Any parent knows the cost of quality daycare has risen considerably. This is primarily an outcome of the increased need for daycare, now that it’s more common for new parents to have full-time jobs. But like any other business, the amount of money daycare centers take in is merely a reflection of the amount of money it costs to stay in business and maintain their customers’ trust.
Expenses for running a daycare keep profit margins surprisingly low. Traditional businesses can hire as many employees as they want, but daycare centers must comply with state laws that mandate certain staff-to-child ratios. Payroll can therefore eat up approximately 70% of revenue from sales, all year round. Daycare centers often struggle to find good help, so when they do, they must pay them well.
Hard assets like playgrounds, toys, couches, storage areas, cribs can cost you about $600 per child. Everyday equipment must be regularly replaced, on top of continuous expenses like cleaning supplies, food, crafts and office supplies. Then there’s your increasingly necessary marketing budget, which is likely to rise now that more and more daycare centers are opening throughout the country. Between these expenses in addition to rent, property taxes, insurance and maintenance, daycare operators can expect profit margins of roughly 5%.
Fundture Capital is proud to be providing Small Business Loans for Child Care & Day Care Centers across America. Similar to other customer service businesses such as senior healthcare centers and restaurants, child care businesses require refurbishment to stay competitive. Contact us today for your FREE business funding consultation!