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How Profitable is Running a Day Care Business?

written by: •edited by: Jean Scheid•updated: 5/7/2010

The profitability of running a day care business depends on how you manage the business. Though the turnover in a day care business is good, it takes research and planning to make a profit. We have done the research for you and here are some tips to profit in a day care business.

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    Profitability of Running a Day Care Business – Turnover vs Profits

    Early Toddler Wikimedia Commons Child turnover and managing turnover can affect the profitability of running a day care business. You can increase the profitability of running a day care business if you follow some simple tips listed here. Add your own ideas and industry knowledge to get the most out of your day care business.

    A day care business is not very easy to start. Different states have different rules on how a standard day care business should operate. This includes a minimum space for each kid in the premises, quality of snacks, first aid, toys, etc. These requirements alone reflect how much you will have to invest on kitchen, toys, first aid kits, space etc. In addition, you may not be able to handle the children all alone. In this case, you will have to hire people. With child turnover, employees, expenses, and income, all revealed in your Profit and Loss statement, your profit depends upon how you plan and run the day care business.

    The following section explains and offers some tips on increasing the profitability of running a day care business.

    Image Credit: Early Toddler Wikimedia Commons

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    Tips to Increase Profitability of Running a Day Care Business

    Most people are under impression that the profitability of running a day care business is high as there is a good demand for day care centers. Because the economy requires both parents to work, children need to be attended to – and day care centers are the most popular choice when it comes to looking after children. After reading the above section, you know that you have to spend much to keep the business running. The following five tips will help you plan savings and thereby, increasing profits.

    1. The first step you need to take is to study the rules pertaining to the day care business in your area. The rules may vary perFig 2 - Profitability of Running Day Care Business  state or even county. Some requirements may include a licensed nurse, number of meals or snacks per day, one attendant per 10-15 children as well as other requirements. After studying these rules, you'll gain a rough estimate of the amount of working capital you'll need. You now need to plan how to save some working capital without compromising on quality. Everyone knows that quality attracts more business.
    2. You also need to think about saving that capital investment too. To start a day care business, you need good space. A building with a large backyard would be the ideal place. If you offer to share space with other building tenants, you can save on the rental of your day care space.
    3. You need to remember that most people like to drop off their kids at a place close to their homes. The more kids you have, the more the profitability. The place you choose should be near a housing complex that is large enough to get you a good number of clients.
    4. To save on salaries, hire one or more "nurse-on-demand" instead of an "on-site" nurse. You can also hire a nurse who is just out of the college at a lower pay. Use college students as teachers. They will work for lower pay compared to experienced child caregivers. Hire people who love kids and not just the pay.
    5. Finally, advertising, personal visits, and cold calls won't work well in this case. To increase the profitability of running a day care business, get some good brochures printed. Specify all the activities, facilities, and your contact information clearly. For example, if you intend to have local celebrities or artists talk to the kids or plan on taking the kids out for excursions once a month, mention it in bold. Do NOT try to save on words or even paper quality, as the brochure is the first impression of your day care business. You can employee college students or utilize local newspaper inserts to distribute these brochures.

    The main point to remember throughout, for increasing the profitability of running a day care business, is that you need maintain a strong base of kids. Focus on procuring more students by thinking outside of the box. Small steps like emergency baby sitting, adding breakfast for people who don’t want to cook in morning, and offering transportation may help. If you need more tips or ideas, or if you have anything to share, please feel free to do so in the comment section below.

    Image Courtesy: Wag Insurance