A good daycare business plan will guide you through each stage of starting and managing your childcare organization- including how to structure, run, and grow your new business.
Prospective investors want to feel confident they’ll see a return on their investment and your center’s business plan is the perfect tool to assure potentials that working with you — or investing in your business— is a smart and profitable decision. In this blog, learn quick tips for building a simple daycare business plan.
Table of Contents
- Write an Executive Summary
- Conduct an Opportunity Analysis
- Problem and Solution
- Build an Execution Plan
- Map Out Your Funding Sources
- Find the Right Vendors
- How a Childcare Experience Platform Can Boost Your Business
How to Build a Business Plan for Daycare
1) Write an Executive Summary
Building a daycare business plan starts with the executive summary. Although this section is the first thing people will read, it’s advised that you write it last, once you know the details of your business inside and out.
Ideally, your executive summary will be able to act as a stand-alone document that covers the key highlights of your detailed business plan. In fact, it’s common for investors or loan providers to ask for just the executive summary when they start evaluating your business.
As your executive summary is such a critical component of your business plan, you’ll want to make sure that it’s as clear and concise as possible. Cover only the essential components of your daycare, ensuring your executive summary is one to two pages maximum.
The executive summary is a tell-all first paragraph that details…
- The city and state of your center (you can decide on the exact location later)
- A potential open date
- A projected enrollment count (number of full-time enrollments)
- Programs you plan to offer
- Ages you hope to serve (who's your daycare target market?)
- A quick financial summary (based on grants, funding, and potential revenue from projected enrollments)
2) Conduct an Opportunity Analysis
Starting a business is tough work.
Use your previous competitive research to determine your daycare business’s competitive advantage and position. The best daycare center will analyze a range of potential strengths, weaknesses, opportunities, and threats.
3) Problem and Solution
Describe the problem that you are solving for your customers. Childcare centers are need-oriented, meaning your consumers have tangible pain points that you must resolve to be successful. From there, you'll identify your daycare target market.
4) Build an Execution Plan
In an execution plan, you’ll address your marketing and enrollment plans, operations, success metrics, and any key milestones that you expect to achieve. Your execution plan should be carefully detailed...
- Marketing and Sales – The marketing and sales section of your business plan details how you propose to reach your target market segments and how you plan on converting those target markets.
- Positioning Statement – Refer back to your value proposition to create a simple, straightforward sentiment, explaining where your company sits within the competitive landscape and what differentiates your venue. This statement should be written for an investor or loan provider, rather than for your customer.
- Mission Statement - This should be just one or two sentences that are geared toward your target consumer and describe what your business plans to accomplish. This statement usually includes your company's core values.
- Strategic Alliances - You may wish to collaborate with other organizations such as local camps, after-school programs, pediatricians, or even other childcare centers that don’t offer the same activities that you do.
- Operations– Discuss day-to-day business logistics here.
- Milestones & Metrics – Know what milestones you want to hit (be specific) and decide which metrics you need to track to reach these goals.
- Company & Management Summary – Describe the structure of your staff and teams.
- Financial Forecasts - A typical financial plan will have monthly sales and revenue forecasts for the first 12 months, and then annual projections for the remaining three to five years.
Need more ideas? See how to grow your childcare center's brand like a pro in this video resource! 🙌
5) Map Out Your Funding Sources - Apply for Daycare Grants
Often, startup costs for opening a daycare are high. Certain states and counties offer grants for new daycare businesses. There are several grant options, depending on your child and family details.
For example, there’s a Preschool Development Grant Program and a Head Start/Early Head Start grant to provide funding that expands early childhood centers and developmental programs.
See 3 Essential Grants for Daycare Business Owners
1. CCDBG Funds
The Child Care and Development Block Grant, also known as CCDBG Funds, provides federal funding to individual U.S. states. The goal of the grant is to help low-income families afford child care. With the recent of the American Rescue Plan Act of 2021, the CCDBG program will get an extra $15 billion in funding to support both families and childcare providers in need.
What Can This Be Used for?
- Parents who need financial assistance for daycare.
- Childcare owners and directors who need help allocating funding for payroll, cleaning supplies, and other issues that have resulted from Covid-19.
- Improve the quality of care and support childcare providers.
2. CACFP Funds
For many daycares, the cost of food is a large, ongoing expense. Fortunately, there are grants for child care centers that aim to alleviate this financial burden.
The Child and Adult Care Food Program (CACFP) provides funds to care centers like yours that can be used to purchase nutritious meals and snacks for eligible children. The way it works is by giving cash reimbursements to child care centers for serving meals and snacks that meet Federal nutritional guidelines to eligible children. In general, centers may be approved to claim reimbursement for serving up to two meals and one snack, or two snacks and one meal, per day to each child participant.
What Can This Be Used for?
- Childcare centers (owners/directors) that provide children with multiple snacks/meals (can help offset the rising cost of goods due to inflation).
- Provides reimbursements for nutritious meals and snacks eligible for children and adults who are enrolled at a childcare center
- Provides reimbursements for meals for children in emergency shelters
3. Childcare Expansion Initiative Grant
In February 2022, the Texas Workforce Commission approved $75 million to increase the number of high-quality home- and center-based childcare providers for working parents in Texas. Part of this funding will go towards the Child Care Expansion Initiative, to offer start-up funding to help expand the availability of child care in areas of the state that lack sufficient supply (child care deserts); for programs opening or expanding in partnership with a local employer; and, to expand the availability of infant care around the state.
New and existing home- and center-based child care providers who are opening or expanding their child care businesses after March 1, 2022, will be eligible to apply if they will be:
- Serving families in a pre-defined childcare desert.
- Operating in partnership with a local company or consortium of companies, to serve the children of their employees; and/or
- Expanding the availability of care for infants (0-17 months).
What Can This Be Used for?
Funding can be used to offset operations costs incurred during startup and/or the first few months of opening or expanding. It cannot be used for major renovations or construction. Operations costs can include the use of a CMS/CRM or a unified childcare experience platform like LineLeader by ChildcareCRM. Applications will be available in June 2022 and will be accepted on a rolling basis through early 2023.
6) Find the Right Vendors
Choosing the right suppliers for your business is essential. If your vendors aren’t reliable or don’t deliver quality products, your new center will struggle to attract families. As a childcare provider, you will likely need the following vendors at one point or another:
- Food and Beverage Supplier
- Educational Materials Supplier
- Substitute Staffing Provider
- Childcare Licensing Consultant
- Cleaning & Maintenance
- Childcare Management System (CMS)
- Customer Relationship Management (CRM) Software
- Digital Payments Provider
- Online Forms Software
- Childcare Experience Software
How a Childcare Experience Platform Can Boost Your Business
Invest in your staff and family experience. Save time, grow enrollment, and simplify center management with a childcare experience platform, the first and only solution to offer full-featured customer relationship management (CRM) software, a family engagement app, and childcare management software (CMS) in one unified platform. You can optimize your staff and family experience while managing your business more efficiently.
Take a look at the videos below to start your daycare business off on the right foot. Plus, learn the power of running your business with LineLeader - the only childcare experience platform.
Unlock the Full Daycare Business Plan Toolkit to Achieve Success
The daycare business plan e-book will give you all the tools and knowledge you need to start up your own childcare business. It’s important that you identify your business objectives and use the e-book as a guideline for how to achieve those goals. Building a daycare business plan isn't easy, but we're here to help.