How to Create a Daycare Center Business Plan

Childcare owners get into the business through many pathways. Whether you are a business-savvy educator, a new parent looking to fill a need in your community, or a seasoned entrepreneur looking to expand your horizons – the first step to launching your business is to plan it.

Let’s get real for a moment here – writing a childcare business plan will take quite a bit of time, a lot of thinking, and even more energy to follow through. But, get this step right and you will set the tone and direction for a successful business (ad)venture! 

When developing your daycare business plan, it is ideal to think in the timeframe of 3-5 years. This level of long-term thinking will serve as a map on your way to your goal of establishing a daycare business.

Without further ado, let’s help you get started. Here’s an overview of 9 elements that you’ll need to build your childcare business plan:

  1. Executive Summary 
  2. Company Overview 
  3. Service Description 
  4. Market Analysis 
  5. Marketing Plan 
  6. Operations Plan
  7. Financial Analysis 
  8. Milestones
  9. Supporting Documents 

Executive summary 

This is your introduction and “elevator pitch.” Keep it short, sweet and to the point. This section of your business plan should function to get potential investors and partners excited about what your center has to offer in the following sections. 

This is an opportunity for you to include: 

  1. A brief but “wow!” description of your childcare business 
  2. Your mission statement

This is the place to express what’s unique about your childcare business – is it the location, approach, learning philosophy, team, diversity, or something brand new? Don’t be afraid to make this your own!

Company Overview 

This section covers the structure of your business. Are you planning on being a thought leader within a specific niche of childcare? A special Waldorf school? A school that prioritized multiculturalism? A center that is Montessori first with Reggio influences to prioritize independent learners? Or do you want to build an empire with an eye on franchising your business model? 

Some key elements to include here are: 

  1. Your business structure
  2. History of the business
  3. Core services offered
  4. Target age group and capacity
  5. Success milestones (accreditation, state-focused quality rating)  
  6. Mid-term business goals & requirements

Service Description 

This section dives into the nitty-gritty of what services you will provide to your community and how your business will go about doing so.

Things to think about for this section are: 

  • Baseline program offerings
    • Full-time or part-time care 
    • After school care for school aged children 
  • Center capacity 
  • Age group information 
  • Operation hours 
  • Special offerings  
    • Extra-curricular programs (yoga, music instruction, languages, gardening)
    • Food program 
  • Room layout & design 
  • Furnishing & equipment needs 
  • Facility management & development 
  • Expansion plans 
    • Do you have a big vision that needs to be broken down into different phases?
    • If yes, what do these phases look like? 
  • Will consultants be hired to support each phase of growth? Is this even necessary?
  • Will there be a board involved in the decision making process (NFPs)

This is where your vision meets reality! Think of this piece as your ingredients list to build a successful business. Write everything down and ask people in your inner-circle for feedback.

Market Analysis 

Market analysis is a business way of saying, “Get to know your surroundings.”

Here’s a list of questions to get you on the right track: 

  • Who are your target families/customers? 
  • What are the geographic boundaries that your business will serve? 
  • What is the population of young children & families in your area? (Are there many new young families moving in?
  • What is the demand for childcare? 
  • What is the supply for childcare? 
  • How many childcare providers are there in the area? 
  • Where are other providers located? 
  • How long are waitlists? 
  • What kind of programming / services are offered by existing childcare providers?
  • What are childcare vacancies like? 
  • How much does childcare cost in the area? 
  • What’s the dominant age group in the area? 
  • What are the unique licensing & regulation requirements for childcare providers in your area?

Answering as many of these questions as you can will give you a clear picture of what you’re getting yourself into and how to stand out in a competitive environment. 

Okay, let’s get practical for a minute – how can you answer these questions? Drive around. Join parent communities online. Facebook groups are great resources to understand what parents around you are talking about, stressing about, enjoying, and prioritizing in their childcare search.

In short, really get to know your community. I cannot stress the importance of this step. Nothing beats listening to real people with real problems when building a business case. This seems simple, but it does take a lot of work and persistence to get results. 

To distill this process into 5 broad business categories: 

  1. Understand your target customers
  2. Identify the need 
  3. Research your competitors 
  4. Define your differentiators 
  5. Position yourself to grow your business

A note on licensing and regulation: Before you take any steps towards setting up your child care business, take the time to understand the center licensing guidelines and regulations that will apply to you from your local government. Make sure that you will be able to obtain the necessary licensing for your facility.

Marketing Plan 

My favourite part. Now that you have an idea of your business identity, you have to have a plan to promote it and make a splash!

  • What differentiates you from existing providers in the area? 
  • How can you really showcase what’s special? 
  • What are your initial marketing goals? Perhaps building out a waitlist before launching? 
  • How will you connect with families you want to work with?

Building out your marketing plan can be as simple or as elaborate as you like. Get creative with it and really show your personality. Here’s an in-depth post we did about marketing your childcare center.

Operations Plan

Now an idea is just a thought without a team to get it done. Your operations plan is the backbone of your business. In this section, key things to include are: 

  • Who is on your management team?
  • Who are your core staff members? 
  • What does the organizational chart look like? 
  • Training opportunities & needs for staff? 
  • If your center is a NFP, who are the board members? 
  • If your center is a for profit center, will you have a parent committee that drives operations at your center?

Think of this section as building out your A-team. Why have you chosen certain people for their roles? What do they bring to the table that’s unique?

This also brings transparency to how your team is structured and career development opportunities. Remember to keep growth in the back of your mind for each section of your daycare business plan. 

Financial Analysis 

Now that you’ve done most of the heavy lifting, you can use all the information that you have previously gathered to come up with a financial projection for the first few years of your operations. 

Remember, starting any business is difficult and it usually takes 3-5 years to break even and start becoming profitable. Here are the key questions to answer in this section: 

  • What is your startup budget? 
  • What is your annual operating budget (income & expenses) 
  • Build these out based on a 3 year projection:
    • Income statement
    • Balance sheet 
    • Revenue model 
  • Your current revenue & expense statement 

Need a template to get started? Check out How To Manage Your Child Care Center Budget to download the template.

Milestones 

This last section is one I like to call, the “keeping us honest” section. This is where you and your team will list down milestones that you plan on accomplishing on your journey. Don’t leave this section blank as it’ll be your measuring stick as you launch your business. 

Some example milestones are: 

  • Reaching 80% of capacity 
  • Getting NAEYC accredited 
  • Achieving the most stars in your state QRIS 
  • Collecting 5 star reviews from parents for your Google page 
  • Reaching 100 followers on your Facebook community 

Get together with your team and pick the measures that make the most sense for your childcare business.

Supporting Documents 

Here’s a list of documentation that might come in handy when pulling all of this together. 

  • Revenue & expenses sheet 
  • Financial projections 
  • Resumes of everyone on your team
  • Contracts with external consultants 
  • Letters of endorsement 
  • Legal documents (childcare license, property documents, articles of incorporation) 
  • Any other relevant information 

Child Care & COVID-19 

While COVID-19 has thrown a wrench in many people’s plans, that does not mean that you should give up on your dreams of becoming a childcare business owner. With all the change and uncertainty of the current climate comes the space for opportunity!

Centers now have to operate under different health and safety requirements, most notably reduced ratios. Here’s a roundup of resources that we’ve compiled as a team to support your business during the pandemic and beyond.

To quote Dwight Eisenhower, “Planning is everything, the plan is nothing.” The process of defining your vision will make a difference when facing obstacles on your journey. Things won’t go perfectly according to plan, but because you’ve mapped out your way, you will find a way to work over, under, or around those obstacles to get there. Good luck! 


Did you know that HiMama makes it simple to get organized, stay in touch with parents, and keep on top of your operations? Contact us today to find out how we can make your daycare business plan into a reality.Do you have any pointers to add to this? We’d love to hear them. Let us know in the comments below. Don’t forget to follow us on social media @HiMamaSocial.

Carmen Choi

Carmen is the Marketing Coordinator and Preschool Podcast Manager on the HiMama team. She's been working with childcare business owners and consultants for 3 years. She is passionate making connections that empower the ECE Community through knowledge-sharing to support better outcomes for children, their families, and society!

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