When starting your daycare, you must consider the expenses you will have to put out to operate the business. Between the labor, supplies, and building maintenance costs, you must consider everything you need to properly operate the facility.
Completing your daycare expense list will involve:
Calculating your income.
Figuring total expenses.
Learning how to complete a budget template.
The first step to completing a daycare expense list is recognizing what entities are considered your income and your expenses.
Calculating Your Income
Income can be divided into 3 categories: daycare tuition, administrative fees, and grants and/or donations.
The tuition is the monetary amount that parents pay to enroll their children at your daycare facility.
According to ValuePenguin, the average annual tuition for an infant in daycare in the United States is $9,991.
American Progress says that average tuition for infant care at a childcare center costs about $1,230 per month. Toddler care at a daycare center costs about $910 per month.
Tuition income for your child care center will depend on the ages of all the children attending your facility, how many children are enrolled, and your specific tuition rates.
Say that you charge $850 per month for toddler care and $970 for infant care, which is a little lower than the average for both figures.
If a toddler attends daycare Monday through Friday for an entire month, that’s 5 days per week and about 20 days in daycare per month with 4 weeks in a month. This means you are charging about $42.50 per day for child care services.
If an infant attends daycare full-time as well for an average of 20 days per month, then that means you are charging about $48.50 per day for child care services.
You can project your yearly tuition income by doing some math based on how many infants and toddlers you will have enrolled at the start of the grand opening of your daycare.
For example, let’s say that you will have 16 infants enrolled and 20 toddlers enrolled to start on grand opening day.
One toddler attending your daycare will help you bring in $10,200 annually in income. One infant attending your daycare will net you $11,640 per year. Let’s do the math!
16 infants x $11,640 annual income per infant= $186,240 per year for the infant classes
20 toddlers x $10,220 annual income per toddler= $204,000 per year for the toddler classes
$186,240 + $204,000
Total annual tuition income= $390,240
That’s almost $400,000 in tuition income. We are not done yet! Thankfully, you do not have just tuition to rely on for income.
Administrative fees are charges that you collect for different instances throughout the application process and during the life of enrollment of an infant or toddler.
When enrolling a child, you may charge a registration fee for completing the enrollment paperwork once a child has been approved to come into your daycare.
If parents do not pick up their children on time, you can charge a late pickup fee. Usually, daycare centers will charge $1 per minute that a parent is late in picking up his/her child which must be paid upon arrival to the facility.
If a parent does not pay their tuition bill on time, you may charge a late payment of $25 to $50 to encourage parents to pay on time in the future.
You can offer autopay for tuition on your website to help parents to minimize this inconvenience for them. However, it is an inconvenience for you if you constantly receive late payments from the same parents.
If you do a class trip, you will have to pay transportation costs to bus all the children to the destination. This would be more for toddlers that are able-bodied and able to walk on their own and do not need to be in strollers.
Don’t forget the car seats that you will need for each toddler attending the trip because they must be installed into the bus or van transporting everyone to the destination.
Your administrative fees may look something like this if you have 36 enrolled children:
Registration fees: $640 (36 families pay $40 registration fee)
Late pickup: $4,000 (say you make $10 or more per day on late pickup fees)
Late payment:$2,000 (say about 5 or more parents pay late per month; late fee is $30 per instance)
Transportation: $3,000 (say you have 3 school trips; 100 per car seat for 20 toddler is $2,000 alone; $333 for bus rental for the day per school trip is another $1,000 cost)
$640 + $4,000 + $2,000 + $3,000
Total administrative fees= $9,640
Grants and/or Donations
Grants would be monetary amounts paid out to you via an organization whether the Small Business Administration or a local or national organization that gives out grants to small business daycares in need of funding.
Donations could come from anywhere whether via crowdfunding sites, from parents of enrolled children, or from other community members and organizations that wish to support your daycare.
Say that you receive a $3,000 grant from the Small Business Administration, a $2,000 grant from a local organization that supports small business daycares, and a $5,000 donation from a wealthy parent that has their child enrolled at your facility.
The total grants and donations that you have received as income in the first year of your business would be $10,000. That’s a great bump up to supporting your daycare facility!
Learn more about donations HERE.
Figuring Total Expenses
Consider this list of expenses that your daycare will have to spend to operate:
- Books for the classroom
- Art supplies
- Professional services (accounting, lawyer, web designer)
- Maintenance (electric, plumbing, etcetera)
- Telephone services
- Internet services
- Television equipment
- The rent or mortgage on your facility building
- And more!
Let’s not forget the labor cost it takes to pay your facility’s director, teachers, and aides. Since you are a small daycare, you will have fewer labor costs to worry about. Let’s say your labor costs are as follows:
Director: $40,000 per year
Head Teacher (in a toddler classroom): $25,000
FT Infant Teacher: $23,040
FT Infant Teacher: $23,040
PT Infant Room Aide: $12,000
PT Infant Room Aide: $12,000
FT Toddler Teacher: $23,040
FT Toddler Teacher: $23,040
Substitute Aide: $10,000
Total Annual Labor Costs: $191,160
You will have 2 infant teachers and split up the total of 16 infants into 2 groups of 8. United States daycare regulations say that you cannot have any more than 12 infants in one classroom and 1 teacher or aide must watch over 4 infants each. An accompanying Aide will be in each of those classrooms.
Ratios for toddler-based classrooms will depend on your state. You can access those mandates by visiting World Population Review. For children ages 2-3, you cannot exceed anywhere between 8 to 13 children per 1 teacher or aide in the classroom. Say that you can exceed no more than 10 children per 1 teacher where you are operating your daycare. You can employ just 2 Full-Time Toddler Teachers to stay within the ratio.
You can train your Teachers and Aides to clean and sanitize the classrooms themselves before closing time to reduce labor for Maintenance Workers. If you partner with the public school in your area, you can have lunches made the morning of at a local public school and delivered to your daycare facility before lunchtime. This is great if your daycare provides free lunch to children. This will cut labor costs on the need for a cooking crew.
Sample Budget Template
Based on the examples that we have shown you and the information about possible expenses, let’s show you a sample budget template to inspire you to make your own!
With an income of $409,880 and expenses of $240,860, you will profit by $169,020. Don’t forget to pay yourself as the owner each month after figuring out the profit after all the expenses have been calculated and paid for accordingly. Put a large portion of the profit back into the business by purchasing new furniture if any has broken, increasing employees’ salaries each year, and planning more toddler field trips than the prior year.
1. Where can I get a free fill-in budget template online?
Visit HiMama to get your free downloaded daycare budget template, so you can easily fill in your income and expense figures to discover how high your yearly expenses are currently.
2. How can I get more grants and donations to benefit my daycare facility?
You can get more donations for your daycare facility by:
- Setting up a crowdfunding account on sites such as GoFundMe.
- Hold a fundraiser to benefit your daycare such as a bake sale and lemonade stand or partner with a business (restaurant, toy store, etcetera) for a fundraiser night to get a percent of the proceeds donated to your daycare.
You can get more grants for your daycare by:
- Applying for them on SBA.gov.
- Typing “daycare business grants” into your favorite search engine to see what you can find.
- Seeing if any local or national organizations offer daycare business grants to small business owners.
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.