Our List of Daycare Startup Costs

It takes money to start a daycare business and to be successful it is important to have a fairly accurate idea of how much you will need. Daycare business startup costs can range from as little as a few thousand dollars for a home-based operation up to more than $100,000 for a larger center in leased premises.

Many factors can influence the total startup cost for a daycare. These can include location, age of the children, quality of the equipment and the kind of schedule offered among other things.

Below we discuss some of the typical startup costs for a child care business and how you should plan and budget for them.

Daycare Startup Costs Vs Operating Costs

Don't forget to clearly distinguish startup costs from operating costs to get a realistic figure of how much capital you will need. Startup costs are the sum total of all the spending that you will need to do up to the point where you can open your doors for business. Operating costs on the other hand are the ongoing monthly expenses associated with running a daycare.

Eventually your income will cover your operating costs and leave you with a profit every month. Businesses can be slow to take off though and you may not reach full capacity and have everything running smoothly for quite some time after you have commenced business. Therefore it is wise to make sure that you have enough funding for your daycare business to cover startup costs as well as operating costs for the first three to six months at least.

Location and Renovations

The main expense associated with running a daycare is gaining access to suitable premises. While you can in some cases save money here by operating a daycare from your home, you still have to devote a large part of your property to this venture that won't be able to be used by your own family for other purposes. This represents an opportunity cost that can be hard to place a dollar value on.

Don't forget that you may be required to make alterations to your home and property to create a 'child friendly' environment. These renovations could include fencing off an outdoor play area or installing gates to keep children from falling down stairs.

If you will start off in commercial premises then you will either be signing a lease or purchasing a suitable space. If you lease business premises then you may have to come up with a deposit and you may also be facing the costs associated with doing some renovation work

Compliance and Safety

Compliance and safety costs can quickly add up with the many necessary devices that must be installed for fire safety (extinguishers, alarms), child health (First Aid kit) and child safety. Combine these with the costs associated with getting a license and permits and you could be looking at around $300 to $400 in this area alone.

Furnishings and Equipment

Next, you have to consider all the equipment that you will need for child care, entertainment and education as well as to create a visually pleasing environment. You may need to buy small tables and chairs, toys, books, wall charts, art and craft supplies, play structures and DVD's.

Requirements will differ depending on the market that you are catering to. If you take care of infants you may need such equipment as cribs, blankets and high chairs.

Children can be really rough on equipment and you have to keep this in mind when pricing your daycare services. When buying toys and furniture always go for the best quality rather than the cheaper products which don't have such a long lifespan. Buying second hand is a good idea but just make sure that any really old equipment meets current safety standards.

If you are preparing meals for children on-site then you will also need to kit out your kitchen if you haven't done so already.

Business Administration

Also allow for the costs associated with setting up a small office from a desk or in one room for you to manage the daycare from. The usual costs here are associated with stationary, phone line connection and computer and internet expenses.

General Business Startup Costs

Some other daycare startup costs may also include professional fees to lawyers, accountants and consultants. There will also be an initial cost relating to your insurance premiums.

Daycare Marketing

You will have to anticipate the marketing expenses associated with launching your daycare startup. These promotions could include an opening party, a pre-launch advertising campaign as well as costs associated with getting your brand established such as a logo design, business cards and signage.

Miscellaneous Costs and Price Rises

No matter how carefully you plan out your budget for start up costs you will always encounter unforeseen expenses. You will also find that some of the prices that you researched have risen by the time you get around to buying the items in questions. For these reasons it is wise to add a small allowance onto your total startup costs for unexpected expenses. Budget around 5% of your total startup costs for this.

It is easy to see how costs can get out of control from the outset and on an ongoing basis. The important thing is to budget carefully and buy only what you need at first. Make a list of priorities and plan to buy some of the less essential items at a later date when your business is already making a profit.

Be disciplined right from the start and keep your daycare startup costs to a minimum while still ensuring that you have everything that you need to serve your customers well.

Additional Articles

Daycare Funding Options - How to Finance a Daycare Business

Daycare Business Plan

Daycare Business Market Research