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Business Plan Tips | 30 June, 2024

How to Start a Daycare Center

Imagine waking up each day to the sound of laughter and the sight of children eager to learn and grow. Starting a childcare business is more than just a job; it’s a chance to make a lasting impact on young lives while creating a fulfilling and profitable career for yourself. 

With the increasing demand for a quality day care business, there’s never been a better time to turn your passion for working with children into a thriving business.

At BSBCON, we understand that the journey to starting a daycare business can be overwhelming. Wondering what to put in your childcare business plan or how to start a childcare business?

Fret not, we’ve crafted this comprehensive guide to help you navigate each step, from financial planning to marketing strategies. With our expertise and your dedication, we can turn your dream of starting a childcare business into a reality.


Executive Summary

The executive summary is the cornerstone of your day care business plan. This is a key first step on how to start a day care. This section gives a quick overview of your business idea and highlights key details:

  • Contact Information: Include your name, address, phone number, and email.
  • Business Concept: Describe your daycare startup services, staff size, types of services, operational summary, and necessary licenses.
  • Business Structure: Detail the owners, partners, managers, employees, target market, and basic marketing strategies.
  • Mission Statement: Explain your motivation for starting the day care business. For example, you can focus on providing a nurturing environment that supports children’s development.

Keep this section brief and clear, ideally one to two pages.


Market Research and Location Analysis

Understanding your local market and choosing the right location are crucial in owning a daycare and its success:

  • Market Analysis: Check out the local childcare scene and daycare openings. Are there many competitors? Is there a demand for more services? Assess neighborhood trends, competitor services, and pricing.
  • Location Details: Decide whether your daycare will be home-based or in a separate facility. Home-based daycares often have lower costs, while commercial locations might attract more clients but are more expensive.
  • Community Needs: Understand the demographics and needs of families in your area. This includes analyzing local zoning laws, insurance requirements, and neighborhood characteristics.


Financial Planning

A detailed financial plan is essential for securing funding and managing your daycare effectively. “How much does it cost to start a daycare?” You should be able to answer this at the end of this section.

  • Startup Costs: Estimate the initial costs, including licensing, equipment, renovations, and marketing.
  • Funding Requirements: Specify the amount of funding needed and potential sources, such as loans, grants, or investors.
  • Revenue Projections: Outline your expected income over the next few years. Include a monthly and annual budget, along with a cash-flow forecast.
  • Tax and Insurance Plans: Define your business’s legal structure (e.g., LLC, sole proprietorship) and plan for taxes. Assess insurance needs to mitigate risks.


Marketing Strategy

Your marketing plan should demonstrate your understanding of the local market and outline strategies to attract and retain clients. This is integral and one of the key steps to opening a daycare.

  • Business Niche: Identify what makes your daycare unique, such as specialized programs or extended hours.
  • Promotion: Develop strategies for promoting your daycare, including online marketing, local advertisements, and community engagement.
  • 5 P’s of Marketing: Address the product (services offered), price (competitive rates), place (location), promotion (marketing tactics), and people (target clientele).

Utilize platforms like Nextdoor to create a free business page, engage with local families, and build a trusted reputation.


Operational Business Plan for Daycare

Up next in our opening a daycare checklist: it’s important to detail the day-to-day operations of your daycare ensures smooth functioning and high-quality care:

  • Personnel: List your team members and their roles, including hiring practices and staff policies.
  • Daily Schedule: Provide a typical day’s schedule, highlighting activities like nutrition plans, educational programs, and playtime.
  • Parental Policies: Establish clear guidelines for parents regarding drop-off/pick-up times, behavior policies, and communication methods.
  • Emergency Plans: Outline protocols for emergencies, such as fire escape plans and medical procedures.


Have Questions? Looking To Get Started?


Daycare Centers in Today’s Economy

The daycare industry is essential, but it has faced challenges, especially during the COVID-19 pandemic. Many childcare programs had to close or operate at reduced capacity due to social distancing regulations. However, as parents return to work, the demand for childcare is rebounding. 


According to the U.S. Bureau of Labor Statistics, there will still be an average of 153,000 childcare worker openings each year, despite a slight decline in job growth from 2022 to 2032. The childcare industry is resilient, and starting a daycare center offers significant benefits.

Benefits of Opening a Daycare Center

Starting a day care business has lots of benefits, including personal childcare, financial freedom, tax benefits, and a rewarding career:

  • Personal Childcare: If you have young children, opening a childcare center and running a daycare can provide a convenient solution for their care while earning an income.
  • Financial Freedom: Owning your own daycare start up gives you control over your income and financial decisions, leading to greater financial independence.
  • Tax Benefits: As a business owner, you can write off various expenses, such as utilities, vehicle costs, and childcare supplies. Home-based daycares may also be able to write off a portion of housing costs.
  • Rewarding Career: Many daycare owners and workers find their roles fulfilling, as they contribute to the cognitive, physical, and social-emotional development of young children.


How Much Does It Cost to Start a Daycare?

Before starting a daycare, it’s important to understand the financial commitment involved and the daycare startup cost. The average cost to start and run a daycare business ranges from $10,000 to $100,000, depending on factors such as location, size, and the number of children and staff. Home-based daycares usually have lower start-up costs compared to larger centers.

Typical operating costs include:

  • Rent and Utilities: Home-based daycares may have lower costs than renting a commercial space, which typically charges between $0.60 and $2.50 per square foot.
  • Employee Compensation: Childcare workers in the U.S. earn an average salary of $29,000 to $35,600 per year, depending on location and qualifications.
  • Licensing Fees: Licensing requirements and fees vary by state, so it’s essential to research the specific requirements for your location.
  • Insurance: Insurance costs can range between $3,000 and $5,000 a year, depending on the policies and location.
  • Supplies and Equipment: Budget for educational supplies, furniture, and equipment, which can range from $30,000 to $40,000.
  • Food: If your center provides meals, include the cost of food and kitchen supplies in your budget.
  • Advertising and Marketing: Allocate funds for marketing materials, website costs, and social media ads, typically ranging between $1,000 and $1,500.


Let’s Build Your Dream Daycare

Opening a child care center requires significant effort, time, and resources, but the rewards are immense. By creating a detailed business plan, conducting thorough market research, and developing a strong marketing strategy, you can set a solid foundation for your daycare’s success.

At BSBCON, we specialize in crafting tailored business plans that help entrepreneurs like you succeed. Our expertise ensures that your plan will be comprehensive, actionable, and geared toward growth. We understand the unique challenges of starting a business and are here to guide you through every step of the process.

Don’t navigate the complexities of starting a daycare business alone. Partner with BSBCON and let us help you create a business plan that not only meets but exceeds your expectations. Contact us today to get started on your journey to success.