Business Plan

Business Plan Algorizm

EXECUTIVE SUMMARY:

This business plan deals with the opening of a profit making educational institution. This kind of moneymaking business is very secure and profitable in Pakistani environment. In this plan I have discuss in detail the opportunity that has been created in education sector in recent years due to the introduction of Centralized Admission Policy (CAP) for Intermediate classes. This business plan will function on two main aspects: One is opening of a college for intermediate students and secondly as a tuition center for O/A levels student. The main purpose of the input of dual function is to properly utilize the premise that is college in the morning and tuition center in the evening. The strategy that the ACC will adopt is discussed along with the management team that comprises of highly qualified teachers. The future goals of the institution i.e. expending its campuses throughout the city are also brought into highlight. The market potential of the ACC is although low but still it is quite profitable as projected in the financial statements. The main competition is with government colleges but hardly any competition prevails with private institutions. There is a high scope for O/level coaching center.Our service will be different in many respects such as low cost, highly qualified teachers and better environment for students.The promotion strategy using different forms of media along with its consistency using different styles are sought out.

Hamdard Institute of management Sciences 1


Three years final projections are included in this business plan. The projected financial statements include Income statements, Balance Sheets and Cash flow statements.

I have named the institute as Algorizm College and Coaching center. It is named on a Muslim scholar, Ibn Al- Musa Khwarizmi.Khwarizmi who is considered as the father of mathematics. In order to define the strategy of the company it is essential to understand the basis on which the institute will work. The strategy of the company and in fact the whole business plan will work on these firm groundings. Since the inception of centralized admission policy (CAP) a new opening has been created in the educational sector. This centralized admission policy works on certain basis, which are fruitful for the opening of private college. Some of the characteristics of this CAP include:

The admissions are strictly on merit basis. Every government college has a certain percentage of marks allocated for admission. Students need to clear all the papers of class 10th in order to get admission in the colleges. Quota system and admission to colleges on regional basis has been eliminated.



No shifting or transfer is allowed once a particular college is assigned to a student.

These some of the characteristics have aroused certain kinds of problems and difficulties for the student. Students with Low percentage are specially the key victims. Even students with higher percentages are also suffering one or the other way. Many students are given admissions in those colleges that are very far away from their homes and add to that those colleges do not have any good reputation. This mainly happens with students who secure low percentages in the prerequisite exams. These students then prefer private colleges as they are convenient to them and standard of private colleges are far much better then that of government. Students with high percentages also do prefer private colleges, which have good reputation; DHA College is the best example in this context. This is the need or the opportunity for us on which we will formulate our company strategy.Now it is important to evaluate the need of O/level coaching center that is our second function. O/level education has taken hype during recent years and many now do prefer British system of education to the local education system. Taking tuitions is a trend in Pakistan and more then 90% of students at this level do prefer taking tuitions. Since home tuitions and individual are expensive, a group coaching system will be beneficial to students.

Now since the opportunity and need is now defined we will formulate our business strategy on this basis. Our Institute will work as a college in the morning and a coaching



center in the evening. This institute will give admissions to the students on the basis of their prerequisite examination. Students with minimum 60% can apply and will be given admission on that. As per about the coaching center no conditions will be implied on admissions. Admissions will be given until the desired potential strength is completed.The Algorizm College will be affiliated with board of higher secondary education. The campus will be a state of art facilities as per the board requirement with most modern computer, physics, chemistry and biology labs. Affiliation with board of secondary education is essential requirement for running a college at this level. There are certain requirements and an annual fee charged by the Board for the enrollment of students.The best locality for such kind of institute could be North Nazimabad. The reason for that is there are not many private colleges in this area. Secondly North Nazimabad is almost the center of Karachi and is easily accessible from all parts of the city. A prime location such as near to the main road will be more beneficial. North Nazimabad and its adjoining areas are highly populated and thus increase our potential market.Since our company is a start up relaxations in admissions will be given till few years after which higher stress would be on creating a good impression in the market.In past ventures such as these have been successful specially colleges and tuition center open separately. But this is a unique kind of combination and idea that is much safer than any other form of business.



The profit margins are quite high as per industry analysis but highly depend on how efficiently the institute is being run. The future plans of ACC will be to first make reputation in the market and then expend through opening branches in all parts of the city. It is expected that it is almost takes a decade for proper expansion.

Mission Statement OF ACC:

To Impart Knowledge with utmost sincerity and

devotion

Create individuals with high caliber and skills.

Achieve academic excellence.

Culture of professionalism must prevail.

To achieve the basic aim of imparting standard

education.

To make our student worth human beings who will

contribute to the well being of nation.



Management Team:

It is very essential for venture such as this to have a highly skilled and professional team otherwise this venture can end up as a bad dream. Properly selected team of individuals is necessary. The ACC management team will comprise of highly professional teachers and professors who have credibility in the market. Renowned teachers and professors who have vast experiences in the field will be the part of the team. An individual who has the experience of running an institution will administer the ACC. A retired principal of a government college is one of the best available options in my consideration.

The ACC management team will have approximately 10 to 15 employees. At first most of the teachers will be hired on part time basis with fewer permanent ones. But as soon as more strength of students develops more teachers will be recruited on permanent basis.

The team of ACC will consist of individuals who are highly qualified and experts in their field. For college those teachers or professors will be preferred who have taught in some renowned colleges and whose names are it self an institution. For coaching center teachers who are well verse with British education system will be preferred. These



teachers for coaching center will be hired on commission basis i.e. a particular amount will be given on per student basis. The commission will range from 30 to 60% depending upon the caliber of teachers.The market for ACC will be the student who cleared Metric examinations, both boys and girls. The potential market of ACC will be of students mainly residing in North Nazimabad and the adjoining areas i.e. Nazimabad, North Karachi and Gulshan.Market research and analysis have yield that there are more than 5000 students in these areas for college and more than 250 students for coaching center.Market competition with private colleges do prevail but not at a great extent. There are very few private colleges and add to that they do not have a very good reputation except one or two. The main competition that we face is with government colleges, which are cheaper, and some do have very good reputation. But one point that favors us even within this context is that there are hardly two good reputed government colleges in our targeted area.

There is hardly any coaching center that is specially catering the needs of O/Level students. Thus hardly any competition prevails but there are home tutors available who charges much more than what we will be charging. Hence our service will be much more attractive to students than our competitors. Add to that we will be providing them all the convenience under one roof i.e. they will be taught every subject by professional teachers at one place and at low fees.



Market research and analysis have shown that there is annually an increase of 5% in the enrollment from previous year. Accessing the market competition I believe we have potentially 2% of the total customer in our hand in the first year. The percentage is very low because many still prefer government colleges and we have a tough competition in our hand. Remember that our target market are those students who prefer private colleges either because of not getting admission in desired government college or for any other purpose such as distance.

The total number of customers along with potential customers in the first three years of the ventures is shown in the bar chart below:



The total number of customers along with potential

customers for coaching is shown in the bar chart below:



It is the love of teaching and the affection toward this

profession has led me to write this business plan. The

tutorial service that we will provide will be of high excellence

and above all will be a benefit to them. The highly skilled

management team is the asset of ACC. Some of the salient

features of our service include:

Students will be taught by highly Qualified teachers

It will be the best provided service in relation with cost

charged to students.



Proper evaluation of the student will be done

throughout the academic period.

Greater emphasize will be on the grooming of students

to make them better citizens.

The use of information technology and Islamic studies

will be the highlight.

Consistency and standard of education will be the first

priority.

Different forms of media will be used to promote the

ACC among the target market. The promotion of ACC will

be done on regular basis so as to create much more

awareness among the people. The promotion for college

and center will start two months before the launch. And

once it is launched much more frequent advertising will be



done. For the coaching center some form of the

advertisement will be done throughout the year but for

college it will be only done during admission days.

Hoardings will be placed in the major localities around

the ACC premises with some attractive textures.

Pamphlets will be distributed at major locations such as at

Inter board Office. Regular advertisements will be given

on reputed newspapers such as Dawn, News, Jung and

etc. Keeping all the constraints in mind more effective

ways of communication, which has low costs, will be used.

In our promotion we will try our best to get good

students enroll in ACC. For that in our promotion we will

urge students to get enroll in ACC and good students will

get scholarships that may be up to 50% of the tuition fees.

Discounts will be given in the coaching to those students



who will study more than three subjects. Students will be

motivated through these incentives and others that will be

introduced from time to time.

ASSUMPTIONS RELATED TO FINANCIAL PROJECTIONS

1. The fee charged from college students is RS 1000.2. The fee charged from coaching center is RS 500 per

subject.3. We have projected 100 students for the first year in

college and 50 students for coaching center.4. I have assumed that every student in the coaching

center is studying 2 subjects5. Rent of the premise is RS. 10,000 per month with a

deposit of 100,000.6. Assumed that 5% of the total fees would be our

receivables.7. An annual affiliation expense is RS. 10,000 with initial

cost of 30,000.8. In the second year project strength is 150 students for

college and 100 students for coaching.



9. In the third year projected number of students for college is 200 and 100 for coaching.

10. Fee receivables from the first year to third year increases from 9000 to 30000.

11. In cash flow statement operating activities are evaluated.

Projected Income Statement For the First Year:

Tuition fees (college) 1200,000Tuition Fees (coaching) 600,000Total income 1800,000

Less Expense:

Advertising 200,000Salaries 700,000Rent 120,000Utility Expense 300,000(Elect, gas and telephone)



Office Expense 80,000Depreciation Expense 5,000Affiliation Expense 10,000

Miscellaneous 50,000Total Expense 1465,000Net profit 335,000

Projected Balance Sheet for the first year:

Fixed ASSETS :

Furniture 100,000Less: prov for depreciation (5%) 5000Total 95000

CURRENT ASSETS : Fees Receivables 9000Deposit (Refundable) 100,000Cash at bank 3, 21,000Cash at hand 10,000

4, 50,000

Current Liabilities : None Nil



4, 50,000 5, 45,000

Financed BY:

Capital Balance 210,000Less: Drawings NilAdd: Net profit 335,000 5, 45,000

Projected Cash Flow for the First year:

Net Income 3, 35,000ADD: Depreciation 5000Less: Fees Receivables 9000

Cash Flow from Operating activities 3, 31,000



Projected Income Statement For the Second Year:

Tuition fees (college) 1800,000Tuition Fees (coaching) 1200,000Total income 30, 00,000

Less Expense:

Advertising 200,000Salaries 1200,000Rent 120,000Utility Expense 350,000(Elect, gas and telephone)



Office Expense 100,000Depreciation Expense 5,000Affiliation Expense 10,000

Miscellaneous 55,000Total Expense 2,040,000Net profit 9, 60,000

Projected Balance Sheet for the Second year:

Fixed ASSETS:

Furniture 100,000Less: prov for depreciation (5%) 10,000Total 90000

CURRENT ASSETS:Fees Receivables 20,000Deposit (Refundable) 100,000Cash at bank 9, 00,000Cash at hand 54,000

1,074,000

Current Liabilities:



None Nil

1,074,000 1,164,000

Financed BY:

Capital Balance 204,000Less: Drawings NilAdd: Net profit 9, 60,000 1,164,000

Projected Cash Flow for The second year:

Net Income 9, 60,000ADD: Depreciation 5000Less: increase in Fees Receivables 11000

Cash Flow from Operating activities 954,000



Projected Income Statement For the Third Year:

Tuition fees (college) 2,400,000Tuition Fees (coaching) 1800,000Total income 4,2,00,000

Less Expense:



Advertising 200,000Salaries 1500,000Rent 180,000Utility Expense 350,000(Elect, gas and telephone)Office Expense 120,000Depreciation Expense 5,000Affiliation Expense 15,000

Miscellaneous 60,000Total Expense 2,430,000Net profit 1770,000

Projected Balance Sheet for the Third year:

Fixed ASSETS:

Furniture 100,000Less: prov for depreciation (5%) 15,000Total 85000

CURRENT ASSETS:Fees Receivables 30,000



Deposit (Refundable) 100,000Cash at bank 17, 00,000Cash at hand 65,000

1895,000

Current Liabilities:None Nil

1,895,000 1,980,000

Financed BY:

Capital Balance 2, 20,000Less: Drawings 10,000Add: Net profit 1,770,000 1,980,000

Projected Cash Flow for the Third year:

Net Income 1770,000ADD: Depreciation 5000Less: increase in Fees Receivables 10000



Cash Flow from Operating activities 1,765,000


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