Preparing a Day Care Start Up Budget

Allison Martin
Woman working on day care start up budget

Once you have developed a business plan for your new daycare facility, it is necessary to calculate start-up costs needed to open up for business. A budget will make the process easier.

Step-by-Step Guide

Preparing a daycare startup budget can be a very tedious process if you are unsure of where to begin and what items to consider for inclusion. The following list and corresponding spreadsheet will facilitate the process, making it easier for you to create a list of estimated expenditures.

To access the spreadsheet, simply click on the image. Categories and corresponding items can be added or omitted from the spreadsheet in order to best suit your needs.

As you work through each section of the budget form, input estimated expenses in each cell for the first 12 months. Totals will automatically calculate by item, section, and month, which will facilitate budgeting efforts and help identify areas where projected costs are excessive and need to be adjusted.

Registration Fees

Before opening your doors for business, you will need to obtain the proper licensure and permits (if applicable) through the county clerk in your area of operation. Once this is taken care of, be sure to register with your state's department of revenue office and secure a Federal Employer Identification Number. The federal number is free, but you will incur costs for licenses, permits and state registration.

Legal and Accounting Fees

Shop around for a local attorney who can compare the contracts you will need to provide to employees and those who patronize the services of the daycare. Retrieve estimates for the required legal fees.

You will also need to include estimates for a bookkeeper or accounting software to record and manage the finances of the facility.

Facility Fees

Find a reputable and licensed real estate agent to help you identify potential facilities. Incorporate the average monthly cost of the top selections in the budget. Prior to conducting the search, verify whether or not your state of operation has a minimum square footage requirement per child as this may have a significant impact on your potential options.

Also, consider any renovations that the building may need to remain in compliance with state regulations.

Utilities

Once the building is up and running, costs for utilities will be incurred. These include electricity, water, phone and garbage removal. Contact your local utility company for industry averages to include in your budget.

Insurance

You will need to purchase liability insurance to cover unfortunate circumstances, such as personal injury and property damage, that may occur on the premises. To ensure the most adequate coverage possible, consider carrying theft and fire insurance.

To locate list of insurance agencies that provide this type of coverage, contact your local provider or use online search tools provided by Child Care Insurance Professionals or Assure Child Care.

Salaries

The number of employees you will need to hire is based on how many children you plan to enroll. When estimating salary expenditures, be sure to take into consideration the federal minimum wage and industry averages. Also factor in Social Security and Medicare taxes. Visit the NAEYC website to learn more about the mandated teacher-to-student ratios.

Supplies and Equipment

You will need to estimate the costs associated with furnishing a daycare facility in accordance with specific standards. The items needed will vary based on the age of the children and size of the facility. These items include:

  • Furniture (such as cribs, tables and small chairs)
  • Activity centers
  • Safety equipment (gates, outlet guards)
  • Playground equipment
  • Special needs equipment
  • Teaching toys and supplies
  • Eating utensils
  • Books
  • Cleaning supplies
  • Diapering supplies

Food Costs

Factor in the food costs for all enrollees. As a guideline, you can use the Standard Meal and Snack Allowance Rates provided by the IRS.

Administrative Costs

You may need to hire a secretary to oversee the daily operations of the daycare facility, such as phones, emails, fax, accounts receivable, bill pay and ordering. Office computers and general supplies will also be needed.

Marketing Costs

In order to spread the word about the new daycare facility, a marketing campaign is needed. Word of mouth and social media is one way to accomplish this objective, but funds should be allocated for items such as newspaper advertisements, business cards, brochures, flyers, booth rentals for local events and festivals, car magnets and yard signs. Vista Print and Club Flyers offer low-cost printing solutions to businesses.

Other Operating Costs

It is wise to allocate funds for variable expenses, including contractor, consulting and continuing education fees.

Other Helpful Tips

Starting a daycare is no inexpensive task, but with proper planning it is possible to attain the desired level of success. It is best to use conservative numbers when populating the template to ensure that you have sufficient cash on hand to operate comfortably and free of financial constraints.

Preparing a Day Care Start Up Budget