Money management can feel like a daunting task, no matter the business, but strong daycare financial practices give you more control, freedom, and clarity on the progress of your services. In the long term, a solid budget allows you to improve your marketing, obtain better equipment for the kids, offer raises to your staff, and level up the quality of your facility or services. 

You may be wondering how to understand the finances that come in and out of your daycare and how to use budgeting to your advantage. Luckily, Playground has the knowledge and tools to help. We’ll explain how a daycare should balance revenue and expenses, including some challenges you may face and solutions to lead you toward financial stability and growth. 

Understanding your daycare business finances

First, you should have a thorough understanding of the flow of money for your particular daycare. Your revenue, predominantly tuition, should be compared against the long list of expenses you can expect to incur. Keeping a profit-and-loss balance sheet and sample operating budget can help you get a sense of your current standing. 

To help you picture your budget, let’s discuss revenue, expenses, and common budgeting challenges. 

What kind of revenue can you expect from a daycare?

The main sources of revenue for daycares are tuition and fees, but there are other revenue streams out there to help you boost your profit, like grants and donations. It’s important to have a strong payment policy where these things are detailed and communicated to parents upon registry. Automating payments with software like Playground is a great way to ensure you’re getting the payments expected while helping you track your revenue from one dashboard.

Tuition is going to be the primary way your center makes money, as well as associated registration fees. Beyond registration fees, there are others you can consider to help you cover expenses: 

• Waitlisting fees

• Service fees, such as for meals

• Incidental fees for late payments or early drop-offs 

Automating the collection of these fees can help a daycare tremendously, and Playground can do just that. With our billing software, you can set up automatic fees for late pickup, implement one-time charges, and even pass on processing fees should the need arise. You can also use Playground to put your drop-in care scheduling and payment on autopilot, boosting your margins without additional operational overhead or staffing costs.

Childcare centers are of great value, and communities may respond well to offers for donations. If your daycare has a social media page, Instagram and Facebook are great ways to link fundraisers to those interested in supporting your business. Fundraising events can also be a fun way to involve your community by partnering with local businesses and organizations.

If your center is dealing with a difficult revenue stream, there are many childcare financial assistance programs offered by the government, such as grants and subsidies.

Now, what are the costs of running a daycare?

As you know, daycares come with an extensive array of costs. In materials, there are supplies, books, toys, meals, furniture, cleaning supplies, and more. For the facility, there are licenses, utilities, and maintenance. For staff, there are payroll, training, and license certifications. The list, unfortunately, keeps going.

While the number of costs can seem endless, they can be categorized in ways that make them easier to understand, like fixed and variable costs. Fixed costs remain the same each month, like rent and utilities. Variable costs can depend on your services, enrollment, and activities: this can include inventory, supplies, equipment, etc. 

Maintaining a strong grasp of your costs allows you to more accurately estimate where money should be allocated. Then, when capital expenses come up, you can see where adjustments can be made to help support them. When expenses occur, Playground can help you keep track of them. We offer a robust expense tracker dashboard so you can categorize them without ever losing a receipt.

What are some budget challenges daycares face?

There are three common challenges a daycare should watch out for:

• Underestimating the costs of startup: The cost of the physical space is front of mind for daycare owners, but many other costs come with starting a daycare, like licensing, equipment, etc. The costs can add up, throwing more onto the pile of debt you’ll accrue until you’re getting steady revenue.

• Not allocating enough toward marketing: Since tuition is one of the largest sources of income for daycare centers, that also means managing your advertising to keep enrollment numbers high. Those who don’t put enough money into marketing are more likely to suffer from meager enrollment metrics.

• Budgeting inefficiently: Unfortunately, a lot of crumbs can fall under the fridge, so to speak. Budgeting without a clear understanding of the daily costs while jumping from platform to platform is sure to create some inaccuracies. That’s why it’s so important to invest in childcare budgeting software.

How to budget for your daycare efficiently: 6 helpful strategies

Streamline your billing, payroll, and expense tracking

For ease and organization, keep your core financial transactions in one place. Collect payments, manage salaries, and track expenses using Playground’s all-in-one software. Use Playground’s automation to organize your work for you and reduce the chances of error where it matters most. 

For expense tracking, Playground allows you to log and categorize different purchases, save receipts, and forecast your cash flow. You can watch your revenue and expenses tracked in intuitive formats.

With billing automation and flexible payment plans, Playground makes managing tuition easier for you and for parents. A more efficient payment system means a greater likelihood of obtaining reliable income, and Playground helps you digitize and track billing to aid that.

One of Playground’s unique benefits over other childcare management software is its payroll capabilities. Employees can find their pay in the same place they find their schedules; plus, for your benefit, you can file your payroll taxes automatically.

Automate administrative tasks

Automating different aspects of your administrative process can eliminate tedious tasks and invest in less software than needed. That means more time and resources devoted to other areas of running your business. How do you automate your daycare, then?

Each of Playground’s features is geared toward automating the background processes of running your daycare. For example, you can track daily attendance, manage your food program, and digitize paperwork. By simply investing in one platform, you can eliminate countless costs to support your budget.

Reduce unnecessary expenses

Before purchasing more items, remember to take inventory to make sure you aren’t overbuying, especially for resources that lose quality over time. Decide which items can be repurposed or recycled before trashing them. Save things like boxes or packaging material that can be used for building crafts and projects. Look for cost-effective materials at local thrift stores first. 

Try to avoid overstaffing by using enrollment as a guide. You can assign teachers to manage a few kids at a time by grouping kids in similar age groups. For times of the year that you know will see lower enrollment, try to make scheduling more flexible and only keep the staff you need for the week’s enrollment. 

Eliminating costs, as with personal finances, often means canceling unnecessary subscriptions. Playground aims to help you consolidate, access, and manage the many different childcare management tasks required to run a successful business. Why invest in several different pieces of software when you can invest in Playground? 

Add new programs and diversify income

Increasing revenue may mean expanding the services your business offers. Learn what parents, kids, educators, and other businesses need to understand which activities would garner the most attraction. While adding to your income, this would also work as advertising that helps you reach a wider audience, leading to potentially higher enrollment. 

For example, adding more extracurricular activities could mean capturing families looking for a recreation center. Summertime educational programs and evening tutoring programs can be helpful to students beyond the age group that your daycare serves.

Adding drop-in care services to your daycare facility can help optimize your space and obtain the most revenue possible in a week. Luckily, if you use Playground, there are drop-in features to entirely automate the scheduling process. 

Market your daycare with social media and SEO

Marketing your daycare is essential throughout your business’s lifespan; as such, advertising costs can be a consistent expense, for things like printing flyers and maintaining your website. Cost-effective marketing means attracting as many views as you can while optimizing the marketing streams you have for the highest quality.

In the age of information, there are two main ways for a daycare to market itself effectively online: social media and SEO. An active social media presence with a decent ad spend can get eyes on your business fast and even help you reach and engage new audiences. Your socials will direct leads to your website, which should be fully optimized for search engines to gather organic traffic.

Not sure you have the SEO skills to become visible in top search results? Playground websites are fully optimized for search engines so you can start with a great foundation online. 

Check out options for government assistance

Grants, subsidies, and donations are great ways to add to your revenue. Look out for ones that match your services, like the Community Facilities Grant Program and the Child and Adult Care Food Program (CACFP). You can find different grants that aim to support businesses of certain kinds, with different goals, promoting diversity and inclusion. 

Look through the US Small Business Administration website for more resources. 

Playground has billing, payroll, and expense tracking features

Balancing revenue and expenses for a daycare center is simply a matter of careful planning and efficiency. Using resourceful strategies can help you cut down on expenses and maximize revenue. One strategy to help you both in the short and long-term success of your daycare is to invest in Playground.

Having all of your administrative processes in one place can save you hours of collecting, counting, and organizing. With Playground, you can not only automate many of your tasks, but also communicate with families, build an SEO-friendly online presence, and so much more. 

If you’re interested in maximizing your time and money, start by building your daycare’s digital home base with Playground today.