Many childcare centers are established out of genuine passion and love for kids, but this doesn’t mean it isn’t a profitable venture. On the contrary, child care can be a lucrative business.
Majority of American parents are part of the workforce, making child care services a necessity. In fact, it is estimated that there are about 15.7 million young children who are into some form of child care arrangement. With expected annual revenue of $57.6 billion and an average growth rate of 3.3%, daycare operators can indeed earn profit.
Although child care service is a promising industry, starting and operating a daycare center can be challenging – but can be done. Once you hurdle the initial stages, you need to focus on boosting its revenue aside from being a place for kids to socialize, learn and grow.
How to make your daycare center more profitable?
Here are some ways to drive profitability at your child care center and maximize its true potential.
Your childcare center’s revenue depends on your enrollment. The larger the client roster is; the lower the overhead and the better the profit margin. As such, you need to work hard to grow your enrollees. This can be achieved by increasing your exposure within the community such as through sponsoring fundraisers, joining local community activities, and placing advertisements in local newsprints.
Keep your online presence through setting up a website, social media accounts and online ads. The Internet and social media are among the first things a parent will check when looking for a daycare. It’s important that you are easily searchable online.
Another great way to attract new clients and retain existing ones is by offering incentives and discounts. Monetary incentives will give cash-strapped parents more reasons to enroll or keep their kids to your center. While this might seem counter-intuitive if your goal is to increase revenue, having more enrollees mean more people who will likely recommend your services to others. Word of mouth referral remains among the most persuasive marketing strategies, particularly in a trust-based business like child care.
Streamline your processes
Many childcare centers spend so much on repetitive and costly clerical tasks. For example, paper-based administrative tasks entail expenses on the paper, folders, and other documents. You will also have to encode information into the database, which needs manpower. The same is true with paper-based billing, wherein you need to print out each billing and sent through postage every billing period. Aside from the cost of printing the invoices, you also have to pay for postage.
Automating your daycare center’s administrative tasks could very well reduce your overhead. Childcare management software is a popular and cost-effective tool that will help you run your facility efficiently. It digitizes majority of your back-office functions – from recording and monitoring daily attendance to creating daily reports and even managing invoices, payroll and other accounting stuff.
With the use of this specialized IT solution, you and your staff can focus on more important functions instead of these time-consuming tasks. By digitizing paperwork, you will not only boost your revenue, you’ll also discover how it makes managing your daycare center a whole lot simpler.
Offer add-on services and products
Once your clients like and trust your center, they are more likely to avail of other add-ons you offer, which can give you extra source of revenue. Aside from standard add-ons include pick-up and drop-off services, consider offering unique services like dry cleaning, hair-cutting, grooming and childcare supplies, child/family portraits, pre-packed meals, etc.
If you have ample time, you can start another business on the side like children’s birthday party business, first-time parents childcare sessions, and even trainings for childcare workers. You can choose a wider variety of services that suit your skills and expertise.
You can also collaborate with other service provider and get commission from every sales or referral you bring. Typically, you can earn up to 10% to 20% share of the revenue. These commission-based income streams could translate to a few hundred to several thousand dollars in your annual profit.
Broadening your services and making it a one-stop-shop for anything child-related can set you apart from your competitors, which is crucial to your long-term success.
Invest in your staff
The profitability of your childcare center depends wholly on your staff. Equipping your team with specific training and certifications ensures that they deliver quality service and provide the best experience to children and their families. Quite obviously, if the families are satisfied, they are more likely to retain your services and even recommend you to others.
Continuously educate and train your employees to cut down on inefficiencies and maximize their effectiveness. Orient them on your financial goals and encourage them to help you achieve these goals.
Consider each of your staff as a crucial member of your team so you will not have to deal with fast employee turnovers. Frequently changing workers is never good and can halt your daycare’s profitability.
Use facility for other services
Not all childcare centers operate 7 days a week. Many daycares sit idle for 3 or 4 days. If your center does not hold classes every day, you can look for other companies or organizations that need a facility like yours and offer to lease your facility during off-days. There are lots of home-based businesses, church groups, local clubs, and non-profit organizations that might need exactly the same arrangement that your offer. Just make sure that their activities won’t affect your business.
This additional revenue stream could potentially add hundreds of dollars into your monthly revenue. You can use this to pay up recurring expenses.
Accept assistance programs
There are federal and state assistance programs that allot funding for children qualified for these services. You can apply for accreditation so that you can admit kids coming from qualified families and receive vouchers. Typically, these assistance programs are offered to low-income families.
These subsidies can boost your profit margin without the need to increase on prices. You can keep your rates low to encourage parents to enroll their kids to your daycare. Again, the goal is to increase your roster to improve your revenue.
Striving for profitability for your child care center is not bad. In fact, it’s a must. Without the necessary financial resources, you might have a hard time running a quality childcare program. Boosting your revenue can help ensure that you’ll be able to fund your operations continuously, improve facilities, staff, and quality of care.