Roseleen Kagiri

XYZ LIMITED INVESTMENT PLAN (2015 - 2019) (OCTOBER 2015) EXECUTIVE SUMMARY XYZ, a leading provider of education and training, offers 8-4-4 curriculum in the Nairobi area that is par excellence. The school plays an important role in bridging the gap between the demand for quality school and the available capacity currently provided by available schools. XYZ seeks to provide excellent quality education through small class ratio of 28 pupils per class as well as by providing new and improved programs. The school draws its pupils mainly from Donholm estate and other surrounding estates i.e. Kayole, Umoja, Saika, Buruburu, Greenspan and Jacaranda. XYZ has experienced exponential growth which is attributed to the high-quality services offered by the school. The service quality has been rated excellent when compared with those of the competitors. The student population has increased from 21 pupils in 1996 to 1,504 pupils as at the end of June 2015. XYZ is seeking funding to create additional capacity by the construction of new classrooms which will lead to increased capacity. The school has set out development plans that include acquisition of new facilities to increase classrooms, construction of a swimming pool and construction of computer labs. It is expected that the value addition in the education and extracurricular programmes resulting from this project, will help support increment of fees. The estimated cost of the project is Kshs 80,000,000 with Kshs 40,000,000 sourced from external funding and Kshs. 40,000,000 funded from the school’s retained earnings account. The project is expected to be self-financing from the second year onwards. XYZ – Business Plan (2015 – 2019) Page 2 TABLE OF CONTENTS EXECUTIVE SUMMARY .......................................................................................................................... 2 LIST OF GRAPHS / TABLES ..................................................................................................................... 5 SECTION ONE - BACKGROUND AND OVERVIEW OF THE SCHOOL ........................................... 6 1.1 Education in Kenya ................................................................................................................................. 6 1.2 XYZ ltd ................................................................................................................................................... 6 1.21 About XYZ ........................................................................................................................................... 6 1.22 School Demographics ........................................................................................................................... 8 1.23 XYZ Accomplishments........................................................................................................................ 9 1.24 XYZ - Target Population / Catchment Area ......................................................................................... 9 SECTION TWO: XYZ – FINANCIAL AND ORGANISATIONAL OVERVIEW ...................................................... 10 2.1 Financial Growth ............................................................................................................................ 10 2.2 Competition Analysis and Management ......................................................................................... 11 2.3 XYZ ’s organization and management ........................................................................................... 12 2.4 XYZ ’s organizational Chart ........................................................................................................... 13 2.5 Pricing Strategy ............................................................................................................................... 14 2.6 Corporate Social Responsibility...................................................................................................... 14 SECTION THREE: PROPOSAL FOR FINACIAL SUPPORT ................................................................ 15 3.1 Financial Support Request and Justification ................................................................................... 15 3.2 Justification for the financial support.............................................................................................. 16 3.3 Proposed Development Plans.......................................................................................................... 16 3.4 Project Timeline .............................................................................................................................. 17 3.5 Expected Impact of the Funding ..................................................................................................... 18 3.51 Increased revenue............................................................................................................................ 18 3.52 Reduced costs................................................................................................................................. 18 3.53 Increased marketing activities ..................................................................................................... 18 XYZ – Business Plan (2015 – 2019) Page 3 3.6 Projected revenues .......................................................................................................................... 19 APPENDICES ............................................................................................... 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Appendix 2 – Projected Income and Expenses ........................................................................................... 20 Appendix 3 – Performance analysis in KCPE National Examinations -) .................................. 20 Appendix 4 – Stakeholder Analysis Matrix ................................................................................................ 21 Appendix 5 – Annual Report Summary (for the last 3 years)..................................................................... 22 XYZ – Business Plan (2015 – 2019) Page 4 LIST OF GRAPHS / TABLES Graph / Table 1: The growth of the school. .................................................................................................. 8 Graph / Table 2: The Financial growth of XYZ ........................................................................................ 10 Table 3: XYZ - Competitor Schools .......................................................................................................... 12 Table 4: XYZ - Current School Fees ........................................................................................................ 14 Table 5: Funds Allocation ........................................................................................................................... 17 Table 6: Summary Timeline ....................................................................................................................... 17 Table 7: Proposed Fee Structure ................................................................................................................. 19 Table 8: Proposed School Population ......................................................................................................... 19 XYZ – Business Plan (2015 – 2019) Page 5 SECTION ONE - BACKGROUND AND OVERVIEW OF THE SCHOOL 1.1 Education in Kenya The field of Education in Kenya has undergone phenomenal changes in the last three decades. There has been an accelerated shift in the mix between public and private providers of education, with the later playing an increasingly greater and significant role, particularly in the last 15 years. This shift has seen the establishment of several private primary schools, secondary schools and universities. The government has recognized the important role now being played by the private sector investors in education because the discrepancy gap between the demand for quality schooling and the available capacity currently provided by government is humongous. A further role being fulfilled by these private investors in education is to provide employment opportunities for the Kenyan population; both for teaching and non-teaching staff. 1.2 XYZ LTD 1.21 About XYZ XYZ, a registered Limited Liability Company, is a non-denominational Christian School in Nairobi, Kenya. The school was founded in 1990 when it started its operations within Donholm estate, in the Eastern side of Nairobi. This area is home to lower middle-income households. The school offers 8-4-4 educational curriculum and has both pre-school (baby class, nursery and preunit) and primary (Standard 1 to 8) sections. It was initially registered as a sole proprietorship but incorporated as a limited liability company in 2005. XYZ has since grown from one branch to four, in its nineteen years of existence, and has also seen tremendous growth in student enrolment. XYZ – Business Plan (2015 – 2019) Page 6 The school’s vision: To be a leading provider of education and training. Mission: To provide Sound Education Training and Guidance that empowers the Child to becoming a total being and capable of handling life’s challenges with confidence. Motto: “A special beginning.” Core Values: XYZ is guided by the following principles which define our CHARACTER. Courtesy: - We endeavour to act courteously and give others a feeling of being valued and respected. Honesty: - We strive to cultivate the spirit of goodwill by being truthful and sincere to others as it builds their trust in us. Altruistism: - We care about the needs and happiness of other people more than our own. Respect: - We believe that each individual irrespective of their age or social status in life deserves to be treated with dignity and deference. Accountability: - We accept accountability for our actions and offer amends instead of excuses. Compassion: - In dealing with both our internal and external customers we endeavour to provide whatever support is affordable. Tolerance: - We accept differences with patience and flexibility knowing that others have needs, feelings, hopes and dreams. Excellence: - We aim to excel in all that we do, in academics, extra-curricular and even social commitments. Reliability: - Our commitment to meeting the expectations of our clientele and the provision of our services is dependable. XYZ – Business Plan (2015 – 2019) Page 7 1.22 School Demographics The school’s population has increased steadily throughout the years from 21 pupils in 1996 to 1504 pupils as at the end of June 2015. The average class population is 28 pupils. This low ratio allows for more individualized attention to all the students, which ensure continued good performance. Graph / Table 1: The growth of the school- STAFF 600 NOS. OF CLASSES 400 PUPILS -(June) 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 0 YEAR PUPIL POPULATION NO. OF TEACHERS / OTHER NO. OF CLASSES STAFF - - - XYZ – Business Plan (2015 – 2019) - Page 8 -(June) - - - 1.23 XYZ Accomplishments The first KCPE Candidates at XYZ sat for the National K.C.P.E exams in 2006 where the 27 candidates posted one of the most impressive mean scores in the country of 423 marks. In subsequent years the school has continued to do well with the 2008 candidates posting a mean score of 426 marks. In 2011 the school produced the top candidate in the nation; Christine Kagiri who achieved 442 Marks. (See KCPE Analysis – Appendix 4) 1.24 XYZ - Target Population / Catchment Area The school draws its pupils mainly from Donholm estate and other surrounding estates i.e. Kayole, Umoja, Saika, Buruburu, Greenspan and Jacaranda. The targeted population is primarily children from middle and lower-middle income households. XYZ – Business Plan (2015 – 2019) Page 9 SECTION TWO: XYZ – FINANCIAL AND ORGANISATIONAL OVERVIEW 2.1 Financial Growth XYZ’s continued growth in student population has resulted in increased financial growth. There has been a steady rise in the annual turnover and increase in the asset value held by the school. The growth is attributed to the high-quality services offered by the school, which are rated excellent when compared with those of the competitors. Graph / Table 2: The Financial growth of XYZ Year - Annual Turnover (Kshs.) 84,000 1,470,000 2,100,000 3,591,530 5,032,100 6,784,178 8,230,926 12,639,023 14,803,084 XYZ – Business Plan (2015 – 2019) Operational Expenses (Kshs.) 216,000 1,862,000 1,969,262 2,620,949 3,820,682 6,079,641 8,059,989 11,751,566 13,553,876 Annual Surplus/Deficit (Kshs.) Asset (Kshs.) (132,000) (392,000) 130,738 970,581 1,211,418 704,537 170,937 887,457 1,249,208 Page 10 Value 719,000 846,560 976,738 1,391,230 2,494,630 4,047,790 6,883,683 8,684,270 10,280,769 - 2.2 17,072,871 19,949,564 28,044,896 34,208,284 37,020,066 42,029,760 41,039,596 54,632,422 60,733,322 74,174,440 15,306,461 22,044,998 26,836,503 31,781,614 35,805,030 44,429,682 41,501,402 53,881,505 60,505,810 63,321,165 1,236,487 (2,095,434) 1,208,393 2,426,670 1,215,036 (2,399,922) (461,806) 750,917 227,512 10,853,275 7,156,100 7,156,100 11,055,077 13,260,888 17,866,388 17,283,787 22,284,152 28,445,063 35,239,746 41,239,746 Competition Analysis and Management XYZ is in competition with other schools within Komarock, both private and public. XYZ seeks to stay ahead of its competitors by continually reviewing its services and ensuring they continue to be a cut above the rest. XYZ ’s competitive advantage is embedded in its culture and tradition: ➢ ➢ ➢ ➢ ➢ ➢ ➢ ➢ A tradition of excellent performance in national examinations in all the years. The school believes in provision of quality services and continuous improvement. At XYZ, every child is special and as such receives specialized individual attention. The school believes in giving value for monies received from its clientele i.e. school fees and other charges. The school also boasts of excellent relations between the parents and the school’s management, which has added tremendous value in the way we do things. The school believes that our parents are a resource when it comes to desired improvements and as such continuous participative consultations through parents’ open days are a way of life. A disciplined and dedicated workforce. Prudent financial management. XYZ – Business Plan (2015 – 2019) Page 11 Table 3: XYZ - Competitor Schools School Year established Ownership (private or public) Current pupil population Komarock Primary School New Light Junior Academy By Grace Academy Infill Academy Precious Gift School Lakewood Schools - Public Private Private Private private private 900 3,- 2.3 XYZ ’s organization and management XYZ is headed by two directors who are also not only the founders but also qualified and experienced teachers. Mr. John Doe the principle director holds a Bachelor’s Degree in Education while his co-director Mrs. Jane Doe holds a Certificate and Diploma in Early Childhood Development. The school employs two head teachers who oversee the day to day operations of the school’s academic and extracurricular programs. They are assisted by two deputy head teachers, one in charge of curriculum implementation and the other one in charge of administration. The head teacher in charge of the Umoja School holds a Bachelor of Education Degree as well as other certifications in primary education. He has held leadership positions in top performing schools for close to two decades. Similarly, the head teacher at the Donholm schools is a seasoned P1 teacher of many years who comes from a background of headship in many private and public primary schools. There is a senior teacher heading each of the other two branches. Additionally, the school’s learning program is organized in such a way that each of the main subjects (English, Mathematics, Kiswahili, GHC and Science) has a panel head who collaborates and consults on the assigned roles, Effective teaching methods and techniques are applied with an aim to achieving best performance in each of the subjects. XYZ – Business Plan (2015 – 2019) Page 12 The school also employs 5 administrative assistants who assist the directors and the head teachers on the day to day administrative matters e.g. collection of fees and book keeping. There is a total of 22 subordinate staff (drivers, driver assistants, cleaners and cooks). The total number of staff on payroll now stands at close to 100. 2.4 XYZ ’s organizational Chart XYZ – Business Plan (2015 – 2019) Page 13 2.5 Pricing Strategy XYZ has adopted a pricing strategy that enables it to compete with other players in the market. This pricing strategy ensures that the fees structure is comparable to that of the competitors. The differentiating factor however is in the quality of service offered which is rated as much more superior based on feedback received from parents, children, visitor and other stakeholders. The table below presents the current school fees structure: Table 4: XYZ - Current School Fees Section description School fees charges per term Annual Charges (Kshs). (Kshs). Pre-Primary section Lower Primary section Upper Primary section 9,500 12,000 25,000 2.6 28,500 36,000 75,000 Corporate Social Responsibility XYZ has adopted a Corporate Social Responsibility Strategy that gives back to the community. At present, the school is giving full bursaries to 19 pupils and partial bursaries to many others. Many of those enjoying the bursaries are disadvantaged pupils e.g. orphans. The school has also sponsored several high school students who would otherwise have missed an opportunity to attain secondary education due to lack of fees owing to their low-income backgrounds. XYZ – Business Plan (2015 – 2019) Page 14 SECTION THREE: PROPOSAL FOR FINACIAL SUPPORT 3.1 Financial Support Request and Justification XYZ is seeking funding to extend its educational, training and extra curriculum resources and facilities. Since 2008 the school has been improving on the physical infrastructure by constructing modern classrooms and office block in sector 8A Donholm and this phase is now nearly complete. Notably the entire project has been financed through retained earnings just as had been envisaged in the business plan 2005 - 2009. The school now plans to acquire a ½ acre piece of land in Umoja Estate and construct the necessary facilities, all estimated at a cost of Kshs 80,000,000/=. The land is already in the possession of the school on tenancy basis and currently accommodates part of the school namely Umoja branch with a population of 452 pupils as at the end of May 2015. The entire acquisition and improvement project is to be implemented over a period of 2 years. During the first year of the project, the school is seeking external funding of Kshs 40,000,000 and will self-fund the balance of Kshs 40,000,000 from its retained earnings account. The project is expected to be self-financing from the second year onwards. XYZ – Business Plan (2015 – 2019) Page 15 3.2 Justification for the financial support The school expanded its operations to Umoja estate in 2006 by taking over the operations of ABC school. After acquisition of the facilities, XYZ has experienced a steady rise in student enrollment over the years. This is as a result of the goodwill derived from the star performance of XYZ in national examinations and also on grade to grade learner formative evaluations. During this period improvement on the physical infrastructure has been by way of the construction of temporary facilities due to the fact that the premises are held on a rental basis. With the acquisition of the property at Kshs. 20,000,000 it is envisaged that permanent multi storey buildings will replace the present semi-permanent structures. These additions will create room for even higher enrolment. The proposed acquisition will: ➢ Facilitate the school to commence construction of modern classrooms and offices. ➢ Provide space for the construction of a swimming pool thereby saving the school the cost of transferring children for swimming lessons to hired pools. ➢ Open the possibility of offering high school education. 3.3 Proposed Development Plans The following are the proposed developments; ➢ To construct 8 classrooms to accommodate the entire primary section of the Umoja branch. ➢ To put up and equip a modern computer learning facility. ➢ To establish facilities for practical learning e.g. laboratory, home science etc. ➢ To provide various sports facilities for the pupils in order to promote balanced learning. ➢ To put up an all-inclusive administration block. ➢ To put up a modern kitchen. ➢ To establish a well-equipped music room. XYZ – Business Plan (2015 – 2019) Page 16 ➢ To construct a compressed steel tank hoisted on a high tower to store water. Proposed Application of Funds XYZ seeks to obtain funding of Ksh. 40,000,000 for its proposed project with funds being allocated as outlined below: Table 5: Funds Allocation Quantity Estimated Cost Purchase of Land ½ acres Architectural charges (approx.6%) Classrooms (approx. Size 7.5m x 8.85m) and Administration block Toilets Computer room and facilities Water storage facilities Fencing Total 3.4 20,000,000 2,400,000 12,500,000 1,500,000 1,400,000 1,200,000 1,000,000 40,000,000 Project Timeline Implementation Plan (Timeline) Below is a summary of the proposed implementation plan, which is spread over 2 years Table 6: Summary Timeline Activities Submit funding proposal Expected funding approval Proposed start date August 2015 September 2015 Proposed end date Purchase of land September 2015 Construction (8 classrooms October 2015 and admin. Block, fencing October 2015 February 2016 Water storage facilities Construction (8 classrooms) February 2016 December 2016 June 2016 April 2017 Computer room and facilities April 2017 August 2017 XYZ – Business Plan (2015 – 2019) Page 17 Remarks 3.5 Expected Impact of the Funding 3.51 Increased revenue The funding will allow XYZ to achieve all the development plans it has set out. These improvements will expand the infrastructure and facilities that will support the school’s plan to increase the school fees. Additional facilities will also raise the enrolment rates and in the long run, allow the introduction of new programmes. It is expected that the value addition in the education and extra-curricular programmes resulting from this project, will help support increment of fees by 20% in the 2nd year (2016/17) and a further 10% in the 3rd year (2018/19). Thereafter additional revenue will be generated from new enrolments. (Refer to the Projected Cash Flows– Appendix 1) 3.52 Reduced costs XYZ will seek to reduce it operating costs in various areas. Cost Reduction will be achieved through a decrease in, supervision/coordination expenses, hiring of extracurricular facilities expenses e.g. swimming pool, and rental charges amongst others. (Refer to the Projected Cash Flows– Appendix 1) 3.53 Increased marketing activities The created additional capacity due to the construction of new classrooms will lead to increased capacity and allow for a more rigorous marketing plan for the school. It should be noted that enhancement of capacity at our Donholm Sector 8A installation is ongoing and nearing completion with the construction of an ultramodern tuition and administration block. XYZ – Business Plan (2015 – 2019) Page 18 3.6 Projected revenues a) Proposed new Tuition fees structure Table 7: Proposed Fee Structure Section description Pre-primary Lower primary Upper primary School fees charges per Annual charges (Kshs). term (Kshs). 11,000 33,000 15,000 45,000 25,000 75,000 b) Projected School Population Table 8: Proposed School Population Year Pre-primary Lower primary Upper primary - - - - - 513 560 620 700 760 c) Projected Cash flow statements (see appendix 1) XYZ – Business Plan (2015 – 2019) Page 19 Appendix 2 – Projected Income and Expenses The table below provides a summary of the projected income and expenses for the period-. Year Annual Turnover Operational Annual (Kshs). ’000 Expenses (Kshs) ’000 surplus/Deficit (Kshs) ’000 86,850 75,898 10,952 91,193 86,085 5,108 95,752 88,148 7,604 100,540 91,359 9,181 108,583 99,688 8,895 - Appendix 3 – Performance analysis in KCPE National Examinations -) YEAR ENGLISH KISWAHILI MATHS SCIENCE SSR TOTAL MEAN GRADE - MEAN GRADE - A - A- - A- - B+ - B+ - - A- A B+ A B+ B AB+ AB+ A- XYZ – Business Plan (2015 – 2019) Page 20 Appendix 4 – Stakeholder Analysis Matrix XYZ – Business Plan (2015 – 2019) Page 21 Appendix 4 – Stakeholder Analysis Matrix STAKEHOLDER ANALYSIS MATRIX Stakeholder Name Directors Employees and Staff Impact How much does the project impact them? (Low, Medium, High) High Medium Influence How much influence do they have over the project? (Low, Medium, High) High What is important to the stakeholder? How could the stakeholder contribute to the project? How could the stakeholder block the project? Spearheading the vision for Successful execution of the the project and bringing Decide not to proceed project together all elements for the success of the project. Medium Job Security through continued success of the organisation. Good Remuneration Terms. By providing good services in the organisation to maintain the good reputation of XYZ Ltd By not providing good services leading to poor reputation for XYZ which will affect enrolment and therefore the income Support by Continuing to attend school and provide the revenue through school fees lack of support could greatly affect the projected revenue Apply non restrictive tax requirements to XYZ Ltd Restrictive Taxation of the project Providing good credit terms to meet continuous need of the organisation Offering restrictive terms of payments or no credit terms Provide goodwill and feedback to the school Poor goodwill would affect student enrollment Students / Parents Medium Medium Success of the school and continued growth Kenya Revenue Authority Medium Medium Tax Collection High High General Public (Mwananchi , sick, disadvantaged) Medium Medium Social responsibility Good for business Insurance (CIC) Medium Medium Premiums Accuracy in reporting Provide insurance cover for Denial of insurance cover the project to proceed with the project High High Good Return on Investment Provide adequate and timely Lack of support could delay financial input to the project project indefinitely Creditors Financiers XYZ – Business Plan (2015 – 2019) Good Repayment Terms Appendix 4 – Stakeholder Analysis Matrix STAKEHOLDER ANALYSIS MATRIX Stakeholder Name Directors Employees and Staff Impact How much does the project impact them? (Low, Medium, High) High Medium Influence How much influence do they have over the project? (Low, Medium, High) High What is important to the stakeholder? How could the stakeholder contribute to the project? How could the stakeholder Strategy for engaging the block the project? stakeholder Spearheading the vision for Successful execution of the the project and bringing Decide not to proceed project together all elements for the success of the project. Ensure buy-in to the vision. Medium Job Security through continued success of the organisation. Good Remuneration Terms. By providing good services in the organisation to maintain the good reputation of XYZ Ltd By not providing good services leading to poor reputation for XYZ which will affect enrolment and therefore the income Support by Continuing to attend school and provide the revenue through school fees lack of support could Ensure engage parents in greatly affect the projected school vision for their revenue continued support Ensure Staff engagement and support in Implementing the Vision and Mission of XYZ Ltd. Students / Parents Medium Medium Success of the school and continued growth Kenya Revenue Authority Medium Medium Tax Collection High High General Public (Mwananchi , sick, disadvantaged) Medium Medium Social responsibility Good for business Insurance (CIC) Medium Medium Premiums Accuracy in reporting Providing adequate Provide insurance cover for Denial of insurance cover information for correct the project to proceed with the project coverage for full execution of the project. High High Good Return on Investment Provide adequate and timely Lack of support could delay financial input to the project project indefinitely Creditors Financiers XYZ – Business Plan (2015 – 2019) Good Repayment Terms Apply non restrictive tax requirements to XYZ Ltd Restrictive Taxation of the project Ensure XYZ is tax compliant in all aspects Providing good credit terms to meet continuous need of the organisation Offering restrictive terms of payments or no credit terms Communicate terms of payments Provide goodwill and feedback to the school Poor goodwill would affect student enrollment Engaging general public in corporate social responsibility activities Meet and provide them with all relevant documents to ensure successful financing. Page 22 Appendix 5 – Annual Report Summary (for the last 3 years). XYZ – Business Plan (2015 – 2019) Page 22