As a leading expert in the business of child care, I often get asked about the key steps one should follow when deciding to open an early learning center or preschool.
While there are many small pieces of a vast puzzle that need to fit together to start a successful child care business, here are 8 essential steps that I guide my clients to follow, whether it’s their first school or their fifth location.
One: Your Big Why. You must have a clear vision for WHY you want to start a child care center. Your “big why” will fuel you through the highs and lows you experience in this business venture. Specificity is important. The more you can write out a clear picture of your vision, the more easily you’ll be able to share it with others. When it’s time to galvanize the people on your team to take on more projects and tasks, it’s this vision that will sustain you and enable you to attract the right team members. Part of the vision is defining how your program is going to be unique and special in your market, compared to what preschool options are currently being offered by competitors. This will help you attract families and teachers, when it’s time to open your doors.
Two: Business Plan & Market Research. A solid business plan is key to your success. It will help you clarify your thinking, as you define your ideal size of school, building style, location, supply & demand calculations, competition, financing requirements, staff size and education requirements, marketing plan, and much more. The Small Business Administration is a great resource for helping new business owners understand the ins and outs of doing a business plan. They also have mentors available to help coach you through the process and ask you questions you may not have considered.
Three: Financing. Once you have your business plan written, and you’ve done your market research on the ideal location and size of your school, you can start putting numbers together for financing requirements. The more down-payment you have saved, the larger (or newer) facility you can lease, buy, or build. If you’re brand new to early childhood, or you don’t have a large savings set aside you might want to lease first, which is less of a financial commitment. You may also want to consider one of the leading child care franchises, as they help you with design, floor plan, operations, and marketing. Franchises typically require more cash up front than a traditional lease or than buying an existing smaller preschool that’s not a franchise. Again, the Small Business Administration is a great resource for financing options, as well as local community banks.
Four: Your Team. You need a team. This is crucial to your success. Before you open your doors, you will likely need a good commercial real estate broker, a child care business broker, and a financing expert or banker on your team. You may also want to hire a child care design expert to help you plan the ideal interior spaces of your school. As you get closer to gaining your license, you’ll need to determine if you’re going to act as the the Director or Head of School, or if you need to hire one. Also, you’ll need to start hiring teachers to begin employment 2-3 weeks prior to opening, so you have time to train them. Finally, I recommend you hire a bookkeeper or CPA to help you manage your finances and keep your eyes on the cash-flow.
Five: Site Selection. This step is related to financing and your business plan, but it warrants its own discussion because it’s so important. Weigh the pros and cons of different approaches to your facility. Buy or lease? Build from the ground up? Franchise or not? Go back to your vision. What’s the style, specific location, square footage, street visibility, and playground layout for the perfect school that’s defined in your “big why”? Perhaps most important, you need a clear understanding of your market and the demand for child care relative to existing supply. Lay out all the existing child care options on a map, including family child care homes and church preschools. You should be able to get a comprehensive list from ChildCareAware.org. Enter your zip code into the website and locate your local Child Care Resource & Referral Agency (CCR&R). Give them a call, ask for this list, and ask about other resources they may have to help you as a new provider, such as training and low-interest loans.
Six: Licensing. Each state has its own licensing requirements and you should become very familiar with yours. Call your state and do some digging. Ask for the name of who your licensing agent will be, based on your location. Try to build connections and relationships with these people. If you have a positive relationship with your licensing representative, it will make a world of difference (versus an adversary relationship). Obviously, you need to gain your licensing approval prior to opening your doors. This is a big and important piece of the process.
Seven: Interior Design / Equipment. As you get closer to opening, you need to design the interior spaces of the school and purchase furniture, toys, curriculum (or create your own), and other equipment. If you’re going to serve meals and snacks, you need a kitchen for food prep. Your state ratios and square footage requirements by age of child will help you plan out the size of each age group’s room. If you decide to do mixed ages, you probably need to meet requirements for the youngest child in that room. Your approach to early childhood and your vision will feed into this plan. For example, the design and learning equipment for a Montessori approach is much different than a traditional play-based approach or a STEM learning area.
Eight: Software and Tools. You will have a much easier business to run, and much more successful from the opening, if you use child care software programs to help you and your staff manage the operations. The first one to consider is child care management software. The leading option in this category is Procare. You can have children automatically checked in and out, which enables real-time tracking of exactly who is in each classroom. Procare also provides automated tuition collection, payroll, scheduling, and so much more. Another great software to have is called customer relationship management (CRM) software. This software helps you maximize your enrollment early and quickly, by allowing you to build a database of prospective families who contact you, and you can track how many of them take tours and enroll, as well as set up automated email and text campaigns so you can stay in touch with them over time. This is much more effective than managing your leads by “sticky notes” or paper.
Finally, understand that you’re starting a business, not just an early learning service. Yes, you are opening a school but you’re also starting or expanding a business that needs to survive and thrive, even if you’re a non-profit. The more you study successful entrepreneurs, leadership, money management, and other business topics, the more you will succeed.