How to Start a Daycare Business Plan 

Build an Expert-Level Business Plan for Daycare

The childcare industry is full of passionate, hard-working individuals. Entrepreneurs just like you are starting a daycare from the ground up. In this guide, we'll give you guidance and provide templates to build a solid daycare business plan.

Essential Planning Steps Before Starting Your Daycare Business

1) Conduct Market Research

When it comes to starting your childcare center, relying on assumptions about your customers and competitors leads to wasted time, money, and effort. In contrast, businesses that conduct regular market research improve customer retention and are 76% more likely to see an increase in revenue. 

Market research is a data collection process that evaluates both consumer behavior, competitor habits, and industry trends to determine the viability of your center and build a foundation for future business operations. 

Prepare for success upfront by conducting thorough market research to understand your competition, improve communication with your target audience, and identify new market opportunities. This research should result in actual data that you can use to drive your business and marketing strategies as you launch your center. 

There are a variety of tools available to help you conduct market research - all from the comfort of your own office. Gone are the days of hiring team members with clipboards to approach consumers face-to-face. Survey Monkey, Attest, and Sprinklr all offer digital market research tools to help guide you through the process of understanding your audience, your competitors, and your industry. 

Target Market Terms

This should include everyone you wish to reach. 

Example: Your entire local community. 

SAM: Your Segmented Addressable Market or Served Available Market 

This is a portion of the TAM you will specifically target because they align with your offerings. 

Example: Families with young children. 

SOM: Your Share of the Market 

This is the group of your SAM that you will realistically reach—particularly in the first few years of your center’s opening, as you may expand and grow your service over time. 

Example: Families with young children who make at least $65,000 each year in household income. 

For childcare organizations with multiple brands, schools, or programs - increasing revenue and keeping families happy is vital for growth. Your Millennial parents need a uniform, high-quality experience, regardless of location.

Standardizing business processes has a significant impact on time savings, costs, and most notably quality. In fact, standardization improves quality by 61.9%, on average. Create consistent enrollment processes across all your franchise locations to ensure every family has a great experience and a positive association with your brand – leading to higher conversion success and profitability.  

To achieve consistency, your franchisees’ marketing approach and advertising material must follow all your corporate brand guidelines. Your organization should have a lead management system that supports your childcare franchise staff as they guide families through the decision-making journey while also ensuring each location is delivering a consistent parent experience. 

When you understand your customer’s motivations, you can uniquely address their concerns and questions in your marketing materials - leading to increased tours, enrollments, and revenue.  

1. Start by listing out the various kinds of programs and classes you’d like to offer at your center. 

2. Then, determine who the primary decision-maker is and who the primary influencers might be in each scenario.  

3. Primary decision-maker: typically the individual(s) taking financial responsibility and remitting payment at your center.  

4. Primary influencers: are also crucial in the purchasing process as they often have the ability to sway decision-makers. 

For example, imagine you’re promoting availability for Summer camp programs at your center. In this instance, the primary decision-maker might be the parent(s) or guardian(s) whereas the primary influencer would likely be the child who’s deciding what kind of activities they want to do this Summer. 

Audience Overview

List the audiences, personas, or segments that you want your center’s marketing and messaging efforts to reach. 

Select one audience from above and describe it to the best of your knowledge. Go beyond the traditional persona to consider motivations & behavior. 

Identify the key stages in your audience’s enrollment journey from beginning to end, knowing there may be multi-dimensional steps within a stage. Complete the table for each journey at the individual stages from the specific audience’s point of view. 

Decision Journey Map Terms & Definitions 

• Stage: This refers to each stage of the enrollment journey - awareness, consideration, action, and advocacy. 

• Awareness: This is when a family is first learning of your center and your brand. They are researching multiple daycare centers and eventually send an inquiry to tour your facility or learn more.  

• Consideration: During this stage, a family is touring your center and may be deciding between you and 1-2 other providers. Tip: Proactively equip your staff with key talking points so they can highlight your unique center features. 

• Action: This is when a parent decides to register their child for care, pay fees, and is either placed on your waitlist or enrolls. 

• Advocacy: After a successful, happy experience, this parent or guardian has become an advocate for your business. They’re telling friends and family about your center. This is vital for your word-of-mouth marketing strategy. 

• Emotion: Identify what the persona is feeling at each stage of the customer’s journey. They may be anxious, curious, excited, or satisfied at various points. Put yourself in their shoes. 

• Key Actions: What actions would a consumer take at each stage? For example, during the awareness stage, they may see your ad on Facebook, look you up on Google, or visit your website. In the consideration stage, they may call your center to get more information, look at your services online, or read reviews. 

• Questions: What questions is the consumer asking in each stage? These are the questions you need to be answering for them in your advertising and marketing efforts. 

Write a Day Care Executive Summary (Daycare Business Plan Outline)

Although this section is the first thing people will read, it’s advised that you write it last, once you know the details of your business inside and out. At this stage, you will be able to articulate your business more clearly and summarize all the information in a succinct, concise manner. 

Ideally, your executive summary will be able to act as a stand-alone document that covers the key highlights of your detailed business plan. In fact, it’s common for investors or loan providers to ask for just the executive summary when they start evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation, and more in-depth daycare business plan financials. 

As your executive summary is such a critical component of your business plan, you’ll want to make sure that it’s as clear and concise as possible. Cover only the essential components of your daycare, ensuring your executive summary is one to two pages maximum. This section is intended to be a quick read that hooks your potential investors’ interest and excites them to learn more. 

The executive summary is a tell-all first paragraph that details... 

1. The city and state of your center (you can decide on the exact location later) 
2. A potential open date 
3. A projected enrollment count (number of full-time enrollments) 
4. Programs you plan to offer 
5. Ages you hope to serve 
6. A quick financial summary (based on grants, funding, and potential revenue from projected enrollments)

This may seem like a lot of information upfront, but it’s simply a high-level overview of your plan.  

Opportunity Analysis: An Example 

Now, assess how they are solving their problems currently and where there’s room for improvement. If there's only one childcare center in your community and it has no open seats, you could be the solution. Or maybe there are lots of existing care providers in your city but they’re expensive or have rigid pickup and drop-off times that working parents have trouble meeting. Or perhaps there aren’t any existing childcare businesses within a reasonable driving distance of where you’d like to place yours. 

Defining the problem you are solving for your customers is by far the most critical element of your business plan and is crucial for your daycare business’ success. If you can’t pinpoint a problem that your potential customers have, then you might not have a viable business concept. 

To ensure that you are solving a real problem, try conducting your own survey with potential customers to get a better understanding of their needs and validate that they have the problem you assume they have. Then, take the next step and pitch your potential solution to their problem.

Do they agree that it’s a good fit or does it seem to fall flat? See how to come up with a strategic plan for your business.

Execution Plan: Marketing and Sales 

It’s critical that you take the time to look forward and schedule the next critical steps for your business. Investors will want to see that you understand what needs to happen to make your plans a reality and that you are working on a realistic schedule.

Then, determine how you will measure the success of each milestone by listing out the key performance indicators and metrics needed to see progress. These will be the numbers you monitor on a regular basis to evaluate the trajectory of your business. For example, you may look at how many families tour your center each week, how many children you enroll each month, or the amount of revenue you bring in per quarter. 

Company and Management Summary

The structure of your staff and teams sets your daycare up for success. In a new daycare center, there’s typically an owner (or franchisee), a center director, staff members, an enrollment or marketing team, accounting/administration, teachers, assistants, cooks, bus drivers, and janitorial staff. For example, the average small daycare business plan includes 8-10 fully licensed and/or certified early education teachers.

Financial Forecasts 

Consider Various Funding Sources

Know Which Loans Are Available to Daycare Business Owners

While grants are a wonderful option for freshly opened daycare businesses, loans are occasionally easier to come by. They’re offered widely and often have fewer requirements to qualify. Check out a few loan examples for your daycare center.  

1. SBA Loans, otherwise known as Small Business Administration loans, have exceptional rates, low interest, and flexible repayment options. 
2. SBA 7(a) Loans are beneficial for covering pricier equipment funds and real estate. Loans of up to $5 million are available to daycares. 
3. SBA 504 Loans – these are wonderful for business expansions and involve a loan for 50% of the project cost. 

Get Familiar with Daycare Licensing Requirements

All states have different daycare licensing requirements. Generally, you'll follow the steps below.

1) Take a Course

Attend and complete a pre-application course (you’ll receive a certificate at the end – remember to save it). 

2) Submit Your Application

Submit your online licensing application. It'll ask for details about your business that were outlined in the executive summary.

3) Pay Fees

Pay your application fees. The fee depends on your center's capacity or the number of children you plan to enroll.

4) Complete Inspections

An inspection of your business property must be conducted.

5) Submit Your Service Payment

Register and pay for the inspection.

6) Conduct Background Checks

How to Gain Enrollment at Your Daycare

From a business owner's perspective, the next step after successfully starting your daycare is to grow your center and gain enrollments.  

Begin by building a strong company culture, actively marketing your daycare center, and finding the right childcare technology to optimize your enrollment process and save time. 

See how to elevate your business plan for daycare with better waitlist management.

Create a Culture Where Staff Want to Work

A daycare center that stands out from the rest has happy staff members that want to work hard. Create a diverse employee culture that feels comfortable openly talking about situations. Provide support, patience, and room for growth. See more tips for creating a healthy and positive culture for your daycare staff. 

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