Riyadh Day Care Centre: Demand for Child Day Care Services in Saudi Arabia

This document outlines the details of the proposed Riyadh child daycare centre. It has been posted to you due to your institution’s ability to provide financial assistance. The necessary research has been conducted and it has been found that indeed there is a high demand for child daycare services in Saudi Arabia, especially in Riyadh. The document is being sent to you due to the capacity of your institution to provide part of the much-needed capital for successful project implementation. The available capital can only provide for half of the start-up budget and therefor the other half is to be sourced from financial institutions such as yours. Any assistance will be highly appreciated, thanks

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Executive Summary

The demand for child daycare services has been on a steady rise worldwide. This is occasioned by the increasing number of mothers joining the workforce. In Saudi Arabia for instance, the appropriate policy reforms have necessitated the shift from traditional roles of women and have led to women being part of the national labour force. Since the early 1990s there has been a steady rise “from 5.4% to 15% women” involvement in the national labour force. (Raphaeli, “Women Employment in Saudi Arabia”) The present project seeks to establish a child day care centre in Riyadh. Proper market research has been conducted and the business is viable. The cost of the project is $108,300. $55,000 is available and the rest of the money is to be sourced from financial institutions.

Introduction

Child day care “refers to the care offered to child during the day by someone else other than the parents or guardian.” (Gould 45) Day care is mainly given when the guardians are busy and this is so often during the working hours when the parents are a way on duty. The provision of day care services has created business opportunities for many entrepreneurs. Thus, this paper seeks to determine the most effective way a child day care business can be established, funded and run to provide proper and adequate day care service in Riyadh, Saudi Arabia.

Background

The demand for child day care services has been on a steady increase world wide as more mothers join a become part of the work force. These women have shifted from their traditional roles as home care takers which included child care roles. “In today’s world women constitute the highest percentage of the growing work force,” this includes both the single mothers and married women. (Modigliani 73) This implies that many more children are being left at home to be taken care of by other relatives or the demand for child day care services is increasing.

For a long time Saudi Arabia has been characterized with poor legislative laws that prevented women from participating in economic activities. However, reforms have seen the increase in women taking part in labour market activities. “Since the early 1990s the women’s participation in Saud Arabia’s national labour force has increased from 5.4% to nearly 15%.” (Raphaeli, “Women Employment in Saudi Arabia”)

As a result, there has been a predictable increase in the demand for child day care services. Many small scale entrepreneurs can venture in the business and provide quality services to fill the gap. However, due to the nature of the business, there are many challenges faced by small entrepreneurs and this range from the “cost of running the business to legal framework that regulates the day care services.” (Modigliani 107)

Problem Statement

There is an increase in the demand for child day care services in Saudi Arabia. The provision of this service as a business is often a difficult task that requires careful planning. This is because child day care service is not just like any other business and a lot considerations need to be taken to guarantee the safety and wellbeing of the children at the care centre. And thus the need for a comprehensive research for a child day care centre project.

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Literature Review

In the preparation to setup a centre in any to provide day care services many factors need to be considered, these include; “Health, cost, location and safety.” (Gould 29) All this factors are important since a day care business is not just a business like any other. It deals with children and therefore their well being should be considered in every aspect. The proximity to homes that are likely to require the services is another important factor in setting up a day care centre. Other factors to consider may include the availability of other day care centres in that particular area and the range of services they offer.

Parents will choose the most convenient centre, most parents work in central business districts of cities such as Riyadh. Thus the ideal centre should be located on a major street or highway just outside the central business district so that parents can easily drop off their kids and pick them up in the evening. Therefore an ideal centre should have a parking space. “While one may setup the business in an existing building, health and safety of the children must be considered.” (Modigliani 136)There are several models of day care services, the common ones include;

The home based business

This is suitable for persons with own children who wants to stay home to raise them and therefore can be able to take in more children. This is the most cost effective of all the child care services as the operations are normally at home and therefore no need to find a building. The children are often from neighbouring families who in most cases are well known to the care giver. However, the home owner must have a home that is suitable for that kind of service. This is established by consulting the regulating authorities.

Corporate Centre model

The corporate care services are provided by large corporations which see the need to go a step further to address family issues affecting its employees. In most cases the corporation s relies on an entrepreneur who sets up and runs the care centre on behalf of the company. The company normally provides the financial support required in setting up the care centre.

Franchising model

In this case a large “day care Services Company develops a prototype and invites individuals to buy the legal rights” and to open and operate care centres based on the prototype. ( Pinney 116) The operator usually pays “initial franchising fee to get started and subsequently pays a proportion of the gross income for the ongoing use of the franchise.” (Modigliani 55)

The agency sponsored model

These are care centres located in both rural and urban centres and are operated by an agency. The finances are in most cases provided by the sponsoring agency. Some may be non profit organisations mainly supporting early childhood education programmes. The agencies may include; “community organizations, church groups, labour unions or neighbourhood organizations.” (Modigliani 57) Most of these organizations run the care centres from grants provided by sponsors.

The licensed care model

In most cases this model always begins as an informal care centre without experience and later formalizes as it incorporates the many programmes and standard requirements. Most small scale entrepreneur child day care givers begin this way.

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Challenges in the child day care industry

Like many other industries, the child day care industry is often faced with many challenges that sometimes make it very difficult for the “commercialization of the service.” (Modigliani 170)There various challenges encountered include;

Staffing, child day care service is a labour intensive activity, thus staff requirements is the core for the day to day operations of a day care centre. The problem normally arises from the cost of maintaining the staff, studies show that the staffing usually accounts of up to 65% of the total costs. The staffing requirements are often controlled by the law depending on the size of the care centre and the age of the children admitted. “The law also mandates the qualification requirements of the supervisors.” (Modigliani 62) This implies that the staff will be highly paid in exchange for their professional services.

In some countries or states, there are standard requirements for any day care service. Some “jurisdictions require licensing or certification,” most countries have formulated laws outlining childcare which indicate the minimum required conditions for any childcare centre. (Modigliani 79) Such laws often lead to increased financial implications since more funds are required to “provide the tools for quality child healthcare.” (Modigliani 80)

The legislation also puts a limitation to the range of services to be offered which includes the age of children a day care centre may admit. This makes the industry a highly fragmented one and is often one of the major prohibiting factors in any one intending to venture in the child day care service.

Objectives

  • To determine the current demand for day care services in Riyadh, Saudi Arabia
  • To establish all the requirements to be considered in setting up a day care centre.
  • To determine the financial implications of carrying out a successful child day care project in Riyadh

Methods/Approach

Due to the increased involvement of “women in the national labour activities in Saudi Arabia,” there is an increased demand for day care services. (Raphaeli, “Women Employment in Saudi Arabia”) This was especially seen in the densely populated areas which include Riyadh and other major cities. The information was obtained from the national data on citizens which indicate that there has been a marked increase in the number of women joining the work force. The project will be carried out in Riyadh, the capital city of Saudi Arabia. This city was chosen because it has the highest concentration of women involved in the national labour force.

There it is presumed to have the highest demand for child day care services in the country. The location of the day care centre will be just outside the central business district where parents can easily drop off and pick their children on their way to and from work. The most favourable is beside the road that leads to the densely populated area of Ummul Hammam. The day care centre will be called Riyadh child day care centre and will admit children from two to six years of age.

All the safety and regulation requirements have been considered. This includes; the age of children who may be admitted at the day care centre, “reporting of disease detection, Nutritional standards, availability of public transport, fire and police protection, playground safety standards, hand and dish washing procedures.” (Gould 124) The appropriate education for the various ages of children to be admitted at the Riyadh child day care centre will be provided by the staff.

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A lot of funds will be used to implement the project and therefore suitable financial institutions, mainly commercial banks will be approached to provide part of the funding for successful implementation. This is discussed in detail in the budget plan.

The marketing activities for the day care centre will be carried out in the media and posters will be placed in the residential areas. The competition for day care services is still low at the moment, however, strategies will be developed to enable the Riyadh day care centre maintain a competitive advantage over other day care service providers. This will be mainly accomplished through provision of quality customer friendly service.

Time Schedule

Time Schedule

Budget

The “success of any business depends on the financial management plan”; therefore the budget plan for the Riyadh day care centre provides a realistic actual projection of the estimated expenses and income. ( Pinney 155) This is shown in the start up and operating budgets for the Riyadh day care centre. The start up budget includes operating costs for the first three months. The start up budget developed is based on the actual costs except for the personnel and other services which are based on the estimated service requirements for 20 children.

Table 1: start up budget.

EXPENSES AMOUNT IN $
Personnel 10,000.00
Purchase of building 50,000.00
Remodelling costs 15,000.00
Utilities deposit 4,000.00
Equipment
Office 1,500.00
Program initialization fee 10,000.00
Supplies
Office supplies 500.00
House keeping 5,000.00
Food services 5,000.00
Miscellaneous
Advertising 3,000.00
Legal and professional fees
Operating costs 1,200.00
Insurance 2,200.00
Depreciation 900.00
Total expenses 108,300.00
Total Income 55,000.00

Operating budget

The operating budget will be prepared after the centre has opened for services to reflect the reality on the ground, mainly depending on the number of children who will be admitted when the services are launched.

Personnel

The Riyadh day care centre will employ different professional workers to carry out the various services. The personnel will include both full time and part time employees. The full time personnel will include; the director of the centre, 2 teachers, 2 aides and cooks. The part time personnel whose contract will depend on the increase in the work load will include; aides, secretary, and substitutes for the full time workers.

Conclusion

The increase in the demand for day care services in Saudi Arabia has created opportunities for entrepreneurs who can offer this type of services. The increased demand has been occasioned by the large of women joining the work force following successful reforms in the policy framework. To take advantage of the opportunity this research was done to identify the most effective way a child day care business can be established, funded and run to provide proper and adequate day care service in Riyadh, Saudi Arabia. Successful implementation will reduce the burden faced by many mothers in Riyadh who find it hard to care for their children during the day.

Works Cited

Gould, Stephen. Child Development. New York: W.W Norton and Company Publishers, 1991. Print.

Modigliani, Lawrence. How to start a Quality Child Care Business: Financial Planning. London: Mcmillan Publishers, 1997. Print.

Pinney, Constance. Budgeting for Small Business. Arizona: Pinney and Company, 1997. Print.

Raphaeli, Nimrod. “Women Employment in Saudi Arabia.” MEMRI Economic Blog, 2010. Web.

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