Funding and Expenses

After you've developed the concept of your new center you'll need to focus on funding. In the US it might help to look into federal, state, and local government programs that offer grants or financial assistance for childcare businesses. For example, the U.S. Small Business Administration (SBA) provides loans and resources for startups, while the Child Care and Development Block Grant (CCDBG) may offer funding opportunities through state agencies. Check out SBA.gov or look into your state’s childcare agency website to explore options.

Note that your state's childcare agency might be a part of the state's Department of Health or Department of Education. Even if these agencies don't directly offer grants, they should be able to provide information on where you might look in the local government to find funds. 

There might also be private grants and nonprofit support available. For example, groups like the National Association for the Education of Young Children (NAEYC) or local Child Care Resource and Referral (CCR&R) agencies often list grant opportunities or connect providers with funding sources.

Corporate grants from businesses with a focus on community development or family support (e.g., large retailers or banks) might also be available but your program will need to align with their priorities. But beware, before alerting your concept make sure that you're interested in running a center that aligns with a third-party business. 

You might also consider small business loans through banks or the SBA (as mentioned above), such as the SBA 7(a) loan program, which can help cover startup costs. Still, there's a vetting process here and you’ll need a solid business plan to secure this funding.

As with many start up business ventures, you can explore partnerships with private investors, such as family, friends, or local business owners, who might be interested in supporting a childcare venture in exchange for a share of profits. While certainly not a requirement, you might to include a method where, after being paid back their money, you can "buy back" their ownership stake.

Calculating Expenses for a New Daycare Center

To begin the process of modeling out the expenses for your new center you'll first have to identify key expense categories. This might fall into three buckets for a new center: 

First is startup costs. Many of these costs are required once (or will need to be renewed infrequently). For example, licensing fees, insurance (liability and property), facility purchase or lease, renovations (childproofing, safety equipment), furniture (cribs, tables, chairs), and initial supplies (toys, art materials, cleaning products).

Next if standard operating costs. These will be a constant expense that you'll need to be watching closely every month. For example, team salaries, utilities (electricity, water, internet), food (if provided), ongoing supplies, maintenance, and marketing. Remember that your salary expense might change based on certain local requirements such as child:teacher ratio. 

Lastly you'll need to consider costs that come up infrequently but might be significant. For example, if you need a new playground, a method of transportation for children (if you provide that) or new HVAC units. 

Some helpful advice as you begin this journey is to start small, especially if funding is limited. Perhaps consider a home-based daycare to reduce initial costs, then scale up as revenue grows.

Talk to other centers and gain advice on funding and what your expenses might look like in a new center.

Keep records of everything! Maintaining detailed financial records from the start will help you understand your costs, funding requirements, and can help to support grant applications and tax deductions.

By combining these strategies—leveraging government and private funding, carefully estimating expenses, and using available tools—you’ll be well-equipped to plan and launch your daycare center. Let me know if you’d like help refining any part of this process!