Starting a home daycare is like starting any business; make a business plan! Here's how.
Are you saying to yourself, "Okay, I like children, I have room in my house, I'm responsible and organized - I'm thinking of starting a home daycare and it seems do-able. But...write a business plan? No way, not me!" The concept of a business plan strikes fear in the hearts of many would-be entrepreneurs. But, the reality is, it doesn't need to be that scary; business plans are just an organized way of thinking about the things you need to consider before starting any business.
When you're thinking about starting a home daycare
, one of your first steps (and an important part of the business plan) is to look at the need for your services and that means doing a market study, in business terms. One way to find out if a home daycare
is needed is to call other home daycares and daycare center
s and ask if they have waiting lists. If they do, then you know that people are looking for care. A second approach is to interview people with children in the geographic area where you want to start a home daycare. In that way you can find out not only about waiting lists at other facilities but you may also learn about families who would like to switch from their current provider to someone new. You can also get information such as the fees that are being charged in your area. Third, call the state agency responsible for overseeing daycare programs; they will tell you about areas of need. This information will help you decide if there is a "market" for services. See, you are already able to throw around the lingo.
Another early and important step is to research the regulations governing starting a home daycare in your state. Go to your state's website (New York, for example, is www.state.ny.us) and search for childcare. This information will tell you how many children you will be able to care for in your home and answer many of your questions about how to get started. Here's an alternative, useful site. http://www.oursite.net/daycare/family.htm
For most people, the hardest step in exploring starting a home daycare is doing financial projections. Follow these steps to get an initial estimate.
1. Determine startup needs such as the cost of renovations to your home, buying furniture and equipment in order to start a home daycare.
2. Establish fees. (Use your market study as a guideline.) Calculate revenue by multiplying fees by the number of children you will take. Reduce the total by 15% or so to account for unfilled slots, vacations, etc. Project revenue on a monthly basis. Be sure to account for the startup period when starting a home daycare when you may not operate at full capacity.
3. Determine labor costs. Your state regulations will tell you how much help you will need, if any. Figure out what your salary will be and the salaries of any other people you use. Add the cost of any benefits and replacement coverage for vacations, etc.
4. Determine operating costs. These are costs such as food, paper supplies, cleaning supplies, etc. You may be able to get help from someone at the state level or from other Daycare Providers who are willing to share information about starting a home daycare. Don't forget to add costs for insurance and accounting. Also, you will be able to include a portion of your home's utilities, mortgage, etc.
5. Project revenues and costs on a monthly basis. Are you making money on a monthly basis by the time you are at full capacity? If yes, great. If not, go back and figure out what you have to do to make it work.
6. Figure out how much money you lose in the initial months when starting a home daycare, before you start making money. You will need to make up for those losses with "working capital" that you either put into the business yourself or get as a loan. Your working capital needs plus your startup needs added together equals the amount of money you need to find to get your business started.
Okay, now write down everything you did for starting a home daycare. You have a business plan! You have just paved the way to starting a home daycare that will be well-thought out and successful!
