Now that you have opened your daycare, enrolled some children, and all your teachers and aides have been properly trained to teach and care for them, what should you do next?
It’s time to create a monthly operating budget so that you know how much is expected of you financially for every expense item your daycare needs to successfully operate daily.
Today, you will learn:
Making a monthly operating budget is important so that you know what to expect for your business expenses before you accrue them. You can also make plans for additional income or find ways to cut expenses so that you will not go in the red at the end of the month.
Table of Contents
These calculations will be based on roundabout average monthly costs for each expense item. Figure that your one-time expenses have already been paid for since your daycare is already in operation.
For this example, we will say that you have enrolled about 50 children in your daycare (you have a full capacity of 80 children) and operate 254 days out of the year. You will be open Mondays through Fridays and closed on weekends and for select public and national holidays such as Veteran’s Day, Thanksgiving, Christmas, Martin Luther King Jr Day, and President’s Day.
What we have shown above for you is a sample operating budget. You may have all or some of these expenses that your daycare already pays.If we did include an expense in this sample operating budget in which your daycare pays, just add a category or subcategory to the template as you fill out your operating budget.You can copy and paste our sample operating budget into your own Word document or Google Docs file for you to fill in. You can create your own Microsoft Excel (Google Sheets) document if you prefer to keep expenses and income organized that way as well.
Now that you know your expenses will cost about $45,000 per month give or take (some extra unexpected costs could accrue or you could find ways to cut expenses), let’s calculate an average monthly income so your daycare business stays profitable.As a daycare business, you will solely be making money from the weekly child care costs that parents (or state programs) pay you for caring for the children.
According to Care.com, the average weekly daycare rate for one toddler child is $340.
Let’s say that you will charge only $300 per week for toddlers attending your daycare. For sake of calculation, let’s say you have 35 toddlers.
A 2018 article from the Center for American Progress Action Fund stated that infant care in an American child care center is about $1,230 per month or about $308 per week. With it now being 2021, the cost of inflation may have risen this amount to about $1,500 per month or $375 per week.
Since infant care costs more than toddler care because infants require more assistance with diapering and feeding than toddlers, let’s say that you will charge $360 per week for infant care (babies aged 12 months and under). For sake of calculation, let’s say that you have 15 infants.
Let’s say that you have already collected the registration fees for enrolling the 50 children.
If you charge a $60 registration fee per child, this means you have already collected $3,000 in income at the start of your business when enrolling all 50 children before your grand opening day.
When calculating your yearly income, you can include this $3,000 on that income template. As each child renews their term at your daycare yearly, you can charge another registration fee for additional income.
This income template is based on if you continue to have the 50 children enrolled in your facility without enrolling anymore for a few months. Of course, this would be additional income if you have another family interested in enrolling their child at your daycare. Since you have a full capacity of 80 children, this means that you can enroll up to 30 more children before you have to start a waiting list.
Your static income will be the child care tuition payments that you receive every month whether paid directly out of pocket from parents or state programs. You are always going to receive this income because each family has a contracted weekly amount that they must pay for their child to stay enrolled at your daycare center.
The irregular income includes late pick-up fees, late tuition payment fees, and monthly fundraiser amounts because they will all depend on the behavior of the parents.
Do the parents regularly pick up their children on time at the end of the day? If so, this means you will not have as many late pick-up fees.
Do the parents regularly pay their tuition fees on time? If so, you may not have many late tuition payment fees to charge to them.
Do parents regularly participate in fundraisers to further support your daycare? If so, then you may reach your monthly fundraiser goal.
1.How can I cut my monthly expenses?
You can cut your monthly expenses by:
2. How can I increase my monthly income?
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
To learn more on how to start your own daycare checkout my startup course and documents here.
Meet Shawn Chun: Entrepreneur and Childcare Business Fan.
I’m a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online daycare business resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a childcare business owner, I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Daycare Business Boss: I want to help childcare business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.
