Over the past 20+ years, we have helped over 5,000 entrepreneurs and business owners create business plans to start and grow their child care centers. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a child care business plan template step-by-step so you can create your plan today.
What is a Childcare Business Plan?
A business plan provides a snapshot of your childcare business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan as a Childcare Provider
If you’re looking to start a childcare business or grow your existing one you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your child care in order to improve your chances of success. Your business plan is a living document that should be updated annually as your business grows and changes.
Source of Funding for Child Care Businesses
With regards to funding, the main sources of funding for a child care business are bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.
The second most common form of funding for a child care is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan.
How To Write a Business Plan for a Childcare Center
A comprehensive business plan for a child care center should include 10 key elements as follows:
- Executive Summary
- Company Overview
- Industry Analysis
- Customer Analysis
- Competitive Analysis
- Marketing Plan
- Operations Plan
- Management Team
- Financial Plan
- Appendix
Executive Summary
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of child care facility you are operating and the status; for example, are you a startup, do you have a child care that you would like to grow, or are you operating a chain of child care businesses.
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the childcare industry. Discuss the type of child care you are operating. Provide key details regarding your direct competition. Give an overview of your target audience. Provide a snapshot of your marketing strategy. Identify the key members of your team. And offer an overview of your financial plan.
Company Analysis
In your company analysis, you will describe your business concept for a child care center that you are currently operating or plan to open.
For example, you might operate one of the following types:
- Home-Based Child Care: this type of childcare business operates out of your home and typically has one or two caregivers on staff.
- Child Care Center: a childcare center operates out of a commercial building. It typically has multiple staff and caregivers and can serve many, many children.
- Early Childhood Education Center: a childcare business that primarily serves preschoolers
In addition to a business description, the Company Analysis section of your business plan needs to provide background on the business.
Include answers to question such as:
- When and why did you start the business?
- What is your mission statement?
- What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new program offerings, etc.
- Your legal structure. Are you incorporated as an S-Corp? A Limited Liability Company? A sole proprietor? Explain your business structure here.
Industry Analysis
In your industry analysis, you need to provide an overview of the child care center.
While this may seem unnecessary, it serves multiple purposes.
First, researching the child care industry educates you. It helps you understand the local market in which you are operating.
Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards child care that includes transportation, it would be helpful to ensure your plan calls for such a service.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section:
- How big is the child care business (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the target market?
- What trends are affecting the child care industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your child care. You can extrapolate such as figure by assessing the size of the market in the entire country and then applying that figure to your local population.
Customer Analysis
The customer analysis section must detail the target customers you serve and/or expect to serve.
The following are examples of customer segments: working parents, young families, baby boomers caring for grandchildren, etc.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most child care businesses primarily serve customers living in their same city or town, such demographic information is easy to find on government websites.
Psychographic profiles explain the wants and needs of your potential customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
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Competitive Analysis
Your competitive analysis should identify the direct and indirect competitors your business faces and then focus on the latter.
Direct competitors are other child care centers.
Indirect competitors are other childcare options that customers have that aren’t direct competitors. This includes keeping children at home and/or after school programs among others.
With regards to direct competition, you want to detail the other child care businesses with which you compete. Most likely, your direct competitors will be child care centers located within the same residential neighborhood or very close to your local area.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- What child care services do they offer?
- What times are they open?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective.
The final part of your competitive analysis section is to document your unique value proposition. For example:
- Will you provide superior childcare services?
- Will you provide childcare services that your competitors don’t offer?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Marketing Plan
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a child care center, your marketing plan should include the following:
Product: in the product section you should reiterate the type of child care that you documented in your Company Analysis. Then, detail the specific services you will be offering. For example, will you over technology or exercise classes to the children?
Price: Document the competitive pricing strategies you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the menu items you offer and their prices.
Place: Place refers to the location of your child care. Document your location and mention how the location will impact your success. For example, is your child care located next to a heavily populated office building, or gym, etc. Discuss how your location might provide a steady stream of customers.
Promotions: the final part of your child care marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some marketing efforts you might consider:
- Flyers
- Social media marketing
- Reaching out to local bloggers (particularly “mommy” bloggers) and websites
- Local radio advertising
- Banner ads at local venues
- Digital marketing methods
Operations Plan
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your child care such as discussions with prospective new customers, procuring supplies, cleaning and sanitizing the facility, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 100th child, or when you hope to reach $X in sales. It could also be when you expect to hire your 4th employee or launch a new location.
Management Team
To demonstrate your child care’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally you and/or your team members have direct experience in the child care industry. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in childcare businesses and/or successfully running retail and small businesses.
Financial Plan
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
Income Statement: an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your ongoing expenses to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you serve 10 children per day or 50? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets: While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your childcare center, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement: Your cash flow forecast will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a company approached you with a massive $100,000 childcare contract, that would cost you $50,000 to fulfill. Well, in most cases, you would have to pay that $50,000 now for employee salaries, etc. But let’s say the company didn’t pay you for 180 days. During that 180-day period, you could run out of money.
In developing your financial projections be sure to include several of the key start-up expenses needed to open a childcare center:
- Center build-out including design fees, construction, etc.
- Cost of fixtures like tables, chairs, couches, etc.
- Cost of equipment used like computers and televisions
- Staffing costs for support staff members
- Business insurance
- Taxes and permits
- Legal expenses
Appendix
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your childcare center design blueprint or location lease.
Child Care Business Plan Summary
Putting together a business plan for your childcare facility will improve your company’s chances of success. The process of developing your plan will help you better understand your target market, your competition, and your customers. You will also gain a marketing plan to better attract families, a business operations plan to focus your efforts, and financial projections that give you goals to strive for and keep your company focused.
Free Business Plan Template for Childcare Providers
You can download our child care business plan PDF to help you get started on your own business plan.
Growthink’s Ultimate Child Care Business Plan Template allows you to quickly and easily complete your business plan. This template has numerous features not available in the free template including its financial projections template which automatically calculates your complete five-year financial projections including income statements, balance sheets, and cash flow statements.
Additional Resources For Starting a Childcare Center
- Opening & Running a Child Care Center
- Marketing Your Child Care Program
- Childcare Licensing and Regulations
Finish Your Child Care Business Plan in 1 Day!
Don’t you wish there was a faster, easier way to finish your business plan?
With Growthink’s Ultimate Child Care Business Plan Template you can finish your plan in just 8 hours or less!
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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.
See how our professional business plan writers can create your business plan for you.
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