daycare business plan

daycare business plan

Starting a Successful Daycare Business

1. Introduction

You can now easily begin to brainstorm a detailed plan to start your own daycare business on the side. By choosing to build a daycare business, you would be doing something that you are very good at and love doing. Why not help take care of your own children as well as some of the neighbor kids and get paid for it? Many parents prefer the intimate setting and personal attention that a small home daycare can provide. This is a great choice for parents sending their children to daycare for the first time. Most new daycare businesses start off very small, and for this reason you should create an overall business plan for a home daycare. An overall business plan can serve to help you focus on the potential of your business, detail the risks and opportunities you foresee, and plan the resources you will need to start and grow your business. This is the first step in making your business a professional one, so you will need to make sure that this plan is thorough, thoughtful, and to the point. A business plan is often requested by banks in the case that you are looking to take out a business loan, so a well thought out plan can help to sway the decision in your favor. A plan also can be a communication tool for your loved ones and can provide direction for the business now as well as your future. Your plan may change as your business grows, and remember there is not one right way to write a plan! Your plan should reflect your personal goals and the vision you have for your business.

2. Market Analysis

For most small daycares, the primary customers will be local residents in the community—mostly families with children. Characteristics of the community and the families within it can have a big impact on the demand for daycare services. Suburban communities are generally good locations for daycare due to larger amounts of dual-income families. Consider characteristics like socioeconomic status of residents and family size in the community. These characteristics may influence both the price at which customers are willing to pay for daycare services and the amount of demand for those services.

– Who are our customers?

A situational analysis is often referred to as the foundation of a marketing plan. It consists of examining the internal and external factors of a business which affect its success or failure. In order to conduct a situation analysis, one must collect information on the company, but the main focus is on the collection and examination of information from the external environment (Winsemius, 1996). For a small private daycare, the situation analysis can be done fairly simply and informally. A few points to consider when collecting information to better understand the environment are listed below:

2A- Situational Analysis

Running a successful daycare will involve a certain level of strategy and analysis. A childcare business can be a highly profitable venture, but only with careful planning; the likelihood of a thriving long-term daycare is greater with the more thought and resources put into the launch and operation. A solid understanding of marketing concepts is at the core of opening and operating a prosperous business—specifically understanding the fundamental small business marketing idea: discovering a want or need and filling it. In the case of childcare, the need for reliable and professional daycare is a high one. Today’s society is seeing more and more households in which both parents are working—making childcare a near necessity. Any market targeting families with dual working parents will be a good one, however before any strategy development is begun and tactics employed it is necessary to conduct a situational analysis.

3. Business Operations

The location is an obvious static piece of information that should be evaluated with regards to price. Also consider what use your clientele will have of your services. A mother wanting two days a week of social interaction for her child may not drive 15 minutes out of the way for a rural in-home service, while a stay-at-home father looking for occasional time off to coach the rest of his son’s little league team may seek something within a residential neighborhood. An open spot this fall on a team that fathers sons, best babysitter resume vote. Always remember a decision that benefits a private interest is not always a bad one. With diverse locations comes diverse children and environments that are welcoming to the children they represent. Step into the shoes of your customer and think about location as an alternative to services over another provider.

The most successful way to set a pricing strategy is to evaluate the services you will provide, and use data on local daycares already providing those services. Competitive pricing is the most optimal formula to maximize revenue for a new business. You can expect that a new daycare will not reach full capacity of 60-70% for at least a year. Because of this and the fear of a job loss if a client is typically a dual income family, unemployed, securing the clients during the interview process would be a wise time to offer a payment discount for securing a position with a deposit. This is a way to ensure a commitment for a client that may not visit the daycare again until their first day of service. Always remember the price is the first reason a client will leave a facility. Any page long … cost increase if necessary. An increase in overhead from previous months losses may have fixed expenses increase for the same variable services. This is a quick way to lose a long time client who may not understand the business rationale. Be sure to communicate this information. Variable price increases should be commutative with the level of service you are providing. An increase in speaker hire CPL may justify a small increase in price for school age children. This is also a good time to weigh the cost and benefits of services upon providing them. Always have the customer in mind and do not assume that a new marketing service will lure more customers.

Your operations section should keep in mind the usual daycare motto “There is no such thing as over communication.” There is strong emphasis placed on communication between provider and client. From the initial meeting, to the procedure of scheduling days off. Doing a daily report of the child’s behavior and activities are all forms of communication that provider should be used to and indeed want to provide to their clients. Buyers for a new daycare are likely to look first at the price and location of a new daycare.

4. Marketing and Promotion

Successfully marketing your daycare business requires identifying your target market, exploring and deploying marketing strategies, utilizing free and low-cost advertising, and finally, developing a marketing plan. The target market for a daycare facility is typically parents of children in need of childcare. Understanding who your potential clients are will help you cater to their desires and needs for their children. Considering the time it takes to develop a new business and the amount of time given for advertising, low availability clients are those needing childcare immediately may not be a good target market as you might miss them. An ideal situation would be to market towards parents who may have done co-op with friends for care, other homecare situations, or older children beginning school. These parents are trying to find affordable childcare within a safe learning environment. Constructing a marketing plan involves using advertising and promotion to generate inquiries or leads. Someone within the organization should be put in charge of sales and acquiring clients. While the owner or director may be qualified, generating leads may take away from the time it takes to get the business operational. Hiring an external source such as a sales consultant or putting someone in charge of generating leads can be crucial to the marketing plan’s success. After generating leads, it becomes a matter of tracking and success and improving results. Ask how clients heard about the center and keep a tally to see which advertising methods are most effective. Track the inquiries from lead group to see what percentage we can close and use that data to determine how many leads are needed to meet the desired enrollment. With the cost of everything involved in starting a daycare business, it is important to maximize cost effectiveness at all turns. Track spending on promotions and advertising and measure the cost per client acquisition. With the money left over after all the advertising and promotion, compare the excess revenue from enrolled children and determine the success of the marketing plan.

5. Financial Planning

Your fees will generally need to cover all of your expenses, so it is necessary to determine a pricing structure prior to setting up the business. Research the pricing of other local daycares to determine an appropriate fee for your services and create a payment schedule that meets the needs of parents using your service. Keep in mind that if your prices are too high, it may affect the demand for your services. High-quality services will allow for higher fees, so providing better services can be a more feasible option than raising fees.

After determining your start-up costs, you need to estimate your monthly expenses in operating the daycare. This will include rent, insurance, utilities, wages for employees, food, and transportation. It may take several months for your business to become profitable, so it is important to prepare for this stage by estimating a timeline of these costs over the first year of operation.

Estimate your start-up costs. These will include licensing, equipment, building rental, and professional fees. Underestimating your start-up costs can be detrimental to your business, and it is therefore important to be thorough in determining these costs. If your costs are going to be significant, you may want to investigate financing options or lease agreements with equipment suppliers.