Managing a Daycare Budget

Every business needs a budget. A successful business gets a solid return on investment and brings in a profit. If you don’t have a budget, you can’t plan for your expenses and revenue. You would just be running blind, which is a recipe for disaster. 

The concept of a budget is very simple. You track what your business spends and what it brings in. If the revenue is higher than your expenses, then you can continue to run your business. If it isn’t, then you could be in trouble. The difficult part comes with the details you need to track. You have to factor in every possible expense when you are developing your budget; otherwise, you will end up being surprised at some point through the year. 

If you budget well, it will help make certain decisions easier and help you plan out the next steps for your business. Your budget will determine how much you charge for your services, how much you have to reinvest back into the business, and how many clients you need to make it all work. 

As a daycare provider, you need a budget just like any other business. There are several variables in play that you will need to consider. Here is a quick guide to managing a daycare budget. 


Your first step is to calculate the revenue you bring in every month. Add up everything that brings in money. You will definitely have your tuition or registration costs, but there may be other ways to bring in revenue. For example, you could charge a fee for certain snacks or meals. You could also make money through extra costs for day trips, renting space in your building, and fundraising efforts. 

For the most part, the revenue for daycare is pretty straightforward since there are only so many ways that you can bring in money. To be as accurate for forecasting as possible, add up several months’ worth of revenue, and divide by the number of months. This will give you an average and give you a baseline to work from. Also, if your business has been growing, then this average may underestimate what your revenue will be in the future. This will be handy since you will end up with a surplus down the road while being smart with your money. 


The expenses are where things can get a little more complicated for a daycare business. There are many types of expenses that you might have monthly. For example, if you are not operating from your home, you will have to pay rent and utilities. There is food for the kids, day trip costs, and toys. You will also need some office supplies and a computer to work on. You also have to factor in taxes and licenses when figuring out your expenses. 

Insurance is one of the most important expenses you can have. While you might not want to take on the child care insurance cost, it is crucial. If a child gets injured, or if you get into a dispute with a parent, you need protection from a lawsuit. Plus, there is always a risk of damage to your property or an employee getting hurt on the job. These scenarios can have massive financial implications, and insurance could be the only thing keeping your business from declaring bankruptcy. 

Calculate Your Profit or Loss

Once you’ve calculated your revenue and expenses, you can then figure out whether you have a profit or a loss on your budget sheet. All you have to do is subtract your costs from your revenue. If you are in a profit situation, you can choose to spend the extra however you want. For example, you can invest in equipment, pay your staff more, or get some much-needed upgrades to your daycare space. 

If you have a deficit, you will need to look at where your money is going and why there isn’t more coming in. You can’t operate a business at a deficit for a long time. You want to be profitable and hopefully grow that profit over time. When you start out, you might find that it’s hard to make a profit, but over time you can figure out how to balance your revenues and expenses so that you will find yourself there eventually. If you find that your profit is very tight every month, then you will have to look at ways to cut your expenses to give yourself some breathing room. 

Build An Emergency Fund

You should always prepare for a rainy day no matter what kind of business you run. Yes, you will have insurance, but insurance won’t help you if you are simply going through lean times or you may not want to make a claim for certain things. So, every month, add into your budget that you will save a certain amount for an emergency fund. This money will help you out when times are difficult so that your bills will still get paid. Or, you can use the money for emergency repairs, such as to a vehicle or appliance. You need to build your fund to at least $5000, although $10,000 is a better limit. That way, you will always have the money if you have an emergency. 

There’s no doubt that running a daycare can bring in a lot of revenue. However, it also comes with a wide array of expenses. If you haven’t accounted for all of them, then you could find that you aren’t bringing in enough to cover it. With a good budget, you can ensure that your spending is always aligned with your revenue so you don’t overextend yourself. Use your budget to project what your revenues might be over several years so that you can have a plan in place to grow your business. If you don’t’ have a budget, then you don’t have a guide for where you want to go. 

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