“A goal without a plan is just a wish” – Antoine de Saint-Exupery

Having a detailed child care business plan can help ensure your centers succeeds. Planning out your child care center before you open your doors can help you stay focused on what really matters to you. From basic operations to expansion plans, this article will help you think about the first steps to writing your child care business plan.

Step 1: Know the rules

The very first place to start when it comes to writing your business plan is your state’s licensing requirements. Understanding the basic rules for licensing will help ensure your child care center  and your business plan are headed in the right direction. Here are just a few things to consider:

  • Child-to-staff ratios
  • Square footage requirements per child
  • Meal and sanitation requirements
  • Building codes that must be met
  • Licensing requirements
  • Safety requirements

Step 2: Outline your goals and objectives

After you understand the rules to the game, figure out why you’re playing. What is your motivation? Outlining your goals can help you stay focused when you’re busy scaling your business. Objectives are slightly different from goals.

For example, goals may be rooted in measurable success factors, such as enrollment rates. Objectives, however, can be rooted in values. Perhaps you want to teach the children in your center valuable life skills, such as effective communication. You may have a different approach for your center based on your objectives.

Aligning your goals and objectives is vital for guiding your business. This can also be valuable information for potential funders. Showing them the “why” of your business, along with well-structured goals, can help win over an investor.

Step 3: Do your research

Look into your competition. Figure out what makes them successful. If there are many child care centers, daycares, and preschools in your town, look at them all. They will likely serve different markets or have different competitive advantages.

The cost of care may be different from each center. Perhaps the location alone helps to bring in customers. Find each center’s competitive advantage. Here are a few questions to start your research process:

  • How many child care centers, daycares, and preschools are in the area in which I plan to open my center?
  • What teaching philosophy do the centers follow?
  • What is their child-to-staff ratio, and do they advertise it?
  • What are their hours of operation?
  • Do any of the facilities have waitlists? If so, how long can a family expect to wait to be enrolled in the center?

You should also spend a significant amount of time researching the clientele in your area. Who will use your child care services? Understanding as much as possible about their lives is extremely important. After you identify your target market you should conduct as much research as possible. Start by exploring these topics:

  • Demographics: Both those of the families who use your facility and of the children enrolled
    • Age
    • Gender
    • Race
    • Income Level
    • Marital Status
    • Education
    • Religion
    • What does the family composition look like?
      • How many children are in each family, on average?
      • Are grandparents heavily involved in the child’s life?
  • Geographic
    • Neighborhood
    • City, State, Zip Code
    • Distance traveled to work by parents
  • Psychographics
    • Values
    • Attitudes
    • Interests
    • What problems do they have?
    • Why does the family need a child care provider?
    • What do they care about, specifically when it comes to child care?

As you research your target market, you will likely come across hidden gems of information. You should use this information to help make informed decisions. Be sure to remember that what market reports and web searches may produce may not be 100% accurate. It is smart to overlap your findings with primary research. Finding and speaking with parents in the area often create the most valuable insights.

Step 4: Think about marketing

Word-of-mouth is a great first step when thinking about marketing, but it should not be your only source of advertising. As you begin thinking about your clientele, you should also start thinking about how they like to be approached with opportunities. After completing the target market analysis, you should have a pretty good idea about who you’re hoping will use your child care facility.

The next step is getting them to actually enroll.

Your marketing plan should discuss the “Four P’s” of marketing, “Product,” “Place,” “Price,” and “Promotion.”

  • Product: This is the “product” you are selling. In the instance of child care, it is actually the child care service. You will be watching children and providing them with countless opportunities to learn and grow. Within this section, you can also talk about your curriculum style, learning activities, or anything else that is a strong characteristic of your child care center.
  • Place: This is the physical location of your child care center. This section should also contain information about travel patterns of parents, distance from other daycare centers, and proximity to populated locations in your town.
  • Price: This section is pretty self explanatory, right? Use this space to highlight the cost to parents. Consider offering second child discounts, field trips, and child care management software, like tend.ly, into this section.
  • Promotion: How do you plan on getting the word out about your child care center? Parents consume advertisements in many different ways. Do a bit of market research to find the most effective ways to tell parents about your center. You may consider billboards, flyers, business cards, open houses, a referral program, or even social media advertising.

Step 5: Budgeting and Cash Flow

Creating a budget is a great way to start thinking of the financial success of your child care center. You’ll need to account for the various supplies, furniture, and safety equipment required to run your child care facility. Be sure to factor in the wages of teachers and administrators, too. Building costs, safety materials, and various fees also come into play.

We’ve created a non-exhaustive budget template for you to use to develop your own. Customizing the template to your business is critical. In addition to the expenses, you should also think about the type of child care center you plan to open. In our previous article, Picking the Right Child Care Structure, we outlined the general things to think about when picking the type of child care center you want to run. Applying some of this same logic is relevant when creating your budget.

For example, if you’re running an in-home child care center, you may need to allocate a higher percentage of your budget to renovations to meet safety codes. In a franchise child care structure, you may need to devote some of your budget to an open house to show off your new facility upon opening. Keep your business structure in mind when creating your budget as each structure will have different needs.

You may also want to create a “Sources and Uses” worksheet. Child Care Aware has created one which you can find here. This document essentially shows where funds may flow in from and where you plan to allocate those funds. It can help you stay on top of funds within your facility.

Step 6: Throw it all together 

At this point, you should have a lot of information available for your business plan. The next step is to put it all together into an easy-to-read document. Take the time to carefully articulate your meanings here. This document is not only designed to offer insight to investors about your business, but also to help you effectively communicate what you plan to do. Check out this template to help with formatting and idea generation.

Now you’re well on your way to drafting your daycare business plan. Keep in mind that a business plan is a roadmap, but it’s not etched in stone. Things are bound to change, and that’s. If you find you’re drifting too far from your first version, take the time to critically think about your business. Owners often find themselves dealing with the most pressing problems rather than thinking about how that problem aligns with their goals and objectives. If you start to stray, revisit your plan. You can use your business plan to stay on target. If things have changed, rewrite the sections that need adjustment. You’ll thank yourself later.

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