How Much Does it Cost to Run a Daycare?

One of the most important things to do as you get started is to figure out how much it will actually cost to run your business. By creating a thorough budget, you will be able to prioritize the essential items your center will need and which ones are nice-to-haves items. This will also help you figure out how many children you will need to enrol and how much their tuition should be.

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At its most basic level, a budget keeps tracking of the money your center brings in and the money it spends. Your goal is to bring in more money than you spend so that your business can continue to run.

And that’s all there is to it!

Getting into the details, however, this process begins to get a little tricky. When you factor in everything you need to spend money on — from crayons and dish soap to salaries and rent — costs will begin to add up quickly.

There are a lot of costs that go into running a child care center. In general, these can be grouped into two overarching categories: staff and operations.

A lot of these costs are estimates and are beyond your control, so two important things to keep in mind when budgeting are:

  • Estimate high so you don’t end up not having enough funds.

  • Have an emergency fund just in case.

  • Consider inflation as prices may change over time.

Staff

When planning for staff, first check with your local government as there may be specific requirements for teacher/child ratios.

Some common roles to budget for include:

  • Director

  • Assistant Director

  • Head Teacher

  • Assistant Teacher

  • Teacher’s Aides

  • Substitute Teachers

  • Administrators

  • Cleaning

  • Maintenance

  • Cooking

Depending on the size of your center, some of these positions may be possible to combine for one person.

Determining staff salaries can be very tough for center owners. Although it is an important service, child care jobs are typically low-paying; however, if you want to retain the best staff in your area, your salaries will need to be competitive. If not, you will need to work extra hard to provide other incentives to keep your employees happy.

Operations

There are seemingly endless components that go into running a child care center. Some are very expensive like rent, while others can be under a dollar. The more advance planning you do, the less surprises you’ll have along the way.

Here is a list of typical operational expenses for child care centers:

  • Activities

  • Advertising

  • Assessment and/or curriculum

  • Books

  • Discounts

  • Fees (e.g. licensing)

  • Food

  • Equipment maintenance & repairs

  • Insurance

  • Interest

  • Maintenance

  • Marketing

  • Office supplies

  • Payroll

  • Postage

  • Printing

  • Professional services (e.g. lawyer or accounting)

  • Rent or mortgage

  • Software

  • Supplies (cleaning, kitchen and teaching)

  • Taxes

  • Telephone and Internet

  • Toys (e.g. games, outside equipment, puzzles)

  • Utilities

There are many factors that can affect how much it will cost to open your own daycare business. Depending on the size of your facility, its location, and the quality of care you would like to provide, costs can add up quickly. A home daycare business can be opened for a few thousand (if that), while a larger preschool could be closer to $100,000. 

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