Daycare Business Plan Template
Written by Dave Lavinsky
Business Plan Outline
- Daycare Business Plan Home
- 1. Executive Summary
- 2. Company Overview
- 3. Industry Analysis
- 4. Customer Analysis
- 5. Competitive Analysis
- 6. Marketing Plan
- 7. Operations Plan
- 8. Management Team
- 9. Financial Plan
Daycare Business Plan
You’ve come to the right place to easily complete your daycare business plan.
We have helped over 100,000 entrepreneurs and business owners create business plans and many have used them to start or grow their daycares.
How To Write a Daycare Business Plan & Example
Below are links to each section of your daycare business plan template:
- Executive Summary – This is a brief overview of your daycare business plan. The executive summary should be no more than 2 pages long, with brief summaries of other sections of the plan.
- Company Overview – This is where you provide a business description, including your company history, business structure, and any pertinent information about the daycare center.
- Industry Analysis – The industry analysis describes the daycare industry, including market size and trends.
- Customer Analysis – This section of your daycare business plan describes your target market and potential customers. You will detail the demographics, needs, and wants of your target audience and how you plan to meet those needs.
- Competitive Analysis – The competition in your local area will be described here, along with how your daycare business will compete in the market.
- Marketing Plan – Your marketing plan will describe your daycare’s marketing strategy, including your advertising and promotion plans.
- Operations Plan – This section of your business plan describes how your daycare will be operated on a day-to-day basis. It may also include your long-term plans for expansion and the milestones you want to achieve to get there.
- Management Team – The management team section of your business plan should describe the experience and qualifications of your management team including the director, teachers, and support staff.
- Financial Plan – The financial plan section of your daycare business plan should include your financial statements, such as your income statement, balance sheet, and cash flow statement.
Next Section: Executive Summary >
Daycare Business Plan FAQs
What is a daycare business plan.
A daycare business plan is a plan to start and/or grow your daycare business. Among other things, a good daycare business plan will outline your business concept, identify your target customers, present research about the child care industry, detail your marketing plan, and provide your financial plan.
You can easily complete your daycare business plan using our Daycare Business Plan Template here .
What Are the Main Types of Daycare Businesses?
There are different types of daycare businesses that parents can choose from for their child's needs. A traditional daycare center is most sought after by working parents since it provides child care during regular work hours. There are also in-home daycare centers that are licensed to provide child care in a home setting with fewer children. Other child care centers provide hourly care services by trusted babysitters or nannies and are operating on an as-needed basis.
What Are the Main Sources of Revenues and Expenses for a Daycare Business?
The primary source of revenue for a daycare business is its child care services.
Some key expenses for a daycare business is rent, salaries for staff, utilities and snacks expenses for the children.
How Do You Get Funding for Your Day Care Business Plan?
A daycare or child care center is typically funded through small business loans, personal savings, credit card financing and/or angel investors. This is true for a business plan for daycare or a childcare business plan.
What are the Steps To Start a Daycare Business?
Starting a daycare can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop A Day Care Business Plan - The first step in starting a business is to create a detailed child care business plan that outlines all aspects of the venture. This should include market research on the childcare industry and potential target market size, information on the services you will offer, marketing strategy, pricing strategies and detailed financial projections.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your daycare business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your daycare business is in compliance with local laws.
3. Register Your Daycare Business - Once you have chosen a legal structure, the next step is to register your daycare business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your daycare business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Daycare Equipment & Supplies - In order to start your chlidcare business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your childcare business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising to reach your target audience.
Learn more about how to start a successful daycare business:
- How to Start a Daycare Business
Where Can I Get a Daycare Business Plan Example PDF?
You can download our daycare business plan PDF template here. This is a business plan template you can use in PDF format.
- Sample Business Plans
- Education & Training
Daycare Business Plan Template
It’s no secret—the demand for quality childcare is on the rise due to more parents heading back to work.
So, if you’ve ever thought of providing a safe and nurturing environment for children, now is the right time for you to start a daycare center!
However, establishing a successful daycare business takes more than just a passion for childcare. Well, it takes a solid business plan to stand out in the crowd and make it thrive as there are 568,000 daycare centers in the US alone.
Wondering how to create a daycare business plan?
Explore this daycare business plan template that walks you through all the key steps to draft an effective business plan for your daycare.
But first, let’s understand…
What is a daycare business plan?
A daycare business plan is the equivalent of a detailed blueprint for your business journey. This document clearly summarizes what your daycare stands for and outlines the strategies to launch childcare services.
Typically, it includes all the key elements of your daycare business, such as its concept, goals, target audience, marketing strategies, management structure, and financial projections.
Overall, this plan serves as a guide to establish, manage, and grow your daycare center effectively as well as ensures what you’re getting yourself into.
Why is a daycare business plan important?
A well-crafted daycare business plan is essential as it helps you add substantial value to your business at every stage. Here’s how it can make a difference:
1. Gives you clear direction
Starting and growing a daycare involves making several decisions, from choosing a location to deciding on the services you’ll offer.
Creating a business plan forces you to evaluate the right options, make informed decisions, and track progress over time. Plus, it helps you turn conceptual goals into definite objectives.
2. Helps you understand the target audience
For a successful daycare, you must understand the needs of parents and children in your community. Writing a business plan lets you organize your research and know your target market better.
Additionally, your plan ensures that you fulfill the needs of the families you serve, whether it’s infant care or after-school programs.
3. Lets you analyze the competition
While operating in the competitive market, you need to know what other popular daycare centers in your city offer. Developing a detailed business plan allows you to identify what your competitors do well and where they fall short.
Further, it helps you specify areas where you can stand out and position your daycare effectively by providing extended hours or unique programs.
4. Attracts and convinces investors
If you want to secure funding for starting and growing your daycare services, a business plan is crucial. A well-written business plan provides detailed financial projections and illustrates how your daycare will make money.
It also showcases the financial viability of your daycare services to potential investors or lenders and makes it easier to gain their support.
Simply put, preparing a detailed daycare business plan isn’t just a formality. But it’s a clear roadmap to navigate the intricacies of running a successful daycare, from startup to expansion.
How to write a business plan for daycare?
Preparing a good daycare business plan consists of a certain number of well-defined sections to articulate your childcare services.
Here’s a step-by-step guide to writing an excellent business plan.
1. Executive summary
An executive summary is one of the most important sections of your daycare business plan that serves as a pitch for potential investors who can provide you with funds for your childcare center.
Generally, it concisely summarizes your entire daycare business and previews everything you lay out inside the plan. Here’s what your daycare executive summary will include:
- Registered business name along with its location
- Daycare business concept and goals
- Mission-vision statements
- Target market & competition
- Marketing efforts & USPs
- Financial highlights
Overall, your plan summary provides a high-level overview of your daycare services and captures readers’ interest. So, be sure to make it short, simple, and persuasive as well as aim to keep it under two pages.
2. Company overview
The company overview section provides an in-depth understanding of your daycare business and its core values.
It covers all your business-specific details and foundational elements, from the daycare concept to its growth potential and future plans. This will help readers or investors better understand your daycare and make informed decisions.
To plan this section, you should consider emphasizing on the following:
- Type of daycare center you run (in-home, center-based, pre-school, after-school care, or daycare franchise)
- Legal structure (limited liability company, partnerships, or sole proprietorship)
- Location and reason for choosing that place
- Vision and mission statement
- Background history or milestones achieved (if any)
- Short-term goals & long-term objectives
Besides that, discuss any regulatory requirements and legal compliances involved in starting a daycare center. Also, ensure you follow health & safety policies, such as childproofing measures or illness prevention.
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3. Market analysis
The market analysis section provides a comprehensive overview of the childcare industry, its target audience, key competitors, and local market trends.
So, first, you’ll need to conduct thorough market research and explore the specific market niche in which your daycare intends to operate. Doing so will help you understand the demand for childcare services and the clients you will serve.
For instance, your target customers could be parents or guardians who consistently need safe and reliable daycare for their kids while they’re working or occupied with other duties.
Here’s a list of primary customer segments for a childcare business:
After that, shed light on the competition in your chosen area and evaluate the strengths & weaknesses of the other childcare centers.
Further, clearly articulate the competitive advantages and explain how your daycare stands out in the market. If required, perform a SWOT analysis to identify the internal & external factors that might affect your daycare.
4. Services offered
This section offers a detailed description of all the services your daycare will provide. It helps you demonstrate how your daycare will meet client needs and preferences.
For example, highlight all your child care services like infant care, full-day care, half-day care, after-school care, or special needs care.
If applicable, consider outlining any unique programs, such as educational curriculum, language classes, early childhood education, STEM (science, technology, engineering, and mathematics) activities, or arts & crafts.
Moreover, don’t forget to describe your operating hours, days of operation, and pricing strategies for each service offering.
5. Sales and marketing strategy
Your sales and marketing strategy outlines how you’ll promote your childcare business and reach your target customers.
It covers all the traditional advertising methods and digital promotional techniques you might use to attract families or working parents. This will help you build your brand’s identity and sustainable value in the market.
Here are some strategies you might include in your daycare marketing plan:
- Social media marketing (Instagram, Facebook, YouTube)
- Email marketing campaigns
- Collaborations or partnerships with local businesses
- Offline advertising in local newspapers or radio stations
- Loyalty programs or community events
- Regular communication & personalized customer service
Simply put, your marketing plan allows you to focus more on building and maintaining a loyal customer base as well as ensuring your daycare’s long-term success.
6. Management & organizational structure
Keeping a well-structured management team is especially crucial for a daycare service. It not only helps your business run smoother, but it also makes you look more responsible and reliable in front of the readers or primary lenders.
So, introduce the daycare owners, key managers, the team of childcare providers/caregivers, and administrative members in this section. Include their roles and responsibilities, educational qualifications, skills, as well as industry experience.
Furthermore, explain how each member fits their role and how their expertise benefits your business’s growth and success.
Then, try to create an organizational chart that illustrates how your team is structured and the relationships between key roles. Here’s an example:
You can also explain the compensation plan as well as mention advisory board members if your team is lacking. Highlight their specific expertise in providing strategic guidance to your childcare.
7. Operations plan
The operations plan provides a quick overview of the day-to-day activities and procedures required to run your childcare business smoothly and efficiently.
A well-written operations plan will help you and your team define the responsibilities and manage everyday processes. This will also allow you to meet business goals and client commitments while ensuring optimal results.
So, consider including the following details in your business operations plan:
- Staffing requirements & training
- Daily operations (opening/closing procedures, child drop-off & pick-up, meal times, activity schedules)
- Daycare facility and ambiance
- Cleaning schedules & equipment maintenance
- Customer service protocols
In short, this section presents your childcare’s operational intricacies and clarifies how they directly impact your service quality. So, don’t skip any essential points.
8. Financial plan
Financial planning is mandatory while writing a childcare business plan as it helps you lay a strong foundation for the financial health and sustainability of your daycare.
So, in your daycare financial plan , provide a detailed analysis of your financial projections for the next 5-7 years.
Consider incorporating these key financial statements and reports:
- Startup costs
- Revenue forecasts
- Operating expenses
- Cash flow estimates
- Break-even analysis
- Funding needs and sources
- Contingency plans
By developing realistic and comprehensive financial projections, you show potential investors or lenders that you have a solid understanding of the financial requirements and challenges of running a successful daycare.
Further, it helps you build confidence and credibility as well as increases your chances of securing the necessary support for long-term success.
For instance, you may consider formulating the key financial projections as shown below:
Income statement
Cash flow statement
Balance sheet
Download a sample daycare business plan template
So, ready to kickstart your daycare business plan writing? But need more assistance? Well, here you go; download our free daycare business plan PDF to get started.
It’s a modern business plan template that has been designed specifically for daycare businesses. It comes with step-by-step guides and examples to help you develop your own plan.
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Daycare business plan summary
Now that we’ve discussed all the key sections of a daycare business plan and how to draft them, it should be much easier for you to write a professional business plan.
However, if you’re still confused or need extra help in presenting your plan, consider using modern business plan software . It helps you create an actionable and comprehensive business plan more effectively and quickly.
So, wait no longer; start planning today!
Related Posts
Key Components of a Business Plan
Business Plan Outline Creation Process
Frequently Asked Questions
What are the key factors investors look for in a daycare business plan.
The following are the key factors that investors look for in a daycare business plan:
- Market research & competitive landscape
- Financial performance and projections
- Unique Selling Propositions (USPs)
- Relevant experience in the childcare industry
- Funding requirements and use of funds
- Marketing plan
What to include in your daycare business plan?
While writing a solid daycare business plan, consider including the sections mentioned below:
- Executive summary
- Business description
- Daycare industry and market research
- Service description
- Sales and marketing plan
- Management team
- Operations plan
- Financial projections
How long should my daycare business plan be?
The length of a detailed daycare business plan might be 15-30 pages that cover all the essential elements like business goals, target market, services offered, operations plan, marketing strategy, and financial plan.
However, the business plan length may vary depending on the complexities of your services and the level of detail required.
How to make a childcare business plan?
Follow these steps to make a childcare business plan:
- Provide a brief summary of your childcare business, including its mission, vision, goals, and strategies to achieve them.
- Describe your business concept, child care services, and unique offerings.
- Analyze the local market and identify the target audience, key competitors, as well as the demand for childcare.
- Outline the business structure and shed light on the management team, including roles & responsibilities, qualifications, and experience.
- Highlight strategies you’ll use to attract and retain clients.
- Include financial needs, startup costs, revenue forecasts, and operating expenses.
- Discuss day-to-day operations, staffing & training, regulatory requirements, and childcare facilities.
How often should I update my daycare business plan?
It’s important to review and update your daycare business plan regularly, at least once a year, or more often as your business evolves. Additionally, you may update your business plan whenever significant changes happen in the regulatory environment or competitive landscape.
About the Author
Upmetrics Team
Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more
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How to Write a Business Plan for a Daycare Center
Sholom Strick
13 min. read
Updated February 7, 2024
Free Download: Sample Daycare Business Plan Templates
Working out a business plan for your daycare center can be a challenge. There are many expenses you must calculate—more than you’d think! Projected enrollment growth and market demand can also be tricky to estimate.
From knowing your competition to picking the right place to establish your daycare center, there are a lot of lessons to be learned. As someone who owns eight successful daycares in the Chicago area, I know the strategies and approaches that work when it comes to developing a sound business plan for a daycare center.
A business plan should look about three to five years into the future. It serves as a cornerstone of your vision as you move forward. You want to put a lot of thought and solid analysis into your daycare center business plan, because it will more than pay off in the end.
- What makes your daycare center unique?
First of all, start with a description of your daycare center. You want to review all the different components of your business model. This description should basically be an elevator pitch for potential partners and business investors to get excited about what you’re offering and your unique location, philosophy, and approach.
What’s your curriculum based on? What criteria will you use in hiring staff? Write about the market and how you’re fulfilling demand. Write down particular statistics and characteristics of the neighborhood where you’ll locate your daycare center that make your center uniquely promising. Real estate sites like Loopnet and Zillow often provide helpful demographic analyses of neighborhoods; the most in-depth info is usually on commercial properties. For example, if the area around your future daycare center has 3,000 kids under five-years-old and only two daycare centers serving them, you’re in good shape.
In writing your company description, make sure to pay special attention to what sets you apart. Maybe it’s your prime location, your previous experience starting or helping start a daycare center, connections with top-notch staff willing to work for your daycare center, or other unique tools or services you can offer that distinguish you from your competition.
- Do a focused market analysis
Next up is a market analysis . Study statistics of the childcare industry: how big is it? How much do economists and experts project that it will grow in the next five years?
How big is your target market?
For detailed information on the size of your primary market, there are helpful resources such as this market research guide from the US Small Business Administration .
Who is your target market ? Describe who you’re targeting. Using some of the information from real estate websites can be a good approach, like I mentioned above. For example, is the median age of your daycare center’s neighborhood quite young or more elderly? Are you in a bedroom community of a nearby city? Note down how your daycare is going to help these different kinds of parents.
Also, keep in mind other factors: Are you in an area with large amounts of seasonal work where the workforce and population shrinks during winter or grows massively during summer? Like it or not, this will likely affect your revenue and enrollment, especially if you are offering part-time care.
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- What is your business model?
In addition to analyzing your market, note your pricing structure, gross margin levels, and other nuts and bolts of your business model. Will you offer discounts, or accept government-subsidized or reduced payments from lower-income parents? What employee childcare discount will you offer?
For detailed information on the size of your primary market, there are helpful resources, such as this guide from IBISWorld . This insightful article from Forbes is also a good resource, and notes that the U.S. Bureau of Labor Statistics expects daycare to be one of the fastest growing industries in the next few years.
- Location and rental agreements
Pay special attention to the obvious: What is the square-foot-per-child requirement in your town, city, and state, and what is the price-per-square-foot of the daycare center you plan to lease? These two facts are absolutely key to putting together a solid business plan. You will generally need more square-feet-per-kid the younger they are (i.e. toddlers get more square feet than preschoolers).
Pro tip: things like the arc of a door’s inward swing and required sinks will eat up square footage, so take them into account. Always leave at least 10 percent breathing room when calculating required square footage for the classroom sizes you want.
Also, aim for using at least 60 percent to 80 percent of your daycare center on classroom size. Other square footage will be used for office space, hallways, required sinks, foyer, and so on, but you want to be using at least 60 percent for classrooms because that’s where you make your money.
Let’s use the example that you need 35-square-feet for every kid in a classroom up to a max classroom size of 20. That means you need a classroom of at least 700-square-feet (20 multiplied by 35). However, as I mentioned above, you want to leave breathing room of between 20 percent to 40 percent (for things like door swing radius, required baby changing tables, required sinks, future building modifications) so you should actually have a room that’s bigger than 700-square-feet.
In noting the lease information on your business plan, aim to negotiate free months of rent with your landlord. Opening a new daycare takes a long time for construction build-outs, permits, licensing and many other factors—sometimes up to a year. Explain this to the landlord. They want a tenant and commitment. Consider agreeing to a longer lease in return for a few months free or a landlord investment in build-outs.
Alternately, the landlord may agree to defer rent in return for a larger security deposit or added monthly payments. Asking for free months shows you’re a competent negotiator who takes his business seriously and has a long-term profit goal in mind.
Another thing to watch out for with monthly rent is all the added costs. Say your price is $20 per square-foot and your building is 5,000 square-feet. This adds up to $100,000. Divide that by 12 to get your monthly rent: $8,333. Make sure to find out if it is a gross or net rate.
Gross includes everything, but net doesn’t include the following:
- Property taxes
- Landlord insurance
- Common area maintenance fees
- Various other charges
Other questions to answer
How many kids are in your daycare center’s neighborhood and how many daycare centers already exist to serve them?
Take an average daycare center in a city that has, say, 100 kids enrolled. If you’re in a neighborhood that has 2,000 kids you still have room for a few daycare centers to serve demand, assuming around 10 percent to 20 percent of parents will enroll their kids in daycare.
There’s a pretty high demand for good childcare in the United States right now and many other countries. Whether you’re urban or rural the chances are you’ll be in demand—but you should still crunch the numbers before the contractors start working.
- Who are your competitors?
How much market share do they have? What makes them strong and what are their weak points? Are there some more general impediments that could get in the way of flourishing, such as increasingly burdensome regulations in your state, or a lack of reasonably-priced leases to choose from?
There are a lot of regulatory requirements in the childcare industry (a lot!), so keep these all in mind when calculating the costs. There’s so much to keep track of!
Things to keep in mind:
- Understanding your building’s zoning details
- Organizing utilities and garbage pickup
- Having the required playground
- Cribs (for infant room)
- Meeting daylight requirements in each classroom
- Two points of exit from the center
- Up-to-code kitchen with three-compartment sink and grease trap
- Fire alarm system hooked up to a central box
- Buzz-in security system
- Parking requirements
- Maintenance and repair fees
You’ll work with a daycare licensing representative from your town or city from the beginning of the process. They will help guide you through the regulatory process (you have to follow both city or town and state regulations), but it is still entirely your responsibility to keep track of all the costs that regulations and requirements.
- Who will run your daycare center?
Next, you want to list organization and management of your daycare center. Who’s the director and assistant director? What are the details of your ownership structure, board of directors, investor list, partners, and so on?
Write down the responsibilities and roles of everyone on your team. List an advisory board if you have one, list all employee salaries, incentives, referral bonuses for recruiting, and all such details. Also in this part of your business plan, you want to be clear about the legal structure of your business in terms of incorporation, type of partnership (I recommend a passive partnership) and other such information.
All percentages of ownership, investor details, stock details, and so on should be listed. Profiles of staff, directors, investors, and board members should include everything from past track record to education and unique skills.
What’s your marketing plan?
Following your organizational details, you should describe your marketing plan. Budget-friendly marketing strategies are the name of the game here.
Reach your target market
There’s no one way to do this, but I recommend thinking specifically about who your customer base is and marketing accordingly. In my case, I had great success with a marketing campaign where I put ads on the baby seat of grocery carts at a grocery store close to my daycare center.
Be specific
Know your target audience and what they’re looking for, and then show them that you fill that need.
Your marketing strategy should look at how to explain the unique strengths of your daycare center, how you’re going to grow, what staff, if any, you’re going to hire in marketing roles, and what methods you will use, from online ads to brochures and billboards. Having a solid marketing plan will help you get clear on your sales strategy.
Have a plan for funding
Finding funding is another area you’ll want to pay attention to when you’re crafting your daycare center’s business plan.
A funding request should list:
- How much you need now and in the coming three to five years
- What the money will be used for
- Any perks such as free months of rent you negotiated with a landlord that show the viability of your model
- Future potential situations such as a buyout, selling the business, and so on
Your financial projections should include forecasted income, expected enrollment growth, balance sheets, cash flow statements and projected/needed capital expenditures.
Projected costs
Keep in mind that as enrollment goes up you will need more staff as well, in order to meet required student-to-teacher ratios. You’ll also need more food and supplies when you have more kids enrolled.
Financial projections need to factor in many things including:
- Registration fees
- Wait-list fees
- Construction cost
- Staff appreciation day costs
- Software costs
- Supply costs
- Training costs
- Utilities costs
- Marketing costs
- Bank service charges
- Monthly nurse consultant costs
- Interior daycare supplies from clocks to filing cabinets to computers
- Accountant and legal costs
When you first start a daycare, you’re going to be in the red. It costs a lot to start a daycare, and it takes time to get going, as I mentioned. This is normal. You should see profits start kicking in after an initial period of six to 12 months of operation.
Capital costs
In terms of capital expenditures, the list is long, from monthly rent and utilities to staffing, construction, repair and supply costs as mentioned above. Digging deeper in these categories reveals even more items. Infants need everything from towels and cubbies to cribs and toys. Preschoolers need crayons, games, tiny chairs, craft supplies, and much more. List everything you can think of and then add more estimated cost.
For construction, you need to calculate the cost of:
- HVAC systems and ductwork
- Baseboards and finishing work
- Interior doors
- Buzzer system
Get a contractor and tradesperson or two to quote you on the job so you have an idea what it will cost. Don’t forget to factor in architectural fees and the cost of heating, electric, and utilities for the months the daycare is empty of students but contractors are working on it.
Securing loans
To get a bank loan for a new daycare center you’ll have to base a loan off the income of another business you own. That said, loans through the SBA can be standalone based on the viability of your business plan, so I recommend looking into them. If you buy a business, an SBA loan can also be a possibility.
For example, if you pay $500,000 for someone’s existing daycare and are required to put a typical 20 percent down ($100,000), you can cover the rest with an SBA loan. You’ll need to show a solid business plan and have good credit, but an SBA loan has the advantage of not drawing on your other sources of income as collateral.
Funding from investors
Another funding source, of course, is to drum up investors. Some people turn to family, friends, or colleagues. I would recommend keeping it strictly business and avoiding family or friends. If you do go this route, however, have a strong paper record to refer back to if this turn sour down the road.
Business partnerships
In finding a partner you want to ideally find someone who loves your plan but doesn’t have time or interest in being directly involved. This is called a passive partnership, where one partner supplies an investment and the other operates the business.
In terms of a repayment scheme, this will depend on your unique situation. For example, if an investor or investors give me cash up front for my financial projection that my daycare center will be making $200,000 per year after several years, I will repay 50/50, so one investor would get back $100,000 per year once the income target has been reached or if there are two investors they will get back one-third each, and so on.
After you address funding and costs in your business plan, add an appendix with supporting documentation. Keep this on hand for investors to look over.
Your appendix can include:
- Credit history
- Reference letters
- Backup details and sources of your market analysis
- Licenses and permits
- Legal documents
- Copies of lease agreements
- Building permits
- Utilities, maintenance, construction, plumbing, and other contracts
- List of all individuals associated with your daycare such as accountants, lawyers, and consultants
- Write your executive summary
Lastly, write down your executive summary . If you’re starting a daycare center, there’s only so much you can know before you have been in operation for multiple years. However, you can write down a lot about the purpose and strategy of your company, your own background and motivations for starting the daycare center, and your projections of future growth and customer needs.
At the end of the day, if you provide a great service and have a business plan methodically anticipates the needs of customers and kids, you will be a huge success in starting a daycare center!
- Download your daycare sample business plan PDF
Get started right now by downloading this daycare center business plan PDF for free. You can also view other daycare sample business plans , or visit Bplans’ gallery of more than 550 sample business plans if you’re looking for more options.
Sholom Strick is a daycare owner and the CEO of Hopping In , a free, web-based app that lets parents earn money when their child is absent from daycare. Hopping In is an easy-to-use, innovative tool that makes it simple for parents to book vacant spots on short notice. He is passionate about developing innovative solutions to improve the childcare industry. You can contact him at [email protected].
Table of Contents
- What’s your marketing plan?
- Have a plan for funding
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