Location, location, location! If you take any fundamental business course, they will drill this mantra into your head time and again. The success of a business, in many ways, rises or falls with its location. If you are interested in opening a daycare business of your own, you have probably spent considerable time thinking about what you want your daycare to be like. But have you thought about where you want it to be? This could be one of the most important decisions you make.
While there are endless factors to consider when choosing the best daycare business location, I would like to focus on three of the most important: the Area, the Acreage, and the Accessibility. We’ll also briefly discuss some other factors that come into play, but these three are arguably the most important!
Now what do I mean by these terms? The “Area” refers to the general location within your city or municipality and all the zoning and regulation laws that may apply to it. The “Acreage” refers to the actual size and dimension (as related to costs) of the building that you want to rent or buy. And finally, its “Accessibility” refers to the ease with which a client can both find and maneuver your space. Let’s dive into each aspect a little more!
Let’s Talk Area
We know that any business requires licensing and regulations, especially businesses that involve the safety of children. If you want to be in the daycare business you will need to embrace that fact! When choosing a location for your business, start from the bottom up in terms of licensing and regulations: start with the landlord or the neighborhood compliance guidelines to see if you may operate a childcare business in that particular building.
Then check your city or municipality’s zoning regulations. These regulations divide a city into zones that have specific purposes in order to best serve the citizens and help traffic and business operate smoothly. You may think you have the perfect location, only to discover that it’s located in a zone that is designated for residential purposes or industrial purposes only. If that’s the case, you will either need to look for a new location, or you will need a special permit to open your business there.
This is where “bottom-up” research is helpful. A particular area may be zoned to allow for a child care center, but the landlord won’t allow it in that particular building. If you only check the zoning regulations, you could move ahead only to find yourself with a roadblock later on.
Another factor to consider when thinking about the “Area” of your daycare business is to consider your neighbors. Is it wise to open a daycare center next to a paint shop? Or a chemical processing plant? Or a drum store? Probably not!
On the other hand, would it be wise to open your daycare near large places of employment, like a company headquarters or a local school? Or next to large up-and-coming residential areas with lots of young families? Yes, yes, yes!
Let’s Talk Acreage
This might be the most confusing aspect to think through but it is critically important if you want to minimize surprises down the road. And to be clear, by the term “acreage” we are talking about the cost per size of the location you want to rent or buy, namely the square footage. Understanding the square footage of your space and the costs associated with it are critical financial baselines.
- Cost per square foot: When considering a location, this cost can help you determine your monthly rent. Simply take the square footage, multiply by the total size of the space and divide by 12. This will give you the estimated monthly rent. Talk with your realtor about how property taxes, insurance, and other shared items in a building are split up between tenants and how it will affect your monthly rent.
- Number of children allowed: Did you know that the square footage in your space also determines the number of children allowed in a classroom? And that does not include space for bathrooms, offices, hallways, closets, etc. Check your state’s regulations for square footage per child. Determine the size per classroom and the number of classrooms you want to operate before looking for locations for your business.
- Other considerations: When thinking about usable space for your classrooms, be sure to factor in changing tables, sinks, water fountains, bookcases, etc. Even the space used for the door to open into a room will impact the “usable space” in a room and drastically impact the number of children you may have in that classroom. Every child represents a valuable source of revenue for your business. You don’t want to needlessly give that away simply because you failed to accurately calculate your business needs at the beginning.
Tips for understanding your square footage needs
- As part of your financial planning, estimate the number of children enrolled in your daycare that you will need to break even.
- Divide this number into anticipated age groups. Do you anticipate having more infants and toddlers? Or more preschool-age children? Each group has different square foot requirements.
- Calculate the minimum classroom sizes you will need, based on these requirements, in order to break even.
- Use this size to filter through possible locations. If there is a space you absolutely love but is too small to let you break even, then you may need to keep looking!
Let’s Talk Access
This final consideration is perhaps the most natural to think about. It involves thinking through how the space meets your clients’ needs—how they will access your daycare! Here are some questions to ask yourself as you search for daycare spaces:
1. Is this space easy to find?
Will your clients see it as they drive by on their commute or does it require twists and turns and a treasure map to get their child to you each morning? The easier it is to get to you, the more likely parents will stop by to check it out. You can have the most amazing, imaginative, kid-friendly zone in the world, but if parents are not willing to drive to your location then you will have a hard time getting any business.
On the other hand, if you are located near a main road or along a common commute path, the visibility of your daycare center will provide a great deal of “passive” marketing. Just seeing your daycare will pique interest and attract potential clients. When they wonder what daycare to use, they will remember seeing yours on the way to work. It will seem familiar to them already and they will already know they can drop their children off in a convenient place. That puts you a step ahead of other daycare centers in the area!
2. Is this space easy to park in?
Parents will be dropping their children off in a rush to get to work so this process needs to be as simple and smooth as possible. Does the parking lot allow for easy flow of traffic? Will cars be able to turn in to your parking lot safely? Is the space for parking clearly marked? If not, will your landlord allow you to make adjustments? Are there giant potholes that could be potential trip hazards for young children? Pull into the space and see it through the eyes of a parent: a very tired, very rushed, already-late-for-work parent. If they can easily navigate your pick up and drop off procedures that is a huge win!
3. Is this space secure?
It’s not enough to know that your clients can easily access your building, you need to make sure unwanted visitors cannot! Safety is of utmost importance in running a daycare. The location you choose needs to be completely secure—or able to be secured with minor modifications that your landlord permits. This includes making sure there is only one main entrance through which all visitors are required to pass. You need to know who is in the building at all times. If there are outdoor play areas, is the fencing adequate to keep children in and intruders out? If there are windows, are they properly installed and do all the latches work? Are there multiple exits in case of a fire? Is there a storm shelter, if needed in your region? Though it may seem extreme, you need to be sure that your building will more than adequately protect the children inside.
Let’s Talk “Other”
While Area, Acreage, and Accessibility are the three main factors when considering where to open a daycare center, there are some other factors worth mentioning:
- Demographics: the demographics in your area will affect the type of payments you will offer at your daycare. Pay structures are typically either private pay tuition, subsidy, or a combination of the two. Typically high-income areas lean towards tuition pay, while lower-income areas will consist more of subsidized pay. This is important to be aware of when choosing a location.
- Competition: is your market already saturated with daycares? Is there a daycare on every corner? Then you might want to pick a different location! You need to make sure there is actually a market for the services you are offering. Look for areas that are attracting lots of young families. Check realtor sites for information about schools, housing trends and more. This is valuable information when choosing your location.
So there you have it! Good luck with your daycare journey!
How do I find the zoning laws for my city?
Zoning Laws are important to understand before undertaking any type of business. They regulate the size, location, and use of structures in specific areas. To make sure your business is operating in the correct zone, check your city’s zoning laws. These can often be found online, through a public library portal or through a local government website. You can also visit your city’s Department of Housing. A commercial real estate agent or lawyer would also be able to advise you on anything pertaining to zoning laws and regulations.
Should I rent or buy my space?
This is a great question and one that many new business owners wrestle with. There are many factors to consider.
Renting requires less start-up capital as you do not have to pay a down-payment. You will also split the cost of insurance and property taxes and fees with other tenants in the building. In many cases, the landlord is responsible for the maintenance of the building and its grounds. However, the landlord may also set restrictions on the use of the building or modifications that may be made to it. If you wish to remodel any space, you will need their approval. And landlords may increase the rent prices at their discretion, so just because you found a great deal now, you are not guaranteed that price will last forever.
That being said, renting allows you to try a location to see if it is favorable to your business without being tied down long term. If you realize you need to find a better location, you can renegotiate your lease, or move at the end of it.
Buying, on the other hand, has much higher start-up costs, as you will need to pay the down-payment and closing costs. While a mortgage may be comparable to a month’s rent, you will also be solely responsible for property taxes, insurance, and other fees associated with the property. The benefit is that you have more control over your business. You will not have to move locations due to sudden rent hikes. You may make modifications to the premises at your discretion. And should you choose to move your business, you may even make a profit from the resale of your building.
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.
Pursue your dream of opening your own daycare center today! Click here to get started.
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.