How to Write a Business Plan for Daycare and Preschool
- Running a business
Writing a daycare or preschool business plan is a big task, but due diligence and hard work will help you understand what you’ll need to launch and run a daycare or preschool successfully.
What do daycare investors want?
Your local government will have rules and regulations you’ll need to follow as a small business owner and childcare provider. Start by reviewing the childcare licensing guidelines for your state and city. Once you’re clear on licensing guidelines, you’re ready to start writing your childcare business plan.
The purpose of a business plan is to help secure funding. You’ll likely need financing to launch your preschool or daycare, especially if you want to avoid the monthly repayment of a loan.
Investors provide businesses with money in exchange for partial ownership. As a result, they expect a larger return on their initial investment. Because many investors work in business, they prefer to invest in an established company.
Most investors look for:
Industry background and experience
Financial performance and promise.
Investors want to make money. Therefore, they are more inclined to work with experienced entrepreneurs and business owners to guarantee a return on their investment.
This might sound discouraging for those with little experience or without a business management background, but the opportunity doesn’t end there. You could consider bringing on a partner with a business background. Additionally, many investors act as a source of business advice.
You need to demonstrate that your business will make money. Investors will likely want to see signs of business growth before they give you money.
Additionally, investors will want to know about your financial stability. Questions an investor might ask are:
- What do you plan to do with the money?
- Has your business been up or down in recent years?
- Is your company losing money? Are there signs of growth for the future?
- How do you plan to repay your investment?
Of course, every investor is different, so they’ll consider various factors. While experience and financial promise are at the top of the list for most investors, they might also look for uniqueness, business readiness, an effective business model, and more.
Writing a daycare business plan
We’ve discussed licensing and investors. Now, you’re ready to begin the framework of your business plan for daycares and preschools. Here’s what you’ll need to get started:
Needs assessment, insurance policies, operating policies and procedures, marketing strategy.
Start with the basics: what does your daycare do? Detailing the service you’re offering will help you create a clear business plan. Next, you might want to write some goals or even a mission statement outlining your purpose and motivation.
Start by looking at general daycare or preschool industry trends, then narrow your scope to the preschools or daycares in your local area. Next, you’ll need to figure out who your target customers are and confirm that there is a need for a business like yours in your community.
Are there a lot of young families in your neighborhood? Are you located somewhere convenient for commuting parents? Does your business offer a specific service that your competitors don’t, like early check-in or extended hours?
Also, check out the competition. Research the existing daycare or preschool options in your community. Look at current preschool or daycare business plan samples. What makes your daycare or preschool unique?
Developing detailed budgets will help you run your small business. You’ll need to compare your current cash flow and expenditures to determine whether you’ll make a profit.
Build a budget for unexpected costs. For example, how many children do you need to serve to be able to pay your bills and stay afloat? Child Care Aware of America offers some terrific budgeting resources for this process.
Depending on the type and size of your preschool, you’ll need insurance policies of several different types, including liability, property, workers’ compensation, and business insurance. Check the licensing requirements for guidance in building this part of your preschool business plan.
Create a comprehensive handbook for families and staff that includes you center's policies and procedures. For instance, you'll need to develop an emergency plan , daycare sick policy , and other safety protocols according to your local childcare licensing requirements.
Your staff handbook will be a helpful resource your employees can reference and include all your employment policies including work and pay schedules, benefits, and information about professional growth and development. You can also include information on your center's philosophy and curriculum, classroom procedures, and expectations for working with children and families.
Your marketing strategy is the key to attracting customers. Decide what type of advertising you will use in front of potential customers. For example, list your school in local directories and participate in parenting and kid-friendly community events. Run a social media campaign focusing on your target population.
Another big part of childcare business marketing is differentiating yourself from other preschools. These days adopting daycare software is a surefire way to attract families with young children. A tool like brightwheel's center management feature will streamline your center's admission process, record keeping, and reporting, saving you up to 20 hours per month.
You can also use brightwheel for recording and tracking daily events and activities, and sending real-time updates to families throughout the day. It also offers secure, digital check-in/check-out and a paperless billing system. This is a great way to keep your families looped in on daily activities and handle all of your administrative tasks in one place.
Your business is ready!
Writing a business plan can be stressful, but it doesn’t have to be. Once you secure the proper licensing, use the information in this article to guide you through creating a solid daycare business plan that drives investors and financing to your business.
These are just the basics to get you started. For further information, the U.S. Small Business Administration’s website has detailed instructions on creating each necessary part of a successful business plan.
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A list of everything you need to start an early education program.
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How to create a childcare business plan
Keeping a group of toddlers occupied and writing a strong business plan may be very different tasks, but both take patience, time, and coordinating a few moving pieces. You bring the child care skills, this guide will help out with the other one, outlining the five key areas to include in an effective child care business plan. From financial projections to local business marketing strategies , here are the most important sections of a successful daycare business plan.
1. Executive summary
Your childcare business plan will be as functional to your business as a shelf stocked with Curious George. Not only is it an essential document if you’re raising funds for your business, but it’s also a helpful way to organize your thoughts and plans for yourself and to share them with employees.
Start every business plan with a summary to hook whoever’s reading it to learn more about your company and your proposal. Think of it a little like a sales pitch for your business and a preview of everything you lay out inside. Be sure to include:
- Contact information – Include your name, number, address, email, and any other relevant contact information so potential partners know how to get in touch.
- Business concept – Whether a one-person babysitting service or a 24/7 child care facility, include key details of your business, including staff size, services, a summary of general operations, and the required operating licenses you have or plan to get.
- Business structure – List owners, partners, managers, and employees, and explain the structure of your business and how it will run. This should also include your target demographic and basic marketing plans.
- Mission – Share your reason for starting a childcare business. For Matt and Anne Evers , owners of the Primrose School of Atascocita in Kingwood, TX, their business is personal: “Since both of our children attend the school it is very easy for us to ask ourselves when making daily decisions, ‘What’s the best choice for the child? What will result in the best outcome for [them]?’”
Keep the executive summary to one or two pages. You’ll have the space to dive deeper into the details of your childcare business in the following sections.
2. Location details
Child care is a local business, which means location, community needs, and demographics are all key in planning your grand opening.
Your business location will likely fall into one of two categories of childcare businesses:
- Inside your home – Operating within your home can mean less overhead costs, fewer rental expenses, and more flexibility. To comply with local and state safety regulations, you may be required to renovate or change portions of your home.
- Outside your home – Factor in rent, utilities, and any necessary repairs to the property. Whether renting in a residential neighborhood or purchasing a commercial property, summarize your general knowledge of the building and neighborhood, plus why you plan to operate there in this section.
Since your location is important to your childcare business, include insurance costs, relevant zoning laws, neighborhood information, and applicable details on kitchen and bathroom facilities.
3. Financial layout
An effective business plan will share both a compelling narrative for your idea and the steps you’ll take to make it a success. Your financial planning section should be well-researched with estimates for costs, the funding you’re seeking, and projected growth over the next three or more years. While this section is necessary for investors and partners, it will also give you a working plan to help your childcare business run smoothly and make a profit.
When fleshing out the financial section of your business plan, include details like:
- Tax plan – Share your business’s legal structure — commonly C or S corporation, general or limited partnership, sole proprietor, or limited liability company — to plan for taxes.
- Insurance – Assess risk, liability, protection, and coverage options to ensure you’ve covered all the necessary bases.
- Budget – Include both costs and projected profit for your child care business accounting for personnel, equipment, supplies, professional fees, and other expenses. Include monthly and annual budgets, as well as a cash-flow forecast.
Detail your plans for fluctuations, which is common for childcare businesses. Take it from Danielle Burns, director of Lil’ Red Barn Academy in Washington whose business experienced an influx of children in the summer of 2021, despite the summer typically being a slower time.
If you run into questions with the financial section of your business plan, consider tapping an accountant for help, especially if they have advised other local businesses in your area.
4. Marketing plan
It’s almost time to spread the word about your services. Building a marketing plan as a neighborhood business is more than catchy slogans and photos of cute kids. In this section, show your understanding of your local market and how your business will support it.
When developing your marketing plan, include:
- Market analysis – Summarize the state of childcare in your area: Will you be one of five daycares on the block, or are you opening up within a community that’s lacking in childcare options? Consider neighborhood trends, your competition, and the average cost of child care in your neighborhood. Include information on your target clientele and how you’ll meet their needs to show your business’s potential.
- Business niche – Whether you’re focused on a specific age group or specializing in evening care, explain where you fit into the overall childcare industry and how any unique services will distinguish you from the competition.
- The 5 P’s: Price, product, promotion, place, and people – You’ll want to make sure you’re offering the right prices and products to the right people in the most effective way possible. Analyze market and demographic data for marketing or advertising plans for your childcare business to reach the right clients for your business.
Start with a free business page on Nextdoor . Set one up for your local business in minutes to instantly unlock a following of your most valuable customers: neighbors. Show up in local searches when neighbors look for childcare options near them, share updates as you open and grow, and build trust in your business with recommendations.
5. Daily operations
The details of your day-to-day operations are just as important as the big picture ideas and long-term goals you’re setting. Use this section for the details of your services, including information on:
- Personnel – List your team along with the goals and responsibilities of each of their roles. Share details of your hiring practices and staff policies, from sick leave to the termination process.
- Structure – Include a schedule for what a typical day at your daycare looks like highlighting what makes your business unique: lunch or nutrition plans, classes and other organized activities, playtime, exercise, and storytime.
- Parental policies – The two most important details with parents are how you plan to keep them informed, and what your policies are. Pick-up and drop-off requirements, what happens if they’re late for pick-up, behavioral issues — build an action plan to set expectations when they first enroll their children.
- Emergency plans – Include fire escape plans, medical protocol, and other possible contingency plans as part of your daily operational details.
Build a community with Nextdoor
The building blocks of a successful childcare service start with a comprehensive business plan. From there, your business will rely on your local community and how you’re able to meet the needs of the families in your neighborhood to thrive.
With one in three U.S. households on Nextdoor , neighbors use the app every day to get things done, connect with everyone and everything nearby, and pass along local recommendations. With 50,000 shared each week, make the next recommendation for your child care services with a free business page and a plan to reach local families who need them.
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How to Start a Daycare Business
14 min. read
Updated November 13, 2023
Free Download: Sample Daycare Business Plan Templates
Do you love caring for children? Does spending your day finger painting, reading Dr. Seuss, and playing ring-around-the-rosie sound like something you’d enjoy doing? Then opening a daycare might be just the thing for you, and this guide can show you how.
To get a sense of how to start a daycare business, we talked with Lindsey Roemen, owner of Lindsey’s Family Daycare in Larchwood, Iowa, and Shalonda Owens, owner of Fruitful Trees Learning Center in Columbus, Ohio, about their experiences as daycare owners.
Lindsey says working from home and being able to stay home with your children are great perks to daycare ownership, but it also takes a special person. “You can’t go into daycare just to stay home with your kids,” she says. “You have to be a kind, patient person.”
- The outlook for daycare businesses
According to the U.S. Bureau of Labor Statistics, daycare businesses will see some of the fastest employment growth out of all industries through 2020.
This means now is an excellent time for opening a daycare. An in-home daycare offers the obvious perks of working from home and spending time with your children, but even if you don’t have any little ones of your own, an in-home daycare can be a fun business for anyone who loves kids. Working parents will always need someone to look after their children, meaning a daycare business will never become obsolete.
- Should you franchise?
You can skip a lot of steps of starting a daycare by purchasing a daycare franchise. But for most people, this option is cost prohibitive: The cheapest franchises start at $59,000 and can cost up to $3 million.
This guide will focus primarily on how to start a daycare center in your own home, which has many benefits: fewer expenses, more flexible hours, and convenience. Read on to learn the ins and outs of how to open a daycare.
- Step 1: Learn about licensing
The first step to starting a daycare is to contact your state Daycare Licensing Agency. “You have to call your state and see what is required of you,” says Lindsey Roemen. “Every state is different and has different guidelines. You have to weigh pros and cons and see if you can make it work in your home.”
Not all states require licenses, but you almost always need to complete a registration, depending on how many children you will be caring for. Daycare.com gives a comprehensive overview of each state’s licensing requirements, so one of your first tasks will be determining what kind of licensing your state requires, and how many children you plan to care for at once. Many states only require licensing if you’re caring for five or more children, so perhaps you’ll choose to avoid the licensing process and keep your enrollment low.
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“There are a lot of people who quit daycare or dropped their numbers down because they didn’t want to be registered,” Lindsey says. When you have a better idea of what your state requires, it will help you identify your own business plan.
Another consideration is your Home Owner’s Association, if you belong to one. The enrollment numbers at Shalonda Owens’ daycare, Fruitful Trees Learning Center, were limited by her HOA. “Where I live, my HOA will not allow me to have over six kids at one time,” she says.
Here are some examples of possible licensing requirements:
- Physical space: a minimum square footage per child, both indoor and outdoor, depending on age.
- Health requirements: annual medical examinations for staff and/or children; immunization records.
- Fire regulations: a posted evacuation plan in each room and regular, documented fire drills.
- Education or training requirements: certifications in Early Childhood Education, on-going professional development for staff. Lindsey was required to have an Early Childhood Education degree or several years of experience in childcare (she qualified with the latter).
Once you have read the licensing requirements carefully, you might want to make an appointment with licensing specialists to ask questions and review the procedure for obtaining your license (if you need one). It might be helpful for them to visit your home, as well.
- Step 2: Identify existing services
Now that you have reviewed the licensing regulations in your state and determined if starting a daycare is a feasible option for you, it’s time to look at other daycares in your area. This will be your competition and colleagues.
Compile a list of daycares in your area with the following information:
- Enrollment numbers (how many children do they care for?)
- Ages of enrollment
- Tuition cost
This information will make it easier for you to decide these things when opening your home daycare.
Ask yourself: Where is the gap between community need and existing services? What needs aren’t being met? If there is a saturation in your area of facilities offering full-time care for two-to-five-year-olds during traditional, weekday hours, then maybe your home daycare could offer very early morning, overnight, weekend, or evening care, or specifically care for infants up to two years old. By identifying the existing daycares in your area, you can determine what your community needs and what will make your business successful.
Where is the gap between community need and existing services? What needs aren’t being met? If there is a saturation in your area of facilities offering full-time care for two-to-five-year-olds during traditional, weekday hours, then maybe your home daycare could offer very early morning, overnight, weekend, or evening care, or specifically care for infants up to two years old. By identifying the existing daycares in your area, you can determine what your community needs, and what will make your business successful.
In addition to knowing the competition, there are other benefits to knowing the other daycare providers in your area. In Larchwood, Iowa, there are six home daycare providers including Lindsey’s, as well as a daycare center. When Lindsey had surgery, all the home providers pitched in to cover for her and take her children while she recovered. “We back up for each other,” Lindsey says. “We get together once every other week and talk about what we’re doing.”
To obtain information about other centers in your area, you can contact your county licensing office, spend some time searching online, or even just browse through the Yellow Pages.
[see-also href=”https://www.bplans.com/start-a-business/market-research/tools/” target=”_blank”]Practical Market Resources for Entrepreneurs[/see-also]
- Step 3: Create a business plan
You have a business idea and now it’s time to to turn that idea into a plan. This requires some specific decision making and research to nail down the details of your daycare.
[see-also href=”https://www.bplans.com/business-planning/how-to-write/ ” target=”_blank”]Business Planning Guide[/see-also]
1. Work out the logistics
Here are some logistical questions to get you started:
How many children will you care for? Many states have strict rules about the maximum number of children of certain ages allowed in a home daycare. “Start out small,” Lindsey says. “I think it’s important to get yourself used to it. If you start out smaller, you’ll be more successful.”
What is the minimum and maximum age for enrollment at your daycare? At Lindsey’s Family Daycare, the youngest child is eight weeks and the oldest is nine years. “It just seems like parents typically around 10 years old start giving them more responsibility and letting them stay home,” Lindsey says.
What time will you open your doors and what time do children need to be picked up? There are a lot of options around timing, and it’s a good idea to check out your competition before making this decision. Some non-traditional options include after-school care (this also opens up the ages of children you can accommodate to include school-age kids), drop-in or demand care, or part-time care.
Will you provide food or do children need to bring snacks and lunches? If you will provide food, check out the Child and Adult Care Food Program (CACFP), a food cost reimbursement program available to home daycares.
Will you be hiring more staff? What about an accountant or bookkeeper? Shalonda encourages outsourcing for daycare owners when possible. “You need strong administrative skills,” she says. “I’m the type that I hire my weakness. I have a friend that helps me with newsletters and things like that.”
A lot of these answers will be provided for you by your regulations, but some of them will be entirely up to your personal preference and the limitations of your space.
2. Come up with your name and philosophy
The name of your daycare will become your brand. You may want to include your personal name, as Lindsey did with “Lindsey’s Family Daycare,” or you may want to choose something completely different, like Shalonda Owens’ “Fruitful Trees Learning Center.”
Choosing an educational philosophy might help you create a name for your daycare. There are plenty of philosophies to choose from—Montessori, Waldorf, and Reggio Emilia, to name a few. If you don’t already have experience with these, research online to find out what resonates with you. Lindsey uses a play-based philosophy at Lindsey’s Family Daycare. “I’m structured as far as when we have breakfast, lunch, snack,” she says. “But I’m a strong believer in the free childcare and letting them be themselves through free play.”
Once you have identified a philosophy and name, organize a program: times for meals, outdoor play, and naps, as well as prepared activities and lessons based on your curriculum.
[see-also] The Complete Guide to Registering Your Business Name [/see-also]
3. Establish a health and safety plan
You will need to have plans for emergency evacuation, sickness prevention, and accident procedures. Many licensing departments require you to do fire and/or tornado drills regularly.
4. Draw up a contract
Create a contract for parents to review and sign when they enroll their child.
This will have information for them about payment, any additional fees for supplies or late pickup, and a sickness and inclement weather policy.
It will also request information from them, such as a child’s allergies or medical conditions, emergency contact numbers, immunization records, and a list of people who can pick them up.
This 211 Childcare website provides guidance on forming a contract and also offers a sample PDF.
5. Create a budget
A major part of any business plan is an organized, well-considered budget. “You have to be able to budget yourself,” Lindsey says. “It can get away from you. You have to be willing to treat it like a job.”
When starting a daycare, it is important to begin with enough money to cover your startup costs and the operational costs for at least the first 90 days. Remember, it is unlikely your daycare will start off with full enrollment, so don’t rely on enrollment fees for children unless they are already registered.
“You need to have a startup budget, but you can start up with the bare minimum,” Lindsey says.
Here are some examples of startup costs when opening a daycare:
- Personnel (including your salary)
- Equipment (educational, kitchen, outdoor, office)
- Supplies (educational, housekeeping, office)
- Advertising (print, online, ad space)
- Licensing fees
6. Set your tuition
Another consideration in your budget is how much you will charge your clients.
One way to get an idea of how much you will charge is by referring to the information you collected on daycares in your area. Your rates will depend largely on your location; in Iowa, Lindsey Roemen charges a flat rate of $25 per child, per day, with a discounted rate of $17 per day for siblings. She and her fellow in-home daycare providers in the area try to keep their rates the same.
Shalonda Owens has a more complicated system for fees at her in-home daycare in Ohio. Her weekly rates are $160 for infants (six weeks to 12 months), $150 for “early toddlers” (13 months to 23 months), $145 for two-year-olds, and $135 for preschoolers (three to five years old). Before and after school care is $7/hour.
Another factor to consider is how and when you will accept payment. You’ll also need to establish a deadline for payment and penalties for late payments. Lindsey’s clients write her a check every Thursday at pickup, and Owen’s clients pay every Monday at drop off. In addition to tuition, many daycares charge a one-time enrollment fee to cover the extra time and paperwork you will need for each new child.
Include anticipated tuition in your projected income for your budget, but don’t rely heavily on it. “You have to be wise in your spending,” says Shalonda. “There are times where your enrollment may decrease and you have to be able to manage things for a long period a time.”
7. Determine where you’ll get your funding
Luckily, for an in-home daycare, it is likely that your startup costs will be low. But should you find yourself needing some startup cash, here are your options:
Private: Ideally, your startup costs can be covered by your own funds or that of a friend or family member. This reduces the time you will spend looking for additional funding and there are no finance charges.
Commercial: Commercial banks offer short-term and long-term business loans at prevailing interest rates.
Government agencies: Contact your Small Business Administration office for information on federal loan programs or your state’s economic development office for information on state loans and grant programs.
Tax credits: There are several home business tax write-offs that can offset your expenses when you are running a daycare from your home. This includes 100 percent deductible expenses like food, toys, and equipment, as well as partially deductible expenses like home insurance and utilities. The IRS has a guide for figuring and claiming the tax deduction for business use of your home.
- Step 4: Get set up
Now that you have a plan, it’s time to set the wheels in motion.
Choose your location
Picking the location for your daycare may be necessary if you don’t plan to run it out of your home. For more information on picking your business location, check out our article, How to Choose Your Business Location.
Purchase any equipment needed for your daycare. In addition to toys, you may need sheets, mats, blankets, child-sized utensils, plates and cups, high chairs, step stools and booster seats.
Education.gov has an exhaustive list of child care equipment and materials that you can consult.
Insurance is vitally important when starting a daycare. You need property insurance to cover your business equipment and liability coverage in case you are sued. For help finding an agent and purchasing insurance, contact your State Insurance Department.
- Step 5: Market your daycare
For both Lindsey Roemen and Shalonda Owens, marketing was never a part of the process of opening a daycare. Word of mouth filled up their enrollment numbers and waitlist so quickly that they never had to market. The same might be true for you, but if not, marketing is an important step for ensuring your home daycare thrives.
Here are some questions that can help you identify your client base and how to reach them:
- Who are your potential clients?
- Where are they?
- What are they currently doing for childcare?
- What can you offer them that is an improvement on their current arrangement?
- How do you compare with your competitors?
You gathered a lot of this information earlier when first formatting your business plan; now, you can use it to help you target your marketing. Put up fliers in your community, create social media pages (Twitter, Facebook, LinkedIn) and be sure to include testimonials from previous clients whose children you have cared for. Recommendations inspire trust in potential clients.
Once your daycare is operational, continue to seek out accreditations like the National Association for the Education of Young Children (NAEYC) or National Association for Family Childcare and other professional development opportunities to improve your knowledge base and your reputation as a child care provider.
Be sure to continue collecting feedback from your clients. Use the positive reactions in your marketing and handle any criticisms swiftly and professionally. With the proper foundation for your home daycare, you are sure to have more positive feedback than negative.
- Child Care Law Center: This nonprofit provides very accessible information about the rights and responsibilities of childcare providers.
- National Association for Family Child Care: A national resource for in-home childcare providers and also a source for accreditation.
- Association for Early Learning Leaders: An excellent source for professional development, accreditation, and the host of an annual, national conference for early childhood educators.
- Child Care Aware: This website is a great place to start when you decide to open a daycare. It helps with both the business and philosophical elements of childcare.
See why 1.2 million entrepreneurs have written their business plans with LivePlan
Emma is a freelance writer and media specialist with a passion for crafting in-depth, human interest articles. She likes spending all of her money on travel, eating cheeseburgers and ice cream, and dancing with abandon.
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Developing Your Business Plan
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Child Care Provider Expansion Initiative: Developing your Business Plan
A main component of your application for the Child Care Provider Expansion Initiative will involve answering key questions outlining your business plan for your new or expanding child care business. These plans will be scored, and results will impact which applicants ultimately receive funding, so we recommend that you take steps to ensure you have thoughtfully prepared your responses. To help you with this preparation, this guide will help you to understand key components of a successful business plan, explain the scoring process, and also provide you with the specific questions you will be asked in your application.
Please note that this guide only covers the business plan portion of the application. For a complete application overview, please view the Application Guide.
Getting started: Understand the Key Components of a Successful Business Plan
At the heart of the application for the Child Care Provider Expansion Initiative is creating a business plan outlining your expansion or opening efforts. Everyone, regardless of where they are at with their expansion, will be required to answer questions about their business plan in order to be considered for this Initiative. The questions included in the application are critical because they give you an opportunity to communicate your vision for your new or expanded child care program and will help you to have a plan to stay on track. Business plans can take many formats, but in this case, you will be asked a series of detailed questions about key components of your child care business plan as part of your online application. These components are ones that will help to project the likelihood of success and sustainability of your new or expanded business and impact both the scoring of your business plan as well as the overall implementation of your program.
It is important that your business plan answers cover your entire start-up or expansion, not just the aspects you hope to pay for by applying for this Initiative. The following sections will outline key components of a successful business plan to guide you through your planning process.
Knowing Your Market
One of the most important parts of a business plan is understanding your market. In other words, you should know what the demand is for your child care services in your area and why parents would select you over your competitors. For example, you will want to identify if there are families in your area who will use your services once you open or expand. Are there enough families who need your services to fill your classrooms? To help answer that question, consider the following indicators of demand for care:
- Parent and Caregiver Demand: The best way to understand the market is by identifying, and even talking to, potential customers. This includes parents and family members who may use your business, both current and prospective. If you are expanding, you may already know parents who want to use your services. If this is the case, ask them to join a waitlist or make a similar commitment that helps you understand how quickly you may be able to fill additional child care slots. If you are starting your business, you can also ask potential parents to sign a form applying for future care.
If you do not know enough families who may use your services, ask around. Talk to other families in your community to learn who needs care and what type of care they would be looking for, including hours, cost, and ages of their children. This information is critical for understanding whether the type of care and child care slots you will be offering are in demand among parents and caregivers in your area.
- Being located in a child care desert : Child care deserts are assumed to have demand in their area due to the scarcity of existing care.
- Providing infant care : Infant care is known to be harder to come by.
- Offering non-traditional hours : Providing care at times when care is needed but fewer care options exist can indicate demand for services.
- Increase in members of the workforce : This could include new factories or other large businesses opening in your area.
- Closing of alternative child care providers : If you know of business closing in your area, include this information as this will result in an influx of families looking for care.
- Service Demand: Finally, it is also a good idea to understand what other child care options exist in your community – are there other programs close by, and are they at capacity? What types of hours and care are they offering? For example, if there are a large number of providers offering infant care in your area that are not at full enrollment, you might consider offering care for other age groups. Alternatively, finding that there are no infant care providers in your area would indicate a potential demand for those slots. Do your hours, proposed ages served, and type of program match what these families would need? The more information you can gather about your market, the better decisions you can make in regard to your business plan.
Pro tip: Check out the Child Care Availability Portal for providers in your area and their availability, which can help you learn more about the market.
In addition to understanding your local market, you should also consider your physical location. Securing a location is a crucial step in opening or expanding your child care business that can have many impacts on your future success. When thinking about your location as part of your plan, be sure to consider the following points:
- Cost: There are several things you should consider in regard to location. First, what will the rent or mortgage cost for this location? Think about what the cost will be to operate in that area and whether you would be renting or owning your facility. You will also want to consider utility costs and other monthly expenses so that you can build this into your budget.
- Proximity: You also should consider how close your business is to families interested in your care, how far they would need to commute, and how convenient it is to access your location. Is it close to where they live, or where they work? Adequate parking and ease of pick up and drop off should be reviewed as well.
- Space: Of course, a crucial component of your location is the space available for care. Is the location already designed for serving children? Check out the areas for indoor care as well as outdoor play and ensure your space will meet requirements for licensing. You can learn more in the Minimum Standards for Licensed and Registered Child-Care Homes or for Child-Care Centers . Will you require major renovations, minor renovations, or other physical modifications to the building? If so, what will those be, how long will they take, and how much would they cost? You will want to factor that information into your decision, timeline, and budget.
- Adaptability: You also should think about how long you plan to remain committed to operating at this location and how difficult it would be if for some reason you needed to move your business. Consider the liabilities if you needed to end your lease early or sell a property.
The child care industry is extremely competitive in regard to securing top quality staff for your business – especially in today’s economy. As you plan to open or expand your business, you will likely need to look for new staff. As such, it is essential that you have a strategy for hiring as part of your business plan, whether you are a new business or an expanding one.
- Positions and Roles: First and foremost, it is important to understand the types of staff that you need to hire. Do you need to look for teachers, a director, or other supporting staff? Next, what roles will these staff members play in your new or expanded business? Will they be full- or part-time? Know what you need before you start looking so that your search can be both efficient and effective.
- Qualifications and Experience: You will need varied qualifications and experience from each of your new hires depending on the needs of your business and the responsibilities that each staff member will have. It is important to be clear about what types of qualifications might be needed to staff your classrooms as this will help to guide your search.
- Hiring Plan: You have determined the guidelines for who you want to hire, and you’ll want to have a plan in place for how to find them. How and where will you post your available jobs? How will you identify who you want to hire? Determine your next steps early on in the process so that you can move quickly from preparing to hire to securing the talent that you need to be successful.
- Attracting and Retaining Staff: Lastly, think about what will make your ideal candidate want to work for you, instead of another child care program, local school, or other company. Finding your employees is only half the battle, especially in today’s market. For instance, you will want to know how much pay you can offer your employees and what their benefit package might look like. These are all important questions to consider because you will need qualified staff in order to open or expand your program successfully. Check com and other sources to see what the going rates are for the type of workers you are seeking, if you are not sure. You can also find several step-by-step guides on ways to attract and retain staff at childcare.texas.gov.
Budget, Pricing, and Cash Flow
A solid financial plan is absolutely critical to the success of any business plan, especially one geared toward growing or starting a business. Take extra care when developing the financials of your business plan as the impact of a well-developed financial plan can make or break your business.
- Budget: An annual budget is a critical tool for managing your child care business. It helps you plan for what you will spend and allows you to monitor your actual revenue and expenses to keep you on track. If you are an existing business, you will want to think about how your expanded operations will impact your budget. If you are a new business without a budget, you will want to create one. To learn more about creating a budget , visit childcare.texas.gov. Making a profit is part of your business and helps you prepare for unforeseen events, provide incentives to staff, replace equipment, and improve facilities over time. Most importantly, a profit can give you the funds you need to ensure you are providing the best quality classroom supplies, teachers, and care for children that you serve.
- Income: Tuition and Pricing. As a child care provider, most of your income will come from tuition and parent fees. Setting tuition rates for the families enrolled in your child care business can be challenging but is critical to running a sustainable business. Your rates should be determined using the cost of providing the type of child care you will offer (cost of care), and the going market rate in your area. When calculating your pricing, it is imperative that you have a solid budget, as your budget will drive the cost of care, and in turn, guide your pricing decisions. You will want to determine if you will accept subsidy and build this in, as well. Make sure to include both start-up and ongoing costs in your calculations. Visit childcare.texas.gov to learn more details about setting rates for your child care business .
- Expenses . As mentioned, when calculating your tuition and pricing, it is important to understand all of your expenses so that you have enough income to cover them. In order to set your rates properly, you need to know your expenses. Take some time to understand your bills, including your monthly rent or mortgage, utilities, insurance, maintenance, taxes, and staffing costs (including payroll, taxes, and benefits). You also should think about advertising, equipment, food, and anything else that you may need. Learn more in our guide, Building a Monthly Budget .
- Cash Flow and Profitability. In order for your business to remain strong and solvent, you will need to know when you are profitable. Profit isn't a dirty word and making a profit does not mean you are overcharging families with children in your care. A cash flow forecast is a great tool to understand how healthy and strong your financing is. A cash flow is less about budgeting, and more about balancing your incoming money with your bills and expenses. Understanding your cash flow is crucial for start-up businesses because you are shelling out lots of money to get your business open and up to par, often before you receive one dollar of revenue. It could take six months or more before your new business breaks even, so are you prepared to withstand that? If you need help determining your cashflow, you can see our Six-Month Cash Flow Workbook on childcare.texas.gov.
Implementation Plan Timeline
Finally, it is important to develop an implementation plan as part of your opening or expansion activities. Your implementation plan will outline the key activities and their timing so that you can make sure everything happens that needs to happen, and that it happens on time. The details in your plan will differ from one organization to the next, but all successful implementation plans will include everything that is critical to opening or expanding your business. This can include all the steps needed to secure a location, hire staff, purchase materials, sign up for utilities, and market to families. There is no detail too small to consider when you are first getting started. In fact, it is better to be too detailed and trim your implementation plan than to miss something and regret it. As you capture these details, be sure to build a little flexibility into your plan as rarely do things happen on time or as expected.
Create a detailed timeline of the most important steps in expanding or opening your child care business including when the activity will start, who’s responsible for it, and your goal end date.
Understanding the Scoring Process
The Business Plan Section of your Child Care Provider Expansion Initiative application allows you to explain your plans for your child care business,
including what you already have in place and how you plan to operate in the future. Keep in mind that your business plan is a written document that describes your child care business and is the roadmap for where you see the business growing in years to come. The business plan section of the application includes a list of questions that you must complete in order to be considered for funding through this Initiative. For many of the business plan sections, you will receive a score, which will impact your application outcome. However, those that score below the funding cut-off will have an opportunity to work one-on-one with a business coach to review, refine, and resubmit your business plan for another review.
The exact questions you get will vary, depending on whether you are a home- or center-based provider, and if you are an existing or new business. While the questions will be slightly different, they will cover the same topics:
Value Proposition (not scored): This is a brief statement that explains “why you.” Why is it that families choose or will choose your child care program over your competitors? This is your opportunity to share what you feel makes your business special.
Experience (10/100 points): These questions ask about the owner’s relevant experience in the child care field. You should make sure to highlight any experience that you have as an owner and/or director, including relevant experience such as previous work in Early Childhood Education or K-12 education or any experience in business, management, or as a program director. Your previous experience in each category will be considered, so you will not automatically be disqualified if your experience is not all in child care. Also, if you do not have the relevant experience but plan to hire someone who does, you can note this in the Operations & Personnel section of the application and highlight it during your interview. Applicants will be scored on business experience, child care experience, and education separately, but scores for each experience type will be combined for a maximum of 10 points for the section. This will ensure that qualified applicants have the opportunity to receive fair scores as long as the experience that they hold is relevant to a successful child care business start-up or expansion.
Market and Location (25/100 points): Here, you should demonstrate that you truly understand your market and the demand for your child care business in the location you intend to serve. You will be asked to describe the geographic area you are serving, what types of care you are offering, and your hours of business. You will be asked about enrollment trends in recent years, if applicable, and will be expected to demonstrate how and why you know there is demand for your new or expanding child care business. Here, you should include more than one example of the demand for your program, as you can earn points for showing multiple examples. Similar to experience scoring, applicants can receive points for demonstrating parent demand, changes in the landscape (such as nearby child care businesses closing or the opening of a large, new factory), providing high-demand care during nontraditional hours or to serve infants, or being located within a child care desert.
This section also includes questions on your physical space, and you are expected to demonstrate your understanding of the space you need to open or expand your business. You may be asked about any possible plans for a build out, new construction, or renovations to existing space and should provide details on those plans, including the timeline when possible. While construction and major renovations will not be covered with award funds, it’s important that you describe them, if needed and that you have the funding needed to carry them out. While you do not need to have secured a location when completing your business plan, you will need to have one secured before you receive any funding, so you will need to include that information and the steps you’ll take to secure it in your business plan.
Operations and Personnel (10/100 points): In this section, you’ll be asked about your need to hire additional staff and what specific roles they would fill. You should be ready to explain exactly which roles you will need to fill in your new or expanded child care business and what your plan is for recruiting, securing, and retaining the staff you need. You also will need to explain your plans for training new staff members and how much it will cost.
After answering questions in these sections, all providers will answer the same questions regarding the financials and timeline associated with their expansion plan. This section is critical as it helps to guide the future success and sustainability of your new or expanded child care business. Include as much detail here as possible to demonstrate the thoroughness of your financial plan. If you are a home-based provider with no employees simply explain that you will not need to hire any staff for your start-up or expansion.
Financials (30/100 points): You will be asked about your planned rates for your expanded program and how they were set. Here, you should demonstrate a clear understanding of the child care market in your location and be able to explain the reasoning behind your proposed rates. Be as detailed as possible. For example, specific rates articulated based on historic numbers or a cost-of-care analysis will generate a higher score than an answer that leaves questions on how your rates were determined.
You’ll also be asked to upload your anticipated start-up budget for your first six to twelve months of operations and will be expected to submit a narrative explaining your proposed budget in detail. Sole proprietors can include their pay in their budget and can follow the Paying Yourself guide to learn how to do this. For more support, see our Project Budget Narrative Template . Your budget narrative will be where you will show the total expansion budget and what parts will be paid for with award funding and what parts (i.e. construction) will be paid by other sources.
You’ll also be asked about your cash flow for the first year of your new business or expansion. You will be asked to describe the anticipated cash position of the business for the first year and will have to submit a project cash flow statement to support your description. More information about creating a cash flow statement can be found at childcare.texas.gov.
The Initiative application also includes questions about your funding needs. If you plan to use additional monies, other than this initiative, to fund your start-up or expansion business, be prepared to explain those funds. The additional monies could include your personal funds, a business loan, tuition increase, additional fees, or other sources. You will need to list the estimated amounts, the source of the funds, how the funds are to be used, and share if these funds have been awarded or have yet to be secured. If no additional funding beyond the Initiative is needed, then share that also. Be sure that your budget is realistic.
You’ll also be asked to upload your business tax returns for the last three years. If you are a sole proprietor, this is Schedule C of your 1040. If you are not yet in business, you will need to upload your personal tax returns for the last three years.
Timeline (15/100 points): The questions in the section are designed to make sure you understand the timeline for opening or expanding your business. If you have not yet received your new or modified license, you’ll be asked to provide a timeline of the most important steps in expanding or opening your business, including start and end dates for all items. If you have received your new or modified license, you’ll be asked to provide a historical timeline of the most important steps in expanding or opening your business, including start and end dates for all items. You’ll also be asked to include anticipated start and end dates for the steps that have not yet been completed, as best you can estimate. Your goal should be to show that your start-up or expansion plans can be implemented within six months. Lower scores will be awarded for timelines that will be implemented within nine to twelve months. For more support, see our Project Timeline Template .
Preparing to Apply: Interview
Interview (10/100 points, plus an opportunity to receive up to 10 bonus points) : While your application will be key in determining whether you receive funding from the Initiative, the interview will be your opportunity to meet with staff and confirm or clarify aspects of your business plan for expansion.
The interview should last about 30 minutes and the questions are designed to prompt providers to talk about the key details of their business plan that will set them up for success. Articulation of your plan details will count toward 10 out of 100 points on your application. Your interviewer may talk through areas of your business plan that need either clarification or will need further development with you and refer you to coaching to help address those areas. During your interview, you can supply additional details on any information that may be missing from the application you submitted online. You may have the opportunity to earn up to 10 bonus points for explanations you provide on other scored areas where points were previously lost, however total scores cannot exceed 100.
Business plan refinement coaching will be available after application submission for those who do not receive “passing” scores. Those providers will work one-on-one with a coach for an average to three sessions to work on those areas of their business plan that were identified for development.
For more detailed information on scoring, you can review the Child Care Provider Expansion Initiative Scoring Protocol which show the actual scoring process that will be used to score each application. For questions, please email [email protected] .
Developing your Business Plan
The following templates include every question that you will be asked to fill out in your application in relation to the business plan. To work on the business plan that is right for your specific child care business, please view the following templates. You may also print your plan.
Is your business plan for a:
- Existing home-based child care business that is increasing capacity or converting child care slots on or after March 1, 2022
- New home-based child care business that is opening/has opened on or after March 1, 2022
- Existing center-based child care business that is increasing capacity or converting child care slots on or after March 1, 2022
- New center-based child care business that is opening/has opened on or after March 1, 2022
Please email [email protected] or visit https://www.childcare.texas.gov/childcare-expansion for more information, support and expansion resources for child care businesses. Go to the Child Care Expansion Initiative Application Guide .
Child Care Business Plan Template
Written by Dave Lavinsky
Download our Ultimate Child Care Business Plan Template here >
What Is a Business Plan?
Why You Need a Business Plan
If you’re looking to start a child care business or grow your existing one you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your child care in order to improve your chances of success. Your child care center business plan is a living document that should be updated annually as your company grows and changes.
Source of Funding for Child Care Businesses
With regards to funding, the main sources of funding for a child care business are bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.
The second most common form of funding for a child care is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan. Venture capitalists will not fund a child care business.
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Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of child care business you are operating and the status; for example, are you a startup, do you have a child care that you would like to grow, or are you operating a chain of child care businesses.
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the child care industry. Discuss the type of child care you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.
In your company analysis, you will detail the type of child care business you are operating.
For example, you might operate one of the following types:
- Home-Based Child Care: this type of child care business operates out of your home and typically has one or two caregivers on staff.
- Child Care Center: a child care center operates out of a commercial building. It typically has multiple staff and caregivers and can serve many, many children.
- Pre-School Child Care: a child care business that primarily serves preschoolers
- School-Age Child Care: a child care business that primarily serves school-age children.
In addition to explaining the type of child care you operate, the Company Analysis section of your business plan needs to provide background on the business.
Include answers to question such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new program offerings, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
In your industry analysis, you need to provide an overview of the child care business.
While this may seem unnecessary, it serves multiple purposes.
First, researching the child care industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards child care that includes transportation, it would be helpful to ensure your plan calls for such a service.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your child care center business plan:
- How big is the child care business (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the local or national market?
- What trends are affecting the child care industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your child care. You can extrapolate such as figure by assessing the size of the market in the entire country and then applying that figure to your local population.
The customer analysis section of your child care center business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: soccer moms, young families, baby boomers caring for grandchildren, etc.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most child care businesses primarily serve customers living in their same city or town, such demographic information is easy to find on government websites.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
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Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other child care businesses.
Indirect competitors are other options that customers have that aren’t direct competitors. This includes keeping children at home and/or after school programs among others.
With regards to direct competition, you want to detail the other child care businesses with which you compete. Most likely, your direct competitors will be child care businesses located very close to your location.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- What child care services do they offer?
- What times are they open?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide superior child care services?
- Will you provide child care services that your competitors don’t offer?
- Will you offer better pricing?
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a child care business plan, your marketing plan should include the following:
Product : in the product section you should reiterate the type of child care that you documented in your Company Analysis. Then, detail the specific services you will be offering. For example, will you over technology or exercise classes to the children?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the menu items you offer and their prices.
Place : Place refers to the location of your child care. Document your location and mention how the location will impact your success. For example, is your child care located next to a heavily populated office building, or gym, etc. Discuss how your location might provide a steady stream of customers.
Promotions : the final part of your child care marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:
- Social media marketing
- Reaching out to local bloggers (particularly “mommy” bloggers) and websites
- Local radio advertising
- Banner ads at local venues
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your child care such as discussions with prospective new customers, procuring supplies, keeping the child care center, etc.
To demonstrate your child care’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally you and/or your team members have direct experience in the child care business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in child care businesses and/or successfully running retail and small businesses.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you serve 10 children per day or 50? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a company approached you with a massive $100,000 child care contract, that would cost you $50,000 to fulfill. Well, in most cases, you would have to pay that $50,000 now for employee salaries, etc. But let’s say the company didn’t pay you for 180 days. During that 180 day period, you could run out of money.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a child care center:
- Child care center build-out including design fees, construction, etc.
- Cost of fixtures like tables, chairs, couches, etc.
- Cost of equipment used like computers and televisions
- Payroll or salaries paid to staff
- Business insurance
- Taxes and permits
- Legal expenses
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your child care center design blueprint or location lease.
Putting together a business plan for your child care is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the child care business, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful child care.
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How to Create a Daycare Business Plan
- Posted by Carmen Choi
- February 13, 2017
- in Posted in Leadership / Management Tips
Childcare owners get into the daycare business through many pathways. Whether you are a business-savvy educator in the child care industry, a new parent looking to fill a need in your community, or a seasoned entrepreneur looking to expand your horizons – the first step to launching your daycare business is to create a comprehensive business plan.
Let’s get real for a moment here – writing a child care business plan, will take quite a bit of time, a lot of thinking, and even more energy to follow through. But, get this step right and you will set the tone and direction to create a successful daycare business (ad)venture!
When developing your daycare business plan, it is ideal to think in the timeframe of 3-5 years. This level of long-term thinking will serve as a map on your way to your goal of establishing a solid daycare business plan to start a daycare.
Without further ado, let’s help you get started.
Here’s an overview of 9 elements that you’ll need to build a good daycare business plan. A child care business plan should include the following:
- Executive Summary
- Service Description
- Marketing Plan
Financial analysis , supporting documents .
Executive summary for your child care business plan
This is your introduction and “elevator pitch.” Keep it short, sweet and to the point.
The executive summary section of your daycare business plan should function to get potential investors and partners excited about what your daycare center has to offer in the following key sections.
This is an opportunity for you to include:
- A brief but “wow!” business description
- Your mission statement
Your executive summary is a place to express what’s unique about your daycare business plan – is it the location, approach, learning philosophy, child care services, team, diversity, or something brand new? Don’t be afraid to make this your own!
This section covers the structure of your daycare business plan and business concept.
Are you planning on being a thought leader in the daycare industry within a specific niche of childcare? A special Waldorf school? A school that prioritized multiculturalism? A center that is Montessori first with Reggio influences to prioritize independent learners? Home daycares? Or do you want to build an empire with an eye on franchising your daycare business model?
Some key elements to include in a brief overview are:
- Your daycare business structure
- History of the business
- Core services offered
- Target age group and capacity
- Success milestones (accreditation, state-focused quality rating)
- Mid-term business goals & requirements
This section dives into the nitty-gritty of what daycare services you will provide to your community and how your business will go about doing so.
Things to think about for your business description are:
- Full-time or part-time care
- After school care for school aged children
- Child Care Center capacity
- Age group information
- Operation hours
- Extra-curricular programs (yoga, music instruction, languages, gardening)
- Food program
- Room layout & design
- Furnishing & equipment needs
- Facility management & development
- Do you have a big vision for your daycare facility that needs to be broken down into different phases?
- If yes, what do these phases look like?
- Will consultants be hired to support each phase of growth? Is this even necessary?
- Will there be a board involved in the decision making process (NFPs)
This is where your vision meets reality! Think of this piece as your ingredients list to build a good daycare business plan. Write everything down and ask people in your inner-circle for feedback.
Market analysis is a business way of saying, “Get to know your surroundings.”
Here’s a list of questions to get you on the right track:
- Who is your target audience? (School age kids? Working parents? )
- What are the geographic boundaries of the client base that your business will serve?
- What is the population of young children & families in your area? (Are there many new young families moving in?)
- What is in high demand for child care services?
- What is the supply for childcare?
- How many daycare businesses are there in the area?
- Where are other daycare providers located?
- How long are waitlists?
- What kind of programming / services are offered by other child care centers?
- What are childcare vacancies like in the daycare industry?
- How much does childcare cost in the area?
- What’s the dominant age group in the area?
- What are the unique licensing & regulation requirements for child care centers in your area?
Answering as many of these questions as you can will give you a clear picture of what you’re getting yourself into and how to stand out from competition.
Okay, let’s get practical for a minute – how can you answer these questions? Drive around. Join parent communities online. Facebook groups are great resources to understand what parents and potential customers around you are talking about, stressing about, enjoying, and prioritizing in their childcare search.
In short, really get to know your community of potential customers for your business. I cannot stress the importance of this step for a good business plan. Nothing beats listening to real people from your target market with real problems when building a business case. This seems simple, but it does take a lot of work and persistence to get results.
To distill this process into 5 broad business categories for your daycare business plan:
- Understand your target customers
- Identify the need of your target customers
- Research your competitors
- Define your differentiators
- Position yourself to grow your business
A note on licensing requirements and regulation : Before you take any steps towards setting up your child care business or daycare franchise, take the time to understand the center licensing guidelines and regulations that will apply to you from your local government. Make sure that you will be able to obtain the necessary licensing for your facility.
My favourite part. Now that you have an idea of your daycare business identity, you have to have a marketing plan to promote it and make a splash!
- What differentiates you from existing daycare businesses or other child care centers in the area?
- How can you really showcase what’s special compared to competition?
- What are your initial marketing goals? Perhaps building out a waitlist before launching?
- How will you connect with families you want to work with with your marketing strategy?
Building out a marketing plan for your daycare can be as simple or as elaborate as you like. Get creative with your marketing strategy and really show your personality. Here’s an in-depth post we did about marketing your child care center .
Now an idea is just a thought without a team to get it done. Your operations plan is the backbone of your business. In this section, key things to include are:
- Who is on your management team?
- Who are your core staff members?
- What does the organizational chart for your business look like?
- Training opportunities & needs for staff?
- If your daycare center is a NFP, who are the board members?
- If your daycare center is a for profit center, will you have a parent committee that drives operations at your center?
Think of this section as building out your A-team. Why have you chosen certain people for their roles? What do your management team members bring to the table that’s unique?
This also brings transparency to how your team is structured and career development opportunities. Remember to keep growth in the back of your mind for each section of your daycare business plan.
Now that you’ve done most of the heavy lifting, you can use all the information that you have previously gathered to come up with a financial plan for the first few years of your business operations.
Remember, starting any business is difficult and it usually takes 3-5 years to break even and start becoming profitable.
Here are the key questions to answer in this section:
- What is your start up budget?
- How will you secure funding?
- What is your annual operating budget (income & expenses)
- Income statement
- Balance sheet
- Revenue model
- Your current revenue & expense statement
Need a template to get started on your financial plan? Check out How To Manage Your Child Care Center Budget to download the template.
This last section is one I like to call, the “keeping us honest” section. This is where you and your team will list down milestones that you plan on accomplishing on your daycare business plan journey. Don’t leave this section blank as it’ll be your measuring stick as you launch your daycare business plan.
Some example milestones are:
- Reaching 80% of capacity
- Getting NAEYC accredited
- Achieving the most stars in your state QRIS
- Collecting 5 star reviews from parents for your Google page
- Reaching 100 followers on your Facebook community
Get together with your team and pick the measures that make the most sense for your childcare business.
Here’s a list of documentation that might come in handy when pulling all of this together.
- Revenue & expenses sheet
- Financial projections
- Income statement, balance sheets and funding
- Resumes of everyone on your team
- Contracts with external consultants
- Letters of endorsement
- Legal documents (daycare license, property documents, articles of incorporation)
- Daycare business plan template
- Any other relevant information
Child Care & COVID-19
While COVID-19 has thrown a wrench in many people’s business plans, that does not mean that you should give up on your dreams of becoming a daycare business owner. With all the change and uncertainty of the current climate comes the space for opportunity!
Centers now have to operate under different health and safety requirements, most notably reduced ratios.
Here’s a roundup of resources that we’ve compiled as a team to support your business plans during the pandemic and beyond.
- [Survey] What Parents Value In Childcare During COVID-19
- [Guide] Cold, Flu, COVID-19: A Director’s Survival Guide (with printables)
- [Article] What To Do If Someone Tests Positive For COVID-19
- [Webinar] HiMama Features To Build Trust During COVID-19
To quote Dwight Eisenhower, “Planning is everything, the plan is nothing.” The process of defining your vision will make a difference when facing obstacles on your journey to creating a successful business.
Things won’t go perfectly according to your daycare business plan, but because you’ve mapped out your way, you will find a way to work over, under, or around those obstacles to get there.
Did you know that HiMama makes it simple to get organized, stay in touch with parents, and keep on top of your operations? Contact us today to find out how we can make your daycare business plan into a reality.Do you have any pointers to add to this? We’d love to hear them. Let us know in the comments below. Don’t forget to follow us on social media @HiMamaSocial.
Carmen is the Marketing Coordinator and Preschool Podcast Manager on the HiMama team. She's been working with childcare business owners and consultants for 3 years. She is passionate making connections that empower the ECE Community through knowledge-sharing to support better outcomes for children, their families, and society!
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OMG this is so helpful!!!!!!! Thank you!!!!
Profit margins in daycare franchises are influenced by the cost structure, including rent, utilities, staffing, supplies, and administrative expenses.
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Daycare Business Plan Template
Business Plan Outline
- Daycare Business Plan Home
- 1. Executive Summary
- 2. Company Overview
- 3. Industry Analysis
- 4. Customer Analysis
- 5. Competitive Analysis
- 6. Marketing Plan
- 7. Operations Plan
- 8. Management Team
- 9. Financial Plan
Daycare Business Plan
You’ve come to the right place to easily complete your daycare business plan.
We have helped over 100,000 entrepreneurs and business owners create business plans and many have used them to start or grow their daycares.
How To Write a Daycare Business Plan & Example
Below are links to each section of your daycare business plan template:
- Executive Summary – This is a brief overview of your daycare business plan. The executive summary should be no more than 2 pages long, with brief summaries of other sections of the plan.
- Company Overview – This is where you provide a business description, including your company history, business structure, and any pertinent information about the daycare center.
- Industry Analysis – The industry analysis describes the daycare industry, including market size and trends.
- Customer Analysis – This section of your daycare business plan describes your target market and potential customers. You will detail the demographics, needs, and wants of your target audience and how you plan to meet those needs.
- Competitive Analysis – The competition in your local area will be described here, along with how your daycare business will compete in the market.
- Marketing Plan – Your marketing plan will describe your daycare’s marketing strategy, including your advertising and promotion plans.
- Operations Plan – This section of your business plan describes how your daycare will be operated on a day-to-day basis. It may also include your long-term plans for expansion and the milestones you want to achieve to get there.
- Management Team – The management team section of your business plan should describe the experience and qualifications of your management team including the director, teachers, and support staff.
- Financial Plan – The financial plan section of your daycare business plan should include your financial statements, such as your income statement, balance sheet, and cash flow statement.
Next Section: Executive Summary >
Daycare Business Plan FAQs
What is a daycare business plan.
A daycare business plan is a plan to start and/or grow your daycare business. Among other things, a good daycare business plan will outline your business concept, identify your target customers, present research about the child care industry, detail your marketing plan, and provide your financial plan.
You can easily complete your daycare business plan using our Daycare Business Plan Template here .
What Are the Main Types of Daycare Businesses?
There are different types of daycare businesses that parents can choose from for their child's needs. A traditional daycare center is most sought after by working parents since it provides child care during regular work hours. There are also in-home daycare centers that are licensed to provide child care in a home setting with fewer children. Other child care centers provide hourly care services by trusted babysitters or nannies and are operating on an as-needed basis.
What Are the Main Sources of Revenues and Expenses for a Daycare Business?
The primary source of revenue for a daycare business is its child care services.
Some key expenses for a daycare business is rent, salaries for staff, utilities and snacks expenses for the children.
How Do You Get Funding for Your Day care Business Plan?
A daycare business is typically funded through small business loans, personal savings, credit card financing and/or angel investors. This is true for a business plan for daycare or a childcare business plan.
What are the Steps To Start a Daycare Business?
Starting a daycare business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop A Day care Business Plan - The first step in starting a business is to create a detailed daycare business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your daycare business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your daycare business is in compliance with local laws.
3. Register Your Daycare Business - Once you have chosen a legal structure, the next step is to register your daycare business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your daycare business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Daycare Equipment & Supplies - In order to start your daycare business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your daycare business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
Learn more about how to start a successful daycare business:
- How to Start a Daycare Business
Where Can I Get a Daycare Business Plan Example PDF?
You can download our daycare business plan PDF template here . This is a business plan template you can use in PDF format.
How to Write a Business Plan for Starting a Day Care Center
- Small Business
- Types of Businesses to Start
- Day Care Centers
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How to Write a Business Plan for a Salon
What are the key elements of a business plan, how to pitch a business plan.
- How to Write a Business Plan for Starting a Medical Spa Practice
- How to Write a Business Plan for Indoor Party Centers
Writing a business plan for starting a day care center will serve a few different purposes. First, a business plan may help you organize your ideas for launching your business by identifying the steps you need for business start-up. A day care center business plan will also help you stay on track after you've launched your business and as you move toward meeting your goals. A business plan isn't necessarily set in stone, however, and you can adjust it periodically as your business grows or your plans change.
In addition, a business plan demonstrates you have carefully thought through the operations of your daycare business; it can be used to show lenders why they should help you finance your business.
Create Your Company Description
Create a general overview of your day care business plans. Write a brief summary of your goals and include why you think starting a day care business is a good idea. Include a description of your own experience and qualifications as well as your expectations for staff.
Provide A Market Analysis
Include an analysis of the day care center industry. List information about day care industry tends and estimate day care industry revenue. Include information about the needs of your target market and how its day care needs are currently being addressed. Include information about how you will position your day care center business for success despite the competition.
Detail Your Marketing Plan
Include details about plans for pricing and advertising your business. Plan how you will communicate your day care business' benefits to your target market.
Outline Your Organization and Management
Describe the legal structure you will choose for your business. For example, if you will be the sole owner of the day care center, you may start a sole proprietorship. If you will have a partner, however, you will have to form a partnership. You may even choose to establish your business as a separate entity from yourself by forming a corporation.
Add information about managing your business. Include details about hiring and training employees. Make sure to cover the legal necessities of a daycare business, such as site safety, emergency care, staff qualifications, and other requirements in your area.
Lay Out Your Finances
Your plan should include a statement of how the business will run financially. That is, what you anticipate as your start-up and operational costs and the type of income you anticipate from the daycare's clients or from other sources of funding such as grants, donations or community assistance.
Make Your Funding Request
Determine what you will need in terms of financial assistance to get your business off the ground. Include a description of the location you've chosen for your day care center, and the equipment and furnishings you will need.
Lenders will want to review your day care business plan if you apply for a loan. Use your business plan to demonstrate how your business will stand out among your competitors, why you should run it and why now is the right time to start a day care center.
- Entrepreneur: Elements of a Business Plan
- Rasmussen College: Your Step-by-Step Guide to Opening a Daycare
- Lenders may review your day care business plan if you apply for a loan. Use your business plan to demonstrate how your business will stand out among your competitors, why you should run it and why now is the right time to start a day care center.
Jordan Meyers has been a writer for 13 years, specializing in businesses, educational and health topics. Meyers holds a Bachelor of Science in biology from the University of Maryland and once survived writing 500 health product descriptions in just 24 hours.
How to write a doggie daycare business plan, how to create a business plan & where should the executive summary be located, how to write a business description, how to write a business plan outline, how to create a business plan as an entrepreneur, what is a business plan template, how to make a business plan for running a dog kennel, how often should a vision or mission statement be changed, how to write a business plan for a food truck business, most popular.
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Your Ultimate Toolkit for Building A Business Plan for Daycare
A good daycare business plan will guide you through each stage of starting and managing your childcare organization- including how to structure, run, and grow your new business.
Prospective investors want to feel confident they’ll see a return on their investment and your center’s business plan is the perfect tool to assure potentials that working with you — or investing in your business— is a smart and profitable decision. In this blog, learn quick tips for building a simple daycare business plan.
Check out the guide for professional templates that help you build a solid daycare business plan .
Table of Contents
- Write an Executive Summary
- Conduct an Opportunity Analysis
- Problem and Solution
- Build an Execution Plan
- Map Out Your Funding Sources
- Find the Right Vendors
How a Childcare Experience Platform Can Boost Your Business
How to build a business plan for daycare, 1) write an executive summary.
Building a daycare business plan starts with the executive summary. Although this section is the first thing people will read, it’s advised that you write it last, once you know the details of your business inside and out.
Ideally, your executive summary will be able to act as a stand-alone document that covers the key highlights of your detailed business plan. In fact, it’s common for investors or loan providers to ask for just the executive summary when they start evaluating your business.
As your executive summary is such a critical component of your business plan, you’ll want to make sure that it’s as clear and concise as possible . Cover only the essential components of your daycare, ensuring your executive summary is one to two pages maximum.
The executive summary is a tell-all first paragraph that details…
- The city and state of your center (you can decide on the exact location later)
- A potential open date
- A projected enrollment count (number of full-time enrollments)
- Programs you plan to offer
- Ages you hope to serve (who's your daycare target market ?)
- A quick financial summary (based on grants, funding, and potential revenue from projected enrollments)
2) Conduct an Opportunity Analysis
Starting a business is tough work.
Use your previous competitive research to determine your daycare business’s competitive advantage and position. The best daycare center will analyze a range of potential strengths, weaknesses, opportunities, and threats.
3) Problem and Solution
Describe the problem that you are solving for your customers. Childcare centers are need-oriented, meaning your consumers have tangible pain points that you must resolve to be successful. From there, you'll identify your daycare target market .
4) Build an Execution Plan
In an execution plan, you’ll address your marketing and enrollment plans, operations, success metrics, and any key milestones that you expect to achieve. Your execution plan should be carefully detailed...
- Marketing and Sales – The marketing and sales section of your business plan details how you propose to reach your target market segments and how you plan on converting those target markets.
- Positioning Statement – Refer back to your value proposition to create a simple, straightforward sentiment, explaining where your company sits within the competitive landscape and what differentiates your venue . This statement should be written for an investor or loan provider, rather than for your customer.
- Mission Statement - This should be just one or two sentences that are geared toward your target consumer and describe what your business plans to accomplish. This statement usually includes your company's core values.
- Strategic Alliances - You may wish to collaborate with other organizations such as local camps, after-school programs, pediatricians, or even other childcare centers that don’t offer the same activities that you do.
- Operations – Discuss day-to-day business logistics here.
- Milestones & Metrics – Know what milestones you want to hit (be specific) and decide which metrics you need to track to reach these goals.
- Company & Management Summary – Describe the structure of your staff and teams.
- Financial Forecasts - A typical financial plan will have monthly sales and revenue forecasts for the first 12 months, and then annual projections for the remaining three to five years.
Need more ideas? See how to grow your childcare center's brand like a pro in this video resource ! 🙌
5) Map Out Your Funding Sources - Apply for Daycare Grants
Often, startup costs for opening a daycare are high. Certain states and counties offer grants for new daycare businesses. There are several grant options, depending on your child and family details.
For example, there’s a Preschool Development Grant Program and a Head Start/Early Head Start grant to provide funding that expands early childhood centers and developmental programs.
See 3 Essential Grants for Daycare Business Owners
1. ccdbg funds.
The Child Care and Development Block Grant, also known as CCDBG Funds, provides federal funding to individual U.S. states. The goal of the grant is to help low-income families afford child care. With the recent of the American Rescue Plan Act of 2021, the CCDBG program will get an extra $15 billion in funding to support both families and childcare providers in need.
What Can This Be Used for?
- Parents who need financial assistance for daycare.
- Childcare owners and directors who need help allocating funding for payroll, cleaning supplies, and other issues that have resulted from Covid-19.
- Improve the quality of care and support childcare providers.
2. CACFP Funds
For many daycares, the cost of food is a large, ongoing expense . Fortunately, there are grants for child care centers that aim to alleviate this financial burden. The Child and Adult Care Food Program (CACFP) provides funds to care centers like yours that can be used to purchase nutritious meals and snacks for eligible children. The way it works is by giving cash reimbursements to child care centers for serving meals and snacks that meet Federal nutritional guidelines to eligible children. In general, centers may be approved to claim reimbursement for serving up to two meals and one snack, or two snacks and one meal, per day to each child participant.
- Childcare centers (owners/directors) that provide children with multiple snacks/meals (can help offset the rising cost of goods due to inflation).
- Provides reimbursements for nutritious meals and snacks eligible for children and adults who are enrolled at a childcare center
- Provides reimbursements for meals for children in emergency shelters
3. Childcare Expansion Initiative Grant
In February 2022, the Texas Workforce Commission approved $75 million to increase the number of high-quality home- and center-based childcare providers for working parents in Texas. Part of this funding will go towards the Child Care Expansion Initiative, to offer start-up funding to help expand the availability of child care in areas of the state that lack sufficient supply (child care deserts); for programs opening or expanding in partnership with a local employer; and, to expand the availability of infant care around the state. New and existing home- and center-based child care providers who are opening or expanding their child care businesses after March 1, 2022, will be eligible to apply if they will be:
- Serving families in a pre-defined childcare desert.
- Operating in partnership with a local company or consortium of companies, to serve the children of their employees; and/or
- Expanding the availability of care for infants (0-17 months).
Funding can be used to offset operations costs incurred during startup and/or the first few months of opening or expanding. It cannot be used for major renovations or construction. Operations costs can include the use of a CMS/CRM or a unified childcare experience platform like LineLeader by ChildcareCRM . Applications will be available in June 2022 and will be accepted on a rolling basis through early 2023.
6) Find the Right Vendors
Choosing the right suppliers for your business is essential . If your vendors aren’t reliable or don’t deliver quality products, your new center will struggle to attract families. As a childcare provider, you will likely need the following vendors at one point or another:
- Food and Beverage Supplier
- Educational Materials Supplier
- Substitute Staffing Provider
- Childcare Licensing Consultant
- Cleaning & Maintenance
- Childcare Management System (CMS)
- Customer Relationship Management (CRM) Software
- Digital Payments Provider
- Online Forms Software
- Childcare Experience Software
Invest in your staff and family experience. Save time, grow enrollment, and simplify center management with a childcare experience platform , the first and only solution to offer full-featured customer relationship management (CRM) software, a family engagement app, and childcare management software (CMS) in one unified platform. You can optimize your staff and family experience while managing your business more efficiently.
Take a look at the videos below to start your daycare business off on the right foot . Plus, learn the power of running your business with LineLeader - the only childcare experience platform .
Unlock the Full Daycare Business Plan Toolkit to Achieve Success
T he daycare business plan e-book will give you all the tools and knowledge you need to start up your own childcare business. It’s important that you identify your business objectives and use the e-book as a guideline for how to achieve those goals. Building a daycare business plan isn't easy, but we're here to help.
D ownload a free business plan for essential templates, tips, and best practices .
Subscribe to stay up to date on the latest industry news, trends and best practices for growing and managing your childcare business.
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