Business Plan for Childcare for starting your own childcare center

Do you want to start a childcare centre? Well If you think you can provide other’s children the right care, attention, and protection as their parents are out, then this can be the perfect business for you.

All parents want to leave their kids in safe and kind hands whenever they can’t take them along. Going to their jobs, parents want to ensure that their children are staying at a home-like place. A place where they are learning new things in the company of their likes.

In this sample of daycare business plan we have explained how to open a daycare centre. This sample is written for We Care, a startup that quickly earned recognition due to exclusive competitive edges.

Executive Summary

2.1 The Business

We Care will be a licensed and registered daycare facility in Seattle. The business will comprise of large space for kids with separate segments acting as a dining hall, play area, and learning area, etc.

Besides, the business will include daycare personnel to carry day-to-day tasks.

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2.2 Management of Childcare Business

We Care will be owned and supervised by Sarah Clarke. The business will have several aspects to manage such as receiving kids and handing them over to authorized guardians at the pick-up time, feeding them at the right time, and helping them learn new things.

Keeping in view the diverse nature of works, Sarah has decided to hire at least two managers and some other workers to work under her guidance.

2.3 Customers of Childcare Business

If you want to create a perfect business plan for starting a childcare center you must remember your customers all the time. Since customers of daycare are mainly working or single parents, you should devise policies to win their trust.

In this business plan on how to open child care center we will be listing all target customers of We Care in detail.

2.4 Business Target

We Care aims at becoming the most trust-worthy daycare facility for the citizens of Seattle. Our target is to earn profits by caring for and loving others’ kids.

Childcare business plan
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Company Summary

3.1 Company Owner

Sarah Clarke has done an MBA from the Milgard School of Business. She worked in a local firm for a whole year but ultimately decided to start her own business.

She has a very cheerful and loving personality and she herself is a mother of one.

3.2 Why the childcare business is being started

During a year of her job, Sarah faced extreme difficulties in raising her kid. She got her two-year-old son admitted in a nearby daycare center but was never satisfied.

Sarah eventually left her job and started thinking about doing a business. Considering that every other family in the US faced the same difficulty regarding toddlers, she ended up opening a daycare center.

3.3 How the childcare business will be started

Despite being a business expert, Sarah studied various examples of child care business plans before devising her own business plan template for childcare. You should also go through sample business plans for childcare before taking a start to know what others are doing in the domain.

Sarah decided to turn one of her properties into a daycare facility. She with her managers purchased the required equipment and furniture.

The lawn and inside were renovated to make the space more appealing to kids. Moreover, Sarah got 10 cameras installed in various segments of the building to provide the parents with the option of monitoring their kids’ activities anytime.

Childcare business plan
Start-up Expenses 
Research and Development$29,000
Expensed Equipment$53,000
Start-up Assets$335,000
Cash Required$360,000
Start-up Inventory$67,000
Other Current Assets$218,000
Long-term Assets$294,000
TOTAL ASSETS$1,274,000
Total Requirements$1,645,900
Start-up Expenses to Fund$371,900
Start-up Assets to Fund$1,274,000
Non-cash Assets from Start-up$1,676,000
Cash Requirements from Start-up$202,000
Additional Cash Raised$41,000
Cash Balance on Starting Date$32,000
TOTAL ASSETS$1,951,000
Liabilities and Capital 
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$45,000
Other Current Liabilities (interest-free)$0
Planned Investment$1,645,900
Investor 1$0
Investor 2$0
Additional Investment Requirement$0
Loss at Start-up (Start-up Expenses)$224,100
Total Funding$1,645,900
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    Before writing a business plan for starting a childcare center, you must decide which services you are going to provide your customers. This decision if taken timely can help you in hiring the right personnel and purchasing the right equipment.


    In this sample business plan for a daycare, we are listing the services provided by We Care. You can take help from here if you are looking for business plan template for childcare.

    Healthy & Nutritious Food

    We will feed your kids with healthy foods, salads, and milk. Our menu for an entire week will be published on our website. We will be happy to make any amendments that can help to provide kids with even more nutrition.

    Quality Play Time

    Our workers will play with your kids as playing promotes child development. We will also allow kids to play with each other under a secure environment and strict supervision.

    Personal Hygiene

    Our workers will be there to keep your kids tidy all the time. When you leave your babies with us, we will be responsible for changing their diapers, washing their hands, and feet, etc.

    Developing Cognitive Skills

    We will be arranging small learning activities for kids so that they can learn a few things before getting into school. The activities will also enable them to think creatively and developing cognitive skills.

    Marketing Analysis of Childcare business

    In this start up business plan for early childcare centers we are providing daycare marketing plan template. You can take help from here if you don’t know how to write a business plan for childcare.

    5.1 Market Trends

    According to IBISWorld, more than 643k daycare centers are operating in the United States. The industry had seen a decline in 2020 due to the unemployment caused by the coronavirus. However, the daycare centers are expected to see high demand again as the economic and unemployment situation is expected to improve. Moreover, the number of kids below the age of 9 is anticipated to increase in the coming years.

    5.2 Marketing Segmentation

    Before starting a childcare business it is necessary to identify your target customers. This will help you draft your services according to their expectations and concerns.

    Childcare business plan

    The detailed marketing segmentation of We Care is as follows:

    5.2.1 Working Parents

    Families in which both the parents are working are expected to be our major target group. Such parents are always looking for a secure and loving environment for their kids.

    We will do everything to satisfy this group of our customers to turn them into our potential clients.

    5.2.2 Single Mothers

    It is very difficult to take care of a kid 24/7 single-handedly. Single mothers who couldn’t provide their kids’ attention and care the whole day are also expected to be our target customers.

    5.2.3 Single Fathers

    Like single mothers, single fathers are also expected to avail our services for the same reasons. We will attend their kids with utmost responsibility while they are busy at their workplace.

    Market Analysis       
    Potential CustomersGrowthYear 1Year 2Year 3Year 4Year 5CAGR
    Working Parents40%36,00040,00043,00046,00050,00010.00%
    Single Mothers26%25,00029,00034,00036,00039,00010.00%
    Single Fathers34%26,00028,00033,00037,00041,00011.00%

    5.3 Business Target

    Defining SMART goals enable you to direct your energy in the right things. In this sample business plan on how to open a child care center, we are listing some of the many business targets of We Care

    • To maintain an average rating above 4.7 throughout the year
    • To achieve a customer repeat rate of 45% by the end of the first year
    • To earn a net profit margin of $10k per month by the end of the first six months

    5.4 Product Pricing

    Our prices are slightly higher than those of our competitors. It’s because we want to ensure that the highest standards of quality service are maintained all the time.

    Marketing Strategy

    Many already-established child care centers are running throughout the US. Therefore, if you intend to start a childcare centre you must come up with unique features – that others are lacking.

    Alongside, you also need to have a perfect marketing plan for childcare business so that your target groups could know what you are offering.

    Through the marketing strategy stated in this sample daycare marketing plan you can have an idea about what features you can add. And what advertisement strategies you can follow.

    6.1 Competitive Analysis

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    Our biggest competitive edge is that we are providing a live surveillance system throughout our working hours. Parents can watch their children any time by clicking just one button on their mobile app.

    Secondly, we are very careful about kids’ health. We will always provide them with fresh and nutritious food items so that they can stay healthy. Moreover, we will play with them and ensure to maintain their personal hygiene as that’s a must for healthy development.

    Lastly, our staff is highly compassionate and polite. Every member from our side will treat your children as if they were their own.

    6.2 Sales Strategy

    • We’ll ensure a strong social media presence to reach our target customers
    • We’ll advertise our startup through local magazines and newspapers
    • We’ll offer a 30% discount on monthly receipt to our daily customers

    6.3 Sales Monthly

    Childcare business plan

    6.4 Sales Yearly

    Childcare business plan

    6.5 Sales Forecast

    Childcare business plan
    Sales Forecast   
    Unit SalesYear 1Year 2Year 3
    Healthy & Nutritious Food53,00056,18059,551
    Quality Play Time45,00047,70050,562
    Personal Hygiene44,00046,64049,438
    Developing Cognitive Skills20,00021,20022,472
    TOTAL UNIT SALES162,000171,720182,023
    Unit PricesYear 1Year 2Year 3
    Healthy & Nutritious Food$66.00$76.56$88.81
    Quality Play Time$45.00$52.20$60.55
    Personal Hygiene$34.00$39.44$45.75
    Developing Cognitive Skills$26.00$30.16$34.99
    Healthy & Nutritious Food$3,498,000.00 $4,301,140.80 $5,288,682.73
    Quality Play Time$2,025,000.00 $2,489,940.00 $3,061,630.22
    Personal Hygiene$1,496,000.00 $1,839,481.60 $2,261,826.58
    Developing Cognitive Skills$520,000.00 $639,392.00 $786,196.40
    TOTAL SALES$7,539,000.00 $9,269,954.40 $11,398,335.93
    Direct Unit CostsYear 1Year 2Year 3
    Healthy & Nutritious Food$60.00$62.00$63.00
    Quality Play Time$44.00$45.00$47.00
    Personal Hygiene$29.00$32.00$34.00
    Developing Cognitive Skills$24.00$25.00$26.00
    Direct Cost of Sales   
    Healthy & Nutritious Food$3,180,000.00 $3,483,160.00 $3,751,700.40
    Quality Play Time$1,980,000.00 $2,146,500.00 $2,376,414.00
    Personal Hygiene$1,276,000.00 $1,492,480.00 $1,680,905.60
    Developing Cognitive Skills$480,000.00 $530,000.00 $584,272.00
    Subtotal Direct Cost of Sales$6,916,000.00 $7,652,140.00 $8,393,292.00
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    Personnel Plan

    Daycare workers must be chosen with great care. You must make sure that the workers are passionate about their job and that they possess a polite and friendly personality for kids.

    If you are writing a business plan for a daycare center and you don’t know how many persons you will be needing, you can take help from here.

    7.1 Company Staff

    Sarah will hire the following people to work for We Care:

    • 2 Daycare Managers to manage daily programs
    • 2 Cooks to prepare food for kids
    • 3 Cleaners to maintain hygiene
    • 6 Daycare workers to attend kids
    • 1 IT expert to set up and maintain the company’s surveillance system and mobile app
    • 1 Freelance Social Media Manager to manage the company’s social sites
    • 1 Accountant to record finances
    • 1 Receptionist to attend parents
    • 1 Security Guard

    7.2 Average Salary of Employees

     Personnel Plan   
     Year 1Year 2Year 3
    Daycare Managers$35,000$38,500$42,350
    Daycare Workers$40,000$44,000$48,400
    IT Expert$10,000$11,000$12,100
    Freelance Social Media Manager$10,000$11,000$12,100
    Security Guard$11,000$12,100$13,310
    Total Salaries$167,000 $183,700 $202,070

    Financial Plan

    Before you create a daycare business plan you must have a clear idea about how much funds you can invest. Financial planning is necessary for the long-term running of the business.

    The cash flow projection and balance sheet help you to evaluate the financial status of your business at various levels. It can give you an estimate of where to direct your capital and how to recover the invested amount through earned profits.

    Financial planning requires expert analysis. If you think you lack the skills to prepare an accurate financial plan, then you must hire some professional to do the work for you.

    The sample financial plan of We Care is given here:

    8.1 Important Assumptions

     General Assumptions   
     Year 1Year 2Year 3
    Plan Month123
    Current Interest Rate8.30%8.38%8.41%
    Long-term Interest Rate8.19%8.33%8.51%
    Tax Rate24.80%25.91%27.40%

    8.2 Brake-even Analysis

    Childcare business plan
     Brake-Even Analysis 
    Monthly Units Break-even5365
    Monthly Revenue Break-even$137,000
    Average Per-Unit Revenue$246.00
    Average Per-Unit Variable Cost$0.63
    Estimated Monthly Fixed Cost$168,590

    8.3 Projected Profit and Loss

     Pro Forma Profit And Loss   
     Year 1Year 2Year 3
    Sales$7,539,000 $9,269,954 $11,398,336
    Direct Cost of Sales$6,916,000 $7,652,140 $8,393,292
    TOTAL COST OF SALES$6,916,000 $7,652,140 $8,393,292
    Gross Margin$623,000 $1,617,814 $3,005,044
    Gross Margin %8.26%17.45%26.36%
    Sales and Marketing and Other Expenses$128,000$134,000$140,000
    Leased Equipment$0$0$0
    Payroll Taxes$38,000$41,000$43,000
    Total Operating Expenses$343,300 $370,550 $398,370
    Profit Before Interest and Taxes$279,700$1,247,264$2,606,674
    Interest Expense$0$0$0
    Taxes Incurred$55,940$249,453$521,335
    Net Profit$223,760$997,812$2,085,339
    Net Profit/Sales2.97%10.76%18.30%

    8.3.1 Profit Monthly

    Childcare business plan

    8.3.2 Profit Yearly

    Childcare business plan

    8.3.3 Gross Margin Monthly

    Childcare business plan

    8.3.4 Gross Margin Yearly

    Childcare business plan

    8.4 Projected Cash Flow

    Childcare business plan
     Pro Forma Cash Flow   
    Cash ReceivedYear 1Year 2Year 3
    Cash from Operations   
    Cash Sales$49,000$52,920$55,900
    Cash from Receivables$11,600$12,528$13,530
    SUBTOTAL CASH FROM OPERATIONS$61,500 $67,035 $72,398
    Additional Cash Received   
    Sales Tax, VAT, HST/GST Received$0$0$0
    New Current Borrowing$0$0$0
    New Other Liabilities (interest-free)$0$0$0
    New Long-term Liabilities$0$0$0
    Sales of Other Current Assets$0$0$0
    Sales of Long-term Assets$0$0$0
    New Investment Received$0$0$0
    SUBTOTAL CASH RECEIVED$62,300 $68,500 $71,800
    ExpendituresYear 1Year 2Year 3
    Expenditures from Operations   
    Cash Spending$36,500$38,000$43,000
    Bill Payments$19,000$20,000$22,000
    SUBTOTAL SPENT ON OPERATIONS$52,000 $54,000 $61,000
    Additional Cash Spent   
    Sales Tax, VAT, HST/GST Paid Out$0$0$0
    Principal Repayment of Current Borrowing$0$0$0
    Other Liabilities Principal Repayment$0$0$0
    Long-term Liabilities Principal Repayment$0$0$0
    Purchase Other Current Assets$0$0$0
    Purchase Long-term Assets$0$0$0
    SUBTOTAL CASH SPENT$53,000 $57,240 $61,819
    Net Cash Flow$12,500$14,000$16,000
    Cash Balance$26,000$28,000$31,000

    8.5 Projected Balance Sheet

     Pro Forma Balance Sheet   
    AssetsYear 1Year 2Year 3
    Current Assets   
    Accounts Receivable$22,400$25,088$28,199
    Other Current Assets$1,000$1,000$1,000
    TOTAL CURRENT ASSETS$269,000 $301,280 $338,639
    Long-term Assets   
    Long-term Assets$10,000$10,000$10,000
    Accumulated Depreciation$16,500$18,480$20,790
    TOTAL LONG-TERM ASSETS$18,000 $20,160 $22,680
    TOTAL ASSETS$260,000 $291,200 $327,600
    Liabilities and CapitalYear 4Year 5Year 6
    Current Liabilities   
    Accounts Payable$15,700$17,584$19,764
    Current Borrowing$0$0$0
    Other Current Liabilities$0$0$0
    SUBTOTAL CURRENT LIABILITIES$13,200 $14,784 $16,617
    Long-term Liabilities$0$0$0
    TOTAL LIABILITIES$13,400 $15,008 $16,869
    Paid-in Capital$27,000$29,000$30,000
    Retained Earnings$63,400$69,106$76,017
    TOTAL CAPITAL$272,000 $296,480 $326,128
    TOTAL LIABILITIES AND CAPITAL$285,400 $291,200 $327,600
    Net Worth$263,000$286,670$315,337

    8.6 Business Ratios

     Ratio Analysis    
     Year 1Year 2Year 3INDUSTRY PROFILE
    Sales Growth7.06%7.82%8.67%3.00%
    Percent of Total Assets    
    Accounts Receivable9.13%10.12%11.21%9.80%
    Other Current Assets2.48%2.75%3.04%2.40%
    Total Current Assets152.00%152.00%153.00%158.00%
    Long-term Assets11.40%12.03%12.30%12.00%
    TOTAL ASSETS100.00%100.00%100.00%100.00%
    Current Liabilities4.66%4.70%4.74%4.34%
    Long-term Liabilities0.00%0.00%0.00%0.00%
    Total Liabilities7.08%7.14%7.20%7.38%
    NET WORTH100.30%101.10%102.03%110.00%
    Percent of Sales    
    Gross Margin97.50%100.13%102.94%99.00%
    Selling, General & Administrative Expenses93.10%95.61%98.29%97.80%
    Advertising Expenses1.81%1.86%1.91%1.40%
    Profit Before Interest and Taxes43.19%44.36%45.60%33.90%
    Main Ratios    
    Total Debt to Total Assets0.29%0.27%0.11%0.40%
    Pre-tax Return on Net Worth75.10%78.86%82.80%75.00%
    Pre-tax Return on Assets91.00%95.55%100.33%111.30%
    Additional RatiosYear 1Year 2Year 3 
    Net Profit Margin33.40%34.44%35.50%N.A.
    Return on Equity57.03%58.80%60.62%N.A.
    Activity Ratios    
    Accounts Receivable Turnover7.37.67.7N.A.
    Collection Days100100100N.A.
    Inventory Turnover32.734.33536.8N.A.
    Accounts Payable Turnover16.116.916.98N.A.
    Payment Days272727N.A.
    Total Asset Turnover2.42.72.9N.A.
    Debt Ratios    
    Debt to Net Worth-0.03-0.04-0.05N.A.
    Current Liab. to Liab.111N.A.
    Liquidity Ratios    
    Net Working Capital$217,600$229,786$242,654N.A.
    Interest Coverage000N.A.
    Additional Ratios    
    Assets to Sales0.860.880.93N.A.
    Current Debt/Total Assets1%1%0%N.A.
    Acid Test26.929.0631.1N.A.
    Sales/Net Worth2.12.22.4N.A.
    Dividend Payout000N.A.

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