How to Write a Daycare Business Plan

How to Write a Daycare Business Plan

The daycare industry has been growing at a rapid pace across the US in the last decade for so many different reasons.

For example, recent research has shown that millennials are starting to have more and more children.  As more children reach toddler and school age, the need and demand for daycares will continue to grow as well.  Further, our society also embraces and actually encourages a two-income household.  Again, as more parents enter the job market, the demand for quality and safe daycares increases as well.  No matter what the reason is for the continued growth of daycare services; whether it be competition or the need for funding, a business plan is almost inevitable.  To help daycare business owners perform well in both respects, a well-prepared daycare business plan is almost a requirement as compared to a luxury.  From this need, our daycare business plan writer has created some tips and tricks for daycare business owners to use when writing a daycare business plan, creating pro forma financial projections for a daycare business plan, or needing to create a daycare business plan template (12/21).

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Executive Summary for a Daycare Business Plan.

The executive summary section of a daycare business plan should start out with the typical information such as the daycare company’s name, address, and the number of employees within the firm.  Further, our daycare business plan writer has found that these types of business plans should also include a breakdown of the age groups serviced, amenities available for the children, and any services, such as school pickup and drop-off, should be discussed as well.  By succinctly touching on each one of these components, business owners are able to paint a broad picture as to how the organization operates and any niche services offered (2/22).

Company Information and Location for a Daycare Business.

The company information section of a daycare business plan should start with briefly describing the problem that the company intends to solve for its customers.  In this case, for the most part, parents need a safe place for children to stay and learn while at work.  Once this problem is explained, then other important company aspects should be examined.  For example, the company information section should describe in detail the ages and educational opportunities available for children.  Some daycares specialize in infants through five years.  Other daycares catered to one-year-olds all the way up to 12 years.  Regardless of the age brackets service, make sure to discuss each and possibly offer a range of prices to give the reader an understanding of your price strategy.

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Product Description  and Competitive Advantages for a Daycare Business

The product description and competitive advantage section should show how your daycare will differentiate itself from other competitors in the area.  To illustrate, a daycare location may be near a busy office complex.  This location will allow office workers easy access for dropping off and picking up their children before and after work.  Regardless of what your competitive advantage might be, make sure to fully explain the advantage and how you may exploit the opportunity in your business operations.

Target Market for a Daycare Business

The tricky part about identifying a target market for daycare businesses is that you really don't know who your actual target market will be until customers start pouring in.  However, when starting your daycare business, you do need to have some idea as to who your target market will be.  Further, your target market should be aligned with the services offered.  For example, if your daycare center will be located in an upscale neighborhood, then make sure your services include proven educational programs.  In this scenario, the target market would be middle to high-wage-earning parents seeking exclusive daycare services using state-of-the-art educational products.  Just keep in mind, that just because you think this demographic will best appeal to your products and services does not actually mean that it will happen.  So, be flexible when considering your target market.

Industry research for a Daycare Business Plan

When conducting industry research for the daycare industry, make sure to start with analyzing national trends.  When researching national trends, look for popular educational programs used, unique amenities provided to children, and complimentary services that might be offered to supplement daycare revenues.  For example, more and more daycares are offering tutoring services after school for school-age children.  Not only does this service bring in additional revenues, but it is also a competitive advantage that other facilities may not embrace.

Owner and Management Section of a Daycare Business Plan

The owner and management section of the daycare business plan should highlight the owner's experiences and desires for starting a daycare organization.  Also, in this section, make sure to describe each manager's experiences as well as the background research conducted on each person coming in contact with the children. 

As we all can appreciate, parents are immensely interested in the safety of their children.  This safety starts with the business owner and managers.  So, make sure to stay ahead of this demand and provide transparency in regards to owners' and managers' backgrounds and experiences.

Funding Request for a Daycare Business Plan

The funding needs for a daycare may be as simple as purchasing simple amenities and safety products for an in-home daycare service.  Also, daycare funding may be as extravagant as a $1 million-plus facility designed to meet the perceived educational and nurturing needs of all age groups serviced.  No matter what the funding needs, make sure to always break down the funding needs into various categories. 

Daycare startup funding needs often include purchasing inventory for meals and snacks, advertising on social media as well as the Internet, purchasing land and equipment, and or acquiring vehicles to transport children to and from school.  Once each category is identified in a dollar amount allocated, in the end, make sure to total the amount needed for startup.

Financials for a Daycare Business Plan.

The financial section for a daycare business plan should start with weekly revenues.  The weekly revenues should be broken into different age brackets and aligned with the expected prices charged for each.  Next, make sure to identify complementary services like transportation fees or additional snack fees.  Once the weekly revenues are calculated, make sure to expand the revenues to a monthly projection.  Once this is done, then create a list of monthly costs, which should include rent, utilities, food, and transportation costs.  Once done, total up the costs and deduct the cost from monthly revenues.  With this complete, you now have a basic monthly profit and loss statement as a foundation for your future daycare business plan.

Hopefully, these insightful tips and tricks for writing a business plan were helpful.  As always, if you need help with a business plan or financial projections, just send us an email or give us a call. 

Author: Paul Borosky, Doctoral Candidate, MBA., Author

Owner of: Quality Business Plan, and Quality Business Consultant.

Date: 12/19/2021