Writing a Solid Daycare Business Plan

The most important first step to take as an entrepreneur is creating a solid business plan. A business plan will help you think through everything you’ll need to do before you get up and running. It is also an opportunity to assess whether there is truly a need for your business within your community and what you will need to do to be successful.

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If at the end of the process you determine that it is not worthwhile for you to open a child care center, the good news is that you will have reached this conclusion before investing significant time and money into the project.

Writing a business plan is a helpful exercise that forces you to plan ahead and anticipate many of the challenges that can often lead to failure when they are overlooked, such as:

  • Is there enough demand for child care in your area (e.g. are there more families with young children in your area than existing daycares can accommodate, is there a particular age/time/shift in demand)?

  • How much will it cost to operate your business? What will your staff costs and requirements be?

  • How much will you need to charge per child, and do you have enough space?

  • What are the licensing requirements for your area?

  • How will you promote your business to get children enrolled?

In general, the more thorough your business plan is, the better prepared you’ll be to open your center. Things will naturally change as you go, but your business plan will give you a solid foundation to build off of.

Doing a Market Analysis and Assessing the Need for Child Care

First, research the demographics in your community to see approximately how many children there are within preschool or daycare age. If you are in the United States, you can find this information from the United States Census Bureau. In Canada, this can be accessed through Statistics Canada. Outside of these locations — or if you are having trouble finding it on the provided websites, which can be difficult to navigate — a simple Google search of “population demographics in [city]” will direct you to the right place.

Next, see if there are already enough child care centers in your community or if you live in a “child care desert” — an area with more than 50 children under age 5 that contains either no child care providers or so few options that there are more than three times as many children as licensed child care slots.

In the United States, you can look at information for your State from the Center for American Progress. In Canada, the Canadian Centre for Policy Alternatives has published a report on Child Care Deserts in Canada.

If you are unable to find a child care desert report for your area, you can make an approximate calculation on your own. Look on Google Maps and online child care directories for centers in your area and note how many spots each center has. Then, search for demographic information for children who are child care aged.

After that, see if this number comes close to the number of spots available. This will not be as thorough as an official child care desert report, but it is a good way to at least set you on the right track.

Performing a Competitive Analysis

Search for all of the child care centers you can find and create a spreadsheet to compare each center’s details. 

Here are some important criteria to look for:

  • What ages do they serve?

  • What learning philosophy do they use?

  • How many classrooms or spots do they provide?

  • How many miles are they from your intended business location?

  • How much do they charge per age group?

  • Do they offer part-time, full-time, after hours, or weekend care?

  • Are they licensed?

  • Are they home-based or in a facility?

  • What are their ratios?

  • Are they accredited?

  • Do they offer meals?

  • What extracurriculars do they offer that are included in their tuition (e.g. music, yoga or language classes)?

  • Are they bilingual or immersion programs?

By compiling all of this information in a spreadsheet, you can then look at all of the centers side-by-side to see how much overlap there is between the centers and where there may be an opportunity for your center to stand out. For example, if there are ten centers in your area but only one is accredited (more on this later), then making an accreditation requirement for your business is a great way for you to stand out.

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