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.
Day Care Business Plans
Did you know each of these plans was created in LivePlan? Learn More
Child Care Business Plan
The Toddler Warehouse is a full-service child care/development facility that cares for toddlers from age three to five.
Child Day Care Services Business Plan
Kid's Community College offers upscale child care services for kids aged 4 months to 5 years.
Day Care Business Plan
Safe Kids is start-up child care center serving children from three months to six years of age.
Workout Gym Business Plan
Mountain Brook Fitness Center is a fitness center where parents can bring children to be taken care of while they do whatever exercise activity they desire.
You know how important it is to plan activities for the kids at your day care? It's just as important to plan for the financial future of your business. These sample business plans for day care centers will help you write a business plan for your business.
If you’re looking to develop a more modern business plan, we recommend you try LivePlan . It contains the same templates and information you see here, but with additional guidance to help you develop the perfect plan.
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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.
Childcare and Preschool Supply List
A list of everything you need to start an early education program.
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Daycare Business Plan Template [Updated 2023]
Daycare Business Plan Template
If you want to start your own daycare business or expand your current daycare center, you need a business plan.
The following daycare business plan template gives you the key elements to include in a winning childcare business plan. In addition to this template, conducting research will not only support your business concept, but help you better understand the daycare industry, pricing strategies and your target market. It will also help you craft a smart marketing plan and strong financial projections.
You can download our Daycare business plan template (including a full, customizable financial model) to your computer here.
Below are links to each of the key sections of a sample daycare business plan:
I. Executive Summary II. Company Overview III. Industry Analysis IV. Customer Analysis V. Competitive Analysis VI. Marketing Plan VII. Operations Plan VIII. Management Team IX. Financial Plan
Click below to see each section of our free child care business plan template. You can also click here to get our sample daycare business plan pdf .
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Daycare Business Plan Outline
How to Start a Daycare Business Plan
A Step-by-Step Guide for Childcare Planning with Tips to Help Entrepreneurs Start Their Daycare Business
Table of contents
What is daycare and why should i start one.
- Types of Daycare Providers
- Before Starting Your Daycare Business Essential Planning Steps
- Decision Journey Map Definitions
Assess the Competition
How to start your daycare business.
- The Importance of an Execution Plan
- Execution Plan: Marketing and Sales
- Form Your Daycare Business
Get Familiar with Daycare Licensing Requirements
- Choose Your Insurance and Liability
- How to Gain Enrollment at Your Daycare
- Invest In Childcare Experience Software to Build Your Daycare with Less Work
Build an Expert-Level Business Plan for Daycare
The childcare industry is full of passionate, hard-working individuals. Entrepreneurs just like you are starting a daycare from the ground up. In this guide, we'll give you guidance and provide templates to build a solid daycare business plan.
According to Forbes , daycare businesses were projected to have some of the fastest employment growth of all industries through 2020. Starting a daycare is a great opportunity for aspiring business owners who have a passion for early childhood education and child development.
‘Daycare’ is an umbrella term for various childcare options (such as Montessori, head start programs, preschool, and many more) where parents and guardians drop their children off and leave them in your care to...
- Socialize with other children in their age group
- Learn basic fundamentals for future academic success
- Reach important developmental milestones
Is Starting a Daycare Business Worth It?
Starting a childcare business or franchise is profitable, emotionally rewarding, and sustainable – the need for committed childcare entrepreneurs has never been greater.
As of 2021, there were 856,238 childcare centers in the United States. The growing popularity of childcare centers comes from the demand. Parents will always need a form of care for their kids. Plus, there’s a necessity, especially beyond COVID-19, to socialize children in an environment that fosters development.
Types of Daycare Providers
- In-home daycare
- Relative care
- Independently-owned daycare
- Daycare franchises
The Difference Between Individual Centers and Franchises
An independently-owned daycare often has an individual owner, a center director, and possibly a few other administrative staff members – along with teachers, cooks, bus drivers, etc. The owner is typically an individual who puts their own money and savings into opening the daycare, so all business rights (name, branding, etc.) belong to them.
Alternatively, a daycare franchise falls under a corporate brand that has made an agreement with an individual to legally establish a business – using the company’s brand or trademark. In this scenario, the franchisee usually pays an initial fee, as well as ongoing royalties to the corporate franchisor. In return, the franchisee gains the use of a trademark, support from the franchisor, and the right to use the franchisor's system of doing business (including unique business policies and procedures, such as their method for advertising or enrollment). This model can be particularly beneficial for individuals who are passionate about early childhood education but don’t know how to get started on their own.
For example, Kids R Kids and Kiddie Academy are both successful daycare business plans in the United States. Each center operates similarly, has the same name (aside from a unique location number or city/county name), and the same branding as all locations fall under the franchisee umbrella.
Daycare Franchise Terms
- A franchisor is a daycare company that provides its services, brand, and business operations to the individual. This may also be known as a ‘ franchise system ’.
- A franchisee is an individual owner that is being supported by the company (franchisor). Buying into a daycare franchise makes you the franchisee.
- The franchise refers to the legal agreement between the company and the franchisee.
- The franchise disclosure document is the legally binding contract between the company and the individual.
Essential Planning Steps Before Starting Your Daycare Business
1) conduct market research.
When it comes to starting your childcare center, relying on assumptions about your customers and competitors leads to wasted time, money, and effort. In contrast, businesses that conduct regular market research improve customer retention and are 76% more likely to see an increase in revenue.
Market research is a data collection process that evaluates both consumer behavior, competitor habits, and industry trends to determine the viability of your center and build a foundation for future business operations.
Prepare for success upfront by conducting thorough market research to understand your competition, improve communication with your target audience, and identify new market opportunities. This research should result in actual data that you can use to drive your business and marketing strategies as you launch your center.
There are a variety of tools available to help you conduct market research - all from the comfort of your own office. Gone are the days of hiring team members with clipboards to approach consumers face-to-face. Survey Monkey, Attest, and Sprinklr all offer digital market research tools to help guide you through the process of understanding your audience, your competitors, and your industry.
2) Determine Your Target Market
A market segment is a group of consumers that could potentially enroll at your childcare center. First, identify your daycare target market segments and determine how big each segment is.
Be careful not to fall into the trap of defining your market as “everyone in your community.” This often leads to a ‘spray and pray’ approach to your marketing and as we know, a message for everyone really speaks to no one. When you generalize your advertising in favor of not isolating a potential consumer, you aren’t able to effectively communicate with your ideal customers – forgetting to recognize how your childcare center can appeal to them and their needs.
A classic example is a shoe manufacturer. While it would be tempting for a shoe company to say that their target market is anyone who has feet, realistically they need to target a specific segment of the market in order to be successful. If they sell adult athletic shoes, they should be building their message to target athletes or individuals who enjoy staying active and exercising. Likewise, if you offer programs for children aged 6 months to 4 years old, you should prioritize advertising toward young adults in their 20s and 30s.
A common strategy when identifying target markets is to use the TAM, SAM, and SOM approaches to look at market sizes from a top-down approach as well as a bottom-up approach.
Target Market Terms
This should include everyone you wish to reach.
Example: Your entire local community.
SAM: Your Segmented Addressable Market or Served Available Market
This is a portion of the TAM you will specifically target because they align with your offerings.
Example: Families with young children.
SOM: Your Share of the Market
This is the group of your SAM that you will realistically reach—particularly in the first few years of your center’s opening, as you may expand and grow your service over time.
Example: Families with young children who make at least $65,000 each year in household income.
For childcare organizations with multiple brands, schools, or programs - increasing revenue and keeping families happy is vital for growth. Your Millennial parents need a uniform, high-quality experience, regardless of location.
Standardizing business processes has a significant impact on time savings, costs, and most notably quality. In fact, standardization improves quality by 61.9% , on average. Create consistent enrollment processes across all your franchise locations to ensure every family has a great experience and a positive association with your brand – leading to higher conversion success and profitability.
To achieve consistency, your franchisees’ marketing approach and advertising material must follow all your corporate brand guidelines. Your organization should have a lead management system that supports your childcare franchise staff as they guide families through the decision-making journey while also ensuring each location is delivering a consistent parent experience.
3) Develop Your Buyer Personas
Before you begin writing your daycare marketing plan, make sure you’ve defined your market and buyer personas. Without a deep understanding of whom you’re speaking to, a daycare marketing plan will have little value.
Audience personas allow you to dive even deeper into your target market and help you understand more than just who your customer is. These identities inform you how to communicate with your customers in a way that relates to their pain points and needs.
Building a daycare business plan is no joke! Check out childcare business tips at a glance .
When you understand your customer’s motivations, you can uniquely address their concerns and questions in your marketing materials - leading to increased tours, enrollments, and revenue.
Start by listing out the various kinds of programs and classes you’d like to offer at your center.
Then, determine who the primary decision-maker is and who the primary influencers might be in each scenario.
Primary decision-maker : typically the individual(s) taking financial responsibility and remitting payment at your center.
Primary influencers : are also crucial in the purchasing process as they often have the ability to sway decision-makers.
For example, imagine you’re promoting availability for Summer camp programs at your center. In this instance, the primary decision-maker might be the parent(s) or guardian(s) whereas the primary influencer would likely be the child who’s deciding what kind of activities they want to do this Summer.
List the audiences, personas, or segments that you want your center’s marketing and messaging efforts to reach.
Select one audience from above and describe it to the best of your knowledge. Go beyond the traditional persona to consider motivations & behavior.
Identify the key stages in your audience’s enrollment journey from beginning to end, knowing there may be multi-dimensional steps within a stage. Complete the table for each journey at the individual stages from the specific audience’s point of view.
Decision Journey Map Terms & Definitions
Stage : This refers to each stage of the enrollment journey - awareness, consideration, action, and advocacy.
Awareness : This is when a family is first learning of your center and your brand. They are researching multiple daycare centers and eventually send an inquiry to tour your facility or learn more.
Consideration : During this stage, a family is touring your center and may be deciding between you and 1-2 other providers. Tip: Proactively equip your staff with key talking points so they can highlight your unique center features.
Action : This is when a parent decides to register their child for care, pay fees, and is either placed on your waitlist or enrolls.
Advocacy : After a successful, happy experience, this parent or guardian has become an advocate for your business. They’re telling friends and family about your center. This is vital for your word-of-mouth marketing strategy.
Emotion : Identify what the persona is feeling at each stage of the customer’s journey. They may be anxious, curious, excited, or satisfied at various points. Put yourself in their shoes.
Key Actions : What actions would a consumer take at each stage? For example, during the awareness stage, they may see your ad on Facebook, look you up on Google, or visit your website. In the consideration stage, they may call your center to get more information, look at your services online, or read reviews.
Questions : What questions is the consumer asking in each stage? These are the questions you need to be answering for them in your advertising and marketing efforts.
Competitive research helps you understand why customers choose your center over other alternative care options. This information provides you with insight into how your competition is marketing their services and over time, this can help you improve your own marketing campaigns and business offerings.
Look up similar daycare centers in your area, and see what programs they offer, the type of facilities, their capacity, and their curriculum. Then, highlight the features that make your center stand out. Showcase your selling points in all marketing and advertising efforts. Get started with these key questions...
- Who are my direct competitors and what do they offer?
- Who are my indirect competitors
- What does my competition's pricing look like?
- Do they offer promotional pricing or payment plans?
- What do they do best?
- What do they do poorly?
Download the guide to stay up to date on the latest industry news, trends and best practices for growing and managing your childcare business.
Download the Guide
Build a Daycare Business Plan
A good 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.
There’s no correct or incorrect way to write your business plan. What’s most important is that you identify your business objectives and use this document as a roadmap for how to achieve these goals.
A strong business plan can help you recruit business investors, gain funding, or find new partners. 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.
Write a Day Care Executive Summary (Daycare Business Plan Outline)
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. At this stage, you will be able to articulate your business more clearly and summarize all the information in a succinct, concise manner.
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. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation, and more in-depth daycare business plan financials.
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. This section is intended to be a quick read that hooks your potential investors’ interest and excites them to learn more.
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
- A quick financial summary (based on grants, funding, and potential revenue from projected enrollments)
This may seem like a lot of information upfront, but it’s simply a high-level overview of your plan.
Conduct an Opportunity Analysis
The opportunity section of your business plan includes information about:
- The problem that you’re solving within your community
- P rograms and classrooms do you plan to market your center(s) to
- How your daycare facility fits into the existing competitive landscape
Opportunity Analysis: An Example
The opportunity analysis portion of your business plan is important for outlining what distinguishes your daycare from your direct and indirect competitors. It details how you can continue to expand and grow your center in the future.
Use your previous competitive research to determine your daycare business’s competitive advantage and position. Analyze potential strengths, weaknesses, opportunities, and threats.
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.
So, what is the primary pain point for them? Maybe it’s that busy, working parents need a caring, safe place for their child during the day, or perhaps families are seeking after-school care options for their elementary-aged children, or maybe parents need 24-hour childcare options when they’re traveling or working odd hours.
Now, assess how they are solving their problems currently and where there’s room for improvement. If there's only one childcare center in your community and it has no open seats, you could be the solution. Or maybe there are lots of existing care providers in your city but they’re expensive or have rigid pickup and drop-off times that working parents have trouble meeting. Or perhaps there aren’t any existing childcare businesses within a reasonable driving distance of where you’d like to place yours.
Defining the problem you are solving for your customers is by far the most critical element of your business plan and is crucial for your daycare business’ success. If you can’t pinpoint a problem that your potential customers have, then you might not have a viable business concept.
To ensure that you are solving a real problem, try conducting your own survey with potential customers to get a better understanding of their needs and validate that they have the problem you assume they have. Then, take the next step and pitch your potential solution to their problem.
Do they agree that it’s a good fit or does it seem to fall flat? See how to come up with a strategic plan for your business.
The Importance of Creating an Execution Plan
The execution chapter outlines how you’re actually going to make your childcare center work . You’l l address your marketing and enrollment plans, operations, success metrics, and any key milestones that you expect to achieve.
Execution Plan: Marketing and Sales
The marketing and sales plan section of your business plan details how you propose to reach your target market segments, how you plan on converting those target markets, what your pricing model looks like, and what partnerships you may need to make your center a success.
Your Positioning Statement
Once you understand your audience, the first part of your marketing and sales plan is your 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 from the alternatives that a customer might consider. This statement should be written for an investor or loan provider, rather than for your customer.
One daycare business plan example - a positioning statement for a 24-hour childcare center in Austin, Texas may look like this:
“For the Austin-based family who is seeking childcare around the clock, Jenny’s 24-Hour Daycare is a safe option for young children with nutritional meals, best-in-industry sleeping arrangements, a clean outdoor play area, and highly trained care professionals. Jenny’s 24-Hour Daycare is the first center of its kind within 30 miles of the Austin metroplex and offers competitive pricing and tuition payment plans.”
Use this formula to develop a positioning statement for your center:
Your Mission Statement
Your mission statement is a scaled-down version of your positioning 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 company core values that explain your daycare’s purpose and how you serve your audience.
For example, Cadence Education is a leading early childhood education provider with the mission of “providing parents with peace of mind by giving children an exceptional education every fun-filled day in a place as nurturing as a home .”
Your positioning strategy will typically determine how you price your memberships and packages. There are some basic rules that you should follow when deciding on your price point:
- Cost-plus pricing : For the most part, you should be charging your customers more than it costs you to host them at your center to ensure your venue is profitable and appealing to investors.
- Market-based pricing : Look at what your competitors are charging and then price based on what your audience is expecting.
As part of your marketing plan, 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.
This partnership should benefit both of you – it may help provide access to a target market segment for your venue while allowing your partner to offer a helpful recommendation to their customers. If you’ve already established an alliance, it’s important to detail that in your business plan.
The operations section is all about how your business works. This portion details the essential logistics such as staffing and sourcing and fulfillment. But remember, your goal is to keep your business plan as short as possible, so too much detail here could easily make your plan much too long.
Milestones and Metrics
It’s critical that you take the time to look forward and schedule the next critical steps for your business. Investors will want to see that you understand what needs to happen to make your plans a reality and that you are working on a realistic schedule.
Then, determine how you will measure the success of each milestone by listing out the key performance indicators and metrics needed to see progress. These will be the numbers you monitor on a regular basis to evaluate the trajectory of your business. For example, you may look at how many families tour your center each week, how many children you enroll each month, or the amount of revenue you bring in per quarter.
Company and Management Summary
The structure of your staff and teams sets your daycare up for success. In a new daycare center, there’s typically an owner (or franchisee), a center director, staff members, an enrollment or marketing team, accounting/administration, teachers, assistants, cooks, bus drivers, and janitorial staff. For example, the average small daycare business plan includes 8-10 fully licensed and/or certified early education teachers.
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. Break your sales forecast down into several rows, focusing on just high-level buckets at this point.
Knowing how much your daycare will cost to open ahead of time can save you money, stress, and time. Daycare business plan start-up expenses vary by size, enrollment capacity, and miscellaneous needs.
Keep in mind that you can save on staffing costs and cut down on overhead with technology that helps to streamline your center’s operations. After all, 40% of Millennials prefer self-service over human contact when interacting with businesses.
It’s essential that you find ways to enable families to book tours and enroll online without ever having to make a phone call to the center- reducing time spent on necessary-but-manual tasks for both your staff and inquiring families.
Finally, articulate your profits and losses based on the data from your sales forecast and your personnel plan plus a list of all your other ongoing expenses associated with running your childcare center.
See this Formula for Financial Forecasts
Step 1 : Average cost of tuition per child x your expected enrollments x 12 (annual revenue – assuming each family enrolls their child in one of your summer programs).
Step 2 : Daycare businesses make around 16% profit from their overall revenue, after daycare expenses. Multiply your number from step 1 by .16 to get your predicted profit.
Example : Let’s say you plan to charge families an average of $315 per week for childcare. With that, your goal is to enroll 60 students by the time your daycare center opens. Multiply $315 x 60 x 12 (annual revenue). This should come out to $226,800. Lastly, multiply your revenue of $226,800 by .16, which equals a net profit of $36,288 per year.
Consider Various Funding Sources
Depending on your situation, there’s both loan and grant funding in childcare. Between state tax credits, loans, and grants – there are financing options for a variety of situations.
Review Your Tax Deduction Options
Collecting tax credits is one way to receive an annual deduction on daycare costs. Based on your state, you can claim tax credits for...
Collect Daycare Grants for Your Business
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.
Know Which Loans Are Available to Daycare Business Owners
While grants are a wonderful option for freshly opened daycare businesses, loans are occasionally easier to come by. They’re offered widely and often have fewer requirements to qualify. Check out a few loan examples for your daycare center.
- SBA Loans , otherwise known as Small Business Administration loans, have exceptional rates, low interest, and flexible repayment options.
- SBA 7(a) Loans are beneficial for covering pricier equipment funds and real estate. Loans of up to $5 million are available to daycares.
- SBA 504 Loans – these are wonderful for business expansions and involve a loan for 50% of the project cost.
Take Actionable Steps to Bring Your Daycare Business to Life
Both Limited Liability Companies and Incorporations offer the significant legal advantage of helping to protect assets from creditors and provide an extra layer of protection against legal liability.
The main difference between an LLC and a corporation is that an LLC is owned by one or more individuals, and a corporation is owned by its shareholders. In general, the creation and management of an LLC are considered simpler and more flexible than that of a corporation.
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
All states have different daycare licensing requirements. Generally, you'll follow the steps below.
1) Take a Course
Attend and complete a pre-application course (you’ll receive a certificate at the end – remember to save it).
2) Submit Your Application
Submit your online licensing application. It'll ask for details about your business that were outlined in the executive summary.
3) Pay Fees
Pay your application fees. The fee depends on your center's capacity or the number of children you plan to enroll.
4) Complete Inspections
An inspection of your business property must be conducted.
5) Submit Your Service Payment
Register and pay for the inspection.
6) Conduct Background Checks
Submit background checks (this may also be an additional charge).
For More Information on How to Operate In Licensing Excellence, Listen to the Podcast Below
Choose Your Insurance and Liability
- Provide general liability – stay covered if your center has any property damage or injuries to third parties (children).
- Abuse coverage protects your childcare business or franchise. If employees turn out to be abusive towards children, this policy covers defense costs and defends you against financial losses.
- Professional liability insurance provides coverage for your business and workers if there is a neglect claim.
- Hired and non-owned auto liability ensures everyone is covered if there is a pick-up/drop-off vehicle accident.
*Liability requirements may vary by state.
How to Gain Enrollment at Your Daycare
From a business owner's perspective, the next step after successfully starting your daycare is to grow your center and gain enrollments.
Begin by building a strong company culture, actively marketing your daycare center, and finding the right childcare technology to optimize your enrollment process and save time.
See how to elevate your business plan for daycare with better waitlist management.
Create a Culture Where Staff Want to Work
A daycare center that stands out from the rest has happy staff members that want to work hard. Create a diverse employee culture that feels comfortable openly talking about situations. Provide support, patience, and room for growth. See more tips for creating a healthy and positive culture for your daycare staff .
Market Your Center
A daycare marketing strategy starts with an achievable goal. Do you want to fill your enrollment spots? Do you want to build a waitlist? Should you focus on scheduling more tours or gaining new leads ?
Choose a goal with measurable results. That way, you can track and analyze your marketing performance. When it comes to how to promote daycare business, marketing helps families realize you're the best childcare center on the block. Promote your centers through...
- Social media (especially Facebook – 83% of Millennials have a Facebook account).
- Landing pages and contact forms on your website
- Listing directories
- Email and text marketing campaigns
- Digital advertisements
- Word-of-mouth marketing
Tip: childcare experience software that automates the reports you need helps you to save time and improve your return on investment (ROI). For example, a Source of Families report shows you where your leads are coming from to optimize your efforts.
Invest In Childcare Experience Software to Build Your Daycare with Less Work
LineLeader is revolutionary childcare software that automates lead capture, follow-up, scheduling tours, and reports. Craft beautiful, personalized marketing campaigns to continually grow your business. Plus, easily manage your curriculum, attendance, and billing with automated center management
Get more from your marketing while saving franchisees 10 hours every week with LineLeader. Automate everything from lead capture and reporting to center management—all from one place.
Download Your Guide
Resources to help you run your childcare business.
Using Customer Service as a Differentiator to Increase Family Retention
How to Standardize Tour Management Across Your Childcare Enterprise
A CEO’s Take on Mitigating Risk for Childcare Enterprises (+ a 5-Step...
For more information on specific childcare resources regarding marketing tools, campaigns, tips, and best practices - see below.
1. Learn hidden secrets no one tells you about starting a childcare business .
2. See how to operate in childcare licensing excellence to boost enrollment.
3. Beth Fiori of Tiny Treasures provides expert tips. check out ways to improve your business plan for daycare with enhanced waitlist management.
4. Discover tips to maintain the best childcare center on the block.
5. Gain advice for strengthening your daycare staff culture.
6. Learn the benefits of building a daycare business plan , at a glance.
LineLeader Video Resources
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Day Care Center Business Plan
Safe Kids Child Care is a start-up organization that provides day care services to Lynn, MA, a suburb of Boston. This mid-sized child care facility serves children from three months to six years of age. Their services are safe and secure, providing the parents with an excellent place where their children can be taken care of.
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The Daycare Business Plan Blueprint (Examples + Template)
April 14, 2022
Starting a daycare business can be a daunting task. There are so many things to think about and plan for. You need to find the perfect location, get the right licenses and permits, hire qualified staff, and, most importantly, create a daycare business plan.
Creating a daycare business plan is one of the most important steps in starting your business. A well-thought-out business plan will help you get funding, attract investors, and operate your business effectively.
The bad news is that there is a lot of advice out there on writing a business plan. With so much information and tons of daycare business plan examples to choose from, it can be overwhelming to know where to start.
The good news is, we've got you covered. In this article, we'll give you a comprehensive guide on how to write a daycare business plan. We will also provide some examples and a free daycare business plan template to get you started.
But First...Is a Daycare a Good Business to Start?
Before we talk about how to create a daycare business plan, let's first answer the question: is starting a daycare a good business to get into?
The answer is a resounding yes! The daycare industry is growing rapidly. It is one of the few businesses that are not only recession-proof but also thrives in uncertain economic times.
According to the National Association of Child Care Resource & Referral Agencies (NACCRRA), the demand for child care services has increased by 26% over the last decade. This demand is only expected to grow in the coming years.
When it comes to profitability, the daycare industry is very attractive. According to IBISWorld , the average profit margin for a daycare business is around 15%. That's higher than the average for most other industries!
If you're thinking about starting a daycare business, know that you are getting into a very profitable and in-demand industry. Now let's talk about how to write a daycare business plan that will help you start and grow your business successfully.
How to Create a Daycare Business Plan
A daycare business plan is as simple as a word document with the following sections:
- Business Description
- Market Analysis
- Location and Facility
- Marketing Plan
- Financial Plan
This article will provide context of what to include in each section of your daycare business plan. As you work on writing your business plan, you will want to grab our daycare financial projection template as well in order to complete the financial plan section.
Your daycare business plan should be an elevator pitch in itself. It should be attractive to potential partners and investors. Basically, it should give them a clear idea of your business, where it is located, what services you offer, who your target market is, and how you plan to make money.
Creating a daycare business plan doesn't have to be complicated. In fact, the cheapest and easiest approach is to simply start with a blank word document and work through each of the above sections, it can be pretty easy. Here is a step-by-step guide on how to create a daycare business plan:
Create a Compelling Business Description
Your daycare business's unique selling point (USP) should be the first thing you include in your business plan. What is it that makes your daycare center different from all the others?
This description should be the foundation of your marketing efforts as well.
There are a few questions you should answer in your company description. They include:
What's your Curriculum Based On?
Potential investors, partners, and even customers will be interested in knowing what your curriculum is based on. This will help them understand the environment children will be in a while under your care.
When describing your curriculum, make sure to include:
- What age ranges do you cater for?
- The type of care you offer (full-time, part-time, drop-in)
- Your educational philosophy
- The activities and programs you offer
For example, if your daycare is unique by offering a Montessori curriculum, you will want to highlight that. In fact, you can learn more about how to start a Montessori program here .
How Big is Your Facility?
The size of your facility will say a lot about the type of operation you're running. Are you a small, home-based daycare or a large center with multiple classrooms?
This section of your business plan may include:
- A floor plan of your facility
- The capacity of your facility
- The number of employees you have
- Type of equipment and furniture you have
Who Is Your Target Market?
You can't market to everyone, so you must identify your target market. This will help you focus your marketing efforts and ensure that you're reaching the right people.
Below is a daycare business plan example that shows how your business description should be:
“ABC Daycare is a small, home-based daycare located in San Francisco, CA. We cater to children aged 0-12 years old and offer full-time, part-time, and drop-in care.
Our curriculum is based on the Reggio Emilia approach, emphasizing hands-on learning and collaboration. Activities and programs include arts and crafts, music, and outdoor play.
Our facility can accommodate up to 12 children at a time. We have a staff of four employees who are all CPR and First Aid certified.
Our target market is working parents in the city who need quality child care but can't afford the rates of larger daycare centers. We've created an affordable subscription-based pricing model for our target market to fulfill the demand. We generate revenue through monthly subscriptions and have low operating costs due to our small size.
Our suppliers are local businesses that provide us with food, toys, and other supplies.”
Do a Thorough Market Analysis
After writing a compelling description of your business, you need to do a thorough marketing analysis. This analysis will help you determine your target market, what type of advertising and promotion will work best, and how to price your services.
You should also research the competition and see what they are doing right and wrong. This information will be invaluable as you create your daycare business plan.
Keep these things in mind when doing a market analysis:
The Size of Your Market
This is determined by the number of potential customers in your area who need or want your services.
For example, if you live in a small town with only a few thousand people, there may not be enough demand to support a large daycare facility.
On the other hand, if you live in a city with hundreds of thousands of people, there may be room for multiple daycare facilities.
Your target market is the segment of the population that is most likely to use your services. This includes factors like age, income, education, and location.
After you've identified your target market, you need to show how you plan on fulfilling the demand. This is where your business model comes in.
Your business model is a detailed description of how your daycare will operate daily. It should include:
- How do you plan on acquiring customers?
- What are your pricing strategies?
- How will you generate revenue?
- What are your operating costs?
- Who are your suppliers?
Your business model should be detailed and easy to understand. It should also be realistic and achievable.
Here is a daycare business plan example of a business model for a small daycare center:
“The daycare will be open Monday through Friday from six in the morning to six at night. We will offer care for children ages six weeks to twelve years old.
Our rates will be $50 per week for one child and $40 per week for each additional child from the same family. We will offer a discount of $20 per week for families who enroll their children for an entire year.
We will generate revenue by charging weekly rates for our services. Our operating costs will include rent, utilities, supplies, and salaries for our employees. Also, we will acquire customers through online advertising and word-of-mouth.”
As you can see, a business model is a detailed description of how your business will operate. It's essential to have one in place before promoting and selling your services.
One thing you should not forget to include in your daycare business plan is the location of your business and your rental agreement. If you are renting a space, including the terms of your agreement and how long you have the space. If you are purchasing a property, include information on the property, such as square footage and any special features that will help your business stand out.
This daycare business plan example shows you how to include this vital information:
“The daycare will be located at 123 Main Street in a commercial space currently leased by the owner. The lease agreement is for three years with an option to renew for an additional three years. The monthly rent is $2000, and the security deposit is $3000.
The daycare will have exclusive use of the main floor, including a large open play area, a small kitchen, two bathrooms, and four classrooms. The daycare will also have access to the outdoor playground.
80% of our space will be used for childcare, with the other 20% used for our administrative offices and staff lounge.
We have chosen this location because it is close to several residential neighborhoods and has easy access to public transportation. The space is also large enough to accommodate our future growth.”
There are many daycare business plan templates you can use to help you get started. This is a basic outline of what should be included.
Daycare Marketing Plan
Most daycare business plan templates will include a section for your marketing plan. Most people overlook the marketing aspect of their business, but it is one of the most important pieces of your puzzle.
In your business plan, you need to outline your target market, your marketing strategies, and how you plan on executing those strategies.
You also need to set aside a budget for your marketing efforts. Many people make the mistake of thinking that they don't need to spend money on marketing, but that couldn't be further from the truth.
The following daycare business plan example shows you how you should describe your marketing efforts:
"Our target market is working for families with children between six weeks and five years old. We will reach our target market through online and offline marketing efforts.
Some of the offline marketing strategies we will use include print advertising, flyers, and word-of-mouth referrals. We will use a mix of SEO, content marketing, and social media for online marketing.
We have set aside a budget of $500 per month for our marketing efforts."
As you can see from the example above, your marketing plan should be clear, concise, and to the point. Don't forget to include a budget!
Daycare Financial Plan
Your business plan should include a financial plan section. This is where you'll lay out how much money you need to start or grow your business. Be specific and include dollar amounts. If you're seeking a loan, including information on how much you're requesting and how you'll use the funds.
You should also include a detailed budget in your business plan. Your budget should include all of your projected income and expenses for at least the first year of operation. Creating a budget will help you get a clear picture of what it will cost to start and operate your business.
This section should include projected costs for:
- Rent or mortgage payments
- Advertising and marketing
- Operating expenses such as utilities, supplies, and more.
Startup costs are another vital item to include in your business plan. This is the money you need to purchase equipment, furniture, or any other items to get your business up and running.
If you plan to secure a loan, your lender will want to see a detailed business plan with information on how you plan to use the loan funds. Ensure you include this information in your business plan to increase your chances of securing funding.
If you're seeking funding from investors, you'll need to include information on how they will be compensated. This is typically done through equity, a percentage ownership stake in your business.
For example, if you seek $100,000 in funding and offer a 20% equity stake, the investor will own 20% of your business.
Make sure you use a daycare business plan template that includes a section on funding to ensure you include all the necessary information. If you’re planning to get a loan or seek investment, you’re going to need full financial projections. Our daycare financial model will provide up to 5 years of projected income statements, cash flow and balance sheet forecasts.
Next I want to answer some key financial questions for you as you consider how to forecast your daycare financials. I am going to hit on:
- Daycare Startup Costs
- Daycare Revenue
- Daycare Facility Operating Expenses
- Daycare Profitability
Let’s dive into some key questions.
How much does it cost to start a daycare?
It costs between $10,000 and $50,000 to start an in-home daycare business according to Bizfluent .
It costs between $59,000 and $3 million dollars to start a daycare facility according to Bizfluent .
So obviously this is a huge range in startup costs. The main thing that will determine your startup costs is your daycare facility. Depending on how large your daycare is, whether you are buying, building, or leasing the space, and how much renovation needs to be done, your startup costs can vary drastically.
Some tips to help you estimate a cost of a daycare facility:
- A daycare facility should have 35 square feet of open floor space indoors per child.
- So if you wanted a facility that could care for 100 children you would need 3,500 square feet of indoor space for children, plus additional space for offices, kitchen, bathrooms, etc. Let’s assume that you would need at least 5,000 square feet of space for a daycare facility that served 100 children.
- A daycare center would cost at least $295 per square foot to construct in the U.S. based on data from Levelset .
- Constructing a new 5,000 square foot daycare center would likely cost at least $1,475,000 based on $295 per square foot.
- Now you might not be constructing new, rather you might rent an existing facility which could require renovations. You will need to get a specific quote for the specific renovations that you need for your space.
How much revenue can a daycare business make?
A daycare facility can generate $17,680 in revenue per year per child according to Zippia .
A daycare business with 100 children can generate over $1.75 million per year in annual revenue based on our average revenue per child of $17,680.
How much does daycare cost?
The average cost of daycare is $17,680 per year, per child in the U.S. according to Zippia .
This means that the average monthly cost of daycare in the U.S. is roughly $1,475.
What is the typical child to staff ratio for a daycare?
The typical child to staff ratios for a daycare are:
- 1 adult staff for every 4 infants (age 0 to 12 months)
- 1 adult staff for every 6 toddlers (age 1 to 3 years)
- 1 adult staff for every 10 pre schoolers (age 3 to 5 years)
- 1 adult staff for every 12 school aged children (5+ years old)
Source - Childcare.gov
These ratios will help you estimate how many staff members you will need. Our financial projection template makes this easy. Just enter in your ratios and the number of children you expect to have in each age group and the model will automatically calculate the number of staff required to maintain your ratios. See the input daycare staffing table below:
What are the typical operating costs for a daycare?
Your largest operating expense for a daycare facility is likely to be your rent.
It should cost between $20 and $30 per square foot to rent a daycare center space based on available spaces on Loopnet .
Other operating costs for a daycare center include:
You can see how you can enter in your operating costs into our financial model below:
How much profit can a daycare make?
The average daycare profit margin is 6.5% according to Daycare Business Boss .
Once you complete your projections you will want to take a look at our At a Glance tab to make sure that your projected profit margins aren’t way out of line with the industry norms. You can find projected profit margins for your daycare below:
This is an important aspect that you may not find in most daycare business plan templates, but it's still essential. An appendix includes any additional information to help you understand your business plan. This might include things like your:
- Business licenses
- Insurance policy
- Lease agreement
- Sample contracts
- Staff bios
This section adds credibility to your daycare business plan and shows that you've done your homework. Including all of the necessary details in your appendix will give investors peace of mind and show that you're serious about starting a daycare center.
An executive summary is a brief overview of your business plan and is often considered the most important section. It should be two pages long, with a clear description of your business, your goals, and why you will achieve them.
There are several key elements to include in your executive summary:
- Business Name: This is the name you have chosen for your business.
- Location: Include the city, state, and country where your business will be located.
- Business description: Describe what type of business you will be operating.
- Target market : This is the group of people you will be targeting as customers.
- Competition: Who are your competitors, and how will you compete with them?
- Product or service : What product or service will you be offering?
- Sales and marketing: How will you generate sales?
- Financials: Include a five-year income statement, balance sheet, and cash flow statement.
- Management team: Introduce your management team and their experience.
- Exit strategy : This is the plan for how you will eventually sell or otherwise exit the business in case you decide to retire or move on to other projects.
The executive summary is the most crucial section of your business plan because it gives investors and lenders a quick overview of your company and its prospects. Be sure to include all of the key elements listed above, and keep it under two pages in length.
What Are The Benefits of Creating a Daycare Business Plan?
Research shows that a business plan helps business owners make better decisions, turn abstract goals into tangible objectives, and track progress over time. But what does this mean for those who want to open a daycare?
Creating a business plan forces you to think through every step of starting your company. It's a valuable exercise that can save you time and money in the long run. Even if you don't end up following your business plan to a tee, the process of writing it will help you better understand your business and what needs to be done to make it successful.
There are many benefits to creating a daycare business plan, including:
Gives You a Roadmap to Follow
As with any journey, it's always helpful to have a map. A business plan is that map for your daycare business. It will give you a clear idea of where you want to go and how you can get there.
Helps You Secure Funding
A business plan is essential if you're looking for investors or loans. It will show potential lenders and investors that you've put thought into your business and have a solid strategy for making it successful.
Ensures Your Daycare Business is Feasible
When you're starting a business, it's easy to get caught up in the excitement and overlook potential problems. A business plan forces you to take a step back and assess whether your business is truly viable. It also helps you identify any areas where additional research is needed.
A daycare business plan is a valuable tool to help you make your business successful.
It is worth noting that your business plan is not a one-time exercise but should be updated regularly as your business grows and changes. This document is meant to be a living document that evolves as your business does.
If you're unsure where to start, there are plenty of resources available to help you, including daycare business plan examples online, books, and daycare business plan templates.
You can also use our daycare projection template to get your financial plan ironed out and ready for your business plan.
The most important thing is just to get started. The sooner you create your business plan, the better prepared you will be for success.
You can get the Daycare Facility financial projection template here!
The template is simple to use and will save you loads of time while still producing professional looking daycare projections. ProjectionHub has helped more than 50,000 businesses create financial projections so you can be confident that you can do it too.
The daycare business projection template includes:
5 Year Daycare Facility Pro Forma Financial Statements
CPA Developed & Completely Customizable
Free Support & Projections Review
Compatible with Google Sheets
Free expert review of your completed projections
The template is easy to use and you do not need to be an excel wizard to fill it out. Editable cells are highlighted in blue, a video guide is included, and our team is available to answer any questions you have.
You can see the complete walkthrough and demonstration of the daycare business forecast template here:
Get the template today for just $79
If you have any questions before purchasing, please feel free to begin a live chat or email us at [email protected]
100% money back guarantee in accordance with our terms and conditions
Photo by Pixabay
About the Author
Adam is the Co-founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors, lenders and internal business planning. Since 2012, over 40,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections.
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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.
Finish Your Business Plan Today!
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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