Whether you have kids of your own or you just love taking care of kids in general, your dream to open a daycare is for a reason. But the question is, “Is a daycare a lucrative business?”.
A daycare can be a lucrative business if you can get have a large enough facility and gain enough loyal families that trust you with their children, you can make a living as a Daycare Owner.
We suggest starting out small in your daycare business by starting one at home or in a small building. Get comfortable with being a daycare business owner for 1-2 years before expanding to a larger facility or opening another location.
What is the Average Salary of a Daycare Owner?
According to Profitable Venture, the median salary of a Daycare Owner is about $9.81 per hour or just under $20,000 per year. Daycare Owners on the lower end of this average make about $7 per hour and others on the higher echelon make about $15 per hour.
Sure, the salary numbers are low, but these are only average projections. Your salary as a Daycare Owner will depend on these circumstances.
- The size of your facility.
- Upgrade to a larger facility for a higher salary.
- Open another facility for salary increase.
- How many children attend your daycare.
- You make money by the weekly daycare fees parents pay to you.
- If your daycare has a higher number of children than average daycares, your salary can increase.
- Your location.
- If you are in a busy city with middle class income families, they could pay your daycare fees without trouble.
- If you are in a lower-income city, you will have a high daycare attendance, but many of the children may have Quality Care funding due to their parent’s low income.
How Much Should I Pay My Daycare Teachers?
Follow the median pay for Preschool Teachers on the BLS when trying to decide your final pay for your Daycare Teachers. The median pay is $30,520 annually which is about $14.67 per hour.
If the Daycare Teacher you are looking to hire has 5 or more years of experience in the daycare industry, consider hiring him or her at an extra $1-$3 above the average depending on your salary budget.
Find out more about the pay and duties of Daycare Teachers by visiting here.
How Much Should I Pay My Childcare Assistants?
Childcare Assistants can also be known as Teacher’s Aides. Pick the name that you like best when advertising for job openings.
Childcare Assistants are usually paid the state minimum wage. Depending on the worker’s experience, you could raise this rate $1-$2 per hour to maintain a competitive wage.
According to the Bureau of Labor Statistics (BLS), the median income in 2019 for Childcare Assistants was $24,230 annually and $11.65 per hour. As the Daycare Owner, the final wage for your Childcare Assistants is up to your discretion.
You can find more information about pay and duties of Childcare Assistants by visiting here.
What Are the Overhead Costs for Running a Daycare?
Overhead costs include everything that you must pay for to properly operate your daycare. You do not include labor costs or any direct expenses or materials. Overhead costs include:
- Self-Employment tax at the end of the year
- Repair Costs
- Utility bills
- Telephone bills
The costs of each of these categories depends on what you are charged in your area. Insurance, rent, and phone bills will stay as fixed expenses. Supplies, repair costs, advertising, and utility bills will fluctuate in amount depending on use. If you have no repairs for the months in your facility, you can save this money for other costs. If most of your advertising is free on social media, you will have less to pay in overall advertising for your daycare.
How Much Should I Charge Per Child?
Some daycares charge $250 to $500 per week per child on average. The younger the child is, the higher the cost of weekly daycare membership.
According to Money Under 30, the cost for full-time childcare for infants can cost about $972 per month which works out to $243 per week.
When infants grow into toddlers, the average cost of childcare lowers to $733 per month which is about $183 per week.
Find out more information about how you can charge parents for childcare here.
What Is the Teacher to Child Ratios for Each Age Group?
To properly care for the children that attend your facility, you must reassure your clients that as the Daycare Owner you follow state regulated teacher to child ratios.
The National Association for the Education of Young Children oversees the teacher to child ratio mandates for daycares operating in the United States. Each teacher will have to supervise more children each as the group gets bigger.
For infants (birth to 15 months), have 1 teacher for every 3 infants. Infant classes should not be anymore than 8. With 8 infants, the ratio is 1:4. If you have more than 8 infants attending your facility, have another room available with a trained teacher to care for them.
Toddler classrooms (12 to 28 months) should not exceed 12 children. If there are 6 children, the teacher to child ratio is 1:3. For 7-12 kids, the ratio is 1:4.
As the children age, this means teachers can handle a larger pool of students. For toddlers aged 21 months to 36 months, the ratio is 1:4 for 8 kids, 1:5 for 10 children, and 1:6 for 12 children.
Classrooms with children ages 2 ½ to 3 years old should not exceed 20. The same is true for classrooms with 4-year-olds and classrooms with 5-year-olds. For 14 children in a class, the ratio is 1:7. 16 children in a class follow a 1:8 ratio and so on.
Find out more about daycare facility teacher to child rations by visiting here.
What If I Am Understaffed One Day?
If you are understaffed, this can pose an issue in maintaining accordance with state regulations for the teacher to child ratio. Getting a visit from the state and not being within the proper teacher to child ratio could cause your daycare to lose grant funding (if applicable) and/or for your daycare to force to shut down.
Whether your Daycare Teachers or Childcare Assistants call out for the day or quit outright, it is a good idea to have a pool of 3 to 5 on-call Substitute Teacher’s Aides. These are individuals who have general experience caring for children and can fill any spots in your daycare if a regular employee does not to show up to work for whatever reason.
If one of your Substitute Teacher’s Aides turns out to be reliable in helping you regularly, he or she can become a Full-Time Childcare Assistant should any of current employees quit. Hence, having a pool of substitute workers can lessen the need for going through an entire hiring process when someone quits.
Do not be discouraged by the low average salary numbers for Daycare Owners. If you are doing what you love, money can matter to a certain point. The daycare business is as lucrative as you make it. Increase brand awareness about your daycare throughout your local and surrounding communities to increase your potential salary.
- How do I write my daycare’s business plan?
Take these steps to begin writing your daycare’s business plan.
- Describe your company. What are its mission and company values?
- Provide a daycare industry market analysis. How successful is it? What is its projected growth over the next few years? How can your daycare capitalize on these positive projections?
- Write a detailed marketing plan. Include how you will use social media, advertising agencies, and other marketing methods to get your daycare noticed throughout the community.
- Who will work for and manage your company? Mention the number of employees for each position.
- Discuss your finances. What are your liquid assets? What funding sources will you use to open your facility?
- Propose a funding request.
We also provide resources to assist you on our course and startup document page.
- How do I make my daycare more profitable?
Make your daycare more profitable by:
- Consider monetizing your facility on nights and weekends when the facility is empty. You can increase your profit by having church or mom meeting groups rent your facility for the couple hours they meet so qualified individuals can watch their children for the time being.
- Get your enrollment capacity to 80% to 85% of the total daycare building’s capacity to see higher profits.
- Make sure to bill parents on a weekly basis rather than a monthly basis so that missed payments do not deter you from making a profit at the end of the month.
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.
Looking for your next lucrative business, get started with our startup course and documents.