Having an accurate and thorough budget is an extremely useful document to help you make financial decisions for your startup daycare facility. Creating this budget can be difficult for new business owners because it involves predicting and planning for expenses that haven’t happened yet.
The main sections of your budget for your daycare are:
- Childcare expenses
- Marketing Expenses
- Furniture, equipment, and improvements
- Administrative expenses
We will go over each of these sections, what they are made up of, and what factors can influence your budget amount.
Depending on this size, type, and quality of your daycare center, you are going to have different budget numbers. For our examples, we will be assuming this is a standard, privately-owned daycare facility that takes care of roughly 50 children per day.
The first category on your budget is for things specifically involved in the care of the children at your facility. In this section, you have a bit more flexibility in how much you spend compared to others, but how much you spend will also have an impact on the quality of your facility.
Educational supplies and equipment
Depending on the type of daycare center you are running, you will have different needs when it comes to educational supplies and equipment. In general, you will need:
- Board games
- Art supplies
If you have a specialty school or are just wanting to have a well-equipped daycare center, you can add things like:
- Tablets (great for educational apps to supplement learning)
- Foreign language books and resources
- Sensory toys and games
For educational supplies, you should expect between $5,000-$10,000.
If you are providing 1-3 meals for the children at your facility, your food costs are going to be much more than if you are just providing snacks.
The easiest way to figure out your food budget is to identify some typical meals that you will be providing (PB & J’s, chicken nuggets, chicken noodle soup, etc.) then figure out how much each of those meals costs per kid.
For example, PB & J’s:
- Loaf of bread (12 slices) – $3
- Jar of peanut butter – $4
- Jar of jelly – $2
Since you are able to make 6 sandwiches for $9, you know it costs about $1.50 per kid for PB & J’s. So if you have 50 kids at your facility, it’d cost about $75 for that day.
When you break it down into smaller units, you can get a better understanding of what things cost on a larger scale.
For food costs, you should expect between $1,000-$2,000
Young children have a knack for getting bumps and bruises throughout the day. You need to have an assortment of first-aid supplies for these small occurrences, but also for more serious injuries, if they were to occur.
Some basic first-aid supplies you should have at your daycare:
- Antibiotic cream
- Alcohol wipes
- Latex gloves
- Large bandages
- Ice packs
- Eye rinse or eyewash station
- Small splints
- Insect bite remedies
Some items you will hopefully never have to use, but you would be surprised how often you end up using some of these items. It is much better to be overprepared than underprepared in this category.
For first-aid supplies, you can expect $250-$1000
This is a pretty straightforward category. Take how many employees you have, their hourly rate, and how many hours you expect them to work and you have your budget number.
Typical hourly rates for childcare employees is from $15-$25 per hour.
In general, small businesses spend anywhere from 5%-10% of their revenue on marketing, but yours may be smaller than this if you are a home-based daycare.
Marketing doesn’t have to be a large part of your start-up costs. There’s plenty of things you can do to get the word out there without breaking the bank. There are 3 main categories when it comes to your marketing budget.
Printed marketing material
This is typically the largest marketing expense, but once you have obtained these materials, most of them can be re-used, or at least used for a while before you need to reorder.
Printed marketing material includes:
- Business cards
Printed marketing material will usually be about $1000 upfront, and $100-$200 monthly.
Website and digital marketing material
Most people don’t realize how affordable most digital marketing items are. Thanks to advancements in technology, you can either build your own website, or have someone build it for you, either way, it is pretty cheap.
Hiring a freelancer to build your website will cost you a little bit more, around $100 to build a professional-looking website.
Along with your website, you should have some other digital marketing material made to supplement your website. This can be things like:
- Social media profiles
- Newsletter template
- Email marketing
Your website and digital marketing materials will usually be between $250-$1,000
Daycare centers typically don’t need to spend a lot of money on advertisements. If they do, it is usually something small such as social media, SEO advertising, or newspaper ads.
How much or how little you spend is entirely up to you, but most daycare centers don’t spend more than $250.
Furniture, equipment, and improvements
This section usually is your largest expense when you are starting up your daycare center. Luckily, a lot of these are only one time expenses that will last a long time.
Indoor furniture and equipment
This is the materials you need to furnish the inside of your facility to make it a comfortable and fun environment. This includes things such as:
- Sleeping mats
- Smoke detectors
- Fire extinguisher
- Indoor play equipment
Your indoor equipment will usually run you around $10,000-$20,000
Depending on your facility, you may have to purchase some playground equipment and outdoor activities to entertain the children.
Along with this, you might need to make some upgrades to things like fencing, lawn, and the parking lot.
Your outdoor equipment will usually be about $15,000-$25,000
Similar to your food budget, this depends on how much and what kind of food you will be serving your children.
Most medium to large-sized daycare facilities will at least have a range, sink, microwave, and prep station.
If you are doing any sort of cooking, you can expect at least $4,000 in kitchen equipment.
Purchasing cleaning supplies is pretty straightforward, but it adds up enough to where you want to include it in your budget. Some cleaning supplies you need are:
- Wet wipes
- Disinfecting solutions
- Washer and dryer
Your cleaning supplies will usually be between $400-$800
Office furniture & supplies
Your office furniture and supplies will be everything you use to do your administrative tasks, and not things associated with caring for the children. Things like:
- Office computer
Your office supplies is usually around $1,500-$5,000
Lastly, are your admin expenses. These are usually the easiest to budget for because a lot of these items you already know the price of. These include:
- Utilities deposit
- Licensing fees
- Legal/accounting expenses
- Employee/professional training
Your working capital is how much money you have available for day-to-day operations. You can budget this money for 6 month to 1 year, but make sure you plan accordingly.
For 8 months, your working capital should be between $35,000 and $50,000
You put a contingency amount in your budget as a safety net. This is meant to cover any unexpected or overlooked expenses.
A good rule of thumb is to have a 15% contingency for the sum total of your budget.
Sample daycare startup budget sample
Now that we have gone through each section in detail, see below for a sample budget with each category and amount. You can add or subtract categories based on your daycares unique situation.
|Child Care Costs
Educational supplies/equipment (toys, books, etc.)
Employee salaries (first month)
Printed marketing material
Website and digital marketing material
|Furniture, equipment, improvements
Indoor furniture/equipment (Smoke detectors, television, sleeping mats, etc.)
Outdoor equipment (Playground equipment, outdoor toys, fencing, lawn care)
Office furniture/supplies (laptop, chairs, desk, printer, phone)
Working capital (8 months)
Subtotal one-time costs
|TOTAL ONE-TIME COSTS
- Where can I go to help me make accurate financial projections?
One of the easiest and most accessible information sources is online forums. These online communities are there to support one another and have plenty of reliable information.
Some great ones are:
Aside from online forums, you can hire the help of a financial advisor who could walk you through the process.
- Do I need a business loan to start a daycare?
This all depends on your current financial state and what size of daycare you are wanting to create. If you are doing a small, home-based daycare and can spare $5,000-$10,000 you should be able to start it without a loan.
If you are wanting to create a larger daycare center it may be wise to get a loan so you aren’t putting yourself in as much financial risk.
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.
Armed with your budget, you are ready to get started with our 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.