Do you have passion for looking after kids? Do you love children? Are you interested in starting a daycare center? Do you need a sample daycare business plan template that will enable you prepare adequately to launch your own childcare center?
If your answer to all the questions above is yes, then below is an in-depth guide on how to start a daycare business.
Times are changing, the economy is getting tougher and parents are getting wiser. Back in the good ole days, the father works to provide the daily needs of the family while the mother sit at home to raise the kids and take care of the family.
However, in this present time; being a stay at home mother is no longer feasible. Current economic trend now demands that both parents need to work and jointly contribute financially to the welfare of the kids. Now who takes care of the kids while the mom and dad is away?
Well, a housemaid or babysitter can take care of the children just fine; but getting a good babysitter is quite difficult and it doesn’t come cheap either. So rather than parents expending most of their income on paying a babysitter, they have resorted to taking their children to a daycare center.
Now what is a Daycare Center?
A daycare center, otherwise known as a childcare center is an establishment, a facility or place where parents who have no time (due to the nature of their job) take their children or kids to; and these children will be taken care of by someone else, in return for a fee. Aside taking care of children on behalf of their parents daily, a daycare center may also provide basic tutoring and educational activities to these kids.
Apart from the fact that running a daycare business is very lucrative, there are still other reasons why setting up a daycare business is the right business idea for you as an entrepreneur or stay-at-home mom who is in search of a good business to invest your money and time.
8 Reasons Why You Should Open a Daycare Center Today
A. You are in control
As a daycare business owner, you are in control of how much money you make on a daily or monthly basis; you are in control of your time and you also decide what kind of client to take in. If you are looking for a business where you will truly be your own boss, then this business is the right one for you.
B. Opening a Daycare centre require low overhead
The best businesses are known to generate profit while running on a moderate overhead and low operating cost. Daycare centers can be started with very little overhead and you can also start this business from home to cut startup cost. The major expenses involved in starting an in-home daycare center are licensing, insurance, advertising, and food.
C. There is a growing trend towards Specialized Childcare
The high demand for specialty daycare services like drop-in care, 24hour daycare, vacation care, sick daycare, and daycare for kids with special needs is growing daily. As a potential daycare owner, you now have the opportunity to map out a niche for yourself by providing unique services and increasing your rate per child.
D. Daycare Business can be lucrative if done right
Now despite the current economy, daycare businesses can be very lucrative. This is because both parents in the household must now work to make ends meet. More than a quarter of stay-at-home nursing mothers or parents plan to go back to work because of the economy and as a result, they need a quality daycare center for their kids.
E. The resource for setting up a daycare is readily available
Setting up a childcare center is definitely one of the easiest things to do because there is a lot of information at your disposal and it doesn’t require any special skill. The internet is filled with websites dedicated to helping potential daycare business owners open their businesses and run them successfully. The equipment you need is readily available anywhere.
F. You will have fun running a daycare business
Passion is the name of the game in this business. What this means in essence is that if you love and enjoy being around children, then this business is for you. Nothing beats being passionate about what you do because when people turn what they love doing into a business opportunity, success flows.
G. You will spend quality time with your own children
For those who are already parents, daycare business is perfect for you because it makes it possible for you to stay home with your own children and still earn an income. A daycare business allow parents to manage their own children upbringing and increases the quality time they spend with their children.
H. You provide job opportunities for people. As your daycare business grows, you will need to hire employees that will help you in running the business. By so doing, you have created a source of livelihood for someone out there.
Starting a Daycare Center – Sample Business Plan Template
1. Learn everything you can about the Daycare business
Aside passion, you need to make sure that you learn everything you can about the daycare business because knowledge is power. You can download materials from the internet and talk to other daycare business owners about what it takes to run a business.
If you are looking to start a daycare business, then you need to create a business plan to ensure the long-term success of your business. Though it might sound insignificant, writing a business plan for your day care business can really boost your chances of success.
Aside that a business plan will keep your ideas organized and help you launch your daycare center successfully, it will help you stay on track after you have launched your business and as you move toward achieving your goals.
Your business plan will define how much money you will need to start your daycare business, how you will earn that money, and how you will spend it. The plan will also include a detailed description of your business, the families you plan to serve, your operating policies and procedures, your budget, your management plan, your competition, and your marketing plan.
Call a business plan a plan for success, and you would be absolutely right. With a well-written business plan, your chances of getting things wrong are slim. A business plan is a complex document, no doubt. But writing yours doesn’t have to be difficult. With the right amount of information, anyone—including you—can write a good business plan. I advice you read on to know the essential sections of your daycare business plan as well as what to include in each section.
Conducting research for your daycare business is not difficult. What you have to do is just a preliminary survey about the number of day-to-day working class parents in your area. You can also talk to parents living within your neighborhood and ask to know the challenges they are facing raising their kids and building a career.
After doing your brief research, you can then proceed to write a business plan. You should also take time to study other people’s daycare business plan. After that, make use of the information you gathered from all those daycare business plans you have read and carefully put into writing your own business plan. Here is a sample daycare business plan template to help you get started.
Writing a Business Plan for a Daycare Center
i. Executive summary
This section is usually the last to be written, but it will appear first in your finished business plan. It is an overall outline of the business plan, summarizing the whole plan into one or two pages.
Your executive summary should tell the read what to expect in the rest of the plan and what you want. Most business owners make the mistake of burying their requests in the later pages, while most readers—including investors and lenders—don’t usually go beyond the executive summary before making a decision. So, clearly state what you are asking for in the executive summary.
ii. Business overview
This section describes your business in detail, starting with a brief description of the industry. Discussing the present outlook and potential of your industry is important, because this is what most investors want to know. In addition, provide information about the various markets within your industry as well as any new products or developments that will benefit or threaten your daycare business.
A description of your target market also comes into this section. Since yours is a daycare business, your target market comprises busy moms whose tight schedules avail them little time for their kids. Find out how many of such moms you have in your locality (a rough estimate would do).
iii. Marketing strategies-: This section details how you will reach your target market as well as how you will position your business in order to garner its share of market sales. Here is a sample daycare marketing plan template to help you get started.
Competition can be a huge threat to any new business, so it is worth preparing for. This section of your business plan helps you determine the strengths and weaknesses of the competition within your market, strategies that will differentiate your business and push it ahead of the competition, barriers for preventing the competition from taking over your unique selling points, and your weaknesses that can be exploited by the competition.
v. Design and development plan
This section of your business plan helps to provide a description of your services and chart how your business is expected to develop over the years. It is one of the sections that investors are mostly interested in, since every investor only wants to fund businesses with impressive growth potential.
This is where you explain how your daycare business will function on a daily basis. You will describe your staff, their skills and experience, and their individual responsibilities. You will also describe how and when your daycare opens and closes every day. Details of how new children will be admitted to your day care will also come into this section.
vii. Financial analysis
Though this is typically the last part of a business plan, it is in no way less important than the previous sections. Your financial analysis will detail how much startup capital you will need as well as how you will get it—whether you will provide all the needed funds from your end will turn to third-parties for funding.
This section of your business plan will include an estimate of the costs required to run your business—such as staff salary, maintenance, monthly bills, and so on. It will also detail how much revenue you expect to earn over time.
How Much Does it Cost to Open a Daycare Center?
One of the best approaches to take before starting any business is to first conduct detailed cost analysis before investing your time and money in the business. The mistake some entrepreneurs make in pursuit of their business ideas is that they undermine the importance of detailed cost analysis when making plans.
The truth is that if you are able to conduct detailed cost analysis before starting your daycare centre, you will have a good idea of how much it costs 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 before hand the required start-up capital. 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. Now let us consider a detailed cost analysis for starting a daycare centre;
- Cost of Registering the Business and Obtaining the Required Business License-: One of the costs that you must consider before starting your own daycare centre is the cost of registering the business and also the cost of obtaining the required business license (permit). These costs vary from country to country and even from state to state. So, it is important to enquire from corporate affairs commission of your country to know the amount required in registering a new business and also the amount you would need to obtain your business license or permit to be able to operate a daycare centre.
- Cost of Leasing or Renting a Facility-: If you want to start a daycare centre, then you would need a decent facility in a good location. Depending on the country and city where you intend to start your daycare centre, you would have to spend more money if you want a decent facility. Your potential clients will first of all access your facility before enrolling their children / babies in your daycare centre that is why you must be willing to pay more for a decent facility.
- Cost of Equipping the Facility-: Another cost that you must consider when conducting detailed cost analysis for your daycare centre is to factor in the cost of equipping the facility. There are basic things that must be present in a standard daycare centre. The cost of acquiring these items varies. So ensure that you conduct a market survey to get the actual price of these items so that you can factor them in your budget.
- Budget for Insurance and Tax-: In conducting detailed cost analysis for your daycare centre, you need to factor in the cost of purchasing the appropriate insurance cover and also the cost of paying tax. The truth is that if you don’t have insurance for your daycare centre or if you don’t pay your tax as at when due, your daycare centre make likely be short down by the regulating body in your country. The amount you are expected to pay for insurance varies and also the amount that you are expected to pay as tax is relative. So ensure that you approach the required authority to get the right amount that a business of your nature should pay as tax.
- Salaries-: Another important cost that you should consider when conducting detailed cost analysis before starting your daycare centre is the amount that you are expected to pay as salaries. It is always advisable to budget for a minimum of 6 months salary for you and your staff when making plans to start a new business. This is so because you might not be able to make the money required to pay salary from the business when you are just starting out. The numbers of employees that you can start with is dependent on how big you want your daycare centre to be. The truth is that you can start with 2 or 3 employees if indeed you want to minimize your running cost.
- Operating Cost-: Operating cost is another important cost that you must consider when conducting detailed cost analysis before starting your own daycare centre. Operating cost involves the cost of buying daily provisions, the cost of paying bills (electric, water and other utility bills, the cost of fueling your car and also the cost of fueling your generator et al. It is important to state that the operating cost of running a daycare is not limited to the cost listed above.
Over and above, it is important to consider all the tangible and intangible cost of starting a daycare centre when conducting cost analysis for the business. The bottom line is that the total cost of running a standard daycare is dependent on your definition of a standard daycare centre and the city where you intend starting the daycare centre.
The next step is to get a good location. One of the key factors that determine the success of any business is the choice of location of the business. No one who intends selling winter clothing will consider going to Ghana or Nigeria to open his or her shop; if they do, they risk struggling with the business and the business may eventually die a natural death.
If you want to open winter clothing line, then you should consider countries like Canada, Norway, Sweden, Russia, Finland et al. So, also if you intend starting your own daycare centre, then you must consider some key factors before choosing a location for the business.
Now aside complying with all required safety regulations and having on-hand all necessary safety equipment, including fire extinguishers, carbon-monoxide detectors, smoke detectors, first-aid kits and other safety equipment; below are 10 other factors you must consider when choosing the best location for your daycare centre if you want to maximize profits in the business.
- An Area dominated By Young Couples-: It is a good business decision to choose an area that is dominated by young couples. The truth is that young couples will one day become young parents and they are the people that will patronize your daycare centre.
- An Area Dominated By Nursing Mothers-: You can easily get the required data once you apply for it from the bureau of statistics or census board in your state or district. Of course, nursing mothers are the ones who patronize daycare centers. So, if you locate your daycare centre in an area dominated by nursing mothers, you won’t struggle to attract customers.
- An Area Dominated By Working Class Parents-: Statistics show that working class parents top the chart amongst those who patronizes daycare centre.
- An Area with Less Noise-: Babies and children generally finds it difficult to fall asleep in a noisy area. If you subject babies and children to a noisy environment, then you would have to be on your toe through out the working hours because they will all be awake and in most cases crying.
- A Location that is in the Heart of Residential Estate-: People find it convenient to drop off their babies or children in a daycare that is close to their houses. So ensure that you situate your daycare center in a residential estate.
- A Location that is Close to Business District-: Nursing mothers who keep paid employment would prefer to drop their babies in a daycare centre that is close to their place of work. It makes it easier for them to dash to the daycare centre during their break – time to check on their babies and in some cases to breast – feed them.
- An Area with Good Security Record-: No parent would want to drop off their children in a daycare that is located in an area that has bad security records. So choose a location that has good security record; it will definitely boost your daycare business.
- A Facility with Good Ventilation-: The truth is that if you subject little children and babies to poor ventilation, you will have them falling sick from time to time.
- A Facility With Adequate Parking Lot-: Parents like it when they drive in freely and drive out freely whenever they come drop off or pick their children as against struggling to find a place to park their cars. As simple as it sounds people will hardly patronize your daycare if they know that you don’t have a place for them to park their cars.
- Accessibility-: Your daycare center should not be in a place to is not traffic prone.
When you have gotten a very good location in a safe environment that is hazard free, the next step is to choose a name for your daycare business. Now when choosing a daycare business name, you must choose a name that is brand-able, short, creative and child friendly. Example of daycare business names ideas are:
- “Your Name” Childcare center
- Special Kids Daycare Center
Getting an adequate insurance protection is another requirement for establishing your daycare business. If you wish to operate the business from your home, you will need a fire and theft insurance. You must also cover your back legally just in case an accident happens or a child dies in your custody. You must also make sure your policy covers the supplies and equipment that you purchase for your business.
6. Equip your daycare center
You must also provide a good variety of things that make children happy. Things like children games, puzzles, books, blocks, cots air conditions, fridges, water dispensers, microwave ovens, gas cookers, fans, TVs, DVD players, arts and crafts supplies, and toys. This will enable the children enjoy their stay at your daycare center. It is also important you purchase software that will help in the scheduling and management of your Daycare center.
List of Equipment You Need to Start a Daycare Center
Aside a daycare center software and business cards, there other things you need for the convenience of the kids. Children are active and fast learners who use the physical environment in a direct, hands-on manner.
The physical environment and all the materials including equipment are part of a child’s learning experience. The schedule, interaction with others, space and daily routines all provide learning opportunities.
The learning environment of a daycare center should provide a rich assortment of materials and equipment for children to develop cognitively, social and physically. Below is a list of playground equipment needed to establish a daycare center:
- Plastic slide
- Rocking toy
- Toy car
- Electric train
- Ball pool
- Spring horse
- Toy house
- Toy game
- Merry go round
- Building blocks
Running a successful daycare does not only rely on proper marketing and proper budget planning but also on having a well grounded and dedicated staff that will run and maintain the business. The staff you select should be well experienced, extremely responsible and willing to work with children of all ages and kinds.
After putting out an advert seeking the services of a competent daycare manager or employee and talking to neighbors and friends; you will need to screen each applicant and make sure they meet the criteria. Any individual you will employ must have:
- A good educational background
- Must be intelligent and fluent in speaking
- Must be an individual that pays attention to detail
- Being experienced in the handling of children will be an added advantage
- He or she must be willing to learn and learn fast
- He or she must have a good personality and appearance. Remember, your first impression to your clients matters
- He or she must have a crime free background. However, you must not trust your employees. It is also important that you keep your eyes open to guard against sexual abuse and child molestation.
After taking the pain to setup your business, you must tell your friends about your daycare center and if you are lucky enough, they may be your first customers and also help you spread the word. You should also place notices on bulletin boards in locations where families congregate like at the church, schools, community halls, etc.
Also put ads in local newspapers or parenting e-newsletters, create a social media page on Facebook, Pinterest, Twitter and don’t forget to give out your business card at any instance.
8 Challenges of starting a Daycare Business
Running a childcare / daycare center or business can be rewarding and as well profitable especially when you run a quality daycare program. But there are lots of challenges that even the best daycare centers experience. Below are some of those challenges:
a. Outbreak of diseases
One thing with running a daycare center is that if one child comes in with fever, catarrh or cold, then there is high possibility that other children in the daycare may get infected too; and this is not good for business at all. So the best action to take is to identify such a child and isolate such individual as soon as possible.
b. A daycare business is not capital intensive, but it is management intensive and can lead to fatigue on your part. Handling quite a number of children is a herculean task and if you are not up for it, you will give up too soon.
c. Scaling through the application process and inspections from relevant regulatory bodies can be quite a pain in the ass. This is because you are dealing with children, so the authorities wouldn’t want to take chances. You definitely won’t enjoy the stress and protocols involved with getting registered or getting a license.
d. You will also be faced with the challenge of getting a good location that will meet the standard requirement for setting up a childcare center.
e. Inability to get the curriculum that will suit every child, as some kids are more gifted than others.
f. You will also have to prepare yourself for legal issues that may arise as you run your business. One thing I have learned in business is that sh*t happens and happens fast. A child may be involved in an accident or even die while under your custody.
What this mean in essence is that you would have to resolve the issue with the government and also defend yourself, against any legal action arising from the situation. So you have to get a good attorney and a good insurance policy long before these things happen.
g. You would also have to deal with the security challenges involved with running a daycare business; so as to avoid the kids under your custody falling prey to criminals, kidnappers and child traffickers.
h. Another challenge you will face is to find employees that are health conscious, take good care of their personal hygiene and love children. Just as I pointed out earlier, running a daycare is not about the money, it is all about the passion and such passion must reflect in your employees.