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Daycare Business Plan Template

Written by Dave Lavinsky

Daycare Business Plan Template

Over the past 20+ years, we have helped over 5,000 entrepreneurs create business plans to start and grow their businesses. On this page, we will first give you some background information with regards to the importance of business planning for your daycare. We will then go through a good daycare business plan template step-by-step to help you outline and create your plan today.

Download our Ultimate Daycare Business Plan Template here >

What Is a Daycare Business Plan?

A daycare business plan provides a snapshot of your daycare business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan

If you’re looking to start a daycare business or grow your existing one, you need a solid business plan. This plan will help you raise funding, if needed, and plan out the growth of your daycare in order to improve your chances of success. It is a living document that should be updated annually as your company grows and changes.

Source of Funding for a Daycare Business

parent holding child’s hand

The second most common form of funding for a daycare is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding or, like a bank, they will give you a loan. Venture capitalists will not fund a daycare business.

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A good daycare business plan should include the following 10 key elements:

Executive Summary

children holding balloons

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of child care business you are operating and the status; for example, are you a startup, do you have a daycare that you would like to grow, or are you operating a chain of child care centers.

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the daycare industry. Discuss the type of daycare you are operating. Include detailed information about your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing strategy. Identify the key members of your team. And offer an overview of your financial plan.

Company Analysis

In your company analysis, you will describe the type of daycare company you are operating, including a business description.

For example, you need to decide which type of child care business you plan to operate:

  • Home-Based Daycare: this type of daycare business operates out of your home and typically has one or two caregivers on staff.
  • Daycare Center: this kind of child care center operates out of a commercial building. It typically has multiple teachers and personnel and can provide care to many kids.
  • Preschool Daycare: a daycare business that primarily serves preschoolers
  • School-Age Daycare: a daycare business that primarily serves school-age kids.

In addition to explaining the type of child care you operate, the Company Analysis section needs to provide background on the business.

Include answers to questions such as:

  • When and why did you start your daycare business?
  • What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new program offerings, etc.
  • Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

school-age children

While this may seem unnecessary, it serves multiple purposes.

First, researching the daycare industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards daycare that includes transportation, it would be helpful to ensure your plan calls for such a service.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your daycare business plan:

  • How big is the daycare business (in dollars)?
  • Is the market declining or increasing?
  • Who are the key competitors in the local or national market?
  • What trends are affecting the daycare industry?
  • What is the industry’s growth forecast over the next 5 – 10 years?
  • What is the relevant market size? That is, how big is the potential market for your daycare. You can extrapolate such as figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section must detail the community you serve and/or expect to serve.

The following are examples of customer segments: soccer moms, young families, baby boomers caring for grandchildren, etc.

Try to break out your target audience in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the families you seek to serve. Because most daycares primarily serve customers in the same local area, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target families. The more you can understand and define these needs, the better you will do in attracting and retaining your families.

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Competitive Analysis

children learning from a teacher

Direct competitors are other daycare providers in your local area.

Indirect competitors are other options that parents have that aren’t direct competitors. This includes keeping children at home and/or after-school programs among others.

With regards to direct competitors, you want to detail the other daycare or child care centers with which you compete. Most likely, your direct competitors will be daycare businesses located very close to your location.

For each such competitor, provide an overview of their services and document their strengths and weaknesses. Unless you once worked at your competitors’ daycare businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

  • What types of parents do they offer services to?
  • What daycare services do they offer?
  • What times are they open?
  • What is their pricing (premium, low, etc.)?
  • What are they good at?
  • What are their weaknesses?

With regards to the last two questions, think about your answers from the parents’ perspective.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

  • Will you provide superior daycare services?
  • Will you provide daycare services that your competitors don’t offer?
  • Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

happy children

Product : in the product section, you should reiterate the type of daycare that you documented in your Company Analysis. Then, describe the specific services you will be offering. For example, will you over technology or exercise classes to the children?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the child care services you offer and their prices.

Place : Place refers to the location of your daycare. Document your location and mention how the location will impact your success. For example, is your daycare located next to a heavily populated office building, or gym, etc.? Discuss how your location might provide a steady stream of potential customers.

Promotions : the final part of your daycare marketing plan is the promotions section. Here you will document how you will drive families to your location(s). The following are some promotional methods you might consider:

  • Social media marketing
  • Reaching out to local bloggers (particularly “mommy” bloggers) and websites
  • Local radio advertising
  • Banner ads at local venues

Operations Plan

While the earlier sections of your daycare business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term procedures include all of the tasks involved in running your daycare such as discussions with prospective new customers, procuring supplies, keeping the center clean, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 100th child, or when you hope to reach $X in sales. It could also be when you expect to hire your 4th employee or launch a new location.  

Management Team

little girl with stack of books

Ideally, you and/or your team members have direct experience in the daycare or child care business. If so, highlight this experience and expertise. But also highlight any experience or certification that you think will help your daycare business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your daycare business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in daycare centers and/or successfully running a retail or small company.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In creating your income statement, you need to devise assumptions. For example, will you serve 10 children per day or 50? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your company. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets : While these financial statements include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your daycare center, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your company, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a company approached you with a massive $100,000 daycare contract, that would cost you $50,000 to fulfill. Well, in most cases, you would have to pay that $50,000 now for employee salaries, etc. But let’s say the company didn’t pay you for 180 days. During that 180 day period, you could run out of money.

In developing your financial projections be sure to include several of the key costs needed in starting or growing a daycare center:

  • Daycare center build-out including design fees, construction, etc.
  • Cost of fixtures like tables, chairs, couches, etc.
  • Cost of equipment used like computers and televisions
  • Payroll or salaries paid to staff
  • Business insurance
  • Taxes and permits
  • Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your daycare center design blueprint or location lease.  

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Daycare Business Plan FAQs

What is the easiest way to complete my daycare business plan.

Growthink's Ultimate Daycare Business Plan Template allows you to quickly and easily complete your Daycare Business Plan.

Where Can I Download an Example Daycare Business Plan PDF?

You can download our daycare business plan sample PDF  here . This is a business plan example you can use in PDF format.

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Daycare Business Plan

Daycare Business Plan

As a lot of toddlers turn to preschool age, the number of enrollees in daycare also increases. As a businessman, you should see this as an opportunity. Parents spend a great deal of time selecting the best daycare for their sons or daughters. Composing a daycare business plan will keep you one step ahead of your competitors.

6+ Daycare Business Plan Examples

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What Is a Daycare Business Plan?

A daycare business plan is a written document that enumerates the goals of a childcare business and specifies the methods to accomplish them. It also includes the marketing strategy to promote the daycare and a framework detailing how they can set their daycare apart from similar businesses. This business plan prioritizes services that focus on teaching and securing the safety of the children. 

How To Compose a Productive Daycare Business Plan

Preschool parents are hard to impress. They are very critical in scrutinizing every daycare they come across. To hook these parents, devise an impressive daycare business plan that would make them choose your daycare. Taking care of children is a significant task. To make sure you can cater to the children’s needs, be careful in creating your business plan.

1. Make a Plan Outline

Start your plan outline by including a list of your goals and the corresponding procedure you plan to follow in achieving them. Your outline would serve as your draft. That said, you can list everything that comes to mind and come back to review and omit the items that don’t contribute to the effectiveness of your plan. There are available sample outline formats and templates online.

2. Study Your Market

The people you’re offering your services to are both the children and their parents. You should focus on that fact the entire process of your plan-making. You should always ask yourself, “will it be the best for the children?”, “will it satisfy the parents?”. The best way of data-gathering is by conducting an interview and through market research .

3. Run a Competitor SWOT Analysis

Aside from your market, also research your daycare competitions. What are their strengths? What about their weaknesses, opportunities, and threats? You will find out by conducting a competitor SWOT analysis on them. The data you can gather will help you to find out what your advantage and disadvantages over them are. 

4. Formulate Your Marketing Strategy

In creating your marketing strategy plan , it is advisable to appeal more to the parents because they are the ones who would decide on the final call regarding their daycare choice. Despite that, it is essential to keep your content strategy and designs child-friendly. Some marketing strategies you can try out are posting a flyer or creating an infomercial about your daycare business. 

What are the parts of a business plan?

The title page, executive summary , marketing strategy plan, business description, competition analysis, operation plan, design plan, and business budget are the parts of a business plan. Each segment of this document is necessary for ensuring the accomplishment of your objectives. Tailor your business plan depending on the nature of your business.

How can I attract parents to my daycare?

Promoting your daycare on social media is a clever way of spreading awareness about your daycare. Another way is to depend on peer-to-peer (P2P) marketing. This type of marketing entails asking your existing customers to recommend your daycare to other parents they know. Parents tend to trust other parents more when they see good results.

What are the various types of business plans?

The types of business plans vary on their purpose and on the mediums used in creating them. The miniplan, the first type, is like a summary of the whole business plan. It focuses on the top priorities of the business. The second type of plan is the presentation plan, which uses PowerPoint presentations. The third one is the working plan, and the last one is the what-if plan.

Parents want the best for their children. Now, your job is to prove that you are the best, and they would naturally pick your daycare. Proving to be the top in offering childcare services is not fun and games. It requires the best daycare business plan. Win the hearts of the parents and prepare to receive several  daycare application forms  by the start of the enrollment period. 

sample daycare business plan pdf

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How to Write a Business Plan for a Daycare: Complete Guide

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sample daycare business plan pdf

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Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) for your daycare, you will need to prepare a solid business plan.

In this article we go through, step-by-step, all the different sections you need in your daycare business plan. Use this template to create a complete, clear and solid business plan that get you funded.

1. Executive Summary

The executive summary of a business plan gives a sneak peek of the information about your business plan to lenders and/or investors.

If the information you provide here is not concise, informative, and scannable, potential lenders and investors will lose interest.

Though the executive summary is the first and the most important section, it should normally be the last section you write because it’s the summary of the different sections included in your business plan.

Why do you need a business plan for your daycare?

The purpose of a business plan is to secure funding through one of the following channels:

  • Obtain bank financing or secure a loan from other lenders (such as a SBA loan )
  • Obtain private investments from investment funds, angel investors, etc.
  • Obtain a public or private grant

How to write an executive summary for your daycare?

The executive summary of your daycare business plan should include the following important information:

Business Overview

Introduce your company (its name, its mission) and the history behind it: why did you decide to create a daycare in your area today? Why you? 

Also, that’s where you should expand on the business: where will the daycare facility be located? How old are the children you target? How many children will you be able to take care of? What are the amenities (classrooms, playground, cafeteria, etc.)? 

Market Overview

Provide here a deep market analysis that backs your decision to open a daycare business in your area today. Why would your business succeed given current market conditions? 

For example, the market analysis should include information like: what are your competitors in the area? What are their characteristics, strengths and weaknesses? Who are your target audience (parents and children)? Is that in line with the demographics in your area?

Management & People

Who is the management team? What is your/their experience in the daycare industry?

Financial plan

What is your expected revenue and profitability for the next 5 years? When do you expect to break-even? Simply include here a chart of your key financials (e.g. Revenue, Gross Profit, Net profit )

Funding Ask

What loan/investment/grant are you seeking? How much do you need? How do you intend to spend the money?

sample daycare business plan pdf

Daycare Financial Model

Download an expert-built 5-year Excel financial model for your business plan

2. Daycare Business Overview

The business overview section of the daycare business plan summarizes the basics of your facility, including the background information, business model, services, target audience, and legal structure. 

a) History of the Project

When you launch a daycare business, you want it to grow and even become the best in the region if possible. One small element that can catalyze your company’s growth is its history. You don’t have to exaggerate the information here, but try to include useful details that will make your daycare business stand out. 

For a business as sensitive as daycare, trust overrides anything else. So, make sure to include in your business plan your experience and passion for children to demonstrate to investors you are qualified and the right person to successfully run a new daycare facility.

Also, flesh out the history behind the project: why are you starting a daycare now? For example, you may have noticed a lack of child care services for toddlers and infants in the city.

b) Business Model

Next up is the business model. This is the revenue-generating plan that identifies how your business operates. A daycare business model should be succinct and address specific things about the business. 

For instance, is it a commercial daycare facility or a family daycare? Is it an independent facility or a partnership? And should you opt for a daycare franchise? 

Keep in mind that daycare facilities vary by the target age group. So, you can opt for a childcare center, a family daycare, a kindergarten/pre-school, or a nursery school.

sample daycare business plan pdf

c) Daycare Services

It takes a lot to raise a child. So, be clear on the services you want to offer in your newly founded daycare facility. The quality of services will make your business more attractive. But an even bigger factor will be the type of services you provide at the facility.

Indeed, a lot happens inside a daycare facility, from hands-on learning (classrooms, private tuition) to field trips, games and community events. 

d) Pricing Strategy

Age is a key factor when setting the prices of your daycare services. On average, parents across the US pay about $9,400 per year on child care per child. Of course, the actual figure will vary based on a number of factors, but this is a great starting point when getting into the industry. 

An accurate pricing strategy can help you outshine your biggest competitors. However, don’t forget that setting cheaper prices isn’t necessarily the best strategy, just in the same way overpriced services may turn off potential clients. 

e) Target Audience

Daycare centers are so named because they are about a child’s well-being. However, the final decision rests with the parents, who must buy into your idea and long-term vision for the facility. 

For this type of business, you have a definite target market. And all you have to do is ensure your facility is closer to a busy neighborhood with many children. Find out if the families truly need child care services, why they need these services and the children’s average age. 

Finally, make sure your services are aligned with your target audience. For example, you wouldn’t necessarily succeed with a daycare operating 9am – 4pm in an area where parents typically work long hours in the city and need time to commute back to their neighborhood to pick up their kids.

Same goes for pricing: if you offer high-quality expensive daycare services, make sure your daycare is either located close to offices or in an area where affluent parents work or live.

sample daycare business plan pdf

f) Legal Structure

Finally, your business overview section should specify what type of business structure you opt for. Is this a corporation or a partnership (LLC)? Who are the investors? How much equity percentage do they own? Is there a Board of Directors? If so, whom? Do they have experience in the industry?

3. Daycare Market Overview

In the market overview section of your business plan, you must cover 2 important areas:

  • Market trends : how big is the daycare industry in your area? How fast is the market growing? What are the trends fuelling this growth (or decline)?
  • Competition analysis : how many competitors are there? How do they compare vs. your business? How can you differentiate yourself from them?

a) Daycare Market Trends

How big is the daycare industry in the us.

It’s always helpful to base your business decisions on the latest trends in the US market. For instance, the US daycare market had a value of approximately $54.3 billion in 2019 . And it is projected to grow at an annual rate of 3.9% from 2020 through 2027. 

According to reports, the high number of parents occupying full-time and part-time jobs is a major driving force behind the increasing demand for daycare services. No matter how you look at it, these statistics make the daycare business even more lucrative, provided you get all the basics right through your business plan. 

sample daycare business plan pdf

How big is the daycare industry in your region?

After the US, assess the size of the daycare market in your city or area. Focus on the zone where you plan to offer daycare services.

Naturally, you might not be able to get the data for your specific city or region. Instead, you can estimate the size of your market, for more information on how to do it, read our article on how to estimate TAM, SAM and SOM for your startup . To give you an example, let’s assume you plan to operate in an area where there are already 10 competitors:

As we know the US daycare industry is worth $54 billion today, and there are about 230,000 child care centers , therefore the average annual turnover per child care center is around $235,000.

Now, we can safely assume that the daycare industry is worth $23 million in your area (10 centers).

How fast is the daycare industry growing in your region?

Growth is an important metric for assessing the status of the daycare industry in your region. 

Here if you don’t find information online or via your research, you can calculate growth using the total number of competitors in your area. 

For example, assuming there were 8 daycare competitors in the region in 2018, and 10 in 2022, the annual growth rate is 6% per year.

sample daycare business plan pdf

b) Daycare Competitor Analysis

At the very least, your competitor analysis should answer all the questions below:

  • How many daycare businesses are the area where you plan to open yours?
  • What type of daycare businesses are there: home-based vs. center-based home care, early care vs. early education & daycare, etc.
  • What age range do they specialise in?
  • What services do your competitors offer?
  • What amenities do your competitors have (playground, classrooms, etc.)
  • What’s their average price (daily rate / monthly rate)?
  • What is the child / staff ratio of your competitors?

4. Sales & Marketing Strategy

For some existing daycare facilities, marketing isn’t the most important aspect of running the business. But you’ll probably have to implement a few marketing strategies at the beginning to attract the first families , especially if you’re starting a new daycare facility.

a) Daycare Market Channels

A daycare business doesn’t have diverse marketing channels like retail stores or other businesses. So, this may limit your options when it comes to new marketing channels. 

Apart from word of mouth, other marketing channels include;

  • Social media
  • Online listing (Google business, Facebook business page)
  • Word-of-mouth

sample daycare business plan pdf

b) What are Your Unique Selling Points (USPs)? 

Daycare facilities offer pretty much the same services, and it’s not easy to stand out from the competition. However, a few factors can be useful when evaluating your opportunities in a competitive market, including:

  • Target age group : You may cover a unique age group as opposed to your competitors
  • Opening hours : you may offer longer opening hours to accommodate for different parents’ jobs and availabilities
  • Price : Your services may be cheaper than your competitors
  • Quality & amenities : Quality services and extra amenities (outdoor playground, etc.) will make your daycare facility more attractive vs. competitors
  • Services : Your services may go beyond the standard hands-on learning and kid games 

5. Management & People

The 5th section of your daycare business plan should be about people. It should include 2 main elements:

  • The management team and their experience / track record
  • The organizational structure: what are the different teams and who reports to whom?

a) Management

Here you should list all the management roles in your company.

Of course, the amount of details you need to include here varies depending on the size of your company. For example, a small daycare business run by 1 or 2 persons doesn’t need the same level of detail vs. a large center with 50 children or more.

If you plan on running your business independently, you may write a short paragraph explaining who are the co-founders and/or senior managers (if there are any in addition to yourself). It’s important to highlight their experience in the industry and previous relevant professional experiences.

b) Organizational structure

No matter how many leadership roles there are, you should now explain how you intend to run the company from a management standpoint.

What are the different teams (management, childcare staff, cooking staff, human resources, finance, etc.)?

Note that you should include these details even if you haven’t hired anyone yet. It will show lenders and investors that you have a solid hiring and management plan to run the business successfully.

A great addition here is to add an organizational chart that list all the roles, from Directors to managers, key supervisory roles and employees. Make sure to highlight with reporting lines who manages/supervises whom.

sample daycare business plan pdf

6. Financial Plan

The financial plan is perhaps, with the executive summary, the most important section of any business plan.

Indeed, a solid financial plan tells lenders that your business is viable and can repay the loan you need from them. If you’re looking to raise equity from private investors, a solid financial plan will prove them your daycare is an attractive investment.

There should be 3 sections to your financial plan section:

  • Your historical financials (only if you already operate the business and have financial accounts to show)
  • The startup costs of your project (if you plan to start a new daycare facility, or add capacity to an existing daycare center, renovate your facilities, etc.)
  • The 5-year financial projections

a) Historical Financials (optional)

In the scenario where you already have some historical financials (a few quarters or a few years), include them. A summary of your financial statements in the form of charts e.g. revenue, gross profit and net profit is enough, save the rest for the appendix.

If you don’t have any, don’t worry, most new businesses don’t have any historical financials and that’s ok. If so, jump to Startup Costs instead.

b) Startup Costs

Before we expand on 5-year financial projections in the following section, it’s always best practice to start with listing the startup costs of your project.

For a daycare, startup costs are all the expenses you incur before you open the space to your customers. These expenses typically include: renovation costs, equipment and furniture, etc.

The startup costs for opening a child care center depend on various factors such as the location and size of your daycare facilities, the capacity (the number of children you plan to have), the quality of the amenities, etc. 

We’ve identified that it costs anywhere between $130,000 to $490,000 to start a daycare business with 50 children . See below the cost estimates.

Note that these costs are for illustrative purposes and depend on several factors which might not fully apply to you. Let’s first start below with startup costs. 

c) Financial Projections

In addition to startup costs, you will now need to build a solid daycare financial model over 5 years.

Your financial projections should be built using a spreadsheet (e.g. Excel or Google Sheets) and presented in the form of tables and charts in your business plan.

As usual, keep it concise here and save details (for example detailed financial statements, financial metrics, key assumptions used for the projections) for the appendix instead.

Your financial projections should answer at least the following questions:

  • How much revenue do you expect to generate over the next 5 years?
  • When do you expect to break even?
  • How much cash will you burn until you get there?
  • What’s the impact of a change in pricing (say 10%) on your margins?
  • What is your average customer acquisition cost?

You should include here your 3 financial statements (income statement, balance sheet and cash flow statement). This means you must forecast:

  • The number of children over time ;
  • Your expected revenue ;
  • Operating costs to run the business ;
  • Any other cash flow items (e.g. capex, debt repayment, etc.).

When projecting your revenue, make sure to sensitize pricing and the number of members as a small change in these assumptions will have a big impact on your revenues.

When it comes to the costs, consider both startup and operating costs. For more information, read our complete guide here .

sample daycare business plan pdf

7. Funding Ask

This is the last section of the business plan of your daycare center. Now that we have explained what type of daycare services your company would offer, at what price, your marketing strategy, management and people, this section must now answer the following questions:

  • How much funding do you need?
  • What financial instrument(s) do you need: is this equity or debt, or even a free-money public grant?
  • How long will this funding last?
  • Where else does the money come from? If you apply for a SBA loan for example, where does the other part of the investment come from (your own capital, private investors?)

Use of Funds

Any business plan should include a clear use of funds section. This is where you explain how the money will be spent.

Will you spend most of the loan / investment to buy the real estate and do the renovations? Or will it cover the cost of the salaries of your childcare staff and other employees the first few months?

Those are very important questions you should be able to answer in the blink of an eye. Don’t worry, this should come straight from your financial projections. If you’ve built solid projections like in our daycare financial model template , you won’t have any issues answering these questions.

For the use of funds, we recommend using a pie chart like the one we have in our financial model template where we outline the main expenses categories as shown below.

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How to Write a Business Plan for a Daycare Center

Three young children sitting with a female teacher at a small table within a classroom.

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.

What’s your biggest business challenge right now?

  • 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.

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Content Author: Sholom Strick

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].

sample daycare business plan pdf

Table of Contents

  • What’s your marketing plan?
  • Have a plan for funding

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sample daycare business plan pdf

IMAGES

  1. Daycare Business Plan Template

    sample daycare business plan pdf

  2. Daycare Business Plan Template Sample Pages

    sample daycare business plan pdf

  3. Free Daycare Business Plan Template

    sample daycare business plan pdf

  4. 15+ Daycare Business Plan Template

    sample daycare business plan pdf

  5. FREE Daycare Business Plan Template

    sample daycare business plan pdf

  6. 15+ Daycare Business Plan Template

    sample daycare business plan pdf

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COMMENTS

  1. Daycare Business Plan Template & How-To Guide [Updated 2024] -

    Daycare Business Plan Template. Over the past 20+ years, we have helped over 5,000 entrepreneurs create business plans to start and grow their businesses. On this page, we will first give you some background information with regards to the importance of business planning for your daycare. We will then go through a good daycare business plan ...

  2. Daycare Business Plan

    A daycare business plan is a written document that enumerates the goals of a childcare business and specifies the methods to accomplish them. It also includes the marketing strategy to promote the daycare and a framework detailing how they can set their daycare apart from similar businesses.

  3. Free Day Care Business Plan Template + Example

    Download a free day care business plan template in PDF or Word doc format What you'll get with this template: A complete business plan Unlike other blank templates, our business plan examples are complete business plans with all of the text and financial forecasts already filled out.

  4. How to Write a Business Plan for a Daycare: Complete Guide -

    📘 Business Plan 📊 Financial Model 💸 Profits 🔎 KPIs Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) for your daycare, you will need to prepare a solid business plan. In this article we go through, step-by-step, all the different sections you need in your daycare business plan.

  5. How to Write a Business Plan for a Daycare Center

    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 ...