Running a profitable daycare management business takes work, but the rewards are worthwhile.
In the US alone, the industry revenue has grown from $32 billion in 2012 to $48.5 billion in 2021. Neither is it projected to decline anytime soon. By 2024, this revenue is expected to reach a whopping $54 billion.
The continuous industry growth indicates that there is still room for you to enter this business. However, you must not only focus on the profits from this business. Your preeminent goal must be the provision of top-notch services for children.
Running a profitable daycare business is no small feat. You’ll need to think about your location and licenses, hiring staff, and managing finances from the moment you start. You should also know what type of daycare will work best for your situation.
In this guide, we’ll cover all the essentials for starting and running a profitable daycare management business. It’s time to get started.
How To Build A Profitable Day Care Management Business
1. Get your business licensed
One of the first things you’ll need to do is get your daycare management business licensed. For sure, the procedure varies from country to country, so you will need to find the one in your country.
Generally, the state will check your daycare business to ensure that it meets certain qualifications. Depending on your state, you will need to ensure that you have completed the minimum set standards.
Then, you will need to fill out an application and provide information about the location of your business, the ages of children you’ll care for, and many other details.
Once you’re approved for licensing, you can start growing your business without getting into legal troubles.
2. Use a daycare management software
Many daycare management businesses out there aren’t using technology to make the most at a bit of cost. One reason can be that they have been established since the times when these excellent tools and software weren’t out there yet.
So, pat your back for entering into this business in the era where you can implement technology to make your daycare management business even more profitable.
Daycare management businesses often find themselves drowning in administrative tasks, which can be frustrating and can take away from the time they want to spend on the best activities for the children.
Fortunately, an all-in-one daycare management software can alleviate the pain of managing the business. Also, you can use it as a competitive edge against your pre-established competitors.
Such software enhances almost every function of a daycare business. For example, it helps you automate daily reports, record children’s progress, and share memorable moments with the parents of the children.
What’s more, it can also help manage many administrative tasks such as billing systems, check-ins, and more.
3. Staff your daycare with the right people
The next step to building a profitable daycare business is hiring the right people. The type of daycare you own will determine the kind of staff you’re looking for, but there are some commonalities. The following are qualities that all daycares should look for when hiring:
A friendly personality
If your staff isn’t friendly or kind, your customers won’t be happy. That’s why it is the first quality to look for while hiring.
Experience working with children
Some daycare centers require staff to have experience in childcare, while others don’t. It depends on what you need and how much money you want to spend on training. However, in most cases, it is preferable to hire someone experienced.
Ability to multitask and work well under pressure
You can’t expect your employees to do one task at a time and only focus on that task. They’re going to be jumping from one thing to another all day long, and they need to be able to keep up with it all.
A passionate, determined person
Your staff should be passionate about the daycare work. They will be responsible for molding children’s crucial stage of life, early childhood. So, they can only give their best if they are passionate and determined about their work.
4. Marketing your business
While marketing is a critical part of your business strategy, it can be challenging to navigate the wide range of marketing channels and techniques available.
It’s not enough to simply have an online presence. You also need to get the attention of prospective customers so you can offer them your goods or services.
Consider how different marketing methods could help your business stand out from its competitors. For example, does it make sense for you to use social media? What about search engine optimization?
It’s essential that you have a well-rounded marketing strategy that includes both online and offline components. This ensures that you’re able to reach potential customers where they are, regardless of whether they’re browsing social media, watching television, or walking down the street.
A strong marketing strategy will ensure that prospective customers are aware of the products or services while also driving sales by converting browsers into buyers.
5. Financial Management
Your business will need to be constantly making money in order to continue operating. But, on the flip side, even if your business is continuously making money, it may cease to function smoothly if you lack proper financial management.
This includes how you manage your cash inflows and outflows. Feels too technical? Yes, it should, and that’s why we recommend you to hire an experienced finance manager to handle the monetary numbers of your business.
A professional finance manager will guide you to invest for growth and divest on time. Also, he will keep an expert’s eye on your product mix and inform you about the following:
- Stars: the products that exhibit potential growth and require more investment
- Question marks: the products that you’ve neglected but can contribute to business growth after more investment in them
- Cash cows: the products where you don’t need to invest more
- Dogs: the products that need to be liquidated
Knowing this information correctly can save you from unforeseen losses as well as make your fortune. So, the finance manager must be a person you can rely on for this critical information.
6. Set strategic pricing
Pricing is one of the most critical aspects of your daycare management business, and this is where you need to be very careful.
You will need to set pricing that will be helpful to both parents and your business. You must remember that you are not just running a business but also providing one of the most important aspects of life, childcare.
By strategic pricing, we mean that you must set your pricing by considering every factor affecting your business, such as competitors, legal & political environment, costs, and more.
At the initial stages of your business, you must try to have competitive pricing in the market, although it won’t be profitable for you. Here, you must target the future benefits and strive to capture a market share.
You can only achieve it by keeping your prices at par, if not lower, than your competitors.
Your competitors have set low prices that seem unprofitable to you because they have achieved economies of scale. As your business grows and you start achieving economies of scale, the same price will now earn you more profits.
So, the key takeaway is to be patient, keep the prices at par with competitors, and strive to capture a market share.
7. Find the right location for your daycare
The next step in building a successful daycare is finding the right location. Of course, your daycare business needs to be accessible and practical for your clients, but it also has to be in a place where you can be present.
If you don’t have the space at your home, find a location that will work for you and your family. Consider whether or not you’re able to access transportation and parking if necessary easily.
If your apartments are on the higher end of the budget spectrum, make sure they have an on-site carpool or doorman, so parents don’t have to walk long distances with their children.
The daycare business is undoubtedly a profitable one. However, as you are considering starting a daycare business of your own, be prepared for the daily challenges that are bound to come up along the way.
There will always be times when money seems tight, or guests are few, but if you remain faithful to your goals, you will succeed in growing your business and making it profitable.
Remember to handle these challenging times with positivity and optimism, and even bail when things appear too tough to overcome.
A daycare business is profitable, but it is also a good cause to work for. Helping the children and parents will build your self-esteem, as you see the rewards that your business brings out in people.
We hope you enjoyed our article on building a profitable daycare management business. Yes, it can be challenging to make your venture a success; however, you can minimize the risk of failure by utilizing the tips mentioned in this article.
Saifullah Napar is a content writer working in this field for the past three years. He has been writing on topics such as business technology, blockchain, fintech, and digital marketing. (LinkedIn)