How can your child care business financially thrive right from the start?

Child care is a mentally, physically, and financially demanding industry. It can also be an immensely fulfilling and inspiring field of work. Running a daycare can be a great option if you find working with children your life calling! But before you start ordering the high chairs and putting together your cleaning checklist, you need to have a good understanding of the financials involved in starting your daycare business.

Here are a few considerations to look into so you and your child care business can financially thrive.

Plan Your Expenses

When you’re first looking into starting a daycare business, plan out what weekly, monthly, and yearly expenses you will need to cover.

Some general expenses for most daycare's include:

Figuring out what expenses you absolutely have to cover (along with start-up expenses) will help you determine the minimum amount you will need to charge per child in order for your business to be sustainable.

You should also research tax benefits your state gives child care business. You might be able to write-off a significant portion of your expenses. Consider meeting with a local tax professional to make sure that you’re secure from a tax perspective.

Figure Out What Income You Need To Operate

daycare income and expenseMany of the legal requirements around starting a daycare and small business will vary state by state. Check your state’s daycare licensing requirements. This will include information on the number of children you’re allowed to care for and the necessary employee-to-child ratios. Knowing how many clients you can take on will have a direct impact on how much you decide to price your services.

After you’ve squared away your projected expenses and income, make sure you invest in marketing your services to keep that income steady. Put out flyers, set up your social media accounts, and get involved in your area’s parenting community. Word-of-mouth recommendations from other parents go a long way in finding prospective clients.

Be aware that your amount of child care families may fluctuate. Families move, parents go on maternity leave, summer withdrawal, or people lose their jobs and can’t afford child care anymore. Most recently, we experienced a health pandemic of new proportions that immensely affected enrollment. This is why you intentional plan how your cash flow is spent. This financial cushion will help keep your business operating during the lean times.

Location, Location, Location

daycare locationMany daycare providers operate out of their own homes for convenience and to keep operating costs down. But if you’re looking to move into a place with more room, it’s important to do research on the location and the demographics in the area.

Household income and employment rate of a community is a large factor in whether families can afford to pay for consistent daycare services.

Research what local child care services are already operating in the area to get an idea of what you should charge. Keep in mind that many lower and middle-income families are struggling to find quality child care in their areas since centers usually gravitate toward higher-income locations. This leads to “child care deserts” and can be a strain for families. Consider operating in these areas, as it may be easier to find consistent clients from the large working parent demographic. Every income bracket deserves high-quality child care opportunities.

child care buying tipTip: Because location is so so important in the planning process, it is very helpful to conduct a thorough feasibility study to determine community need, business viability and a forecast of profit.


Starting A Daycare During COVID-19

No one could have predicted how COVID-19 would decimate the industry. More than half of the U.S’s child care centers have shuttered from states initiating shelter-in-place procedures, as well as the rising unemployment causing clients to leave. If you’re looking to start or reopen a daycare center, be prepared to face more financial strain than in previous times.

Running a daycare center is no easy feat, especially now. But if you care enough about your business and the children to put in the work, you can make a comfortable living doing something you love.

Find a Partner 

Go through this process alone and it can be very difficult to tackle all the different areas necessary to open successfully. When you partner with the child care experts at Child Care Biz Help we will walk you through the entire process from start to finish.

How to open your own daycare center - steps


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A special thank you to our guest writer Natasha Ramirez.



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