Daycare Business Plan Template
If you want to start your own daycare business or expand your current daycare center, you need a business plan.
The following daycare business plan template gives you the key elements to include in a winning childcare business plan. In addition to this template, conducting research will not only support your business concept, but help you better understand the daycare industry, pricing strategies and your target market. It will also help you craft a smart marketing plan and strong financial projections.
Daycare Business Plan Example
I. Executive Summary
Business Overview
[Company Name], located at [insert location here] is a new, upscale daycare focusing on offering a safe, play-based, nurturing environment to promote the physical, social, emotional, cognitive and creative development of children and infants through five years of age. The goal is not simply to look after our client’s children while they attempt to prioritize their various other time commitments, but to truly facilitate the advancement of young minds and bodies during critical years of development.
Services
[Company name] will be staffed with qualified supervisors and attendants who will act as facilitators and teachers. The education curriculum will be based upon the principle that preschoolers learn and develop best through carefully supervised play with educational materials. The Childcare Center environment will provide stimulating, challenging materials, experiences and equipment for children. Each child will have the opportunity to grow emotionally, socially, intellectually, creatively, and physically.
Customer Focus
[Company Name] will primarily serve the residents within a 5 mile radius of our location. The demographics of these customers are as follows:
- 28,672 residents
- Average income of $98,119
- 57.8% married
- 62% in Mgt./Professional occupations
- Median age: 42.9 years
Management Team
[Company Name] is led by [Founder’s Name] who has been in the daycare business for 20 years. While [Founder] has never run a daycare facility himself, he has taught kindergarten classes in a local elementary school for 20 years and before that worked in the daycare industry for almost 10 years. As such, [Founder] has in-depth knowledge of the daycare business including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.).
Success Factors
[Company Name] is uniquely qualified to succeed due to the following reasons:
- There are currently no upscale daycare centers in the community we are entering. In addition, we have surveyed the local population and received extremely positive feedback indicating that customers would be highly receptive to our services once operations are launched.
- Our location is in an area with many high-income families that include a significant number of business professionals (62% of the population). This means that the customer demographics indicate that individuals have the financial means and the prerequisite demand for our company to thrive in [company location].
- The management team has a track record of success in the daycare business.
- Parents are becoming increasingly concerned regarding the development of their preschool age children. Studies indicate that from conception to age three or four is when the brain matures and personality develops, and when psychological and social patterns of bonding with primary caregivers and the community at large are established. For this reason, many high-income parents are willing to pay a premium for truly quality services that will foster a comfortable and nurturing environment for their children to develop.
Financial Highlights
[Company Name] is currently seeking $325,000 to launch. Specifically, these funds will be used as follows:
- Center design/build: $175,000
- Working capital: $150,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Top line projections over the next five years are as follows:
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $738,000 | $1,716,272 | $2,007,297 | $2,331,125 | $2,694,524 |
| Total Expenses | $639,595 | $1,021,515 | $1,110,127 | $1,190,308 | $1,273,715 |
| EBITDA | $98,405 | $694,757 | $897,169 | $1,140,817 | $1,420,809 |
| Depreciation | $16,560 | $16,560 | $16,560 | $16,560 | $16,560 |
| EBIT | $81,845 | $678,197 | $880,609 | $1,124,257 | $1,404,249 |
| Interest | $18,554 | $16,235 | $13,916 | $11,596 | $9,277 |
| Pre Tax Income | $63,291 | $661,962 | $866,694 | $1,112,661 | $1,394,972 |
| Income Tax Expense | $22,152 | $231,687 | $303,343 | $389,431 | $488,240 |
| Net Income | $41,139 | $430,276 | $563,351 | $723,230 | $906,732 |
| Number of locations | 1 | 1 | 1 | 1 | 1 |
| Avg customers/day | 20 | 30 | 40 | 50 | 60 |
II. Company Overview
Who is [Company Name]?
[Company Name], located at [insert location here] is a new, upscale daycare that seeks to attract customers that value their children’s growth and hopes to be viewed as a facility that facilitates the lifelong journey of discovery – one that is informative, enlivened, and enriched by academic achievement, entertainment and personal growth. The aim of [Company Name] is to provide a nurturing environment where every child learns better and is surrounded by affectionate and caring people.
The center is a licensed day care facility and will operate on week days from 7:00am to 6:15pm. The center has a capacity of 80 children and is staffed with qualified, skilled supervisors and attendants who will look after the children in a motherly way trying to teach healthy eating habits, team spirit, a caring attitude and hobby development in every child who comes to the center. The staff will be responsible for the daily care and teachings of the children, meals, first aid and cleanliness.
[Company Name]’s quality educational programs consist of:
- Lessons in drawing, painting and dance as a part of day-to-day activities
- Nutritious meal plan for lunch and snacks
- Curriculum that is gender inclusive, recognizing the society as multicultural and supportive of social justice
- Environment similar to that of school campus
- Staff that fosters competence, dignity, a sense of independence and pride in oneself
[Company Name]’s History
After 20 years teaching children at an elementary school level, [Founder’s Name] realized what a significant impact he was having upon bright young minds and the limitations that the school environment had upon his teaching curriculum. After surveying the local customer base, finding a potential location, and incorporating [Company Name] as an S-Corporation on [date of incorporation], [Founder’s Name] was able to successfully launch his daycare services from his home with only himself as an employee. Once [Name of Founder] recognized that his services were in high demand and his operations became confined by his location (his home), he decided to expand his operations.
The business is currently being run out of [Founder’s Name] home, but once the lease on [Company Name]’s commercial location is finalized, all operations will be run from there.
Since incorporation, the company has achieved the following milestones:
- Found commercial real estate space and signed Letter of Intent to lease it
- Developed the company’s name, logo and website located at www…
- Determined equipment and supply requirements
- Began recruiting key employees with experience in the child care
[Company Name]’s Services
Below are [Company Name]’s daily service offerings that will engage its attendees on a daily basis. All items are classified under the following main categories:
- Lessons in drawing, painting and dance as a part of day-to-day activities
- Nutritious meal plan to take care of lunch and snack requirements
- Curriculum that is gender inclusive, recognizing the society as multicultural and supportive of social justice
- Environment similar to that of school campus and teaches encouragement of peers
- Staff that fosters competence, dignity, a sense of independence and pride in oneself
In addition to these general principles, the Company will attempt to create concrete classes for its “students” in order to formalize its experience and efficiently advance their development as life long learners. Furthermore, this classroom learning environment, coupled with elements of play, will allow attendees to bond with their classmates and allow staff members to provide personal attention to each member. The following is an example for class design based on projected enrollment of children in four age groups.
Group Size
0-27 months (4 children) (1 class) 1 senior staff member
3 year old (24 children) (3 classes) 3 senior staff members
4 year old (20 children) (2 classes) 2 senior staff members
5 year old (30 children) (3 classes) 2 senior staff members
Overall strength in the enrollment of students will grow from year to year based on the demand for this service in the area. [Company Name] expects to be at full capacity from the onset and beyond. The Company’s facilities will operate on weekdays from 7:00am to 6:15pm. The business will generate revenue through its enrollment of children.
Facility Design
[Company Name] will develop a 1,820 square foot daycare center whose key elements will include the following:
- Classroom Areas
- Infant Room
- Administration Office
- Recreational Area
- Kitchen
- Restrooms
Below you will find a rough sketch of the floor plan:
III. Industry Analysis
Today, childcare centers have become a common and necessary part of millions of Americans’ lives. More women in the workforce, longer workweeks and educational research supporting the importance of early childhood education have contributed to the rise of early childhood centers throughout the United States. Since working parents are unable to pay attention to the proper academic and mental growth of their children during the days, they opt for the services of daycare centers. Working parents face numerous decisions when balancing their work and home life, including choosing the type of care to provide for their children while they work.
Industry Statistics & Trends
The following industry size facts and statistics bode well for [Company Name]:
According to the United States Department of Labor, “Obtaining affordable, quality child day care, especially for children under age 5, is a major concern for many parents, particularly in recent years with the rise in families with two working parents. As the need for child day care has increased in the last decade, the child day care services industry began to fill the need of non-relative child care.”
Often employment statistics are a good indicator of where an industry will likely move in the near future; after all, demands for human resources generally reflect a strong demand for products or services within an industry. The United States Department of Labor further indicates that, “wage and salary jobs in the child day care services industry are projected to grow about 34 percent over the 2006-16 period, compared with the 11 percent employment growth projected for all industries combined. The rising demand for child day care services driving industry growth reflects in part demographic trends. Over the same period, the number of children under age 5 is expected to increase at a faster rate than in previous years and many of them will continue to be raised in households with two working parents or a single working parent. Furthermore, growing numbers of parents will hold jobs that require work during weekends, evenings, and late nights. As a result, demand will grow significantly for child care programs that can provide care during not only traditional weekday hours, but nontraditional hours as well. In addition, school-aged children, who generally require child care only before and after school, increasingly are being cared for in centers.”
Interest in the use of professional childcare has grown as the proportion of women in the labor force increased. The growing number of working couples has lead to an increase in demand for child care centers. The stay-at-home trend is decreasing, making child daycare centers important.
Click below to see each section of our free child care business plan template. You can also click here to get our sample daycare business plan pdf.
IV.Customer Analysis
Demographic Profile of Target Market
[Company Name] will serve the residents of [company location] and the immediately surrounding areas as well as those who work in [company location].
The area we serve is affluent and many are employed in professional services, which means many residents must find competent and reliable day care services for their toddlers and children (especially during regular work hours).
The precise demographics of the town in which our location resides is as follows:
| Wilmette | Winnetka | |
|---|---|---|
| Total Population | 26,097 | 10,725 |
| Square Miles | 6.89 | 3.96 |
| Population Density | 3,789.20 | 2,710.80 |
| Population Male | 48.04% | 48.84% |
| Population Female | 51.96% | 51.16% |
| Target Population by Age Group | ||
| Age 18-24 | 3.68% | 3.52% |
| Age 25-34 | 5.22% | 4.50% |
| Age 35-44 | 13.80% | 13.91% |
| Age 45-54 | 18.09% | 18.22% |
| Target Population by Income | ||
| Income $50,000 to $74,999 | 11.16% | 6.00% |
| Income $75,000 to $99,999 | 10.91% | 4.41% |
| Income $100,000 to $124,999 | 9.07% | 6.40% |
| Income $125,000 to $149,999 | 9.95% | 8.02% |
| Income $150,000 to $199,999 | 12.20% | 11.11% |
| Income $200,000 and Over | 32.48% | 54.99% |
Customer Segmentation
We will primarily target the following three customer segments:
- Stay-at-home moms: Although it may seem counter-intuitive to market [Company Name]’s services to this particular segment, marketing services to this group may have some distinct advantages. First, although traditional day care centers do not offer a comprehensive set of services, [Company Name] will offer its customers a thoroughly nurturing environment that combines the concepts of play with actual learning (articulated in its extensive class offerings). Furthermore, our services allow children to interact with one another through play, an experience not easily fulfilled by stay-at-home mothers. Lastly, these individuals often have many children and thus many responsibilities – it may be easier for them to handle all of their responsibilities if they utilize our services a few times a week.
- Business Professionals: The [company location] area is filled with affluent individuals that work in professional environments (this means long work hours as well). These individuals include those who are currently using, but are unsatisfied with, competitors of [Company Name]. For this reason, these individuals need the services that [Company Name] can provide.
- Single Parents: Single parents of
ten work long hours and do not have a spouse to take care of their children. This segment of individuals is looking primarily for reliability (a daycare that is both dependable and flexible around their hectic schedule).
V.Competitive Analysis
Direct & Indirect Competitors
Childcare is one of the fastest growing business sectors in the US. In the age of stiff competition, a sustainable competitive advantage is crucial for the success of players in the daycare industry. While the need for day care services continues to grow as does the number of people interested in providing this service, daycare centers are becoming an extension of personal parental care. These centers differ in relation to the types and the quality of services offered. With the demand expected to increase in the future, this industry is poised to grow.
Competition in general can be divided into two categories and these key local competitors within a 5-mile radius:
Day care centers
Daycare centers begin care for babies six to eight weeks old and serve children until they begin kindergarten. Some of our specific competitors include:
- YMCA: The YMCA runs after-school as well as all-day day care services to the general public and has toys as well as jungle-gym facilities for its attendees. Though their services are well-known and their public image recognized, the YMCA requires each of its members to be toilet trained, have a comprehensive immunization record, and some services are limited to customers that income quality. Furthermore, their services are more or less limited to daycare services which teach their students very little (mostly just looking after kids as they play).
- Jane Street Day Care: Jane Street has been open for 10 years and operates at its capacity of 100 children at a time. Internet reviews and reports from speaking with prior customers of Jane Street show that this daycare has high turnover of children and parents who find the staff and service they receive at Jane Street very uneven. Jane Street has the advantage of a central location but suffers from its poor brand image.
Pre-school
Preschool refers to early childhood programs for children from age two and half to five or six.
- Plainview Montessori: Plainview offers a structured learning approach and experienced staff, but operates only part-day classes. Plainview also operates at its capacity and has little means to expand in its current location. If Plainview chooses to change locations to expand it will take years to complete this transition. In the meantime, [Company Name] will begin to serve the additional children in the area.
Competitive Pricing
| YMCA | Jane Street | Plainview | |
|---|---|---|---|
| Full Day fee | $100 | $110 | $120 |
| Half Day fee | $55 | $60 | $65 |
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantages include:
- Location: [Company Name]’s location is near the center of town. Our location is geographically close to a high density of professional business establishments which puts us in close proximity to our target customers.
- Management: Our management team has years of business and marketing experience that allows us to market and serve customers in a much more sophisticated manner than our competitors.
- Relationships: Having lived in the community for 25 years, [Founder’s Name] knows all of the local leaders, newspapers and other influencers. As such, it will be relatively easy for us to build awareness with the community as well as a loyal customer base.
- High-Quality Staff: The thing that truly separates [Company Name] from its competitors is the quality of our staff and their attention to each individual learner. Through our high-quality staff, we will provide classes that integrate fun and learning into a comprehensive package guided by the principles of efficient childhood development.
VI.Marketing Plan
The Marketing Plan describes the type of brand [Company Name] seeks to create and the Company’s planned promotions and pricing strategies.
The [Company Name] brand will focus on the Company’s unique value proposition:
- Offering a comprehensive learning environment that not only teaches children the value of play, but using those principles to further their emotional, intellectual, and physical development.
- Offering a convenient location that is close to its customer base.
- Providing excellent customer service.
Promotions Strategy
[Company Name] expects its target market to be parents working and/or living within a 5-mile radius of each of its store. The Company’s promotions strategy to reach these individuals includes:
Direct Mail
[Company Name] will distribute direct mail fliers to neighborhoods surrounding its location. These pieces will provide general information on [Company Name], offer discounts and/or provide other inducements for people to frequent the store.
Public Relations
We will contact all local and area newspapers and television stations to tell them about the opening and unique value proposition of [Company Name].
Advertising
[Company Name] will initially advertise in local newspapers and sponsor community events in order to gain awareness.
Ongoing Customer Communications
[Company Name] will maintain a website and publish a monthly email newsletter to tell customers about new events, products and more.
Pricing Strategy
[Company Name]’s will segregate children into different age groups ranging from six weeks to five years. The Company will charge a flat rate of $200 per child per week to all children for full-time care regardless of his/her age. This fee can be considered very competitive with high-quality care, such as the local Montessori. The Company also aims at giving discount of 15% to employees of businesses with which the center has partnerships.
VII.Operations Plan
Functional Roles
In order to execute on [Company Name]’s business model, the Company needs to perform many functions including the following:
Administrative Functions
- General & administrative functions including legal, marketing, bookkeeping, etc.
- Hiring and training staff
Kitchen Functions
- Food preparation for all day learners
Store/Retail Functions
- Teachers for each class
- Customer Service Representatives
- Janitor/maintenance personnel to keep the store clean
To execute upon these day-to-day obligations, the company has created a cost-effective business model that will streamline processes and create an efficient chain of command.
Milestones
[Company Name] expects to achieve the following milestones in the following [] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] facility |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Launch [Company Name]?s facility |
| [Date 5] | Reach break-even |
VIII. Management Team
Management Team Members
[Company Name] is led by [Founder’s Name] who has been in the daycare business for 20 years.
While [Founder] has never run a daycare center himself, he has taught elementary school classes at a local elementary school for 20 years. [Founder] also has considerable experience working in the daycare industry as he has worked for ten years at an existing daycare facility. There, he learned how to interact with young children and was able to splice the principles of learning (which he clearly employed during his work at XYZ elementary school) with the elements of productive play (which he picked up during his years at ABC daycare center. In addition, [Founder] also holds a 90-hour certificate in Early Childhood Education from Prince George’s Community College.
[Founder] graduated from the University of ABC where he majored in Communications.
Hiring Plan
[Company Name] will maintain the student-teacher ratio required by government regulation. Each employee will be familiar with first aid and CPR and have medical clearance and fingerprints on file. The following are the staff requirement and background are described below:
- Director
- Must be at least 21 years old
- Director can only cover 50% of the time
- The director must have 90 hour certification
- Senior Staff
- Must have 90 hour certification
- One year experience
- At least 19 years of age
- Completed high school
- Group Leader
- Must have 45 hour certification (group leader class)
- At least 19 years of age
IX. Financial Plan
Revenue and Cost Drivers
[Company Name]’s revenues will come from its daycare services.
The major costs for the company will be staffing, location maintenance, and food preparation. In the initial years, the company’s marketing spend will be high, as it establishes itself in the market.
Capital Requirements and Use of Funds
[Company Name] is seeking a total funding of $325,000 to launch its business. The capital will be used for funding capital expenditures, manpower costs, marketing expenses and working capital.
Specifically, these funds will be used as follows:
- Store design/build: $175,000
- Working capital: $150,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Key Assumptions & Forecasts
Below please find the key assumptions that went into the financial forecast and a summary of the financial projections over the next five years.
| Number of children per day | Per location |
|---|---|
| FY 1 | 50 |
| FY 2 | 55 |
| FY 3 | 60 |
| FY 4 | 70 |
| FY 5 | 80 |
| Average daily revenue per child | $55 |
| Annual Lease ( per location) | $50,000 |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRETAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
