Business Plan for English Tutoring Company - Assignment Example

Business Plan Essay Table of contents 0 Business idea 2.0 Market 3.0 Main competitors 4.0 Research 5.0 Legal structure 6.0 Location 7.0 Human resource 8.0 Finance 9.0 Costs 10.0 Budgets 11.0 Financial forecasts 12.0 SWOT Analysis 13.0 Appendix 1.0 Business idea The proposed business is an English tutoring business named Learning Master. The company intends to use make students from UCL and LSE as tutors. The tutors will mainly teach students in foundation campus. However the company will charge an intermediate fee. Since most of these students use English as their second language, the tutors will be chosen to correspond with the nationality of the students. Learning master also has the capacity to provide bigger classes at lower prices as compared to the small classes. This is the company logo. It was chosen because it represents the tranquility of the learning environment for the students. 2.0 Market 21. Market size Market size is a very important aspect in business planning. To this end, learning master has identified a niche market for its products. The company’s market is composed of all the foundation campuses located in London. Learning master has tailored its products to serve the linguistic needs of foreign students in London. This market gives the company access to students in foundation campuses in London, who are approximately thirty thousand. 2.2 Market segmentation The company has divided it market into three categories; psychographically, geographically and demographically. Psychographically: psychographic segmentation gives a business the opportunity to divide its clients according to their lifestyle, social class and personal preferences. For Learning Master, this group will be composed of students who are interested in English and do not perform well in their academic subjects because of their low mastery of the English language. These students also aware of the importance of proper mastery of the English language and expect to use the Universities and College Admissions Service (UCAS) to go to good universities in the UK. Geographical segmentation: In geographical segmentation, the students will be grouped depending on their location. Learning Master intends to group the students depending on where their foundation campuses are. Like central London will have Birkbeck, UCL and KCL while the greater London will focus on City University. Demographical segmentation: demographic segmentation divides the market into small groups based on their age, gender, occupation and income. Learning master will divide the students depending on their ethnic background, age and income. 3.0 Main competitors Like any other business, Learning Master has competitors who have been in the market offering English lessons either online or direct classes. Some of the company’s competitors are online English tutors like BK English who offer their lessons through the internet; their services are cheap and cost £ 20. Since they use the internet, they tend to be more flexible and promote their products through the internet. Despite being cheap they cannot be trusted by learners. The second group competitor is the business teachers who offer their tutorials at home in the teacher’s flat. The business teacher’s price are on the higher side at £ 45. Their services are considered professional. However they do not promote their services and depend on referrals from previous students. Cost is their major weakness; they are too costly for the students. The third competitors are educational institutes like the International house located at Convent garden and offer their services through the internet. The lessons offered by International house are professional which gives them an edge over the other competitors in the market. International house promotes its services through the internet and one of their major weaknesses is that they are not flexible because the students have to enroll for at least seven week and only offers IELTS. Learning Master brings to the market a different kind of product to this market with student to student tutorials which are averagely priced ranging from £ 15-30. The lessons will be conducted at the student’s flat and offered with a tutor with the same ethnic origin as the students; a factor that makes the company’s products cheap and flexible. Students will be comfortable learning in their flats and will be at ease knowing that their tutor knows where they come from and therefore understand their needs. The lessons will be tailored to take care of particular student learning needs. The company also tends to increase brand awareness through internet promotion and the use of printed leaflets. One of the major weaknesses of Learning Master is that it is not experienced tutoring but this will be mitigated with the custom made product offering (appendix 1). 4.0 Research 4.1 Primary research Primary research was conducted through questionnaires that were administered to students who learn English as their second language in foundation campuses. Competitors were also interviewed in primary research. The questionnaires administered to students revealed that 60 percent of students are likely to higher student tutors of European origin because they want to improve their English since it is their not their first language this was 70 percent. The questionnaires also revealed that most of the students can comfortably handle classes that are one hour long and are looking for experienced teachers in a class of three of more students. However 60 percent of the students had had one to one classes and were likely to find information about tutoring in the internet. The students stated that they had paid 20 pounds for a class that took one hour. The questionnaire also revealed that the students are willing to pay a maximum of £ 30 per lesson and prefer to have one on one lessons in school (appendix 6). Learning master also interviewed the students on the services offered by the business teacher. The results revealed that most of the students in foundation campuses found the cots to be on the higher side but stated that the price was justified since the teacher offers professional services. This will be Learning Master’s main competitor. 4.2 Secondary research Secondary research involves getting information from already published sources. Learning Master used five sources of secondary data. The first source was www.douban.com which stated that there is a rapid increase in the number of students who require extra help in their studies in the United Kingdom. The second source was BBC news where it was stated that studying abroad like in the UK is a desire that most student have around the world. It further stated that many students over the age of 25 regret not opting to study abroad when they had a chance to (appendix 3). The third source of secondary data was the website of the independent newspaper; where information obtained indicated that there will be 100,000 more international students in the UK in the next five years. This is good news for Learning Master because it will expand the market size for its services which will in turn enable the company get more customers (appendix 5). The fourth source of secondary information was the statistics agency where statistics was obtained about students in foundation level of earning in London. The statistics showed that 40 percent of the students were at the foundation level of learning. This offers Learning Master a considerable market to work with (appendix 2). The last source of secondary information was the Express and daily newspaper which wrote about MPs support for international students in which they asked the prime minister to encourage international students to choose the UK as their destination for tertiary studies. They claimed that this will lead to long term economic growth in university towns and increase export earnings and lay foundation for business opportunities in emerging economies (appendix 4). The influx of international student will expand Learning Master’s market. 5.0 Legal structure Learning Master is a partnership with five partners. Partnership gives the partners an opportunity to share responsibilities in running the business. Each and every partner has capabilities and is involved in the running of the business. Partnership was chosen because it is simple to set up, has no legal formalities, and makes it easy to obtain finances since partners contribute towards the business. A partnership was also chosen because partners share losses and responsibility as opposed to sole proprietorship where the sole trader shoulders all the losses and responsibilities. Partnership also means that company responsibilities are shared and ideas are generated which is beneficial for the business. 6.0 Location Learning master will be located in Holborn area where the target group will find it easy to reach the business. The location was chosen because it served by a transport link tube that will also make it easy for the students to reach the company. It is in a convenient surrounding with amenities and convenient stores like Sainsbury’s, WHSmith and HSBC. The place is also quiet and students will have access to private room. The location also has bigger rooms for classes that will need more than one student. The location is secure, has internet connection, with furnished offices and the company will have a dedicated phone number. The location gives the company an opportunity to be close to its client, good transport network; it is a prime location where the brand can be built. A map of the location can be found on appendix 7. 7.0 Human resources The company will enlist the services of five people comprising of the boss, manager, accountant, secretary and receptionist. 7.1 Job titles and responsibilities Boss: Kemp This position will be held by Kemp who will be located in Holborn. The duties will include recruiting tutors who will be helping students with their academic work and improvement of their English mastery, UCAS and PS. The job of the tutors will be flexible with the tutor expected to work in the evenings and weekends. The qualification for this position is a minimum of a degree level certification in any of the top 30 universities in London. The tutors will be paid 15-30 pounds per hour. Manger: Patrick This position will attract wages of 3000 pounds. The responsibilities in this position are; to control project costs, maintaining relationships with customers, project preparation and implementation plan. Accountant: Zoe The employee in this position will be paid 2500 pounds and will be responsible for the preparation of financial statements and computing accounts Secretary: Carina The secretary will be paid 2000 pounds and will be responsible for the daily work schedule at the office and scheduling meetings. Receptionist: Olivia The receptionist will be paid 2000 pounds and will be responsible for providing information ot the customers and arranging class time. 8.0 Finance The company will obtain a loan from the parents of each of the partners. Each partner will get a loan of 6,000 pounds from their parents. This will be used as starting capital. This method of financing was chosen because it has no interest rate because the parents are not charging any interest on the loan. A bank loan will also be taken to help in building the business. This form of financing was chosen because it gives the company an opportunity concentrate on building the business. Because part of the loan is got from parents and is interest free, it saves the company money that would have been used as interest pay outs. The savings made can be used for promotion or in any other aspect of the business. 9.0 Costs The cost analysis involves the breakdown of start up costs, fixed costs and variable costs. 9.1 Start up costs Start up costs will include; Start up costs Fixed costs/month Variable costs/unit Licenses and permits 250 Rent 833 Printing/ student 5 Business registration 50 Loan repayment 1199 English lesson 12 Professional training (management) 15,000 Advertisement 200 Math lesson 15 Lease contract 10,000 Insurance 4920 Business and economic lesson 15 Working capital 40,000 Salaries 40,000 Total 65300 pounds 47152 pounds 14 pounds 10.0 Budgets 10.1 Sales budget The sales budget represents the prices for math lessons, English lesson and business lessons for a period of one year. The average selling price for math lesson is 25 pounds while that of English lesson is 20 pounds and the one for economic and business lessons is 25 pounds. This gives an average of 23.33 pounds per lesson.   Sales budget for (£) Products Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Unit Selling price English lesson £15,000.00 £25,000.00 £32,000.00 £39,000.00 £26,000.00 £40,000.00 £38,000.00 £18,000.00 £36,000.00 £42,000.00 £40,000.00 £42,000.00 £20.00 Math lesson £12,500.00 £27,500.00 £32,500.00 £37,500.00 £25,000.00 £33,750.00 £35,000.00 £20,000.00 £37,500.00 £42,500.00 £15,000.00 £7,500.00 £25.00 Economic & Business lesson £25,000.00 £46,250.00 £60,000.00 £82,500.00 £35,000.00 £77,500.00 £80,000.00 £47,500.00 £77,500.00 £87,500.00 £30,000.00 £22,500.00 £25.00 Total £52,500.00 £98,750.00 £124,500.00 £159,000.00 £86,000.00 £151,250.00 £153,000.00 £85,500.00 £151,000.00 £172,000.00 £85,000.00 £72,000.00 Average Selling Price £23.33 10.2 Cost budget The cost budget also represents variable and fixed costs over the period under review. The average variable cost is 14 pounds. The cost budget cover running costs which include both fixed and variable costs for the company’s first year of operation.   Cost budget for purchases (£) Running Costs Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Fixed                         Rent £833.00 £833.00 £833.00 £833.00 £833.00 £833.00 £833.00 £833.00 £833.00 £833.00 £833.00 £833.00 Bills (Gas, water, electricity, telephone) £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 Insurance (Public Liability) £4,920.00 £4,920.00 £4,920.00 £4,920.00 £4,920.00 £4,920.00 £4,920.00 £4,920.00 £4,920.00 £4,920.00 £4,920.00 £4,920.00 Advertisement £200.00 £200.00 £200.00 £200.00 £200.00 £200.00 £200.00 £200.00 £200.00 £200.00 £200.00 £200.00 Loan payment £1,199.00 £1,199.00 £1,199.00 £1,199.00 £1,199.00 £1,199.00 £1,199.00 £1,199.00 £1,199.00 £1,199.00 £1,199.00 £1,199.00 Staff Cost £40,000.00 £40,000.00 £40,000.00 £40,000.00 £40,000.00 £40,000.00 £40,000.00 £40,000.00 £40,000.00 £40,000.00 £40,000.00 £40,000.00 Total Fixed £47,152.00 £47,152.00 £47,152.00 £47,152.00 £47,152.00 £47,152.00 £47,152.00 £47,152.00 £47,152.00 £47,152.00 £47,152.00 £47,152.00 Variable                         English lesson £9,000.00 £15,000.00 £19,200.00 £23,400.00 £15,600.00 £24,000.00 £22,800.00 £10,800.00 £21,600.00 £25,200.00 £24,000.00 £25,200.00 Math lesson £7,500.00 £16,500.00 £19,500.00 £22,500.00 £15,000.00 £20,250.00 £21,000.00 £12,000.00 £22,500.00 £25,500.00 £9,000.00 £4,500.00 Economic & Business lesson £15,000.00 £27,750.00 £36,000.00 £49,500.00 £21,000.00 £46,500.00 £48,000.00 £28,500.00 £46,500.00 £52,500.00 £18,000.00 £13,500.00 Total Variable £31,500.00 £59,250.00 £74,700.00 £95,400.00 £51,600.00 £90,750.00 £91,800.00 £51,300.00 £90,600.00 £103,200.00 £51,000.00 £43,200.00 Total Running £78,652.00 £106,402.00 £121,852.00 £142,552.00 £98,752.00 £137,902.00 £138,952.00 £98,452.00 £137,752.00 £150,352.00 £98,152.00 £90,352.00 10.3 Production budget The production budget gives a breakdown of the cost of producing English, math and business lessons for one year.   Production budget for (Estimated Units Sold) Products Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug English lesson 750 1250 1600 1950 1300 2000 1900 900 1800 2100 2000 2100 Math lesson 500 1100 1300 1500 1000 1350 1400 800 1500 1700 600 300 Economic & Business lesson 1000 1850 2400 3300 1400 3100 3200 1900 3100 3500 1200 900 Total 2250 4200 5300 6750 3700 6450 6500 3600 6400 7300 3800 3300 11.0 Financial forecast 11.1 Break even chart The break even chart shows that the company has to sell 50,000 pound worth of lessons to break even. 11.2 Cash flow forecast Sept October Nov Dec Jan Feb Mar Apr May Jun Jul Aug Total Opening Bank Balance 0.00 15080.33 8660.67 12541.00 30221.33 18701.67 33282.00 48562.33 36842.66 51323.00 74203.33 62283.66   Receipts Sales 52500.00 98750.00 124500.00 159000.00 86000.00 151250.00 153000.00 85500.00 151000.00 172000.00 85000.00 72000.00 1390500.00 BANK Laon 35300.00                         Parents Loan 0% Interest 30000.00                         Total Reciepts 117800.00 98750.00 124500.00 159000.00 86000.00 151250.00 153000.00 85500.00 151000.00 172000.00 85000.00 72000.00 737300.00   Payments Rent 833.00 833.00 833.00 833.00 833.00 833.00 833.00 833.00 833.00 833.00 833.00 833.00 9996.00 Bills (Gas, water, electricity, telephone) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Insurance (Public Liability) 4920.00 4920.00 4920.00 4920.00 4920.00 4920.00 4920.00 4920.00 4920.00 4920.00 4920.00 4920.00 59040.00 Staff Cost 40000.00 40000.00 40000.00 40000.00 40000.00 40000.00 40000.00 40000.00 40000.00 40000.00 40000.00 40000.00 480000.00 Stock 31500.00 59250.00 74700.00 95400.00 51600.00 90750.00 91800.00 51300.00 90600.00 103200.00 51000.00 43200.00 834300.00 Parents Loan Repayment 166.67 166.67 166.67 166.67 166.67 166.67 166.67 166.67 166.67 166.67 166.67 166.67 2000.00 Start up costs 25300.00                     25300.00 Total Payments 102719.67 105169.67 120619.67 141319.67 97519.67 136669.67 137719.67 97219.67 136519.67 149119.67 96919.67 89119.67 1410636.00   Closing Balance 15080.33 8660.67 12541.00 30221.33 18701.67 33282.00 48562.33 36842.66 51323.00 74203.33 62283.66 45164.00 The cash flow forecast gives a breakdown of the amount of projected from sales in the first year of operation. 12.0 SWOT Analysis SWOT analysis looks at the company’s strengths, weaknesses, opportunities and threats. Strengths: Learning Master’s strengths lie in the business location, company structure which is relatively simple which makes the business easy to operate, manage and control. The business idea is a pioneer idea pioneer idea and is a first one for London. Another strength is the low start up costs. Weaknesses: One major weakness of the company is the lack of experience of the student tutors that the company intends to use. This represents a drawback especially for a new company. The working hours are also restricted to evening and weekends which will restrict the companies revenue. Opportunities: Since this is a pioneer ides, the opportunities are immense. There is potential for growth and franchising to other parts of the world. Threats: The biggest threat for learning master is that the tutors can decide to have private lessons with the students. However this has been taken care of by signing contracts with the tutors to avoid competition with the company. The business may also be copied by other companies and reduce the company’s revenue. 13.0 Appendix Appendix 1 Business teacher BK english Education institute Our business Product Tutorial at home Online lesson BK english International house Student-to-student totorial price £45 £20 £20 £15-30 place Teacher’s flat internet Covent garden Student’s flat promotion none internet internet -Internet -leaflet strength professional cheap professional -Teacher is from same country -cheap -time is flexible weakness expensive Not trustable -Time is not flexible -must enroll at least 7 weeks -Ielts only Lack of experience Appendix 2 Appendix 3 Appendix 4 Appendix 5 Appendix 6 Appendix 7 Read More