Do you want to know exactly how much it cost to start a daycare center? If YES, here is a detailed cost analysis for starting a daycare business and raising finance.

Running a daycare facility can be tasking and at the same time a very rewarding and profitable venture. An entrepreneur who is interested in taking care of babies and pre–school toddlers and also in having a business might find out that opening a daycare facility would meet both desires. Having provided you with a:

  1. Daycare Industry Overview
  2. Market Research and Feasibility
  3. Daycare Business Plan
  4. Daycare Name ideas
  5. Daycare Licenses and Permits
  6. Daycare Marketing Plan
  7. Cost of Starting a Daycare
  8. Daycare Marketing ideas

We will consider how much it cost to start a daycare business from scratch including the operating costs.

  • Industry Overview

Before starting a daycare business, one must be prepared by ensuring that they carefully plan out the venture from the beginning by researching on local and state laws that govern daycare cum pre-school education business. There must also be planning as regards space, getting insurance, developing a curriculum, hiring additional staff, advertising and registration of children.

Daycare facilities provide daycare services for children, primarily those who are under five years old. Some standard daycare facilities may also run pre-school programs that prepare three and four-year-olds for kindergarten, though, kindergarten education is excluded from industry services, just like in-home nanny services. Basically, the daycare industry provides essential services to working class families who have babies and toddlers.

The first thing that needs to be done before starting out is contacting the local governing body of child care for relevant information regarding the opening of a daycare facility. When approaching the governing agency, ask to meet with the administrators so as to discuss your business idea, and get information on how to become a licensed daycare program provider.

After gathering all the information that you would need including written literature, you would need to contact the local government as regards getting a license to start. Depending on the state you will be operating in, you might be required to register and pay a fee to obtain your license.

After applying for a business license as required by the state and meeting any other special requirements needed in order to open a daycare facility, you should then consult with insurance agencies regarding the right coverage for your facility. Ensure you choose a plan that will adequately cover you, your clients, as well as your business and also ensure that you prepare your location for safety inspections, while ensuring that your facility has emergency evacuation plan in place for any unforeseen circumstances or disasters.

Over and above, the daycare facility line of business in developed countries such as United States of America, the United Kingdom, Canada and Australia are still enjoying good patronage particularly if they are well positioned and if they know how to reach out to their target market (working class families who have babies and children who are under the age of 4).

How Much Does It Cost to Start a Daycare?

If you intend starting your own daycare center, it will be in your best interest to first of conduct a detailed cost analysis before officially launching the business. The truth is that if you are able to conduct detailed cost analysis before starting your daycare center, you will have a good idea of how much it will cost you to start and run the business. It makes it easier for you to raise the estimate of the start-up capital because you already know beforehand the required start-up capital.

When you conduct cost analysis before starting your daycare center, you will have an idea of the gains of starting the business, the risks you will be exposed to and the potential challenges that you will encounter.The truth is that, the cost analysis as it relates to starting a standard daycare facility business in the United States of America, Canada, United Kingdom and Australia can be said to be almost the same except for few variations.

For example, the basic things needed to be able to operate a daycare facility could range from getting a license to even getting a certification. Some countries consider these as the basics, while in some other countries you could get a waiver for it if you are able to meet other criteria.

In starting a Daycare facility, you will be expected to have a standard facility with the required flooring, cots, cartoon channel (flat screen TV and DVD player), toys, baby walker, bicycles, flannels, blankets, first aid kits et al and they are same prices in any of the countries listed above, especially when bench–marked against the US Dollars.

Other factors that may be slightly different in terms of costing when it comes to starting a standard daycare facility business in any of the countries listed above are cost of labor, cost of transportation and logistics, local tax, insurance policies, branding and promotion, business incorporation fee, permits and license, rent/leasing amongst other factors.

Over and above, when it comes to starting a medium scale daycare facility business, you should be prepared to either rent or lease a standard facility designated for such business; this is going to be one of the areas where you are expected to spend the bulk of your start–up capital.

How Much Does It Cost to Start a Daycare Business in the United States?

These are the key expenses you are expected to make when starting a medium scale but standard Daycare facility business in the United States of America;

  • The total fee for registering the business in the United States of America – $750.
  • Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Air and water pollution control permit, Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
  • Marketing promotion expenses for the grand opening of the Daycare facility in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring a business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – $30,400.
  • The cost for leasing a standard facility in a good, centralized and serene location – $350,000.
  • The cost for remodeling the facility – $100,000.
  • Other start-up expenses including stationery ($500), phone and utility (gas, sewer, water and electric) deposits – ($6,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000.
  • The cost for start-up inventory and equipment (Stocking with a wide range of products such as toiletries, flannels, blankets and toys, and staff uniform et al) – $150,000.
  • The cost for store equipment (cash register, security, ventilation, signage) – $13,750
  • The cost of purchase and installation of CCTVs: $5,500
  • The cost for the purchase of furniture and gadgets (Cots, First Aid Kits, Telephone, fax machine, printing machines, computers, flat screen TV, DVD players, tables and chairs et al) – $25,000.
  • The cost for building and hosting a website – $600.
  • The cost for opening party – $8,000.
  • Miscellaneous – $10,000.

You will need an estimate of seven hundred and fifty thousand Dollars ($750,000) to successfully set up a medium scale but standard daycare facility business in the United States of America. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and a business with the potential of owning more than one outlet in key locations within same region.

Starting a small scale but standard daycare facility business that can only accommodate a minimal number of children per–time in just one location in the United States of America will cost about one hundred thousand dollars to two hundred and fifty thousand dollars ($100,000 to $250,000).

When it comes to starting a standard and large scale daycare facility business with several facilities in key cities in the United States of America, a daycare facility that can accommodate over twenty children per-time and a daycare facility business with the intention of selling franchise and also offering complimentary services, then you should look towards budgeting well over two million, five hundred thousand dollars ($2.5 million).

How Much Does It Cost to Start a Daycare Business in the UK?

These are the key expenses you are expected to make when starting a medium scale but standard daycare facility business in the United Kingdom;

  • In the United Kingdom, online applications are usually registered within 24 hours and cost £12 (paid by debit or credit card or PayPal). Postal applications take 8 to 10 days and cost £40 (paid by check made out to ‘Companies House’). There’s a same day service costing £100.
  • Legal expenses for obtaining licenses and permits (Health department license and business license and permits (Fire department permit, Air and water pollution control permit, Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – £13,300.
  • Marketing promotion expenses for the grand opening of the daycare facility in the amount of £3,500 and as well as flyer printing (2,000 flyers at £0.04 per copy) for the total amount of £3,580.
  • The cost for hiring a business consultant (including writing business plan) – £2,500.
  • The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – £28,400.
  • The cost for leasing a standard facility in a good, centralized and serene location – £345,000.
  • The cost for remodeling the facility – £97,800.
  • Other start-up expenses including stationery (£300), phone and utility (gas, sewer, water and electric) deposits – (£1,500).
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – £60,000.
  • The cost for start-up inventory and equipment (Stocking with a wide range of products such as toiletries, flannels, blankets and toys, staff uniform et al) – £148,500.
  • The cost for store equipment (cash register, security, ventilation, signage) – £9,500.
  • The cost of purchase and installation of CCTVs – £4,500.
  • The cost for the purchase of furniture and gadgets (Cots, First Aid Kits, Telephone, fax machine, printing machines, computers, flat screen TVs, DVD players, tables and chairs et al) – £24,200.
  • The cost for building and hosting a website – £600.
  • The cost for opening party – £6,300.
  • Miscellaneous – £8,000.

You will need an estimate of seven hundred and thirty thousand Pounds Sterling (£730,000) to successfully set up a medium scale but standard daycare facility business in the United Kingdom. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and a business with the potential of owning more than one facility in key locations within same region.

Starting a small scale but standard daycare facility business that can only service/accommodate a minimal number of children per–time in just one location in the United Kingdom will cost about ninety eight thousand to two hundred and forty five thousand Pounds Sterling (£98,000 to £245,000).

When it comes to starting a standard and large scale daycare facility business with several facilities in key cities in the United Kingdom, a daycare facility that can accommodate over twenty children per-time and a daycare facility with the intention of selling franchise and also offering complimentary services, then you should look towards budgeting well over two million British Pounds Sterling (£2 million).

How Much Does It Cost to Start a Daycare Business in Canada?

These are the key expenses you are expected to make when starting a medium scale but standard daycare facility business in Canada;

  • For federal incorporation of business in Canada, the cost to incorporate is $200 if filed online through Corporations Canada’s online Filing Centre ($250 if filed through other means).
  • Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Air and water pollution control permit, Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
  • Marketing promotion expenses for the grand opening of the daycare facility in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring a business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – $30,400.
  • The cost for leasing a standard facility in a good, centralized and serene location – $350,000.
  • The cost for remodeling the facility – $100,000.
  • Other start-up expenses including stationery ($500), phone and utility (gas, sewer, water and electric) deposits – ($6,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000.
  • The cost for start-up inventory and equipment (Stocking with a wide range of products such as toiletries, flannels, blankets and toys, staff uniform et al) – $150,000.
  • The cost for store equipment (cash register, security, ventilation, signage) – $13,750.
  • The cost of purchase and installation of CCTVs: $5,500.
  • The cost for the purchase of furniture and gadgets (Cots, First Aid Kits, Telephone, fax machine, printing machines, computers, flat screen TVs, DVD players, tables and chairs et al) – $25,000.
  • The cost for building and hosting a website – $600.
  • The cost for opening party – $8,000.
  • Miscellaneous – $10,000.

You will need an estimate of seven hundred and fifty thousand dollars ($750,000CAD) to successfully set up a medium scale but standard daycare facility business in Canada. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and a business with the potential of owning more than one outlet in key locations within the same region.

Starting a small  scale but standard daycare facility business that can only accommodate a minimal number of children per–time in just one location in Canada will cost about one hundred thousand dollars to two hundred and fifty thousand dollars ($100,000CAD to $250,000CAD).

When it comes to starting a standard and large scale daycare facility business with several facilities in key cities in Canada, a daycare facility that can accommodate over twenty children per-time and a daycare facility business with the intention of selling franchise and also offering complimentary services, then you should look towards budgeting well over two million, five hundred thousand dollars ($2.5 millionCAD).

How Much Does It Cost to Start a Daycare Business in Australia?

These are the key expenses you are expected to make when starting a medium scale but standard daycare facility business in Australia;

  • In Australia, the fees to register your business name with ASIC include: $34 for 1 year. $80 for 3 years.
  • Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Air and water pollution control permit, and Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
  • Marketing promotion expenses for the grand opening of the daycare facility in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring a business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – $30,400.
  • The cost for leasing a standard facility in a good, centralized and serene location – $350,000.
  • The cost for remodeling the facility – $100,000.
  • Other start-up expenses including stationery ($500), phone and utility (gas, sewer, water and electric) deposits – ($6,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000.
  • The cost for start-up inventory and equipment (Stocking with a wide range of products such as toiletries, flannels, blankets and toys, staff uniform et al) – $150,000.
  • The cost for store equipment (cash register, security, ventilation, signage) – $13,750.
  • The cost of purchase and installation of CCTVs: $5,500.
  • The cost for the purchase of furniture and gadgets (Cots, First Aid Kits, Telephone, fax machine, printing machines, computers, flat screen TV, DVD players, tables and chairs et al) – $25,000.
  • The cost for building and hosting a website – $600.
  • The cost for opening party – $8,000.
  • Miscellaneous – $10,000.

You will need an estimate of seven hundred and fifty thousand dollars (AUD$750,000) to successfully set up a medium scale but standard daycare facility business in Australia. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and a business with the potential of owning more than one outlet in key locations within same region.

Starting a small scale but standard daycare facility business that can only accommodate a minimal number of children per–time in just one location in Australia will cost from one hundred thousand dollars to two hundred and fifty thousand dollars (AUD$100,000 to AUD$250,000).

When it comes to starting a standard and large-scale daycare facility business with several facilities in key cities in Australia, a daycare facility that can accommodate over twenty children per-time and a daycare facility business with the intention of selling franchise and also offering complimentary services, then you should look towards budgeting well over two million, five hundred thousand dollars (AUD$2.5 million).

Estimating Start-Up Cost for Daycare Facility Business Based on the following factors;

  • Specific Location

In this kind of business, the location of your business means a lot. The best to do when searching for a location for your business is to consider where other thriving daycare facilities locate their business. If you do your research properly, you will realize that most daycare facilities are located in a serene and secured environment; an environment with the right ambience and demographic composition of the group of people you want to reach out to. Make sure you locate yours around any of these areas.

Basically, it cannot be overemphasized that the location you chose to open your daycare business is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location that is highly conducive for such facility and perhaps a location with a demographic composition of working class and busy families with babies and children under the age of 4.

  • Staff/Manpower

When it comes to starting a standard daycare facility business on a large scale, you would need the services of the following professionals;

  • Head of The Daycare/School Coordinator
  • School Administrator
  • Tutors for Various Learning Areas
  • Nannies/Caregivers/Aux Nurse
  • Marketing and Sales Executive
  • Accountant/Bursar
  • Client Service Executive/Front Desk Officer
  • Cleaners
  • Security Officer

Can a Daycare Business be Bootstrapped on a Lean Budget Right from Home?

If you are a retiree, stay at home mother or a grandma and you are looking for a small scale business that you can successfully bootstrap on a lean budget right from your home, then you should consider starting a daycare facility business.

This is possible if you have enough space in your home/compound. The truth is that people who live in residential estates find it pretty easy to set up a daycare facility business.

All you have to do is ensure that your facility meets the required standard as outlined by the regulatory authority in your council and get the required permits and license. As a matter of fact, you can start a daycare facility business with as low as five thousand dollars or even less depending on how small you want the business to be and if you already have baby cots and toys et al.

The challenge here is that you must be ready to take on more than half of the available roles in the business. You should be able to serve as the nanny, coordinator, bursar, sales and marketing officer et al.

How Much Does It Cost to Buy a Daycare Franchise?

In the United States of America, the Average Cost of Purchasing a Daycare Facility Franchise is $20,000. Examples of 3 Well – Known Daycare Facility Franchising Companies in the United States of America are;

  • Children’s Lighthouse
  • Kids R Kids
  • All About Kids Learning Centers

In the United Kingdom, the Average Cost of Purchasing a Daycare Facility Franchise is £20,000. Examples of 3 Well – Known Daycare Facility Franchising Companies in the United Kingdom are;

  • Little Cherubs Franchise – UK
  • Discovery Point Franchise -UK
  • Banana Moon Franchise – UK

In Canada, the Average Cost of Purchasing a Daycare Facility Franchise is $25,000 (Canadian Dollar). Examples of 3 Well – Known Daycare Facility Franchising Companies in Canada are;

  • Tiny Hoppers – Canada
  • Kinderscare Franchise – Canada
  • Gooddard School Franchise – Canada

In Australia, the Average Cost of Purchasing a Daycare Facility Franchise is AUD$26,000. Examples of 3 Well – Known Daycare Facility Franchising Companies in Australia are;

  • Kids Korner- Australia
  • Kool Kidz Childcare – Australia
  • Goodstart Franchise – Australia

Financing your Daycare Business

There are different ways through which you can raise startup funds for your day care business. For some raising capital can be as easy as breeze. On the other hand, others may have to struggle in order to raise it. Whatever side of the divide you may find yourself, the paramount thing is to explore some options that can help you raise your funds.

You can be lucky to have had a good saving culture. As such, you can start a day care business through funding from your savings. There is also the option of through bank loans. There are loads of banks that are interested in funding businesses; as such you may want to capitalize on it by seeking a loan. There are some banks that require collateral, whilst there are some that do not need one.

There is also the option of angel investors, these investors are all and about looking for businesses with wonderful business plans to invest in. If you do have a great business plan that is well crafted, then you may decide to be on the lookout for angel investors who will be ready to finance your business.

However, there is one overlooked option you can consider as a daycare owner and that is government grants. Government grants are a little bit relaxed with respect to requirements and repayment structure; especially when compared to loans. If you are to consider grants, here is how to do it the right way:

5 Steps to Getting Government Grant for a Daycare Center

If you reside in the United States, some of the various grants you can access are Community Development Block Grant, Community Facilities Grant Program, Child Care Access Grant and Childcare Development Block Grant.

  1. Register Your Daycare, Obtain Your Business License and Ensure Your Pay Your Tax
  2. Study the Various Grants Available To Daycare Business Owners
  3. Draft a Good Business Plan and Proposal
  4. Position Your Daycare Center to Attract Grants
  5. Make Use of Loans and Grants Tools on the Internet

For whatever option you find suitable as the way to raise funds for your day care business, it is very needful that you have a well-structured plan as to how to pay back. That is assuming you are loaning some funds.