.svg)
Are you preparing to launch a new daycare business? Perhaps you are thinking of launching new services or are seeking new financing from investors to upgrade your facilities? Creating a daycare business plan is vital to your planning when making such big decisions.
In this article, we explore the different benefits that a daycare business plan can bring to your business. We will then go over what information you need in order to put a great business plan together. Following this roadmap will help you create a business plan that clearly communicates your goals, helps you attract investment to grow your business, and sets you up to take advantage of future opportunities and face any challenges that may come your way.
Table of contents
- Why is a business plan important?
- Before writing a daycare business plan
- Writing a daycare business plan
- Updating your daycare business plan
- A daycare business plan that serves your goals
Why is a business plan important?
As with any business, a daycare business plan is essentially a document that outlines your goals and your strategies to achieve them. More than just a business formality, a well-crafted business plan is essential for the success of your daycare. It offers clear guidance for both short-term and long-term objectives, aids in attracting investment and funding to achieve your goals, and assists in monitoring your progress over time.
A business plan is crucial for starting a new business and ensuring its successful launch with a well-defined roadmap. It can also enhance your existing business, particularly if you're looking to secure more capital or considering expanding your daycare program with new offerings.
Writing and updating a business plan can be a time-consuming process. Here are a few reasons why it may be worth your time:
Set milestones
Once you have launched your daycare program, your time will most likely be devoted to managing the day-to-day tasks of running a daycare facility. Working on your business plan early enables you to set milestones in advance, so you have a clear roadmap for the future. This way, you can feel safe that your business has a plan for future success, while you are busy tending to daily tasks.
Share your vision
Whether you’re seeking investment into your childcare business, or briefing your team and attracting new employees, a well-defined business plan will assist in conveying your future vision to them. This includes your broader goals, as well as your budget, operating policies, and other core parts of a business plan that we will discuss below in greater detail.
Make important decisions
Sometimes in the course of running a daycare program, you may face unexpected expenses or be presented with new opportunities. You may be considering upgrading your facilities or equipment, or launching a new service for the families you work with. Having a business plan will help you identify which decisions contribute to the growth of your business, staying consistent with your budget and long term goals.
Before writing a daycare business plan
Review relevant regulations
Your local government will have rules and regulations you’ll need to follow as a small business owner and childcare provider. Start by reviewing the childcare licensing guidelines for your state. Once you’re clear on licensing guidelines, you can make sure your childcare business plan will be aligned with those requirements.
Check your idea is viable
In order to prepare to write a business plan you will need to take a closer look at your projected finances. In the next section, we will discuss in more detail the information you should include in your daycare business plan. This includes budgets, identifying income sources, and your expected expenses. It also includes examining the market, identifying potential competitors, and what your daycare facility will offer to attract families to enroll with your program.
Doing this research in advance of launching or expanding your daycare business will help you determine the viability of your project. Ask the hard questions now, because it will help set you up for success in the long term.
Think of how to attract investors
A key purpose of a business plan is to help secure funding. You’ll likely need financing to launch your preschool or daycare, especially if you want to avoid the monthly repayment of a loan.
Investors provide businesses with money and expertise in exchange for partial ownership. As a result, they expect a larger return on their initial investment.
Most investors look for:
- Industry background and experience
- Financial performance and promise
Industry background and experience
Investors want to make money. Therefore, they are more inclined to work with experienced entrepreneurs and business owners to guarantee a return on their investment.
This might sound discouraging for those with little experience or without a business management background, but the opportunity doesn’t end there. You could consider bringing on a partner with a business background. Additionally, many investors act as a source of business advice.
Financial performance and promise
You need to demonstrate that your business will make money. Investors will likely want to see signs of business growth before they give you money.
Additionally, investors will want to know about your financial stability. Questions an investor might ask are:
- What do you plan to do with the money?
- Has your business been up or down in recent years?
- Is your company losing money? Are there signs of growth for the future?
- How do you plan to repay your investment?
Of course, every investor is different, so they’ll consider various factors. While experience and financial promise are at the top of the list for most investors, they might also look for uniqueness, business readiness, an effective business model, and more.
Writing a daycare business plan
We’ve discussed licensing, planning, and investors. Now, you’re ready to begin the framework of your business plan for daycares and preschools. Here’s what you’ll need to get started:
- Business description
- Needs assessment
- Budgets
- Insurance policies
- Operating policies and procedures
- Marketing strategy
Business description
Start with the basics: what does your daycare do? Detailing the service you’re offering will help you create a clear business plan. Next, you might want to write some goals or even a mission statement outlining your purpose and motivation.
Needs assessment
Start by looking at general daycare or preschool industry trends, then narrow your scope to the preschools or daycares in your local area. Next, you’ll need to figure out who your target customers are and confirm that there is a need for a business like yours in your community.
Are there a lot of young families in your neighborhood? Are you located somewhere convenient for commuting parents? Does your business offer a specific service that your competitors don’t, like early check-in or extended hours?
Also, check out the competition. Research the existing daycare or preschool options in your community. Look at current preschool or daycare business plan samples. What makes your daycare or preschool unique?
Budgets
Developing detailed budgets will help you run your small business. You’ll need to compare your current cash flow and expenditures to determine whether you’ll make a profit.
Build a budget for unexpected costs. For example, how many children do you need to serve to be able to pay your bills and stay afloat? Child Care Aware of America offers some terrific budgeting resources for this process.
Insurance policies
Depending on the type and size of your preschool, you’ll need insurance policies of several different types, including liability, property, workers’ compensation, and business insurance. Check the licensing requirements for guidance in building this part of your preschool business plan.
Operating policies and procedures
Create a comprehensive handbook for families and staff that includes you center's policies and procedures. For instance, you'll need to develop an emergency plan, daycare sick policy, and other safety protocols according to your local childcare licensing requirements.
Your staff handbook will be a helpful resource your employees can reference and include all your employment policies including work and pay schedules, benefits, and information about professional growth and development. You can also include information on your center's philosophy and curriculum, classroom procedures, and expectations for working with children and families.
Marketing strategy
Your marketing strategy is the key to attracting customers. Decide what type of advertising you will use in front of potential customers. For example, list your school in local directories and participate in parenting and kid-friendly community events. Run a social media campaign focusing on your target population.
Another big part of childcare business marketing is differentiating yourself from other preschools. These days adopting daycare software is a surefire way to attract families with young children. A tool like brightwheel's center management feature will streamline your center's admission process, record keeping, and reporting, saving you up to 20 hours per month.
You can also use brightwheel for recording and tracking daily events and activities, and sending real-time updates to families throughout the day. It also offers secure, digital check-in/check-out and a paperless billing system. This is a great way to keep your families looped in on daily activities and handle all of your administrative tasks in one place.
Updating your daycare business plan
A thorough business plan should cover your needs in the medium to long term, so you do not need to update it constantly. There are certain circumstances when you will want to update your daycare business plan to make sure it remains relevant to your business and current circumstances. So, when should a business plan be updated?
When you add new services
The information in your business plan is reflective of your daycare services at the time when you wrote it. Adding new services, such as offering extended hours, or offering daycare for children of a different age group, can significantly impact your operations. So, when you add new services, you should also revise your business plan to reflect the new opportunities and expenses that your business will be presented with.
When the market changes
Sometimes, the changes you need to reflect on your daycare business plan will be due to changes in the market. New daycare facilities opening in your area can affect your projected enrollment or the marketing strategies you use to continue thriving. These changes may also be the result of unforeseen circumstances. Consider how the COVID pandemic affected daycare programs and their operations. During times of change, you need to update your business plan to reflect the new circumstances in which you are offering your services.
A daycare business plan that serves your goals
Writing a business plan is time well spent, investing in the long term success of your childcare program. Whether you are just getting started with a new daycare business, or reviewing your operations, a business plan is important to your success. Following the steps above, you will have a clear short and long term direction for your daycare, you can attract investment to finance your operations, and track your progress along the way. Investing time in creating a good business plan will bring great returns for your business in the long term.
These are just the basics to get you started. For further information, the U.S. Small Business Administration’s website has detailed instructions on creating each necessary part of a successful business plan.
Brightwheel is the complete solution for early education providers, enabling you to streamline your center’s operations and build a stand-out reputation. Brightwheel connects the most critical aspects of running your center—including sign in and out, parent communications, tuition billing, and licensing and compliance—in one easy-to-use tool, along with providing best-in-class customer support and coaching. Brightwheel is trusted by thousands of early education centers and millions of parents. Learn more at mybrightwheel.com.
