How to Create a Daycare Business Plan

Childcare owners get into the daycare business through many pathways. Whether you are a business-savvy educator in the child care industry, a new parent looking to fill a need in your community, or a seasoned entrepreneur looking to expand your horizons – the first step to launching your daycare business is to create a comprehensive business plan.

Let’s get real for a moment here – writing a child care business plan, will take quite a bit of time, a lot of thinking, and even more energy to follow through. But, get this step right and you will set the tone and direction to create a successful daycare business (ad)venture! 

When developing your daycare business plan, it is ideal to think in the timeframe of 3-5 years. This level of long-term thinking will serve as a map on your way to your goal of establishing a solid daycare business plan to start a daycare.

Without further ado, let’s help you get started.

Here’s an overview of 9 elements that you’ll need to build a good daycare business plan. A child care business plan should include the following:

1. Executive Summary 
2. Company Overview 
3. Service Description 
4. Market Analysis 
5. Marketing Plan 
6. Operations Plan
7. Financial Analysis 
8. Milestones
9. Supporting Documents 

Executive summary for your child care business plan

This is your introduction and “elevator pitch.” Keep it short, sweet and to the point.

The executive summary section of your daycare business plan should function to get potential investors and partners excited about what your daycare center has to offer in the following key sections. 

This is an opportunity for you to include: 

1. A brief but “wow!” business description
2. Your mission statement

Your executive summary is a place to express what’s unique about your daycare business plan – is it the location, approach, learning philosophy, child care services, team, diversity, or something brand new? Don’t be afraid to make this your own!

Company Overview 

This section covers the structure of your daycare business plan and business concept.

Are you planning on being a thought leader in the daycare industry within a specific niche of childcare? A special Waldorf school? A school that prioritized multiculturalism? A center that is Montessori first with Reggio influences to prioritize independent learners? Home daycares? Or do you want to build an empire with an eye on franchising your daycare business model? 

Some key elements to include in a brief overview are: 

1. Your daycare business structure
2. History of the business
3. Core services offered
4. Target age group and capacity
5. Success milestones (accreditation, state-focused quality rating)  
6. Mid-term business goals & requirements

Service Description 

This section dives into the nitty-gritty of what daycare services you will provide to your community and how your business will go about doing so.

Things to think about for your business description are: 

• Baseline program offerings
  • Full-time or part-time care 
  • After school care for school aged children 
• Child Care Center capacity 
• Age group information 
• Operation hours 
• Special offerings  
  • Extra-curricular programs (yoga, music instruction, languages, gardening)
  • Food program 
• Room layout & design 
• Furnishing & equipment needs 
• Facility management & development 
• Expansion plans 
  • Do you have a big vision for your daycare facility that needs to be broken down into different phases?
  • If yes, what do these phases look like? 
• Will consultants be hired to support each phase of growth? Is this even necessary?
• Will there be a board involved in the decision making process (NFPs)

This is where your vision meets reality! Think of this piece as your ingredients list to build a good daycare business plan. Write everything down and ask people in your inner-circle for feedback.

Market Analysis 

Market analysis is a business way of saying, “Get to know your surroundings.”

Here’s a list of questions to get you on the right track: 

• Who is your target audience? (School age kids? Working parents?)
• What are the geographic boundaries of the client base that your business will serve?
• What is the population of young children & families in your area? (Are there many new young families moving in?)
• What is in high demand for child care services? 
• What is the supply for childcare? 
• How many daycare businesses are there in the area? 
• Where are other daycare providers located? 
• How long are waitlists? 
• What kind of programming / services are offered by other child care centers?
• What are childcare vacancies like in the daycare industry? 
• How much does childcare cost in the area? 
• What’s the dominant age group in the area? 
• What are the unique licensing & regulation requirements for child care centers in your area?

Answering as many of these questions as you can will give you a clear picture of what you’re getting yourself into and how to stand out from competition. 

Okay, let’s get practical for a minute – how can you answer these questions? Drive around. Join parent communities online. Facebook groups are great resources to understand what parents and potential customers around you are talking about, stressing about, enjoying, and prioritizing in their childcare search.

In short, really get to know your community of potential customers for your business. I cannot stress the importance of this step for a good business plan. Nothing beats listening to real people from your target market with real problems when building a business case. This seems simple, but it does take a lot of work and persistence to get results. 

To distill this process into 5 broad business categories for your daycare business plan: 

1. Understand your target customers
2. Identify the need of your target customers
3. Research your competitors 
4. Define your differentiators 
5. Position yourself to grow your business

A note on licensing requirements and regulation: Before you take any steps towards setting up your child care business or daycare franchise, take the time to understand the center licensing guidelines and regulations that will apply to you from your local government. Make sure that you will be able to obtain the necessary licensing for your facility.

Marketing Plan 

My favourite part. Now that you have an idea of your daycare business identity, you have to have a marketing plan to promote it and make a splash!

• What differentiates you from existing daycare businesses or other child care centers in the area? 
• How can you really showcase what’s special compared to competition? 
• What are your initial marketing goals? Perhaps building out a waitlist before launching? 
• How will you connect with families you want to work with with your marketing strategy?

Building out a marketing plan for your daycare can be as simple or as elaborate as you like. Get creative with your marketing strategy and really show your personality. Here’s an in-depth post we did about marketing your child care center.

Operations Plan

Now an idea is just a thought without a team to get it done. Your operations plan is the backbone of your business. In this section, key things to include are: 

• Who is on your management team?
• Who are your core staff members? 
• What does the organizational chart for your business look like? 
• Training opportunities & needs for staff? 
• If your daycare center is a NFP, who are the board members? 
• If your daycare center is a for profit center, will you have a parent committee that drives operations at your center?

Think of this section as building out your A-team. Why have you chosen certain people for their roles? What do your management team members bring to the table that’s unique?

This also brings transparency to how your team is structured and career development opportunities. Remember to keep growth in the back of your mind for each section of your daycare business plan. 

Financial Analysis 

Now that you’ve done most of the heavy lifting, you can use all the information that you have previously gathered to come up with a financial plan for the first few years of your business operations. 

Remember, starting any business is difficult and it usually takes 3-5 years to break even and start becoming profitable.

Here are the key questions to answer in this section: 

• What is your start up budget? 
• How will you secure funding?
• What is your annual operating budget (income & expenses) 
• Build these financial statements out based on a 3 year projection:
  • Income statement
  • Balance sheet 
  • Revenue model 
• Your current revenue & expense statement 

Need a template to get started on your financial plan? Check out How To Manage Your Child Care Center Budget to download the template.

Milestones 

This last section is one I like to call, the “keeping us honest” section. This is where you and your team will list down milestones that you plan on accomplishing on your daycare business plan journey. Don’t leave this section blank as it’ll be your measuring stick as you launch your daycare business plan. 

Some example milestones are: 

• Reaching 80% of capacity 
• Getting NAEYC accredited 
• Achieving the most stars in your state QRIS 
• Collecting 5 star reviews from parents for your Google page 
• Reaching 100 followers on your Facebook community 

Get together with your team and pick the measures that make the most sense for your childcare business.

Supporting Documents 

Here’s a list of documentation that might come in handy when pulling all of this together. 

• Revenue & expenses sheet 
• Financial projections 
• Income statement, balance sheets and funding
• Resumes of everyone on your team
• Contracts with external consultants 
• Letters of endorsement 
• Legal documents (daycare license, property documents, articles of incorporation) 
• Daycare business plan template
• Any other relevant information 

Child Care & COVID-19 

While COVID-19 has thrown a wrench in many people’s business plans, that does not mean that you should give up on your dreams of becoming a daycare business owner. With all the change and uncertainty of the current climate comes the space for opportunity!

Centers now have to operate under different health and safety requirements, most notably reduced ratios.

Here’s a roundup of resources that we’ve compiled as a team to support your business plans during the pandemic and beyond.

• [Survey] What Parents Value In Childcare During COVID-19
• [Guide] Cold, Flu, COVID-19: A Director’s Survival Guide (with printables)
• [Article] What To Do If Someone Tests Positive For COVID-19
• [Webinar] HiMama Features To Build Trust During COVID-19 

To quote Dwight Eisenhower, “Planning is everything, the plan is nothing.” The process of defining your vision will make a difference when facing obstacles on your journey to creating a successful business.

Things won’t go perfectly according to your daycare business plan, but because you’ve mapped out your way, you will find a way to work over, under, or around those obstacles to get there.

Good luck! 

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Did you know that HiMama makes it simple to get organized, stay in touch with parents, and keep on top of your operations? Contact us today to find out how we can make your daycare business plan into a reality.Do you have any pointers to add to this? We’d love to hear them. Let us know in the comments below. Don’t forget to follow us on social media @HiMamaSocial.