Once you have a business plan in place for your new preschool/daycare, it’s critical that you figure out how much you’re going to need to get started. You can create a budget to make this process smoother.

Before you get started, you should be aware that preparing your preschool/daycare startup budget can be quite tedious if you’re not sure where you should start and what you should include.

Following is a list that will facilitate this process, which will make it that much easier for you to create a list of potential expenditures.

As you work your way through this list, write down estimated numbers for the first twelve months, then calculate by item, section, and month. This will help to facilitate your budgeting efforts and help you to figure out where your projected costs are excessive and possibly need some adjustments.

Registration Fees

Before you open up your preschool/daycare, you must make sure that you get the appropriate licensing and permits through the county clerk in your area.

You should check out our article titled: “What Do You Need to Start a Preschool?” to help you figure out what steps you need to take.

Once you have gotten your licensing, you also need to contact the Department of Revenue and obtain a Federal Employer Identification Number. This number is free, but you will have to pay for licensing, permits, and registration with your state.

Legal/Accounting Fees

Take the time to check around with local attorneys who can draft the contracts you are going to need for your employees and clients. Be sure to get estimates of the legal fees.

In addition, it’s a good idea to obtain estimates for a bookkeeper or child care accounting software (find out more in our article titled: “Choosing Accounting Software for Your Childcare/Preschool Center”) that you can use to manage the finances of your facility.

Facility Fees

Take your time and find a reputable, licensed realtor that can assist you with finding potential facilities for your preschool/daycare. Be sure to include the average monthly cost of the top three choices in your budget.

Before you start looking for property or a facility, you must first do some research and find out whether your state has a minimum square footage per child- this could be critical to your search.

In addition, you must think about any renovations that the building might need in order to comply with your state regulations. You’ll need to contact your local Department of Human Resources to find out more about this.

Utilities

Once you have your facility up and running, you need to keep in mind that you’ll be paying utilities including: phone, water, trash and recycling service, and electricity. Get in touch with your local utility companies for the industry averages to include in your budget.

Insurance

No one wants to consider the fact that an accident could occur in their facility, but the truth is that they do happen. Therefore, you will need to obtain liability insurance to cover these unfortunate circumstances, including property damage and personal injury that occur on your property.

In order to make sure that you have the most adequate coverage, consider purchasing fire and theft insurance.

You can find a list of agencies that provide this sort of coverage by getting in touch with your local provide or you can use the online tools provided by Assure Child Care.

Staff Salaries

The number of people you have on your staff will be dependent upon how many children you plan to enroll in your program. When you are creating your budget and estimating salaries, you should be sure that you think about industry standards and the federal minimum wage requirements. You will also need to include Medicare and Social Security taxes. Be sure to visit the National Association for the Education of Young Children website to find out more about required teacher-student ratios.

Supplies/Equipment

You are also going to need to estimate the costs associate with furnishing your facility in alignment with specific standards. Of course, this will vary according to the age of the children in your care and the size of your facility.

The supplies/equipment you will need include the following:

Furniture (i.e. cribs, small chairs, tables, etc.)

Special needs equipment

Activity centers

Teaching toys/supplies

Safety equipment (i.e. outlet guards, gates, etc.)

Playground equipment

Books

Diapering supplies

Eating utensils

Cleaning supplies

Of course, this is not an exhaustive list- again, you’ll need to consult with the information you obtain from your local Department of Human Resources regarding everything you will need.

Food

Be sure that you also include food costs for all children enrolled in your program. This may be difficult to estimate, so you should use the Standard Meal/Snack Allowance Rates found on the IRS website.

Administrative Costs

You will probably need to hire a secretary/receptionist to oversee the day-to-day operations at your preschool/daycare such as phone calls, faxes, emails, ordering, bill pay, accounts receivable and more.

You will also need to have computers, software tools help run the business (eg check-in, observation, online payments, food/toilet notes) and other general office supplies and equipment.

Marketing

You are going to need to get the word out about your new preschool/daycare facility- therefore, you will need to have a marketing campaign.

One free way you can accomplish this is through word-of-mouth and social media. However, you should also include funds in your budget for newspaper ads, brochures, flyers, business cards, car magnets, yard signs, and booth rentals for local events/festivals.

There are many inexpensive options for printed materials- be sure to do an internet search before you choose one.

Miscellaneous Costs

It’s also a great idea to allocate some funds for variable expenses such as fees for continuing education classes, contractors, and consultants.

Final Thoughts

Throughout your planning process, you must keep in mind that starting a preschool/daycare program is definitely not cheap- but when you take the time to properly plan it, you can easily be successful.

When you’re creating your budget, it’s a good idea to use conservative numbers so that you can make sure you have plenty of cash available to operate comfortably and not be financially stretched to the max.