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

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Business Plan

Algorizm

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 AlMusa 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.

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Business Plan

Algorizm

 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

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Business Plan

Algorizm

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.

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Business Plan

Algorizm

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.

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Business Plan

Algorizm

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

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Business Plan

Algorizm

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.

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Business Plan

Algorizm

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:
6000 5000 4000 3000 2000 1000 0 1st year 2nd year 3rd year Total no. of customers Potentail customers

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Business Plan

Algorizm

The

total

number

of

customers

along

with

potential

customers for coaching is shown in the bar chart below:

800 700 600 500 400 300 200 100 0 1st Qtr 2nd year 3rd year Total number of customers Potential customers

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Business Plan

Algorizm

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.

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Business Plan

Algorizm

 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

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Business Plan

Algorizm

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

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Business Plan

Algorizm

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 subjects 5. 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.

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Business Plan

Algorizm

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) Tuition Fees (coaching) Total income

1200,000 600,000 1800,000

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

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Business Plan

Algorizm

Office Expense Depreciation Expense Affiliation Expense Miscellaneous Total Expense Net profit

80,000 5,000 10,000 50,000 1465,000 335,000

Projected Balance Sheet for the first year:
Fixed ASSETS: Furniture Less: prov for depreciation (5%) Total CURRENT ASSETS: Fees Receivables Deposit (Refundable) Cash at bank Cash at hand Current Liabilities: None 100,000 5000 95000 9000 100,000 3, 21,000 10,000 4, 50,000 Nil

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Business Plan

Algorizm

4, 50,000 5, 45,000 Financed BY: Capital Balance Less: Drawings Add: Net profit 210,000 Nil 335,000 5, 45,000

Projected Cash Flow for the First year:

Net Income ADD: Depreciation Less: Fees Receivables

3, 35,000 5000 9000 3,

Cash Flow from Operating activities 31,000

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Business Plan

Algorizm

Projected Income Statement For the Second Year:

Tuition fees (college) Tuition Fees (coaching) Total income Less Expense: Advertising Salaries Rent Utility Expense (Elect, gas and telephone)

1800,000 1200,000 30, 00,000

200,000 1200,000 120,000 350,000

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Business Plan

Algorizm

Office Expense Depreciation Expense Affiliation Expense Miscellaneous Total Expense Net profit 60,000

100,000 5,000 10,000 55,000 2,040,000 9,

Projected Balance Sheet for the Second year:
Fixed ASSETS: Furniture Less: prov for depreciation (5%) Total CURRENT ASSETS: Fees Receivables Deposit (Refundable) Cash at bank Cash at hand Current Liabilities: 100,000 10,000 90000 20,000 100,000 9, 00,000 54,000 1,074,000

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Business Plan

Algorizm

None

Nil 1,074,000 1,164,000

Financed BY: Capital Balance Less: Drawings Add: Net profit 204,000 Nil 9, 60,000 1,164,000

Projected Cash Flow for The second year:
Net Income ADD: Depreciation Less: increase in Fees Receivables Cash Flow 954,000 from 9, 60,000 5000 11000 activities

Operating

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Business Plan

Algorizm

Projected Income Statement For the Third Year:

Tuition fees (college) Tuition Fees (coaching) Total income Less Expense:

2,400,000 1800,000 4,2,00,000

Hamdard Institute of management Sciences

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Business Plan

Algorizm

Advertising Salaries Rent Utility Expense (Elect, gas and telephone) Office Expense Depreciation Expense Affiliation Expense Miscellaneous Total Expense Net profit

200,000 1500,000 180,000 350,000 120,000 5,000 15,000 60,000 2,430,000 1770,000

Projected Balance Sheet for the Third year:
Fixed ASSETS: Furniture Less: prov for depreciation (5%) Total CURRENT ASSETS: Fees Receivables 100,000 15,000 85000 30,000

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Business Plan

Algorizm

Deposit (Refundable) Cash at bank Cash at hand Current Liabilities: None

100,000 17, 00,000 65,000 1895,000 Nil 1,895,000 1,980,000

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

Projected Cash Flow for the Third year:
Net Income ADD: Depreciation Less: increase in Fees Receivables 1770,000

5000 10000

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Business Plan

Algorizm

Cash Flow from Operating activities

1,765,000

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