Assignment

On
Business Plan For Children's Educational Toys

Course Title: Entrepreneurship Development

Course Code: MBA-513(Section-02)

Submitted To:
Dr. Habibur Rahman
Professor
Adjunct Faculty
East West University

Submitted By:
Rabeya Khanam
ID. 2021-1-95-013
Masters of Business Administration
East West University

Submission Date: 22 May 2021

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 Assignment On

Business Plan For Children's Educational Toys

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 Executive Summary
Toy Learn is an exciting start-up company that has developed a line of educational tools for children
that are fun and engaging. The company has been founded by the via group and is registered from
local Government authorities. Toy Learn will be profitable by the end of year one and will have a
steep increase in sales for the first several years.

Toy Learn is initially offering three different educational toys. The first is Number Toy, a fun toy
that teaches children number skills. The second product is Letter Toy which as the name hints, helps
children quickly conquer the alphabet. The third product is Phonic Toy, a device that resembles a
mini PC and teaches phonic and math skills. While all the products are educational tools that develop
core skills within the youngster users, they are fun to play with, thereby encouraging tots to use them
often. New products are currently in development by the in-house department.

Toy Learn has identified three keys to success that are instrumental in the sustainability of the
business. Number one is the need to develop creative, educational, engaging toys. The second key is
to adopt strict financial controls. The last key to success is the need to listen to customer, effectively
creating a feedback mechanism for product improvement.

Toy Learn has identified two customer segments that it will go after. The first group is individual
customers. These are parents or grandparents who are purchasing the product for their child.

Basically, Toy Learn will be leveraging what they do best to create a product that is in demand by
the market. This is an important message because parents will want their children to play with this
type of toy. The marketing strategy will recognize and account for the fact that there are two distinct
customer groups that must be attracted.

To capture the awareness of both groups, Toy Learn recognizes that the groups are very different
regardless that they are buying the same product.

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 Table of Content
Name of the content Page Number
Cover Page ⅰ
Title Page ⅱ
Executive Summary ⅲ
Tables of Contents ⅳ
Elements of a Business Plan
Executive summary 01-02
Business Description 02-03
Marketing 03-04
Operations 05-06
Management 06-07
Financial 08-11
Critical Risks 11-12
Harvest Strategy 12
Milestone Schedule 13

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v
 Elements of a Business Plan

Executive Summary

A business plan is a written document that describes an idea for a product or service and how it will
make money. Toy Learn is a start-up company that has developed three types of educational toys.
The products are called toys because they are fun and engaging to use. They are educational because
they teach constructive skills to the users. Toy Learn will initially distribute the products within the
Bangladesh, with future global distribution being considered. It includes your marketing plan as well
as estimates for revenue, expenses, and how to make a profit.

A business plan is like a roadmap. It allows you to plan out the various aspects of your business on
paper, and keeps you from making unnecessary mistakes later on. It helps an entrepreneur think
about the costs associated with starting a business and show banks that you are serious about your
idea.

Nature of the Business

Children’s educational toy will help to children for basic Learning.

Statement of Finance Needed

Total cost for setting up Education toy Business estimated to be 5 million.The total cost is composed
of about 3 million from partners of the Business and 2 million from Finance company.

Statement of Confidentiality of report

The report is confidential and is the property of the owner and all the content of the plan should be
used in the permission.

Objectives

Create a profitable company.

Develop innovative, educational toys.
Improve the learning curve for children through the use of interactive toys.

Mission
It is Toy Learn's mission to make the highest quality educational toys available. The more children
that learn basic functions from our toys, the more successful we are.

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Keys to Success

Develop creative, educational, engaging toys.

Adopt strict financial and budgetary controls.
Listen carefully to the customers’ needs.

Business Description
Company Ownership
Toy Learn is a privately formed by Via group.
Start-up Summary
The following items will be needed for the start-up of the business:
Office supplies and equipment for three employees including desks, computers, cubicle
dividers.
Assorted equipment for prototyping such as electric circuit boards, molded plastics, speakers,
and L.E.D. lights.
Fax machine, telephones, and printers.

Start up Expenses
Start up Assets
Cash Required $40,00,000
Legal $10000
Start up Inventory $225,000
Logo $5000
Others current Assets $50,000
Rent $10000
Long-term assets $500,000
Payroll $15000
Total Long term $2,25,000
Insurance $2000 Assets
Total Required $50,00,000
Computer $100000

R&D $80000

Others $20000
Total Startup
$2,42,000
Expenses

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Liabilities and owners capital

Accounts payable $1,50,000

Notes Payable $8,00,000

Others Currents
$50,000
liability
Long term liability $10,00,000

Total liabilities $1925,000

Capital $30,00,000
Total Capital and
$50,00,000
Liability

Marketing

Research Analysis

The market for educational toys can be divided into two distinct segments:

Individual consumers: this group is parents or grandparents who are purchasing the toy for a
specific child.
Wholesale purchasers: this segment is schools, daycare centers, etc., commercial businesses
that are buying the product for their clients to use.

Toy Learn has decided to sell direct to the consumer instead of using the traditional layered
distribution system that uses wholesalers to sell to retailers. While this creates more work for Toy
Learn in terms of generating sales, it provides better margins.

Marketing Plan

As mentioned in the previous section Toy Learn has planed the market into two distinct customers,
individuals and businesses.

Individuals: this segment is people buying a single product for their child or someone that
they know. The demographics for this segment is a household income of >$50,000, have high
aspirations for their children in terms of education and development and want to get started as
soon as possible.

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 Businesses: this group is buying the toys for children who are the business' clients. These
organizations typically are either day care based, or school based such as nursery school or
preschool. The number of children that they care for generally ranges from seven to 25.

The toy industry is characterized by many different toy manufacturers. Within the larger toy
industry, there is a niche of educational toy manufacturers. This niche is fairly new (within the last
five years) as the convergence of toys and educational tools becomes more legitimized. For years
there was no awareness that a toy could have educational value, it was assumed that a toy was a
mindless way of occupying a child's time and attention, giving the parent a break. Only recently has
there been studies published that clearly show the ability to design a toy that captivates a child's
attention while teaching them constructive skills.

Marketing Mix: Product, Price, Place and Promotion

Toy Learn has developed three distinct functional and educational toys that are fun to play with, but
at the same time are useful in teaching children needed skills. Although the toys are in prototype
form at this point, they are functionally complete and are near their finished form.

Number Toy: a toy that emits lights and sounds when the children touch a stylus at the
appropriate numbers. In addition to teaching children number skills, it also helps them with
hand eye coordination. When children have used Number Toy in usability tests, not only do
they learn numbers, but they squeal with delight as they are using the product.
Letter Toy: this product is similar to Number Toy but it teaches children the alphabet. Letter
Toy is also successful improving children's attention span.
Phonic Toy: a toy that looks similar to a miniature PC laptop. Inside the unit there is a child's
book and stylus. Use the stylus to touch the page and the device reads stories out loud,
identifies the sounds of musical instruments, and guides the kids along on basic addition.

This is the product line currently developed, however, it is expected to grow over time as new ideas
are generated. While prototypes will be designed and manufactured in house, production will be
outsourced.

The small niche educational toy industry is comprised of several small industry, primarily regional
manufacturers. Toy maker imports by paying only 5% custom duty. Bangladesh spends every year
5000cr taka for import toy. So here is more than 100 producers who made the local product in
Bangladesh.

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Operations
Location
Children’s educational toy
Business Address: Road no: 10, House no: 122, Mirpur:10.

Operations

The operations section of your business plan is where you explain – in detail – you company's
objectives, goals, procedures, and timeline. An operations plan is helpful for investors, but it's also
helpful for you and employees because it pushes you to think about tactics and deadlines.

In the previous course, you outlined your company's strategic plan, which answers questions about
your business mission. An operational plan outlines the steps you'll take to complete your business
mission.

Your operations plan should be able to answer the following:

Who – The personnel or departments who are in charge of completing specific tasks.
What – A description of what each department is responsible for.
Where – The information on where daily operations will be taking place.
When –The deadlines for when the tasks and goals are to be completed.
How much – The cost amount each department needs to complete their tasks.

Personnel needs and uses

The following items will be needed for the start-up of the business:
Office supplies and equipment for eight employees including desks, computers, cubicle
dividers.
Assorted equipment for prototyping such as electric circuit boards, molded plastics, speakers,
and L.E.D. lights.
Fax machine, telephones, and printers, and others machinery.

Proximity to Suppliers
Currently the company obtains the vast majority of its raw materials from South Asian suppliers.
However as we are committed to fair terms of trade and promotion of local business we intend to
engage local suppliers. Hence raw materials, including x and y, may be sourced from local
communal and commercial importer avoiding intermediaries so as to minimize costs, ultimately
benefiting the final consumer. The major advantages of doing so being higher margins, faster

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payments and lower risks of payment default. Through the use of economies of scale we aim to
maintain low input and production costs. This may be undertaken through (discussion removed for
confidentiality).
Hence we intend to establish good rapport with all our suppliers and hence long mutually beneficial
business relationships. This shall be undertaken through working closely with suppliers to ensure
uninterrupted deliveries.

Management
Management Team
The Management Team section outlines: –
Organizational Structure: Highlights the hierarchy and outlines responsibilities and decision-
making powers.
Management Team: Highlights the track record of the company’s managers. You may also
offer details about key employees including qualifications, experiences, or outstanding skills,
which could add a competitive edge to the image of the business.
Working Structure: Highlights how your management team will operate within your defined
organizational structure.
Expertise: Highlights the business expertise of your management and senior team. You may
also include special knowledge of budget control, personnel management, public relations,
and strategic planning.
Skills Gap: Highlights plans to improve your company’s overall skills or expertise. In this
section, you should discuss opportunities and plans to acquire new information and
knowledge that will add value.
Personnel Plan: Highlights current and future staffing requirements and related costs.

Legal Structure
The different business structures are discussed in detail below;

Sole Proprietorship

A sole proprietorship is the simplest business structure and involves one individual who is
responsible for the day-to-day operations of the business. Also, from a tax perspective, the incomes
and expenses of the business are included in the tax return of the owner.

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Partnership

A partnership is a form of business structure that comprises two or more owners. It is the simplest
form of business structure for a business with two or more owners. A partnership shares a lot of
similarities with a sole proprietorship. For example, the business does not exist as a separate legal
entity from its owners, and therefore, the owners and the entity are treated as one person.

Corporation

A corporation is a type of business structure that gives the entity a separate legal entity from its
owners. It is complex and expensive to set up, and it requires the owners to comply with more tax
requirements and regulations. Most corporations hire attorneys to oversee the registration process
and to ensure that the entity complies with the state laws where it is registered.

Limited Liability Company (LLC)

A limited liability company (LLC) is a hybrid business structure that combines the best of both
worlds, i.e., it possesses the characteristics of both partnerships and corporations. It provides
personal liability protection to the business owners while reducing tax and business requirements.
The profits and losses of the business are passed through to the owners, and each business owner is
required to include a share of the profits/losses in their personal tax returns.

Governance

Corporate governance in the business context refers to the systems of rules, practices, and processes
by which companies are governed. In this way, the corporate governance model followed by a
specific company is the distribution of rights and responsibilities by all participants in the
organization.

Governance ensures everyone in an organization follows appropriate and transparent decision-

making processes and that the interests of all stakeholders (shareholders, managers, employees,
suppliers, customers, among others) are protected.

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Financial
Production Budget per Unit

Number Toy Letter Toy Phonic Toy

Budgetary unit 5000 5,000 5000
$ $ $
Material 100 100 100
Labor 60 60 60
Variable overhead 50 50 50
Variable production overhead 75 75 75
Fixed cost 50 50 50
Total production cost 335 335 335
Mark-up 60% 201 201 201
Per unit sales price 635 635 635

The Sales Budget

Budgeted Sales in Unit 1905 taka selling price

Sales for the next five years

year 1 2 3 4 5
Budgeted 15000 17000 20000 22000 25000
sales in unit
Selling Price 1905 1905 1905 1905 1905
Sales Revenue 28,575,000 32,385,000 38,100,000 41,910,000 47,625,000
Estimated cost for 1 to 5 years

Variable cost 15,075,000 17,085,000 20,100,000 22,110,000 25,125,000

750,000 750,000 750,000 750,000 750,000

Fixed cost

Total production
50,25,000 17,835,000 20,850,000 22,860,000 25,875,000
cost

Net Profit 23,550,000 15,000,000 17,250,000 19,050,000 21,750,000

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 Analysis of Net Present Value from 0 Year to 5 Year

Year Annual cash flow Discount Factor Net Present Cumulative NPV
10% Value
$ $ $ $
0 -50,00,000 1.000 -50,00,000 -50,00,000
1 23,550,000 0.909 21,406,950 16,406,950
2 15,000,000 0.826 12,390,000 28,796,950
3 17,250,000 0.751 12,954,750 41,751,700
4 19,050,000 0.683 13,011,150 54,762,850
5 21,750,000 0.621 13,506,750 68,269,600
Total 68,269,600
So, NPV of the project is positive and suggesting that the investment is worthwhile using at 10%
discount rate.

Breakeven Analysis

Breakeven –point = Fixed cost ∕ Selling Price - Variable cost.

Year Fixed cost ∕ Point or unit

Selling price –variable cost =contribution
1 to 5 2,250,000 1905-1005=900 2500

Pro forma profit and loss

Year 1 Year 2 Year 3 Year 4 Year 5

Sales Revenue 28,575,000 32,385,000 38,100,000 41,910,000 47,625,000

Direct cost of
15,075,000 17,085,000 2,010,000 2,211,000 25,125,000
sales

Gross profit 13,500,000 15,300,000 36,090,000 39,699,000 22,500,000

Expenses
Payroll 350,000 375,000 400,000 440,000 480,000
Sales and 2, 00,000 220,000 340,000 350,000 350,000
marketing
Depreciation 100,000 100,000 100,000 100,000 100,000
Rent 100,000 100,000 100,000 100,000 100,000
Utilities 12,000 12,000 12,000 12,000 12,000
Insurance 36,000 36,000 36,000 36,000 36,000
Total Operating 798,000 843,000 988,000 1,038,000 1,078,000
Expenses
Profit before 12,702,000 14,457,000 35,102,000 38,661,000 21,422,000
interest and tax
Interest Expenses 1, 00,000 1, 00,000 1, 00,000 1, 00,000 1, 00,000

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Taxes Incurred 5, 00,000 7, 00,000 9, 00,000 11, 00,000 14, 00,000
Net profit
12,102,000 13,657,000 34,102,000 37,461,000 19,922,000

Projected Balance Sheet

The following table will indicate the Projected Balance Sheet.

Year1 Year 2 Year 3 Year 4 Year 5

Assets

Current Assets

Cash 90,00,000 1,20,00,000 1,30,00,000 1,20,00,000 1,40,00,000

Accounts Receivable 10,00,000 11,00,000 12,00,000 15,00,000 20,00,000

Inventory 20,00,000 22,00,000 25,00,000 30,00,000 35,00,000

Total Current 1,20,00,0000 1,53,00,000 1,67,00,000 1,65,00,000 1,75,00,000

Assets

Long –term Assets 20,00,000 40,00,000 45,00,000 50,00,000 60,00,000

Accumulated (100,000) (2,00,000) (2,50,000) (3,00,000) (3,00,000)

Depreciation

Total Long Term 19,00,000 38,00,000 42,50,000 47,00,000 57,00,000

Assets

Total Assets 1,39,00,000 19,100,000 20,950,000 21,200,000 23,200,000

Liability and
Capital

Current liabilities $100,000 500,000 4,50,000 500,000 500,000

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Accounts Payable $7,00,000 800,000 150,000 300,000 300,000

Current Borrowing $10,00,000 800,000 200,000 200,000 200,000

Other Current $50,000 500,000 100,000 200,000 200,000

liabilities

Subtotal Current $1,850,000 26,00,000 9,50,000 12,00,000 12,00,000

Laibilities

Long-term Liabilities $9,00,000 15,00,000 20,00,000 10,00,000 10,00,000

Total Laibilities 2,750,000 41,00,000 29,50,000 22,00,000 22,00,000

Paid in capital 60,00,000 8,000,000 90,00,000 10,000,000 1,20,00,000

Retained Earnings 5,150,000 70,00,000 90,00,000 90,00,000 90,00,000

Total Capital 11,150,000 15,000,000 1,80,00,000 1,90,00,000 2,10,00,000

Total Laibility And 13,900,000 19,100,000 20,950,000 21,200,000 23,200,000

Capital

Critical Risks
There are several potential risks and problems. Most risks and problems are associated with the risk
of tenants. A few problems created by tenancy are potential destruction to the property or non-
payment of rent. Making necessary repairs will rectify the destruction and the eviction process can
remedy non-payment of rent. While both will require allocating additional time and financial
resources, creating a productive loss, future income will overcome this potential obstacle.
Additionally, finding an insurance company that will insure more than two rental properties is a
current problem. We are currently researching alternatives to overcome this issue.

Additional problems, or constraints, that exist are personal and economic factors. From a personal
perspective Jarrod is currently undergoing a short sale on a property in San Diego. This has had
immense adverse effects on his credit rating; all other credit obligations have been met and are

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current. It is estimated that it will take one to three years to recover from this. A consequence to this
shortcoming, in conjunction with the current economic conditions, Ferventure Realty LLC will have
difficulty obtaining financial support through conventional means.

A few alternatives to overcome this financial obstacle will be to obtain financing unconventionally,
some options are;

utilizing a hard-money lender,

sell properties at market value to acquire “two for one,”
sell properties contract for deed and use capital received to purchase another,
save rental income until sufficient money is saved to purchase additional properties,
purchase additional properties contract for deed, or 6) purchase properties with credit card

Harvest Strategy

A harvest strategy or harvesting strategy is a business plan for either canceling or reducing marketing
spending on a product. The management has decided that it would cost too much to boost sales. In
other words, they could not justify the expense after considering likely future revenues from the
product.

The term ‘harvest strategy’ may also refer to a brand or line of business.

Marketing executives choose a harvesting strategy when a product has reached the end of its life
cycle. They aim to extract maximum profit from any remaining sales.

Put simply; the product sells thanks to its goodwill and nothing else. Goodwill refers to the
established reputation of a product.

When implementing a harvest strategy, the company has three options:

Eliminate or reduce all capital spending on the product. In other words, keep using existing
equipment until it no longer works.
Reduce or eliminate marketing and advertising expenditure. New sales will rely on brand
loyalty.
Eliminate or reduce operating expenses. In other words, only approve expenditure when the
return on investment is very high.

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Milestone Schedule

There’s no real plan without business plan milestones. Milestones are what use to manage
responsibilities, track results, and review and revise. The tracking and review means management,
and accountability.

Just as a need tactics to execute strategy, so too you need milestones to execute tactics. Look for a
close match between tactics and milestones.

List milestones. Set down what’s supposed to happen, and when. Use it for ongoing tactics related to
products, services, marketing, administration, and finance. Toy Learn includes launch dates, review
dates, prototype availability, advertising, social media, website development, programs to generate
leads and traffic. The milestones set the plan tactics into practical, concrete terms, with real budgets,
deadlines, and management responsibilities. Toy Learns are the building blocks of strategy and
tactics. And they Toy Learns are essential to ongoing plan-vs.-actual management and analysis,
which is what turns Toy Learn planning into management.

Give each milestone at least the following:

Name
Date
Budget
Person responsible
Start and end dates
Expected performance metric
Relationship with specific tactics and strategy points

Toy Learn business plan might also have additional information for main milestones. Then make
sure all people know that will be following the plan, tracking the milestones, and analyzing the plan-
vs.-actual results.

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