Business plan for ToyLearn company

A project submitted in partial fulfilment of

the requirements for the award of the degree
of

BACHELOR OF BUSINESS
ADMINISTRATION

BY
SHUBHAM ROY
(SBU190099)

FACULTY OF COMMERCE &

MANAGEMENT SARALA BIRLA
UNIVERSITY, RANCHI
Batch 2019-2022
 ACKNOWLEDGEMENT

The toughest of endeavors in this world is not possible without the support of a helping hand
which guides and motivates a person to take on any challenge head on. Inputs from such
seeking hand are always like very essential because more often or not certain mistakes which
go unnoticed from our eyes.
I would like to thank my guide ‘Anusha Lal ’ without whom I would never be able be able to
finish the project report. The success and final outcome of this project required a lot of
guidance and assistance and I am extremely privileged to have got this all along the
completion of our project. All that we have done is only due to such supervision and
assistance and not forgot to thank him.

Shubham Roy

Signature

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 CERTIFICATE OF APPROVAL

The project entitled “Business plan for ToyLearn Company”, has been presented in
satisfactory manner. It is understood that by this approval, the undersigned do not necessarily
endorse any conclusion drawn or opinion expressed therein, but approve the project for the
purpose for which it is submitted.

(Examiner) (Guide)

(Dean)

2
 CONTENTS

S.no Topic Page no

1 Cover page -
2 Acknowledgement 1
3 Certificate of approval 2
4 Executive summary 4-5
5 Company description 6-8
6 Business strategy 8
7 Marketing plan 9-13
8 Operational plan 14
9 Financial plan 15-28
10 Human resource plan 29-31
11 Bibliography 32

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TOYLEARN
Executive Summary
This is a plan for a new business, TOYLEARN, to be started locally at Ranchi and then
expanded to other estates in INDIA.

ToyLearn is an exciting start-up company that will develop a line of educational tools for
children that are fun and engaging. ToyLearn will be profitable by the end of year one and
will have a steep increase in sales for the first several years.

ToyLearn is initially offering three different educational toys. The first is NumberToy, a fun
toy that teaches children number skills. The second product is LetterToy which as the name
hints, helps children quickly conquer the alphabet. The third product is PhonicToy, 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 lots to use them often. New products are currently in development
by the in-house department.

ToyLearn 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.

ToyLearn 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. The segment is growing at 8% per year and currently has 3,354,430 perspective
customers. The second market segment that will be addressed is wholesale purchasers,
typically organizations that are purchasing the products for their clients to use. These

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organizations are typically some sort of care centre or nursery/pre school. The segment is
growing annually at 10% with 702,335 possible customers.

ToyLearn has conservatively forecasted sales of Rs367,0000 in year two. The yearly sales
will rise to Rs475,0000 in year three. ToyLearn is destined to succeed due to a combination
of seasoned management, excellent product development, and the insight to recognize a
wonderful market opportunity.

Highlights

6000000

5000000

4000000

3000000

2000000

1000000

0
Year 1 Year 2 year 3

SalesGross ProfitNet Profit

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Company Description

ToyLearn is a start-up company that will develop 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. ToyLearn will initially distribute the
products within the INDIA, with future global distribution being considered.

Company Ownership

TOYLEARN is a sole proprietorship owned by Richa Keshri.

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, printers.

Start-up

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160000

140000

120000

100000

80000

60000

40000

20000

0
Category 1

ExpensesAssetsInvestmentLoans

Start-up

Requirements

Start-up Expenses

Legal Rs4,0000

Stationery etc. Rs2000

Brochures Rs2000

Consultants Rs3,0000

Insurance Rs4000

Rent Rs6000

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Research and Development Rs5,0000

Total Start-up Expenses Rs13,4000

Start-up Assets

Cash Required Rs116,6000

Other Current Assets Rs0

Long-term Assets Rs10,0000

Total Assets Rs126,6000

Total Requirements Rs140,0000

BUSINESS STRATEGY
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Objectives

 Create a profitable company.

 Develop innovative, educational toys.

 Improve the learning curve for children through the use of interactive toys.

Mission

It is ToyLearn’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.

Keys to Success

 Develop creative, educational, engaging toys.

 Adopt strict financial controls.

 Listen carefully to the customers.

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 MARKETING PLAN

Market Analysis Summary

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, day care centres, etc., commercial
businesses that are buying the product for their clients to use.

ToyLearn 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
ToyLearn in terms of generating sales, it provides better margins. Additionally, this process
will be more costly for the first few years, however, once relationships are developed with
individual consumers as well as the wholesale purchasers, the marketing cost per sale will
dramatically decrease as the original customers become familiar with ToyLearn’s outstanding
product line and continue to make purchases.

Market Segmentation

 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. Generally they have at least
an undergraduate degree with 41% of the segment having a graduate degree.

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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 pre school. The number of children that they care for generally
ranges from seven to 25.

Market Analysis

Potential Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR

Customers

Individuals 8% 3,354,430 3,622,784 3,912,607 4,225,616 4,563,665 8.00%

Wholesale 10% 102,335 112,569 123,826 136,209 149,830 10.00%

Total 8.06% 3,456,765 3,735,353 4,036,433 4,361,825 4,713,495 8.06%

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Target Market Segment Strategy

ToyLearn will focus on individual consumers and wholesale customers for several good
reasons:

 Better margins. Although sales volume will be less relative to using wholesale
distributors, margins will be higher.
 Closer contact with customers. By selling direct to consumers, a stronger
relationship will be developed. This is advantageous because it provides a more
accurate feedback loop which is instrumental in product development.
 More efficient. Fewer layers involved in distribution.

Industry Analysis

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.

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Competition and Buying Patterns

The small niche educational toy industry is comprised of two market leaders and several
smaller, primarily regional manufacturers. The two main competitors are:

 LeapFrog Enterprises. An Emeryville, CA company. They currently have one main

product line that teaches phonic.
 Knowledge Universe. This company was founded by financier Michael Milken and
Oracle President Lawrence J. Ellison. Knowledge Universe has a total of seven
different products.

In addition, ToyLearn competes with products produced by large game manufacturers.

Sales Strategy

The sales strategy will be tailored for each customer group. The sales strategy for individuals
is to create enough awareness of ToyLearn so that customers are asking their retailers to carry
ToyLearn for them. To address the business segment, it is ToyLearn’s goal that the
businesses are not just buying one or two of the products but that they are buying all of them
addressing different skills, all of which are important. This is especially important as
businesses are generally repeat customers, meaning that if the customer is happy with the
product, it is more than likely that they will become a long-term customer and not look for
new vendors.

Sales Forecast

The first three months will not see any sales as the organization will be ramping up
production and establishing sales channels. The first year is forecasted to have a fairly slow
sales forecast because of the fact that ToyLearn is a start-up organization. Growth for year
two and year three should be fairly steep. After year four it is forecasted that growth will
continue, but at a more sustainable rate than during the second and third year.

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Sales Monthly
35000

30000

25000

20000

15000

10000

5000

0
Month 1Month 2Month 3Month 4Month 5 Month 6Month 7Month 8Month 9 Month Month Month
101112

IndividualBusiness

Sales Forecast

Sales

Individuals Rs66,5800 Rs196,5540 Rs254,3320

Businesses Rs57,9250 Rs171,0020 Rs221,2690

Total Sales Rs124,5050 Rs367,5560 Rs475,6010

Direct Cost of Sales Year 1 Year 2 Year 3

Individuals Rs26,6320 Rs78,6220 Rs101,7330

Businesses Rs23,1700 Rs68,4010 Rs88,5080

Subtotal Direct Cost of Sales Rs49,8020 Rs147,0220 Rs190,2400

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.

Operations Plan

ToyLearn will outsource the manufacture of all of its products. I opted for an outsourcing model for a
number of reasons

1. Neither of them have a manufacturing operations/supply chain experience.

2. Outsourcing will keep overhead costs to a minimum, making all production costs
variable.
3. Outsourcing will allow the management team to focus on marketing and new product
development.
4. Reducing the financial risks by not committing to the expense of a manufacturing
facility.
5. Increasing the scalability of the business model.

Financial Plan

The following sections will outline important financial information.

Important Assumptions

The following table details important financial assumptions.

General Assumptions

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Plan Month 1 2

Current Interest Rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00%

Other 0 0 0

Break-even Analysis

The Break-even Analysis indicates that Rs30,290 will be needed in monthly revenue to reach
the break-even point.

Break-even Analysis

Monthly Revenue Break-even Rs18,596

Assumptions:

Average Percent Variable Cost 40%

Estimated Monthly Fixed Cost Rs11,158

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Projected Profit and Loss

The following table and charts will indicate Projected Profit and Loss.

Profit - monthly

12000

10000

8000

6000

4000

2000

0
Category 1

Month 1Month 2Month3Month 4minth 5Month 6

Month 7Month 8Month9month 10 month 11 month 12

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 Profit Yearly

60000

50000

40000

30000

20000

10000

Category 1

Year1Year 2Year 3

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Pro Forma Profit and Loss

Sales Rs124,505 Rs367,556 Rs475,601

Direct Cost of Sales Rs49,8020 Rs147,022 Rs190,240

Other Costs of Goods Rs0 Rs0 Rs0

Total Cost of Sales Rs49,802 Rs147,022 Rs190,240

Gross Margin Rs74,703 Rs220,534 Rs285,361

Gross Margin % 60.00% 60.00% 60.00%

Expenses

Payroll Rs98,0000 Rs128,0000 Rs156,0000

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Sales and Marketing and Rs4,2000 Rs4,2000 Rs4,2000
Other Expenses

Depreciation Rs1,9920 Rs1,9920 Rs1,9920

Rent Rs7,2000 Rs7,2000 Rs7,2000

Utilities Rs3,6000 Rs3,6000 Rs3,6000

Insurance Rs3,0000 Rs3,0000 Rs3,0000

Payroll Taxes Rs14,7000 Rs19,2000 Rs23,4000

Other Rs1,2000 Rs1,2000 Rs1,2000

Total Operating Expenses Rs133,8920 Rs168,3920 Rs200,5920

Profit Before Interest and (Rs59,1890) Rs52,1420 Rs84,7690

Taxes

EBITDA (Rs57,1970) Rs54,1340 Rs86,7610

Interest Expense Rs0 Rs0 Rs0

Taxes Incurred Rs0 Rs15,6420 Rs25,4310

Net Profit (Rs59,189) Rs36,499 Rs59,338

Net Profit/Sales -47.54% 9.93% 12.48%

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Projected Cash Flow

The following table and chart will indicate Projected Cash Flow.

Pro Forma Cash Flow

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Cash Received

Cash from Operations

Cash Sales Rs31,1260 Rs91,8890 Rs118,9000

Cash from Receivables Rs66,0110 Rs222,2420 Rs332,9510

Subtotal Cash from Operations Rs97,1370 Rs314,1310 Rs451,8520

Additional Cash Received

Sales Tax, VAT, HST/GST Rs0 Rs0 Rs0

Received

New Current Borrowing Rs 0 Rs0 Rs0

New Other Liabilities Rs 0 Rs0 Rs0

(interest- free)

New Long-term Liabilities Rs0 Rs0 Rs0

Sales of Other Current Assets Rs0 Rs0 Rs0

Sales of Long-term Assets Rs0 Rs0 Rs0

New Investment Received Rs0 Rs0 Rs0

Subtotal Cash Received Rs97,137 Rs314,131 Rs451,852

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Expenditures Year 1 Year 2

Expenditures from Operations

Cash Spending Rs98,0000 Rs128,0000 Rs156,0000

Bill Payments Rs74,3510 Rs193,8900 Rs253,5690

Subtotal Spent on Operations Rs172,3510 Rs321,8900 Rs409,5690

Additional Cash Spent

Sales Tax, VAT, HST/GST Rs0 Rs0 Rs0

Paid Out

Principal Repayment of Rs0 Rs0 Rs0

Current Borrowing

Other Liabilities Principal Rs0 Rs0 Rs0

Repayment

Long-term Liabilities Principal Rs0 Rs0 Rs0

Repayment

Purchase Other Current Assets Rs0 Rs0 Rs0

Purchase Long-term Assets Rs0 Rs0 Rs0

Dividends Rs 0 Rs 0 Rs 0

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Subtotal Cash Spent Rs172,3510 Rs321,8900 Rs409,5690

Net Cash Flow (Rs75,2130) (Rs7,7590) Rs42,2830

Cash Balance Rs41,3870 Rs33,6280 Rs75,9110

Projected Balance Sheet

The following table will indicate the Projected Balance Sheet.

Pro Forma Balance Sheet

Assets

Current Assets

Cash Rs41,3870 Rs 33,6280 Rs 75,9110

Accounts Receivable Rs 27,3670 Rs 80,7920 Rs 104,5410

Other Current Assets Rs 0 Rs 0 Rs 0

Total Current Assets Rs 68,7540 Rs 114,4200 Rs 180,4520

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Long-term Assets

Long-term Assets Rs10,0000 Rs10,0000 Rs10,0000

Accumulated Depreciation Rs1,9920 Rs 3,9840 Rs 5,9760

Total Long-term Assets Rs8,0080 Rs 6,0160 Rs 4,0240

Total Assets Rs76,7620 Rs 120,4360 Rs 184,4760

Liabilities and Capital Year 1 Year 2

Current Liabilities

Accounts Payable Rs 9,3510 Rs 16,5260 Rs 21,2280

Current Borrowing Rs0 Rs 0 Rs 0

Other Current Liabilities Rs 0 Rs 0 Rs 0

Subtotal Current Liabilities Rs 9,3510 Rs 16,5260 Rs21,2280

Long-term Liabilities 0 0 0

Total Liabilities Rs 9,351 Rs 16,526 Rs 21,228

Paid-in Capital Rs 140,000 Rs 140,000 Rs 140,000

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Retained Earnings (Rs 13,400) (Rs 72,589) (Rs 36,090)

Earnings (Rs 59,189) Rs 36,499 Rs 59,338

Total Capital Rs67,411 Rs103,910 Rs163,248

Total Liabilities and Capital Rs76,762 Rs120,436 Rs184,476

Net Worth Rs67,411 Rs103,910 Rs163,248

Business Ratios

The following chart offers Business Ratios for this company as well as the industry averages.

Ratio Analysis

Sales Growth 0.00% 195.21% 29.40% 3.34%

Percent of Total Assets

Accounts Receivable 35.65% 67.08% 56.67% 16.20%

Other Current Assets 0.00% 0.00% 0.00% 23.64%

Total Current Assets 89.57% 95.00% 97.82% 79.15%

Long-term Assets 10.43% 5.00% 2.18% 20.85%

Total Assets 100.00% 100.00% 100.00% 100.00%

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Current Liabilities 12.18% 13.72% 11.51% 36.32%

Long-term Liabilities 0.00% 0.00% 0.00% 15.56%

Total Liabilities 12.18% 13.72% 11.51% 51.88%

Net Worth 87.82% 86.28% 88.49% 48.12%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 60.00% 60.00% 60.00% 34.87%

Selling, General & 107.54% 50.07% 47.52% 22.04%

Administrative Expenses

Advertising Expenses 0.00% 0.00% 0.00% 1.89%

Profit Before Interest and -47.54% 14.19% 17.82% 1.46%

Taxes

Main Ratios

Current 7.35 6.92 8.50 1.95

Quick 7.35 6.92 8.50 0.75

Total Debt to Total Assets 12.18% 13.72% 11.51% 59.08%

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Pre-tax Return on Net Worth -87.80% 50.18% 51.93% 3.36%

Pre-tax Return on Assets -77.11% 43.29% 45.95% 8.20%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin -47.54% 9.93% 12.48%

Return on Equity -87.80% 35.13% 36.35%

Activity Ratios

Accounts Receivable 3.41 3.41 3.41

Turnover

Collection Days 56 72 95

Accounts Payable Turnover 8.95 12.17 12.17

Payment Days 27 23 27

Total Asset Turnover 1.62 3.05 2.58

Debt Ratios

Debt to Net Worth 0.14 0.16 0.13

Current Liab. to Liab. 1.00 1.00 1.00

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Liquidity Ratios

Net Working Capital Rs59,403 Rs97,894 Rs159,224

Interest Coverage 0.00 0.00 0.00

Additional Ratios

Assets to Sales 0.62 0.33 0.39

Current Debt/Total Assets 12% 14% 12%

Acid Test 4.43 2.03 3.58

Sales/Net Worth 1.85 3.54 2.91

Dividend Payout 0.00 0.00 0.00

HUMAN RESOURCE PLAN

Manpower requirements:- manpower requirements for TOYLEARN COMPANY includes

managers, front line employees , and employees with special skill sets required for this
project. The roles of each member of our proposed team and how they will interact with each
other will be defined.

Recruitment and selection:- after the firm has attracted enough job applicants, employment
specialist will begin the selection process. The steps in the employees selection process is
described below :

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Step 1:- initial screening

Step 2: - employment testing

Step 3: - selection interview

Step 4:- background and reference check

Step 5:- physical examination

Step 6 : - decision to hire

COMPENSATION

Salaries,as we know,are payments that you receive from your employers in exchange for your
services. However,they are not chosen randomly & there are a few factors that decides one’s
salary & other incentives he might receive.

 Company Goals & Philosophy : Every organization has its compensation

philosophy – how it wants to position itself in the market with reference to
pay, the companies that it considers its competitors, the talent that it
considers critical and so on. For example,if their competitor pays 10K salary
to a networking guy,the company in question might pay him 10K,8K or
12K,depending upon how & what they think of the job role & the
availability of the talent in the market. The higher the availability,the lower
are the chances of getting a good package.
 Experience and Education : Although this may not be explicitly stated,
the number of years of experience and education that you have under your
belt,can & often has an influence on your salary. While its says,the more the
better,however, these could also make you overqualified for a job,which can
give rise to other sets of problems.
 Performance : “Pay for performance” is probably the most commonly
heard term, when salary is discussed. If you are an good/better/excellent
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performer,

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 your increment will take that into consideration and get you closer to the
higher end of the range, while a low performer may not see any increment
& might even be on the verge of loosing one’s job. Similarly, if the
company is doing well and has a profit sharing model, employees may reap
benefits from the company’s performance.

 Cost of Living : Different locations have different costs & item prices. And
as such,the amount needed to survive in those locations also vary. For
example, Pune , Bangalore ,Noida etc are some of the most expensive cities
to live in INDIA Hence,the salaries paid by the companies at those locations
is adjusted to the local cost of living & is generally on the higher side. On
the other hand, Jaipur, Amritsar are some of the most affordable places to
live in the same country. So,you can guess,your salary will also be on the
lower side when compared to the expensive ones. It has nothing to do with
your experience or labor or your certifications or achievements.

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 BIBLIOGRAPHY

 WWW.GOOGLE.COM
 WWW.ECONOMIC.COM
 WWW.QUORA.COM
 WWW.SCRIBD.COM

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