory anywhere we go.

I am keeping my job for the time being as I am luckily a pretty well paid computer engineer, but if the business goes well, I'll quit being a cube monkey soon. Future plans are to build a storefront and have regular classes as well as summer camps, but that will probably wait a year.

Any comments on our venture? Good or bad, I'd love to hear feedback from the group.

[Misfire]

You sound very optimistic--frankly you sound like a piece of ad copy. Just from what I've read, I think I'm smelling over-optimism. What is "huge" anyway? Make sure you forcasts are actually reasonable (meaning ultra conservative) and you have a plan for the worst-case-scenerio. I would highly recommend against leasing computers (or any kind of debt for this venture). If you really are "well paid" and a "huge miser," save up and buy some low-priced machines that are sufficient to run the software and no more.

Another thing you want to be sure of here is that you're building a business, not just moving into self-employment. If a teacher earns up to $18/hr, you and your wife should make at least that ***PLUS*** a return on investment from owning the business. Don't buy a job.

Also, gross means nothing when the bills are due.

[fizzledizzle]

Thanks for the feedback. As far as being optimistic, why wouldn't I be? I guess I am just an optimistic person overall - yes we have discussed the exit strategy in case of failure. You really do never know, so we have incorporated it in our business plan.

Based on talking to other owners and some initial approach marketing, I think our projections are probably too conservative, but that is what we put in the business plan and will strive to meet those goals first.

When you say you advise against leasing computers and taking on any kind of debt, but then you say buy low priced computers that seems kind of contradictory. We plan on leasing new Dell machines, pretty much their cheapest but still new - we have to have 10 machines in order to run the classes. I didn't mention that it is part of the license agreement that each child have their own computer...no sharing. I would much rather spend roughly $300 month on leasing machines (at least initially) then fork over 5k minimum for 10 laptops. And as far as buying low end stuff, I feel it is more important to present professionalism and quality to the clients, rather than the guise of going cheap and running on a shoestring. Image is everything.

As far as teachers go, we would certainly pay them that salary range. They will be very much part time (<20 hrs wk) and that would be down the road once my wife has the business running smoothly. She really can do it all in the beginning - and hire help when it is absolutely necessary.

Finally when I say birthday parties are huge, you are right, that isn't quantifiable. What is quantifiable is the fact that I have two youngsters, as well as many friends who have kids the same age. Every year at birthday party time, we all run into the same scenario if we are trying to have a party at a 3rd party location (Monkey Business, Gymbroee, hell even Chuck E Cheese)...pretty much a 3 month wait and then hope you can get a decent slot available, so I believe there definitely is a market for it. There are so many affluent young profeesional families in our target market with disposable incomes...again, they are always looking for new and interesting activities. Same with special event type of activities...went to a holiday party where a guy was making $150/hr for making balloons. He's booked pretty much solid on the weekends and has to turn away business.

Gross means nothing when the bills are due - agree 100%. Again this business model has little fixed cost. Other than the laptops and the occasional printing expense for marketing materials and gas cost, there really isn't much. I've crunched numbers and made projections til they came out my eyes.

Yeah I am overly enthusiastic - really beyond any kind of work skill and knowledge, all we really have is our work ethic and passion. We will do what it takes to make this venture work. Thanks again for your point of view - feedback good and bad is always appreciated.

[spex x]

It sounds pretty good to me. Its an innovative idea, there is a market for it, it costs you very little money up front, and it has very little overhead, it has excellent growth potential. In sum, sounds very promising. I know the guy who started a similar program called 'Reading is Fun', and he's made a killing with it. What is the name of the software company, by the way.

[avfletch]

In your second post you mention you have a business plan. Why not pop it online somewhere so we can take a look and give you feedback on the whole deal not the cliff notes version presented in OP?

[spex x]

[ QUOTE ]
In your second post you mention you have a business plan. Why not pop it online somewhere so we can take a look and give you feedback on the whole deal not the cliff notes version presented in OP?

[/ QUOTE ]

That'd be cool. I'd love to take a look at it. PM me if you'd like. I've written probably 50 buisness plans, so I might be able to give you some feedback.

[Mr. Now]

This may be a nice fit for:
Ask Mr. Now

[Sniper]

OMG... when did Mr Now get a * ???

[MEbenhoe]

[ QUOTE ]
OMG... when did Mr Now get a * ???

[/ QUOTE ]

looks like just yesterday

[Mr. Now]

I've always had one.