Building a Profitable Childcare Business

How to make your daycare more profitable

How to make your daycare more profitable

Childcare centers aren't just places where kids go while mommies work. They're businesses, too; like any small business, they need to make money to survive. When it comes to running a childcare center, many things impact profitability. Some of the most important decisions you'll make revolve around how much you spend versus what you earn.

How to Reduce Expenses & Increase Profit at Your Child Care Business

Here are four ways to increase profitability and reduce costs to ensure your childcare center will be healthy and thriving.

1. Create a Budget

To run a thriving childcare center , you must understand your financial situation and budget accordingly. Before you open your doors, you must set realistic expectations about how much revenue you can generate each month. You don't want to overspend because you think you can charge $20 per hour when your actual cost is closer to $15.

2. Hire Staff Wisely

When you hire employees, you need to consider whether they'll add value to your business or take away from it. For example, do you need three full-time teachers, or could one teacher handle three children? Do you need a receptionist, or can you use online scheduling software? These questions help determine whether hiring someone is worth the expense.

3. Utilize Technology

Technology has made life easier for parents who work outside the home. It's also made life more complicated for those who provide childcare. Parents now have access to information on their phones and computers that used to only be available in offices. If you don't keep up with technology, you may lose out on potential clients.

4. Offer Unique Services

If you offer services that no childcare center offers, you stand out as an option for families looking for something different. Offering unique services helps you differentiate yourself from competitors and increases your chances of attracting new customers.

profitable daycare tips
Reduce costs to ensure your child care center will be healthy and thriving

Is Owning a Daycare Profitable

It takes a lot of effort and dedication to ensure that children receive quality education and care. However, running a childcare center isn't an easy task.

Here are some tips to make your daycare more profitable.

1. Offer Special Services

Extraordinary services such as after-school programs, holiday parties, and birthday parties can help increase profits. This is especially true if you offer these services at a discount rate.

For example, if you offer $10 off for each party booked, you can expect to generate additional revenue.

2. Hire Good Staff Members

Hiring suitable staff members is another key factor in ensuring profitability. You should interview potential candidates thoroughly. Ask questions regarding their experience, qualifications, and references. There is a cost to hiring new employees and adding them to your payroll system. Getting it right more often will save you money, time, and frustration.

3. Set Up Automatic Payments

Setting up automatic payments ensures you don't miss out on paying bills and incurring a fine. You can automate bill payments using online banking tools.

Payments made via electronic funds transfer are faster than those made manually. Therefore, you shouldn't delay sending invoices. Instead, you should pay bills electronically whenever possible. This will help you save time and money.

4. Send Invoices Promptly

Sending invoices promptly helps you collect outstanding debts. You should send invoices within 30 days of receiving payment.

You should also follow up on overdue invoices regularly. The further a parent falls behind in payment, the harder it will be to collect the balance.

5. Use Third Party Software

Third-party software allows you to automate tasks. Using third-party daycare management software will help you streamline operations and save time.

For example, third-party software can help you automate billing processes. You can also use third-party software for payroll processing.

Streamline your processes

If you are running a daycare center, there are many things you can do to streamline your operations. Paper-based administrative tasks entail costs on paper, folders, and other documents. You will also have to code information into the database, and send it through postage every billing period, just like how you bill customers.

Automation could save you a lot of money. A study by the American Association for Day Care Administrators found that automation saves companies $3 billion annually.

A childcare management system effectively allows parents to manage their childcare facilities. With its help, you can digitize most of your back office functions – from recording and tracking employee attendance to generating daily reports and managing invoices, payroll , and other accounting tasks. You might be able to automate some of your daycare center's administrative tasks, saving you time and money.

Offer add-on services and products.

The best way to increase your income is to offer additional services or products to your existing clientele. This is because it allows you to expand your client base and make money while doing something you love.

Find a niche that you enjoy and feel comfortable providing.

As soon as your clients start liking and trusting you, they are more likely than not to avail of other add‑on services you offer, which can help you generate additional income. You can offer additional services aside from just picking up and dropping off. For example, you could offer dry cleaning, hair cutting, grooming, child/family portrait sessions, pre-packed meals for children, etc.

You can also partner with other service providers and earn commissions from every sale or referral they generate. Typically, you can expect to earn between 5% and 20%. You could earn hundreds to thousands of dollars per year from these sources.

Accept assistance programs

Federal and state assistance programs offer to fund children eligible for these services. You can apply for accreditation to admit children coming from qualified families and get vouchers. Typically, these assistance programs offer subsidies to low-income families. This allows you to raise your profit margins without increasing prices. Parents prefer to pay less because it makes sense financially. You can keep your rates down to encourage parents to enroll their kids in your daycare facility. Once again, the goal is to grow your roster to improve your revenues.

How to Cut Expenses as a Child Care Provider

If you're running a childcare center, you might consider making some changes to save money. If you are looking for ideas on cutting expenses, here are some tips you can implement today.

1. Use Coupons

Coupons are a great way to save money. As a childcare provider, coupons allow you to save money on groceries, household supplies, and even entertainment.

Several websites offer printable coupons. These sites include RetailMeNot, Groupon, and LivingSocial.

Use these sites to find coupons for products you regularly purchase. Then, clip the coupon and bring it to your favorite store to redeem it.

2. Get Rid of Unnecessary Items

Unnecessary items add clutter to your daycare. Get rid of old toys, books, and games. Make sure everything is clean and organized. Being organized will prevent you from purchasing items you already have.

3. Find Free Resources

Many resources are available online for free. Keep an eye on Facebook Marketplace and Craiglist for upgrading daycares that may sell or give away old equipment.

4. Ask Your Parents

Ask your parents for advice about how to save money. They may have suggestions for inexpensive ways to improve your childcare center. They may suggest places where you can find cheap furniture, toys, and other supplies. The parents of the children in your care want you to succeed, so they should be willing to help.

5. Be Creative

Be creative when thinking of ways to save money. For example, consider using recycled materials for decorating your childcare center. Or, try selling used baby gear, toys, and other equipment on eBay or Facebook Marketplace to recoup some of your investment.

6. Create a Budget

Create a budget for your child care center so you can track your expenditures. A budget lets you see how much money you spend on various expenses. It also gives you insight into areas where you could cut back.

7. Plan Ahead

Plan ahead for upcoming events. Prepare for special occasions a year in advance by stocking up on party favors and decorations during clearance sales.

8. Save Money on Groceries

Buy generic brands when possible. Generic brands are cheaper than name-brand products. Look for sales and discounts. Buy in bulk when you find a good price.

In conclusion, owning a childcare business may seem daunting, but once you decide to give it a shot, you'll discover that it's very straightforward. Reducing expenses and increasing profit in your childcare business takes a little extra effort, but it will benefit your bottom line and keep your business solid in the long run. Take pride and get excited about the small profit victories. They will add up to make a big difference.

Alexis Sferra

Alexis Sferra


About Alexis Sferra

Alexis Sferra has been working with children for over 14 years in many different ways. She started when she was younger, babysitting for children around the neighborhood. As she got older, she continued her work into overnight nannying for a few years in high school. At that point, she had to learn a few new skills. Making sure the kids were put to bed on time, had dinner, and cleaned up once the children were in bed. After school, she went straight into being a private nanny for many years. After college, she started a job at a local in-home daycare where she could help care for many more children but still, on a personal level, you get with nannying. After that, Alexis worked as an assistant director at a 24-hour daycare center. There Alexis had to combine all her skills of overnight sitting, parent communication, personalization, and caring for the children. While also learning new ones such as keeping the records up to date, going through inspections, managing a team of staff members, ensuring all rules and regulations were being followed, as well as payroll duties.

Additional Childcare Business Articles

daycare camera systems

The ins and outs of daycare camera systems

Through these devices, guardians now have access to crucial information regarding their loved ones, even…
read more »

Small Childcare Business

How to Make a Small Childcare Business Successful

If you are passionate about your business, you will enjoy selling to your parents and giving them more…
read more »

Types of Childcare Businesses

Types of Childcare Business

A childcare center with or without a preschool, a stand-alone preschool focused on education in a commercial…
read more »

How to make your daycare more profitable

How to Calculate Daycare Rates

The average charge for child care at a center across the United States is $212 per week. Keep in mind…
read more »

Childcare Business Advice

Childcare Business Advice

It was never my dream to be in the business of looking after children. It was, however, the dream of my step-daughter. I had many years of experience running an extensive verity of companies. When an opportunity presented itself to her to step into a daycare space that had been vacant for two years, I was all in to make it happen. Over the years we have learned a lot about managing, marketing, financing, and enjoying the childcare business. was created to share that knowledge.

This site is owned and operated by Childcare Business Advice. Childcare Business Advice is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Childcare Business Advice also participates in other affiliate programs. Childcare Business Advice is compensated for referring traffic and business to these companies.

© Childcare Business Advice All rights reserved • powered by iMprivacy policy