Business Plan for a Trade School

BUS 435 Business Plan for a Opening a Trade School ? Table of Contents I. Executive Summary3 II. Description of the business4 III. Marketing5 IV. Research, design, and development9 V. Operations segment10 VI. Management12 VII. Financial forcasting14 VIII. Harvest strategy16 I. Executive Summary This business plan is to open a door for young adults that want to learn a trade and earn their way in life.Not all high school aged students are eager to go onto a college or a university and this can be for many reasons: perhaps they are not ready to leave home; cannot afford; they are academically challenged; not sure what they want to major in; the list can go on and on. My wish for these young adults is for them to explore what their capabilities are through learning a trade. This trade school is the only one of its kind in this county, we want to offer a variety of skill sets to the students without them having to travel far or live elsewhere.We feel that instead of the undue stress that can wreak havoc on these young adults and their families as to what to do after high school if they are not ready to attend an academic college or university, why not offer them an option of a skill that will enable them to make money and be a prelude to an academic school. Currently, what I am seeing with these young adults that are stuck on what do to with their lives, is a huge increase in drug use, crime and horrifically death. II. Description of the businessOur school would offer barrage of choices from traditional trades for the students that are good with their hands should definitely consider a skilled trade such as plumbing, electrical work, carpentry, welding, and mechanical repair. Additionally, we would offer automotive repair and service certifications, as our vehicles become more complicated and there are more and more commuters in this region, this is a great avenue to consider getting certified in. Our automobiles are not the only thing that continues to change and get upgraded, our technology is forever changing and improving as well.With that stated we will offer industrial technology and machine technology programs. Industrial technology is somewhere between a business and an engineering degree; for the most part they take care logistic and operational problems in the industrial environment. Whereas machine technology students will have the ability to build a car on an assembly line, become a machinist by operating a precision grinder and a vertical milling machine, or even computerized robotic machine.And lastly, we want to branch out and offer the artistic talent in the community the option of developing their talent, be it in interior decorating, art work, or design. III. Marketing There are two target markets that I would start my focus on for my new venture of a trade school; one being high schools, the second being the surrounding businesses that are downsizing. I would visit the schools and set up career days to inform potential stud ents of the opportunities that are available and leave literature and a website address to visit for more information as well as fill out a short survey.Also, toward the end of senior year for these students, when the teachers and counselors give information on what to expect for college and forward thinking for their children; I would arrange being at this event to provide the same information to the parents that the students received. As most parents know not all informational pamphlets make it home. This will provide the data on what type of trades if any the students are interested in and how serious the interest is by the parents. The target of large businesses is basically to try to negotiate getting the people they are letting go on board to learn a new trade as an option.I would try to get these businesses to pay for the trade school tuition as part of a severance package; depending on the length of service. So, leaving information for employees to check out the website and fill out a short survey to provide me with the interest and in what field that interest is. After obtaining the data, analyzing it and working through my reports; the next step which is just as important is the immediate follow up with each interested party. Following up on leads when they are warm is essential when the topic is fresh in memory. After these new data are obtained, the owner/manager must know how to objectively arrange, analyze, and interpret them to draw valuable conclusions,† (Kuratko & Hornsby, 2009, p 137). Also offering a survey online on our website would be another way to conduct it. This can be done without costing a bundle by getting in touch with a graphics design student and hiring him/her to set up a our website that prospective students can go to and do the survey as well as learn about our school and all it has to offer.By conducting a survey sample to a small group of potential students it enabled us to gain insight as to what areas students were interested in getting their education in and if they were open to receiving knowledge of a trade school as an option for said interest. A request to participate in the survey was emailed to 5 individuals. The survey posed four questions to these recipients, as listed below. 1) What are your plans after you graduate? A. Attend community college B. Attend a university C. Work D. Other __________________ ) What career interests you and why? ______________________ 3) Are you interested in learning about our local trade school and what we offer our students? A. Yes B. No C. Maybe 4) What will the total annual costs be at the school you want to attend? A. 0. 00 – 5,000. 00 B. 6,000 – 15,000 C. 16,000 – 25,000 D. 30,000 and up The first question, there were 2 respondents that chose B) to attend a university; one that chose A) community college; 1 chose A) community college and C) work; and 1 choose C) work.From the answers to this question I can surmise that 4 of the p articipants are interested in continuing their education, and possibly 3 could be interested in a trade school if it offered the programs they are interested in. The second question, 3 out of the 5 chose something in the medical profession; health practitioner; medical esthetician; and a radiology technician. 1 respondent chose computer programming; and 1 chose unsure. From this information I would say there are possibly four potential students, the health practitioner would obviously need to obtain a degree from a medical school.On the Third question, 3 out of 5 chose no, they did not want to receive information on the trade school or what it had to offer, and 2 that did. The way I posed the question might have something to do with the negative responses, as most people are turned off to receiving more junk mail, and or get signed up for something they don't want. Perhaps if I had posed the question in a more inviting manner than as matter of fact as I did; for instance, we will be hosting an open house at our facility with refreshments and would like to extend an invitation to you.That could have made it more pleasing to read and thoughtful. And lastly, 3 of the respondents chose B) 6,000 to 15,000 for annuals costs, 1 respondent chose A) 0. 00 to 5,000, and 1 respondent chose 30,000 and up. It is clear that the majority expect to pay up to 15,000 a year in costs for education. The results are not completely positive from this survey; it seems that trade schools may have a stigma. And since we haven't had a trade school of this kind in our area for decades, it is time to reeducate people on what benefits come from trade/vocational schools.There are so many young adults that are not yet sure of which direction to go, this trade school is local so it keeps the costs down by not sending the children away to college to find that they are either not ready, drop out, change their major, etc. It is just another option one that allows the student to perhaps test the waters and in the process learn a trade and apply that experience to earn and income and further their education. IV. Research, design, and development Setting up a board of trustees for this school is my next step.This board will consist of a variety of people some with experience in each of the programs we have to offer as well as education, and the fundamentals of running a school. This group will be responsible for developing processes for the daily school functions, as well as the policies and procedures for the school. Obtaining an accountant and attorney will also be important to get their expertise when it comes to the licensing, operating permits, occupancy certifications and accreditations that may be required.Additionally, assessing what equipment and materials will need to be purchased for not only the administrative area like the copier, fax machine, etc. But also for the classrooms in what their programs are automotive, welding, sewing machines, art materials, etc. Al so any costs that are related to renovating the structure will need to be included. And then there are the start up costs of the school and its daily operations that need to be taken into consideration: utilities, payroll, postage, clerical help, maintenance staff, advertising and marketing.In hiring staff I want to look to the retirement community especially people that are seasoned in the trades that we offer and with the proper training can teach. This allows our retired workers to share their knowledge in their specialized career, and stay an active member of the community. Most of these retired teachers will have their insurance already and an established income. So, the cost of providing insurance for them will be little to none. V. Operations segment The sales budget is a new businesses main budget that when finalized is the baseline budget to build other budgets off of.The cash budget is factored on what type of daily and weekly cash needs the business will need for overhead operations. It involves the maintenance of the expenses as well to know what the allotment of monies there should be for that certain duration of time. â€Å"By linking the other budgets to sales, the owner/manager can adjust expenditures up or down depending on the status of operations. If sales are greater than expected, production can be raised and the number of personnel can be increased.Conversely, if sales are slower, production can be halted temporarily and some employees can be released,† (Kuratko & Hornsby, 2009, p 226). The necessity of sales and cash budgeting management is crucial in my venture, knowing how many students would need to be enrolled to meet and exceed the costs to run the facility is imperative. Having the estimated sales figures and adjusting accordingly as the year progresses to see if the planning was off and if so, make the appropriate changes to the budget plan.I think the best choice for this school in the way of legal forms of business would be the Limited Liability Company (LLC). By choosing an LLC this protects me from personal liability. (In the case of injury like a resident slipping on water in the bathroom or choking on their meal, the lawyers can't go after your house. ) Also, only the amount of money you put into an LLC is at risk. LLCs have other qualities as well: they are not as complex and more flexible; they don't require a board of directors, shareholder meetings and other managerial formalities; they allow entrepreneurs to split up the profits any way they choose.With the type of facility I would like to have and under this form of business I would be able to draw in investors with offering maybe a bigger piece of the profits than their initial investment would warrant. This kind of flexibility could help raise the millions in start-up costs to open one of these facilities. â€Å"The disadvantages of the LLC are relatively few. Perhaps the greatest disadvantage is that LLC statutes differ from state to s tate, and thus any firm engaged in multistate operations may face difficulties.In an attempt to promote some uniformity among the states in respect to LLC statutes, the National Conference of Commissioners on Uniform State Laws drafted a uniform limited liability company statute for submission to the states to consider for adoption. Until all of the states have adopted the uniform law, however, an LLC in one state will have to check the rules in the other states in which the firm does business to ensure that it retains its limited liability,† (Kuratko & Hornsby, 2009, p 115). VI. ManagementBy setting up a clearly identified strategic organizational list of goals to ensure all employees are aware and understand the vision of the organization. In setting up these goals there needs to be a measuring metrics that is specific to real data that flows within the organization and set up for each specific department. So for instance, registering new students and their demographic data would be a measurement from the administrative department, and the students grades would be a measurement from the teaching department.This process of deciding what should be measured based on the goals of the organization should be a type of value stream mapping that should include all the employees as a group. This allows for excellent input and good communications and the old open door policy adage; which in turn makes for a better work environment and higher morale. Once each goal is clearly defined and the performance standards are set, they must be monitored on a periodic basis to see if the target is being met and if not why.This also allows employees to take accountability for their functions and to understand how their duties fit into the big picture, and this can be a realization of the importance of their function as they increase the ownership of their goals. When monitoring the progress and there is a low mark in a particular category, at this point it is imperative to perform something called a Relentless Root Cause Analysis (RRCA), this is a process that we used at a former job), and was quite handy on getting results.There is also the 5-why method or the fish bone analysis, all of which are good analytical methods to find the problem and resolve it. When measurements prove positive having a type of reward for the employee or department sends a positive message to the achievers that their efforts are valued. This is an ongoing process and whether the results are positive or not from the measuring metrics should always include all the employees so they understand where the hiccups are and what needs to be done to rectify them as well as enjoy the benefits of a job well done. VII. Financial forecastingIn order to obtain the start-up capital for my trade school, I would look into many different sources starting with foundations and nonprofits that are experienced committed to underwriting educational projects. â€Å"State grants help State and loc al schools offer programs to develop the academic, vocational and technical skills of students in high schools, community colleges, and regional technical centers. Funds from this program can be used for a broad range of programs, services, and activities designed to improve career–technical education programs and ensure access to students who are members of populations with special needs,† (ed. ov). The type of loan that would make sense for my venture is the Term Loan, and it has a maturity from 1 to 10 years, this enables me to take the time to build my business and pay back the loan over a longer period of time. I would additionally think about having a line of credit open for the just in case scenarios that can arise in a business. Seeking avenues of financing for my school will involve fundraising; this also gets our schools name out there.Write up a strategic professional business plan to present to local donors and once our school is able to start showing the su ccess rate of our students, use that data to gather more donors. Also, by getting in touch with local and national companies to determine if they will sponsor our school with supplies or funds, will help with costs. The necessity of sales and cash budgeting management is crucial in my venture, knowing how many students would need to be enrolled to meet and exceed the costs to run the facility is imperative.Having the estimated sales figures and adjusting accordingly as the year progresses to see if the planning was off and if so, make the appropriate changes to the budget plan. To set the costs for the services for the trade school, I would research the closest similar schools and calculate an average based on that data. One of the pricing strategies I would be using for the start up business is the sliding price strategy. This would allow students to enroll and have a payment plan established based on their financial support, be it their parents, financial aid, etc.Providing discou nts for hardship cases, and/or students that excelled in high school, or want to barter. â€Å"A sliding price strategy is a method of moving prices in relation to demand,† (Kuratko & Hornsby, 2009, p 148). The other pricing strategy would be price bundling, â€Å"a type of pricing in which customers acquire a â€Å"host of goods or services† along with the product they purchase, â€Å"(Kuratko & Hornsby, 2009, p 152). This would be like offering specialized subjects as add-ons to courses as a bundle package.For instance, taking water color painting, and adding oil painting would be a bundled course. VIII. Harvest strategy I would actually do both long-term debt and equity financing, and here is why. With a new venture I would choose long-term debt in the beginning. This allows me to be in control of the business, and therefore if there is a profit great; if there is failure then it will only affect me. Also, the interest on the loan is tax-deductible. I would feel t errible if I asked for assistance from family and friends then lost their monies. Debt capital is divided into three categories: (1) current or short term, (2) intermediate term, and (3) long term. Short-term liabilities (debt) include borrowed money that must be repaid within the next 12 months; intermediate term refers to loan-payback periods from 1 to 10 years; and long-term debt is payable sometime beyond 10 years, depending on the loan terms,† (Kuratko & Hornsby, 2009, p 171). Due to the large upfront money it will take to get my venture off the ground, having the ability to make payments over a long period of time is more feasible than trying to come up with it myself.Now once my business starts to show progress and is in the black for a historical period of time (1-5 years? ) that is when I would enlist investors. At that point in time I would assess a business strategy and see if the monies that are being invested should be applied to loans or used to grow the business . But at least at this point there would be a track record to show the investors why my business would be a good venture. â€Å"Inherent dangers lurk in family business investments, however.Unrealistic expectations or misunderstood risks have destroyed many friendships and have ruined many family reunions. To avoid such problems, an entrepreneur must honestly present the investment opportunity and the nature of the risks involved to avoid alienating friends and family members if the business fails,† (Zimmerer et el, 2008, p 468). † ? References Cohen, Gail (nd). How to Open a Trade School. Retrieved from the Internet website www. ehow. com at http://www. ehow. com/how_4829389_open-trade-school. tml Anonymous (January 2012). Vocational Education–Basic Grants to States. Ed. gov. Retrieved from the Internet website http://www2. ed. gov/programs/ctesbg/index. html Kuratko, D. F. , & Hornsby, J. S. (2009). New Venture Management the Entrepreneur’s Roadmap. Uppe r Saddle River, NJ: Pearson Education, Inc Zimmerer, T. W. , Scarborough, N. M. & Wilson, D. (2008). Essentials of Entrepreneurship and Small Business Management (5th Ed. ). Upper Saddle River, NJ: Pearson Education.