Love it or loathe it, one of the most important parts of running a child care center is maintaining a balanced budget. No matter how great of a service you provide, if you do not bring in more money than you spend, then your business will not be able to survive.
Thorough planning and keeping on top of your numbers will help you understand exactly where you are spending your money and find ways to improve efficiency. The key is having a system that works for you and presents information in a way that you can easily understand.
In this post, we’ll go over budgeting basics to help you understand the many different factors that go into preparing a child care center budget.
Then, it’s time to put your learnings into action by getting started with our free excel child care budget template.
Ready to crunch the numbers? Grab your trusty calculator and read on!
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.
Thorough budget planning will help make it easier to make important decisions, including:
- Which items are essential to run your business and which are nice-to-haves?
- How many children will you need to enroll to sustain your business?
- How much will you need to charge in order to cover all of your expenses?
Whether you’re an accounting wiz or your eyes glaze over when looking at numbers, don’t worry — budgeting can be done by anyone. As long as you carefully think things through and list everything out line-by-line, you’ll be able to create a budget that works for you.
If you haven’t opened your center yet, see our post on the pros & cons of opening a preschool to help make sure it’s the right decision for you.
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As a child care provider, income, for the most part, comes in from the parents of children enrolled in your program. Determining how many children you need to be enrolled and what to charge is possibly the most important calculation you’ll need to make as a business owner.
Calculating your enrollment fees is always a delicate balance of setting a rate that parents can actually afford, while at the same time funding all that goes into providing your programming.
There are many factors that you will need to consider when calculating your rates:
- Your operating budget.
- The capacity of your center’s location.
- What competitors are charging.
- The age of the child (teacher/child ratio).
- Whether you will provide discounts (e.g. for siblings or employees).
- Your absence policy for charging or not charging on sick or vacation days.
- How many weeks you will be open throughout the year.
If you’re feeling a bit stuck, try working backward. Add up all of the expenses your center will have, and then calculate how many children and the cost per child you will need to cover all of your costs.
In addition to the base enrollment costs, there are additional services you can charge for. Just be careful not to go overboard, as no one enjoys having to pay additional costs.
Some commonly-found administrative fees for child care centers are:
- Late payment
- Late pickup
In general, keep the regular, essential services included in your enrollment fees, and save one-off or non-essential services for administrative fees.
Grants can be a big help for child care centers, allowing you to reduce what you will need to charge in enrollment — a win for both center owners and parents!
Check with your local, state/provincial or federal governments and advocacy organizations to see what options are available and how to apply.
Communities understand the importance of providing quality child care and daycare, and can often be very supportive in helping to provide this important service. By providing opportunities for others to contribute towards your cause, you may be able to further offset your enrollment fees.
For example, try throwing a fun community event for the kiddos in your area. This not only provides people with an opportunity to contribute towards your business (e.g. admission fee, donation box, raffle, bake sale) but it will also help get the word out about your center.
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.
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:
- Head Teacher
- Assistant Teacher
- Teacher’s Aides
- Substitute Teachers
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.
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:
- Assessment and/or curriculum
- Fees (e.g. licensing)
- Equipment maintenance & repairs
- Office supplies
- Professional services (e.g. lawyer or accounting)
- Rent or mortgage
- Supplies (cleaning, kitchen and teaching)
- Telephone and Internet
Using the Budget Template
HiMama’s budget template was designed to help you list and analyze your income and expenses. In the Excel file, you will find three sections: Summary, Income and Expenses.
We have included formulas throughout the template to help make calculations easier, allowing you to play with the numbers to determine a budget that works for your business.
This first slide contains instructions on how to use the template, as well as a high-level snapshot of your income, expenses, and the surplus/deficit that your center will have based on the numbers that you have provided.
The Income sheet is where you’ll list all of the ways that you collect money. We have included the most common income sources and approximate numbers, but you can edit the values so that they are relevant for your center.
This section is where you’ll list all of the staff salaries and operating expenses required to run your center. Add additional cells where needed, but when doing so be sure to update the formulas in the Total cells so they include the new data you’ll be adding.
Download the Free Template
Ready to start planning your budget and take control of your center’s finances? Click here to download the free child care budget template!