When daycare owners start, they do so because they love children and are very passionate about helping them learn and grow. While this is undoubtedly an appealing attribute, a big worry for many daycare owners is finding enough clients to fully cover expenses and make a profit.
The truth is, childcare can be a very profitable business. Most parents participate in the workforce, which means they need to rely on daycares to care for their children while at work.
With the daycare industry growing at a rate of 3 percent and annual revenues of over $57 billion, it's safe to say the industry offers lots of opportunities.
Regardless of the promising statistics, starting and running a daycare is challenging. Good childcare providers have to know what they're doing and must be willing to put in the time and effort to differentiate themselves from their competition.
Keep reading to learn four practical tips you can implement today to make your daycare more profitable.
How Profitable Are Daycares
There are more than 700,000 child care centers in the United States alone and over 39,000 in Canada. These figures grow every year. Reports also state 95.4% of Canadian daycares are profitable.
There are a lot of factors that go into the profitability of a daycare center. Your location, size of the child care center, and demand for services will all determine how successful your daycare is.
Like many businesses, starting and maintaining a profitable daycare is a lot of work. However, there are 4 key strategies you can implement to increase your profit margins.
How Can I Make My Daycare Profitable?
#1. Increase the Size of Your Client Roster
A daycare's revenue primarily depends on enrollments. The more kids you care for, the more opportunity you have to increase your profits.
There are always ways you can grow your clientele. Referrals, traditional advertising, non-traditional advertising are ways to increase your enrollment rate.
You will have to put in some work, but it's well worth the effort. You can increase your visibility in your local community by:
- Joining community activities. Many organizations offer local clubs, groups, and associations for mothers of small children. By joining these groups, you will explore the local resources in your area and make connections that you can use to grow your business.
- Sponsoring fundraisers. Looking for a fundraising sponsorship is another good way to increase the visibility of your daycare center. You can sponsor a fundraiser for a school, church, or other nonprofit organization in your community. Your sponsorship will get your daycare centre more exposure, which will increase the number of people who come to your daycare center.
You can also increase exposure by building an online presence. Set up a website, start a Facebook business page, share photos and videos, and even post videos to YouTube.
Building an online presence is one of the best things you can do to increase your daycare exposure and profits.
Put yourself in the shoes of a parent searching for the perfect daycare for their children. The first thing they’re going to do is look at your online presence. Establishing your online presence and managing your reputation will boost your credibility with potential clients, resulting in more enrollments.
#2. Build a Budget or Redefine an Existing One
Building a budget for your daycare business will help you stay on track. It will also allow you to monitor how much money your business makes. You will need to account for several expenses, such as rent, utilities, insurance and employees' salaries.
Before you write your budget, you will want to figure out your short-term and long-term goals. That way, you can include the appropriate expenses. For example, if you need to hire extra staff members or purchase new playground equipment, a budget can help you meet that goal.
A budget will also enable you to forecast how much money you will need to make to reach your goal.
#3. Raise Your Tuition Fees
Deciding to raise your rates can be a tricky topic. You don't want to hike your rates too high, but you also don't want to offer low prices to the point that you will lose money.
Your top priority should be ensuring that parents are satisfied with your service. If you are getting enough positive feedback, raising prices can be an excellent way to reinvest the extra money that you are making. Collecting feedback is easier than you might think. You can set up a feedback questionnaire for free on Google Forms and send it out via email on a monthly or quarterly basis.
The truth is, it’s not uncommon for daycare centers to raise prices every year. When you decide to increase fees, make sure you do the actual math to justify your decision. Then inform parents of the increase so they are not surprised.
If possible, show your clientele exactly why the new rates will benefit them. For example, if you raise your rates by 10% but offer a fun new program or added benefit, they will feel much better about the price increase.
#4. Consider Including Distance Learning as an Option
While researching how to make your daycare more profitable, you should also consider offering distance learning. With distance learning, parents can pay a premium rate to have their child participate in a few or all of your classes.
Long gone are the days when the only options were daycare and learning at home. Now you can offer parents the best of both worlds.
Distance learning helps parents reduce stress while increasing your daycare's potential revenue. Many daycare owners are beginning to see the value in offering distance learning, so it is something you may want to look into as well.
Closing thoughts
Finding ways to improve your profit is the key to running a successful daycare. If you’re finding that the profits from your daycare aren’t enough, One of the best things you can do is look at other successful daycares in your area and see what they may be doing right. Research their budget, how much they earned, and the services they offered. In most cases, these daycares increased profits by raising their rates or consistently delivering better benefits than they did before.