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How to Start A Daycare: The Ultimate Guide

Starting your own daycare center can be both exciting and daunting. Many of those who choose to pursue this step in their career do so out of passion for helping children develop and reach their full potential.

While passion and child care experience are musts when opening a daycare, it cannot be overlooked that child care and daycare centers need a solid business plan. Therefore, the opening of your daycare center must be approached with a careful strategy in place to ensure success in the early make or break years. This combination of a clear mission and a carefully constructed business plan will greatly increase the success of your child care business.

At Procare, we want to encourage and enable child care professionals with all of the tools they need to enrich the lives of their students. That is why we have created this outline of important business needs to consider when starting a daycare center. The following information will provide aspiring daycare owners with direction throughout this challenging process.

Daycare Center

The “Why” Behind Opening Your Daycare Center

Starting a business, especially one as demanding as child care, is a huge time and financial commitment. It’s a good idea to examine the reasons driving your decision to open a daycare center, or “your big why.” Make sure you have a clear understanding of the time you will be required to devote before and after opening.

You should also consider your previous child care experience. If you have been in this field for years and know it is what you want, then you can move on to the business planning stage. However, if you have relatively little experience in the field, it might be prudent to gain more experience at an independently owned center or even franchise. Think about why you want to open a daycare and the specific attributes that make you uniquely qualified for this filed.

Assessing Your Market

Once you are committed to opening your own daycare center, you will have to do research to determine how competitive a marketplace your community currently is, and how sustainable an environment it will be for your business in the future.

First, are there already daycare centers open in your community? If so, you will want to look at things like:

  • What kind of center are they?
  • What age groups do they accept?
  • Where are they located?

Another good indicator of the need in your community is whether these child care centers have waiting lists. This information can help you determine if there is enough demand in your community to open you center there.

Another research strategy is to look at the current demographics in your neighborhood. If there are a lot of young families or newlyweds, this indicates that there will continue to be a need for your services in the future.

Differentiating Your Daycare Center

Once you are familiar with the current child care landscape in your community, you have to think about how you will differentiate your program to fill a need not currently being addressed.

Look at the hours of operations for the other centers in your community. Perhaps there is a timeframe early in the morning or late in the evening during which these centers are not open. Filling this need could make your center a valuable resource for parents.

Additionally, if there is an age group that is not being served, such as daycare for infants (newborns to a year) or after school programs, your center could establish a foothold by filling these needs.

Bonus Tip: Talk to parents in your community to find out what they need most from a daycare, and aim to address these needs at your center. 

Business Planning

Business Planning

Once you have done this initial research into whether your daycare business will be viable in your community, you have to begin compiling a comprehensive business plan that maps out your objectives and the strategies by which you will bring them about.                                              

Child Care Center Business Plan Checklist

Here’s a checklist recapping some essential steps of putting together your child care business plan:

  • Competitor matrix
  • Financial Planning: Funding and budgeting
  • Location of your business
  • Staffing needs
  • Licensing requirements
  • Materials, equipment, and program agenda

Bonus Tip: As you go through creating your business plan, it is a good idea to mark down important deadlines and milestones on a calendar. This will ensure you have an accurate timeline for how long planning and preparations will take, and a strong estimate for when your business will be able to open.

Licensing Requirements

Child Care License

There are many legal regulations to consider when opening your center. License requirements are typically determined by states, and therefore will vary based upon where you live. You will have to make sure your business is in compliance with these regulations by acquiring the proper licenses. Child Care Aware offers a licensing resource that directs you to the proper licensing authorities by state.  

It is important to note that child care licenses and business licenses are not the same. You will likely have to acquire separate business licenses and child care licenses to legally operate your business.

Financing

Financing Your Daycare Center

Starting a business is financially demanding. For your endeavor to be successful, it is essential that you accurately assess how much it will cost for you to open the center, determine where that money will come from, and then budget and plan to ensure your financial structure will sustain your business as it gets off the ground.

During this process, you should consider initial expenses, and how much it will cost to run your business on an annual and monthly basis. Consider how much you will pay your daycare staff, what your tuition structure will be for parents, how late fees will factor in, and how much property rent / cost is in your community.

Potential Costs of Opening a Daycare Center

A few examples of the costs associated with opening a daycare center are:

  • Property renovations
  • Insurance
  • Materials
  • Staff
  • Marketing

Funding

It is important that you don’t begin the business process until you know how it will be paid for. This is money can be accrued from a variety of sources including your personal savings, loans from friends, loans from the bank, government programs, or grants.

Financial Tracking

It is important that you keep track of your expenses and cash flow for multiple reasons. First, it will help you to track and pay back any loans in accordance with the agreement you made with the lending party.  

Second, tracking cash flow ensures that you don’t overspend, or create a payment structure that will jeopardize the financial stability of your business on a month-to-month basis.

To be aware of when money comes into and leaves your center monthly, you should be tracking: the number of tuition payments you get per month, how many times a month your center pays employees, how many enrolled children you are permitted to have, and how many of those slots will be filled.

Bonus Tip: Doing these calculations by hand leaves room for error, so we recommend a child care accounting solution that will track financial information for the center and the families you serve, as well as tracking bookkeeping, tuition payments, and cash flow.

Choosing a Location

Daycare Center

The first thing to determine when choosing a location for your daycare center is if you want to run the center from your own home, or in a commercial space. This will affect your expenses and licensing requirements.

The location of your daycare center will be subject to many licensing regulations, including building safety, zoning, physical space requirements, emergency preparedness, and more. Many of these are to ensure that the environment in which you run you center is healthy and secure. This includes things like proper waste removal and having fire alarms. 

Two important location licensing requirements to keep in mind are zoning and physical space requirements. Zoning refers to a permit from the proper authority that allows you to run a business, or be zoned for business. The physical space regulation refers to the requirement that child care centers must have 25 square feet available per student. Therefore, you have to keep in mind that the size of your space will determine how many students are allowed to enroll.

Staffing

Daycare Staff

For parents to feel comfortable leaving their children at your center and confident that they will get the developmental stimulation they need, you staff has to be well trained and experienced. Additionally, you must have enough instructors to provide quality group and individual care, as well as meet ratio requirements.

When hiring staff for your center there are three key features to keep in mind:

  • The student-to-teacher ratio
  • Licensing requirements
  • Training

Student-to-Teacher Ratio

The student-to-teacher ratio refers to the number of instructors that must be present based on the number of and age of the students. The National Association for the Education of Young Children provides recommended ratios based on age and group sizes.

Staff Licensing Requirements

Professional certification requirements and licenses vary by state; however, child care providers are often expected to have a high school degree or secondary degree. Common certification requirements are the Child Care Professional certification and the Child Development Associate certification. These require a certain number of hours of experience in different child care fields.

Staff Training

You should also make sure that your staff has training in safety courses such as CPR and first aid, as well as how to asses and document child development to report to parents. Child care instructors can provide important information to parents about where their children are developmentally, and where they may need individualized attention. That is why it is important to have reporting and parent engagement processes defined at your center, to simplify communication between caretakers and parents. 

Bonus Tip: The interview and review process to find the perfect candidates for your center can be time consuming, so you will want to start the hiring process at least two months prior to the opening of your center.

Last Steps

With financing, licensing, location, and staffing researched and prepared, you are almost ready to open your child care center. Final steps will be getting the necessary equipment and supplies, and setting an agenda for your daycare programs. You will need kid sized tables, furniture, and cots, as well as toys, crafts, and games. You will also need cleaning and administrative supplies.

When setting the agenda for your program you will want to establish routine daycare schedules for each age group. These schedules should incorporate activities that promote early child care development in major areas such as cognitive, emotional, and physical development.

As you get to know your students better, you will be able to cater the activities and learning programs to their specific interests.

Final Thoughts

The processes and planning that go into starting a daycare center can be overwhelming. However, with a defined mission and strategic business plan in place, it can be a successful and worthwhile endeavor. Following the guidelines above will give you the structure you need to build a thriving daycare center with an environment that fosters healthy, happy kids.   

Looking for ways to automate and organize administrative and business functions at your daycare center? Learn how Procare can help!

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Want more tips and resources to help start your daycare center? Check out these related articles:

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Who’s in control, you or the center?

With Procare, there's no need to struggle

Are you working hard to run your center or is your center working you hard?

What I mean is that many directors often tell us about the work they pour into their center every day. But, in the chaos of everything going on around you, ideas of growing your business take a back seat when it’s a struggle to just maintain. We all know that a well-run center requires a lot of time and energy to run smoothly and profitably. That’s where you come in…

Before you arrive in the morning, your day is already booked. Immediately you are busy greeting parents, posting checks, juggling staff, and managing accounting. Before you know it, you’ve skipped lunch or perhaps you’re picking up toys and wiping down counters so you can go home. With time so short, you may even find yourself working when you should be playing. If this sounds familiar, it’s time to look into automating your center with a software solution that as unique as you and your center.

The best child care management system provides an all-in-one solution. It allows you to do away with confusing spreadsheets, generic financial software, clipboards and bank deposits.It helps you easily manage child and family data, attendance tracking, parent communications, staff hours, child/teacher ratios and more. And, it’s all-inclusive with check-in solutions and door security. Once you start collecting tuition electronically, you’ll say goodbye to late payments forever—all with just a few clicks!
Andy Spliethof
VP Creative Services
Procare Software

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4 Tips to Grow Your Child Care Enrollment

Preschool Boy in Field of CloverLying in a field of clover on a sunny spring day is the perfect way to spend a carefree afternoon—but if you’re waiting for a lucky four-leaf clover to increase enrollment at your preschool, you may be in for a surprise.

Enrollment gains aren’t based on luck. They require focus on marketing your child care business and effectively communicating with potential families. Lucky for you though, it’s easy to do when using Procare Child Care Management Software and following these 4 tips to grow your enrollment. Continue reading

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How to Calculate Full Time Equivalency (FTE) at Your Child Care Center

If you’ve ever played piano or most any musical instrument, you may be familiar with the metronome. It’s used to help you keep in time with the music; that is, to play at a steady tempo and consistent pace.

Likewise, Full-Time Equivalency (FTE) is a way to help your child care business keep each classroom filled in a steady and predictable way.

The beauty of FTE is that it allows you to compare classrooms in a reliable manner, regardless of the types of programs offered. This is possible because FTE uses a single measurement to account for daycare schedule variations, like full-day, part-day, or before and after school.

 

Daycare Schedule

 

Here’s how it works. One child with a full-time, 5 day a week schedule would have a FTE of 1.0. Two children each scheduled half days, all week long, would have an FTE of 0.5 each, but combined they would also have an FTE value of 1.0. In other words, together they would be equivalent to one full-time child.

Managing FTE Calculations

If all the children in your care are full-time you may be able to do the calculations by hand or with a simple spreadsheet, but if some children are scheduled on M-W-F or Tue-Thurs, or a few hours here and there, the calculations get complicated quickly. That’s where daycare scheduling and tracking software can help. By scheduling children in a management system, like Procare Software, you’ll be able to easily print reports showing the full-time equivalency for each classroom. This can be especially helpful when projecting enrollment for future weeks, and help with decisions about which programs need a marketing boost.

How to Calculate FTE at Your Child Care Center

FTE calculations are determined one child and day at a time, then added together for the week. Let’s assume you’re open 5 days a week and consider a full-time day to be 8 hours. For a single day, the most a child could contribute toward the weekly total would be 1/5 of a week, even if they were scheduled over 8 hours. Since 1/5 is the same as 20% or 0.20, a child scheduled 8 hours (or more) would have a FTE value of 0.20 for that day. A child scheduled less than 8 hours would contribute less to the total; for example, a 4-hour schedule would have a value of 0.10 for the day.

Example 1: One Full-Day Child, 3 Days/Week

Let’s say McKenzie was scheduled 8 hours on Monday, Wednesday and Friday, her FTE would be 0.20 for each day and 0.60 for the week. That is, she would be equivalent to 60% of a full-time child.

FTE: One Full-Day Child, 3 Days/Week

Example 2: Five Full-Day Children, 3 Days/Week

If 5 children (including McKenzie) had the same M-W-F schedule, their Monday FTE would be 5 children x 0.20 = 1.0 for the day and 3.0 for the week. In this example, none of the 5 children are full-time by themselves, but added together they are the equivalent of 3 full-time children for the week. A quick glance at the report shows we need to do a better job of getting the word out about our Tuesday and Thursday programs.

FTE: Five Full-Day Children, 3 Days/Week

Example 3: Add Five Half-Day Children, 2 Days/Week

If we add some children on Tuesdays and Thursdays at 4 hours per day, each of them would have a FTE value of 0.10 per day (half of the full-time value) and 0.20 for the week. In other words, half-day kids scheduled two days a week are equivalent to 20% of a full-time child. Adding 5 children with half-day schedules on Tuesdays and Thursdays would give us FTE values of 0.5 for each of those days (5 children x 0.10). And, adding that to the 3.0 we already had for M-W-F children gives us a full-time equivalency of 4.0 for the week.

FTE: Add Five Half-Day Children, 2 Days/Week

FTE Graphs and More

Some software packages let you print graphs to get a feel for your FTE numbers in a more visual way. You may even wish to run reports by department, rather than classroom, especially if you have multiple rooms for each age level. For example, you might have two classrooms called the Blue Whales and Green Turtles, but they are both part of your preschool department. Breaking it down this way provides an additional layer of organization to your daycare scheduling process and data organization.

FTE Pie Chart Graph

Final Thoughts

Having a clear understanding of your enrollment numbers and schedule availability is necessary to optimize operations at your child care center. By calculating the FTE of your students, you can better understand the resources and staff you need day-to-day, as well as days or time slots that can be improved upon.

Depending on how many students you have enrolled and the variation in their weekly schedules, it can be easy to be overwhelmed by FTE calculations. Using a child care management tool can keep track of FTE calculations and reports for you and your staff automatically. We hope this introduction to FTE helps you better manage enrollment in a predictable way, just like the steady beat of the metronome.

Learn more about how Procare can help you keep track of daycare schedules and enrollment.

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Want to learn more about daycare scheduling and enrollment management? Check out these related articles:

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Managing Your Child Care Waiting List

Waiting in line can be a hard thing to do, especially if you’re waiting for something important to you. For children, that might be as simple as waiting for lunch on pizza day. For their parents, it might be waiting for an opening at your child care, daycare or preschool. For you, as their provider, it might be waiting for the official pre-registration payment to hold their slot.

To make sure that families on your child care center’s waiting list actually enroll, it’s important to keep in touch with them through the process. Luckily, for child care administrators, it’s easy to create a contact list of parent names, phone numbers, and email addresses for your wait list families. By using a child care management solution like Procare Software®, you can create a printed list or choose to email or send text messages to selected families all at once.

Child Care Management

Wait List Directory

It’s easy to get a list of everyone on the waiting list with parent contact information. Start with the standard “School Directory II” report (found under Reports > Standard Reports > Family Data > Filtered Reports) and use the Filter button to include only children whose enrollment status is set to “Waiting List”. See Sample: Wait List Directory 

Customized Wait List

With the Procare Data Viewer you have more control over how the information is laid out and can include other fields, such as the date they got on the waiting list (the Status Date). Start with the Child Relationships view and add the fields you want like Primary Classroom, Enrollment Status, etc. See Sample: Data Viewer Wait List  

Use the filter icon (funnel) on the Enrollment Status header to include only “Waiting List”.

To group the report by classroom, drag the Primary Classroom header into the gray area just above the other headers.

You may also want to remove the page break so you don’t get a separate page for each class. Right-click the gray area next to Primary Classroom and uncheck Insert Page Breaks.

Then you are ready to Print or Export to another format, like a spreadsheet, PDF, etc.

Email or Text People on Your Wait List

To begin, use the Select Filter to include only families with children whose enrollment status is “Waiting List”. Then you’re ready to Email the Families or Send Text Messages to the people of your choice. You can even use the built-in Letter Merge to automatically fill in certain fields, like the name and address of each person, etc., and email (or print) the letter.

Final Thoughts

As you get under way for the year at your child care center, it can be easy to lose track of the families on your waiting list. However, though your classrooms might be too full at the moment, at some point you will have space to accept new students.

It is important that you have family contact information for those on your wait list, and are keeping in touch with them regarding their status. Using child care management software, it’s easy to manage your child care waiting list to ensure a positive relationship with prospective parents and simplify their enrollment process.

Learn more about how Procare simplifies family data management at your child care center.

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Want to learn more about child care waiting list and enrollment management? Check out these related articles.

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