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Executive Summary

The demand for childcare services is increasing and is expected to grow through 2020.

Today, it is more common for both parents to work to provide for their family compared to the typical old age structure where the father would bring home the income, and the mother would care for the family. We are aware that childcare services is a multi-billion dollar industry. However, we have also recognized that there are limitations as far as the hours of operations, and cost to the current childcare industry. The average child care center closes at 6:00 pm while many jobs extend pass those hours. The average work week has increased to 47 hours, according to Lydia Saad of Gallup. That is an hour and a half longer than a decadnie ago. With that being said, our group’s proposal is to open a nightcare center for those hard working parents whose work day doesn’t end at regular hours.

The Full Moon Nightcare Center will segment the market based on income, lower, middle, and upper class. Our company will meet the needs and wants of parents that work late hours and are in the middle class. Our night care center will operate Monday through Friday from 2:30pm to 10:30pm and weekends from 1:00pm to 10:30pm. We feel that offering different hours than our competitors and by having a well-rounded, highly qualified staff will create both opportunities and strengths to our company. We will offer a variety of stimulating activities that are appropriate for children ages two to twelve. These activities will include a balance of outdoor activities, social games, arts and crafts, and much more. Not only are we providing fun, engaging games, we also have skilled tutors to aid with homework and educational improvement. Parents will feel confident that their children are in capable hands, while also having a fun time.

Parents also have the wonderful opportunity to earn a discount by opting for the membership. Our regular rate is $16 per hour. However, if someone signs up the Full Moon Nightcare Center membership, the price decreases to $14 per hour. This membership discount is mutually beneficial for the customer and our company. It will create loyal customers, a steady flow of income, while also making the customers happy.

Our research led us to rent a four bedroom house in Fullerton. The house is in a top safety rated neighborhood and provides a lot of open space for safe and fun activities. There are three elementary schools within a three mile radius of the house. They are all walking distance which allows us to offer a chaperoning service to children going to our nightcare center after school. The house is also walking distance from two parks, which both host youth sports leagues. First of all, this is a great place to take the kids for sports and nature walks. Secondly, we can easily promote our service to the youth league parents.

With our extensive advertising budget, we are able to invest in flyers, social media, a mobile-friendly website, online advertising, and radio advertising. By touching upon a wide variety of mediums, we will reach our target market more effectively. Our proximity to three elementary schools gives us the opportunity to form a strong relationship with them and reach our target market directly. As was mentioned previously, we will also approach the youth sports leagues at each park to promote our service to their parents. In addition, there are many popular eateries in the surrounding area. By also targeting them, we can reach those who work late restaurant hours.

The Full Moon Nightcare Center’s financial goal is to break even within the first two years of operation. For our nightcare service, we will be charging $14 per hour for membership individuals and $16 per hour for non-membership individuals. Based on research, we determined that it is most probable that our daycare center will have two non-membership children and four membership children per hour on average. If these numbers hold true, we will have a profit of about $50,000 during our first year of operations. In our pessimistic model, we determined that we will break-even after the second year of operations. For the next two future years, we determined that we will have a steady growth rate of 10% of the first year and 20% of the first year respectively. This is because we are a newer company and will gain market share as our service becomes more well-known. Thus, as a business, we are a very viable option and will start generating profits by the end of our second year of operations.

Introduction

Child care is the action or ability of looking after children, which can be someone else’s children or your own. There are many different types of child care services such as, mother’s helpers, babysitters, nannies, daycare centers, family day cares, and relative cares. A mother helper is a kind of childcare provider that help parents while the parents are still at home, they are usually between the ages of 13 and 18. A babysitter is someone that watches children in exchange for an hourly wage. A nanny watches children most days for multiple hours and usually has a weekly schedule. Nannies are usually more involved with the family and are more dedicated to making their job a profession. A daycare center is a drop-off child care service that is usually in nonresidential areas. They usually provide half or full-day care for children only during the day. A family day care is a child care service at someone else’s home. Finally, there is relative care, which is when relatives provide child care to the children. This is more comforting to parents because they trust them very highly and is a cheap form of child care (Kate Bayless, 2013).

Dr. Sonya Michel, a Professor at the University of Maryland states, “In the United States today, most mothers of preschool and school age children are employed outside the home” (2011). Michel also believes that mothers across America have invented many different ways to have their children cared for when they are working.

The child care centers came to the United States because of the Industrial Revolution and out of response to the large amount of immigration from 1815 to 1860. Kaspar Burger states in her paper, “The first actual descendant of the French crèche was the Nursery for the Children of Poor Women in New York City, which was founded in 1854” (2012). They started out as day nurseries, while both of their parents were working. This prevented children from wandering the streets to fend for themselves and from being put into orphanages. After the war, most women went back to their home and a lot of these day nurseries closed down.

It was not until the last thirty years, since women’s rights began, that childcare has become popular again. The reason behind this is that parents have become more dependent and comfortable with both incomes during the past thirty years. Today, the childcare service is a multi-billion dollar industry, that has been constantly growing for the last thirty years. Because women are deciding to work instead of staying at home to care of their children, the rate of the daycare industry market has increased significantly. The majority of the market has only been consisting of day care services for children under the age of 6 years old who haven’t started school. However, our company believes that the industry has missed a large part of the market, the single men or women that have children and men and women that work the night shift. In order to fulfill the needs and wants of the customers, a night child care center needs to be created.

Brief Description of the Product

The concept of The Full Moon Nightcare Center is to focus on the parents that work at night, providing their kids a safe place to have fun and meet friends. The need of a service after five has been a big issue for parents that work later than the typical nine to five job. By creating a night child care center and focusing on that specific target group, it will allow the company to better serve the customers’ needs and wants.

Industry Analysis

In the United States, there has been a rise in the recognition of the economic importance of child care. Early child care and education is being understood as a crucial piece of social infrastructure, which helps support child development in young kids. Market Data Enterprise did marketing research and found that the 2008 market size in the United States for child care services was over $58.6 billion (2010). There is no company that completely dominates this market in the United States. The top six companies control around $2 billion of the total sales, which is only 3.41% of the total market. Since this large market size does not include babysitters, we can see there is a potential to obtain a large amount of customers. Therefore, this would be a beneficial investment. A marketing research firm called IBIS World completed an industrial analysis stating that in January 2016 there was over 768,021 child care businesses in the United States (2016). The number of child care businesses has been increasing since the recovery from the 2009 recession. Due to unemployment decreasing and more parents going back to work, there is a growing need for child care services. First Research forecasts that the child daycare services will have a steady growth in revenue in US dollars of around 4% between 2016 and 2020 (2016). This is the result from the increase of disposable income of families due to factors such as demographics, income, and low-cost child care. This favorable increase of the overall industry will drive in a large amount of businesses just hoping to get a portion of the 60 Billion dollar industry.

The need for a child care service for parents that work non-working days or longer hours is greatly needed. Today, only a handful of child care businesses offer 24 hour child care or extended hours for parents. From Lynda Laughlin’s study on Household Economics in 2011, she concluded of Mother’s that are employed over 26.7% of 20.4 million Children under five years old use multiple arrangements for child care (2011). That is over 10.9 million children under five years old have to use more than one type of child care. For mothers that are employed and have children 5 to 14 years old, the need for multiple child care arrangements is 21.7% of the overall 40.5 million children (2011). This is about 24.1 million children needing more than one child care service. This proves that parents are doing anything in order to fulfill what they need in the childcare industry.

There are a few competitors that would be competing with The Full Moon Nightcare Center these are, babysitters and family day care centers. Near Fullerton with a five mile radius, from sittercity.com there are over 368 babysitters and over three child care centers (2016). Babysitters are not our initial competitors because our target market is children that have parents that work at night consistently. Another target market we are focusing on is parents that just want to go out which babysitters would directly affect that market. While we are not able to find the actual size of this particular competitor, but due to the amount of active babysitters we know that we have to take them into account.  

There are centers that provide child care within a five mile radius of our desired location, 1613 Central Ave Fullerton, CA 92831. Most of these child care centers start at 6:30am and close at 6:00pm causing a large problem for the parents that do not have the regular schedule.  Therefore, our only competitors are babysitters and family day care centers. The closest centers to our location are the following:

-Morningside Presbyterian Children’s Center and Preschool located at 1201 Dorothy Lane Fullerton, CA 92831.

-Friends in Christ 2311 located at E Chapman  Ave Fullerton, CA 92831.

-Little Angels’ Day Care & Montessori located at 2013 Nutwood Ave. Fullerton, CA 92831.

Our competitive edge over our competitors is that we offer night care service whereas our competitors only offer daycare services. Even though these centers are not our main competitors, they are considered a threat because they are also open during our hours of operation. The industry structure of each competitor is also unique. Friends in Christ is a religious school that offers day care. This is a weakness for the company because they have narrowed their target market. On the other hand, Morningside Presbyterian Children’s Center and Preschool is also a school, but it is not as religious as Friends in Christ because they offer Christian education and welcome all religions. Their staff is CPR/First aid certified and Early Childhood Education certified. One of their biggest resources is that they offer free transportation service to and from school. The facility offers a daycare environment with an additional learning aspect. Little Angels’ Day Care & Montessori is a daycare center that is home-based.

There are less expenses in running a daycare from home because there is less stringent licensing requirements. In a home setting, the business can operate with less employees because the number of children will be less. According to code 102416.5 STAFFING RATIO AND CAPACITY, for a Small Family Child Care Home, the maximum number of children cared for, including children under age 10 who live in the home, is one of the following:

• Four infants, or six children, no more than three of whom may be infants.

• Six children, or up to eight children when one child is at least six years of age and one child is enrolled in and attending kindergarten or elementary school and no more than two infants are in care. Parent notification and property owner consent must be on file.

For a large family child care home, the maximum number of children cared for when there is an assistant provider in the home is either:

• Twelve children, no more than four of whom may be infants

• Up to 14 children when one child is at least six years of age, one child is enrolled in and attending kindergarten or elementary school, and

no more than three infants are in care.

The advantages of having kids in daycare is that helps children develop social interaction skills, learning, etc. Also, it gives a safe environment for the kids to go to after school. However, there are also weaknesses. For example kids could learn about something that their parents wanted to wait to tell them until they were older. Child care centers typically have larger staff (lots of caregivers/teachers, as high as 30+), larger facilities with a more institutionalized feel, many more children (anywhere from around 20 to 150 or more), and separate age groups. A home-based child care program includes a home-like environment, a closer teacher-to-child bond since the caregiver often cares for the child the entire day, mixed age groups allowing for more sibling interaction, better teacher to child ratios since there are fewer children per teacher, a more flexible caregiver who is accommodating to your needs, and typically lower  rates.

TRENDS:

With different child care alternatives, it is important to offer the latest trends. Industry trends for child care are presented below:

Higher Standards- Parents want to leave their child in care of a trusted person. Family day care providers can pursue accreditation from the National Association for Family Child Care (NAFCC). The NAFCC examines different practices like the environment, developmental activities, and health.   

Safety Standards- Safe surroundings is an essential for parents. Additionally, having cameras around the premises is a new trend to monitor both the children and the care providers.

Education- Parents are seeking places that not only offer care but a place where their child can also learn. Centers offer learning through reading, singing, and other daily activities.

Closer Relationships- Parents are also looking for feedback on their child habits. It is important to build a strong relationship between the parents, care providers, and children. Building a relationship will help the child ease with the transition.   

Technology- Technology is a common trend in any industry. However, it plays a major role in child care. Childcare centers use computers, tablets, and other electronics to entertain children. Apps and programs are helping children learn material while playing.

Specialized Services- There is a demand for specialized services for children with Autism, Attention Deficit Hyperactivity (ADHD), and other disabilities.

All of our competitors have a small market share, so we can expect our market share to be small as well. This is an advantage because parents may be more trusting toward a small family child care center in comparison to a large corporate daycare center (Allison Rizzolo, 2000).  Even though we will have a small market share, the child care segment is a $58.6 billion industry. Getting even a small portion of this would make us a great and profitable company (Market data Enterprise, 2010).

Market Analysis

The Full Moon Nightcare Center is offering a child care service for children into the late hours of the night. This can be appealing to working parents that do not have the typical nine to five jobs. Many working parents have difficulty finding childcare for their children, when most day care centers close in the early evening. Therefore, our target market will be parents that work late in the evening. The nightcare program would include various activities and a sleeping room. This environment will allow the children to gain communication and social skills. With this environment, parents will be comfortable leaving their children in our care.

According to the Center for American Progress, less than one-third of children have a full-time, stay at home parent (Glynn). In other words, more than two-thirds of children, do not have someone at home all of the time to take care of them. This is where the nightcare can come in. The 2010 census, resulted in a population of 135,151 people in Fullerton, California. It also showed that 18.9% of the population are children under the age of 14 (Community Profile for Fullerton). Taking this deeper, this would be about 25,544 children that live in Fullerton. To continue, if two-thirds of these children do not have a mother or father home all of the time to take care of them, this would be about 17,029 children that would have to be put in a child care service. This shows the large market that our company can appeal to and that this would be a great business to start up.

Another statistic is that 75.2% of full-time employed mothers use some type of child care part of the time. Also, 86.3% of part-time employed mothers use a child care service also (Glynn). This shows the vast size of the market our company can cater to and satisfy their needs and wants. According to the 2014 Fullerton records, about 50.77% are females. Then, take into consideration that 65,267 of Fullerton residents are employed, which results in about 33,136 working women in the city of Fullerton (Community Profile for Fullerton). Now relate this to 75.2% of full-time employed mothers use some form of child care, which equals about 24,919 working mothers that will use a child care center. This shows the large market and opportunity that our company can capitalize on. This shows the great amount of opportunity that this company has, and this is a financially attractive company and industry to enter.

Market Analysis Pie Chart:

From the graph that above, you can see that there is a large segment of the market whose needs are not being met with child care at night. Since many daycares end between 5:30-6:00pm, the blue portion of the graph represents the population where it would be very difficult or impossible to pick their children up from daycare. Our business will provide great after school child care, which has extended hours into the night for the convenience of the customers and to satisfy their need.

Market Segmentation

The market can be segmented into three different categories, lower class, middle class, and upper class. Since pricing can influence who our target market is, it is best to divide the market this way. The segment of our target market is middle class working parents that have jobs that work late into the night. This company will satisfy the need of the customer by having a place to watch their child while they work. For working parents, it can be extremely difficult to find someone to watch their children. Furthermore, hiring a nanny or babysitter can be very expensive. If the working parent is making minimum wage or even a little above minimum wage, her pay check would not be enough to hire a nanny or babysitter and provide for their family. These working parents need a better solution that is less expensive, but still satisfies their need. The Full Moon Nightcare Center will do both of these things by providing a quality and relatively inexpensive alternative to hiring a nanny or babysitter. This helps them by eliminating the process of trying to find a babysitter or nanny. This would be a great alternative for them.

SWOT Analysis

The SWOT Analysis is a tool that demonstrates the strengths, weaknesses, opportunities and threats associated with opening a night care center.

Strengths

Night care service is a business that is not typically seen because most child care

services are offered during the day. In today’s world, it is crucial that we give alternatives to

parents who work late. The night care center will give parents the peace in knowing that their kids are being supervised by licensed babysitters. The children will benefit from a learning environment where they will interact and socialize with other children at the center. Background checks will be administered to all staff for the protection of the children. The facility will be near schools for the parents’ convenience. The night care center is a good option for parents who would otherwise leave their children with babysitters or home alone.

Weaknesses

There are not many weakness is opening a night care center because it is a service

that is not offered by many. One main weakness with opening a night care center is that this is a

new service that is being offered. Therefore, there is no community reputation. There is also a large start-up cost that encompasses furniture, rent, equipment, etc.

Opportunities

There are several opportunities that arise with opening this center. There is a high demand for parents working late shifts. The center is nearby schools for easy transportation. Opening the first center will allow expansion to other communities. There will be different advertising techniques to gain recognition. Finally, establishing business awareness within the community will help us dominate the market.

Threats

Our main threat is babysitters. They can also offer night care services and most likely at lower prices. Another possible threat is daycare centers. Daycare centers can see this as an opportunity and might want to offer night services as well. We are confident that if we meet and exceed the parents’ expectations,  we will generate adequate revenue. Our friendly environment will ensure that parents bring their children and recommend us to friends and families.

Market Strategy

Marketing/business goals

•    Break-even within the first two years

•    Generate profits within the first three years

•    Increase sales by 10% within the second year and 20% in the third year

•   Stimulate brand awareness

•   Expand into one or two more location in Southern California within three to five years.

As our team researched and evaluated all calculations from variable costs, overhead costs, and fixed costs, we are confident that the Full Moon Nightcare Center has the potential to break-even within the first two years. As demonstrated on the financial analysis, our revenue for the first year is estimated to be $253,440. The cost and expenses for our services is roughly around $203,181. Thus, not only will we meet our break-even mark, but we will also generate a profit of $50,259 in our realistic model. As a result, we can take this as an opportunity to nurture and grow our company. As a small start-up business, we want to make it our priority to improve in every way. Through experience, we can determine what areas we need to enhance, whether it is: customer relations, number of hours, variety of activities, or focusing more on school work. These factors are all important in the contribution of higher sales. As mentioned above, we would like to increase sales by 10% in the second year, and 20% in the third year. To achieve this goal, we must stay on top of our competitors and promote our brand effectively.

Once the Full Moon Nightcare Center is established at our prime location 1613 Central Ave, Fullerton, CA 92831, we can further focus our attention on increasing our presence in nearby cities in Southern California. One city that we considered is Anaheim because the population is in the high 300,000s, and the median household is just slightly under our target income bracket. Since we do plan on expanding within the next three to five years, monitoring the city of Anaheim median household income in the meantime can dictate whether we will move forward with that location as our second establishment or choose a different location.

Detailed Description of the Product

The Full Moon Nightcare Center is a service based facility that provides childcare services for parents that have to work late hours. Since most facilities operate from 6am to 6pm, this caters to parents that have the typical nine to five job. Therefore, working parents that have occupations in the restaurant, hospital, entertainment, and retail industries are unable to take advantages of those hours. Fortunately, here at the Full Moon Nightcare Center, we are available from 2:30pm to10:30pm. Along with the extended hours, parents can take advantage of the quality of service we aim to deliver for both the parent(s) and their children.

Staff

Parents that decide to have their children attend the Full Moon Nightcare Center can feel at ease knowing that their children are in the hands of professionals. We make it our duty to provide a safe environment for the children. Every staff member that is hired will have to meet strict qualifications. Before even being considered, applicants must be well educated, have at least one year of experience working with kids, and have special skills. Some skills required include proficiency in art, music, dance, or sports. In addition to that, they must pass a drug test and have no criminal background. Once all standards are met, we would then pay for their CPR certification and additional training.  

Transportation

The Full Moon Nightcare Center is within walking distance of many nearby elementary schools, so we do not feel it is necessary to offer vehicle transportation. However, we will have our staff meet the children at the school and escort them to our facility. Thus, the children can use their energy in a healthy manner while the parents can feel a sense of comfort and relief knowing that their children arrived at the nightcare safely. Once all the children arrived, we will send out an email or text letting the parents know that they have arrived at our facility.

Activities

        At the Full Moon Nightcare Center, children can enjoy many fun games, outdoor space, and extra curricular activities that we have set up for them. Below is an illustration of a sample chart of activities that you could expect from the Full Moon Nightcare Center. As you can see, we offer kickball, soccer, basketball, dance, music, art, and movies. The group activity time slot is scheduled to be from 3:30pm to 4:30pm because we want to make sure that the kids have enough time to do their homework and appreciate the tutoring services that are offered.

Target Market:

Middle Income Parents

The Full Moon Nightcare Center target market is aimed toward working middle class parents who earn an annual income of $60,000 to $70,000. Since we are charging a fee of 16 dollars per hour for non-membership clients and 14 dollars per hour for membership clients, we believe that the middle-income bracket would be the best fit in terms of financial viability. We believe that the lower income bracket would not have enough disposable income to meet our rates, and the upper income bracket would be more in favor of hiring a nanny. Taking this into account, we have reviewed three potential cities to determine the location we want to start offering our services to: Anaheim, Fullerton, and Cypress.

According to the United States Census Bureau, we found that the city of Anaheim has a population of 346,997, Fullerton’s is 135,235, and Cypress’s is 49,240 (2014). By evaluating the populations, we can estimate how big our potential market is. However, based on data from the United States Census Bureau, the median household income held in these cities are: $59,707 for Anaheim, $65,909 for Fullerton, and $83,819 for Cypress (2014). As a result, we can exclude the city of Cypress. Although Anaheim has a bigger market, it does not meet the income bracket range, leaving us with our target market city of Fullerton, California.

        It is also important to note that, although we are targeting middle class parents that live in Fullerton, California, we are also narrowing our target market for those that are in demand for later hours. Some individuals in our target market include: staff in the restaurant industry, hospital industry, retail industry, and parents that are in need of alone time to go on occasional dates. This market has been overlooked, and the Full Moon Nightcare Center’s goal is to meet their demand with our operating hours of 2:30 to 10:30pm.

Marketing Mix

1. Product

What is it?

The Full Moon Nightcare Center is a facility that provides a safe and fun environment for children whose parents work late night. Parents can drop off their children and pick them up later in the night after their late shift. Our staff of trained and certified caregivers set the standard for childcare and will treat each child with love and care.  

What do we provide?

The Full Moon Nightcare Center provides children between the ages of two and twelve with a host of fun activities for each age group, healthy balanced meals, comfortable sleeping quarters, and designated homework time for educational improvement.

• ACTIVITIES: The activities vary by age group from reading to sports. For example, the children in the older age range (7-12) will be provided with a supervised sports tournament in the sport of choice. For those who prefer not to join the sports tournament (medical reasons or simply uninterested), they can replace that activity with half an hour of outside play. For the younger age range (2-6), there will be choices between arts and crafts, building blocks/toys, and board games. Once each age group is finished with their own activity, the two age groups will come together along with the staff for a group activity. During free time we allow an allotted time of video gaming and electronics. A detailed schedule of homework, activities, snack, and meal time will be provided.

• STUDY TIME: Homework and study time is provided for those who have assignments due or those who need tutoring in certain subjects. We have staff members who provide tutoring in math, science, english, and reading from kindergarten to the sixth grade level. An hour a day is designated for homework and study time between activities. For those who do not need this service, there will be indoor activities such as board games, video games, arts and crafts, etc. During this time, the younger group will be taking a nap. It is up to the parent(s) to let the staff know which subjects the child needs help with and what assignments are to be completed.

• FOOD: Snacks and meals are predetermined, taking into account any dietary restrictions and allergies. We also like to incorporate the children's favorite foods as long as they are consistent with a healthy and balanced diet. For children who adhere to a specialized diet, parents are asked to provide pre-made meals or ingredients that our staff will prepare. These meals must be approved (allergies/dietary restrictions) before the parents provide them.

• NAP TIME/STORY TIME: We have set aside an hour each afternoon for nap time/story time for the 2-5 year-olds (napping is optional for 5 year-olds, decided by parents). During this time, the older children will be working on homework with the tutors or participating in free-play. We will provide comfortable beds and cots with sheets, pillows, and blankets. Once bedtime approaches, we will provide twin sized bunk beds divided by age group. Bedtime is at 7:00pm for the younger group and 8:00pm for the older group. The staff will be checking in on the children periodically until each child is picked up. Pick up can be any time until we close at 10:30pm.

How do I sign up?

Parents can sign up for our night care service through our website or onsite at our care center. Sign-ups involve filling out the required information for each child which includes: allergies, medication, illnesses, emergency contacts, and special requests such as napping, bedtime, and food preferences. The form takes approximately 10 minutes to fill out.

Hours of Operation:

• Mondays-Fridays 2:30pm-10:30pm

• Weekends 1:00 pm-10:30pm

2.  Price

Our night care service is provided at $16 an hour, constant rate. The average cost of child care in Fullerton according to care.com is $11.50 per hour plus a fee for each additional child. Although our price is higher, we are offering a rare service that is not as readily available.

Those who require our services regularly can utilize our membership option. Instead of paying $16 per hour, members will only pay $14 per hour. We offer this membership on a monthly or yearly basis depending on the customer’s preference. By becoming a member, customers will save as much as $496 a month and $5,340 a year.

Check-in: 2:00pm-3:00pm