The Business of Daycare

I recall a long time when I first started in the daycare business, a lawyer that I was consulting with at the time said that daycare was a terrible business model. He said this because kids age out, and so the cycle of finding a new market of clients is never ending. I ignored him at the time and as my daycare company grew more expansive, I thought about his words in a you-were-so-wrong fashion. But...was he?

The problem with operating daycares or any childcare is that the workforce is heavily regulated. Providers have to have a specific number of  employees. The programs also have to have a director. For the most part, by the time you get done employing your workers to meet the adult-child ratio, pay the lease, insurance, inspections, food, supplies, and several other expenses, there is basically nothing left. Maybe a sliver if one is lucky. So, the pressure is on to add more centers to the business in order that the sliver becomes a piece of wood. Yet, state governing bodies wonder why there are childcare desserts all across the country. Entrepreneurs, by and large, want to make money to meet their current and future needs, not be saddled by regulations, debt, rising costs, and having to ponder their future outlook.

The expense of daycare is compounded by the fact that the more years you are in business, the more you retain people and the more you have to meet their needs with increased wages, retirement funds, health insurance, and other expense benefits to retaining employees. Not to mention meeting the minimum wage increases (which at least in NY is headed toward $15 per hour--double the national requirement). Then add to it the thousands of dollars a year that the government snatches from your purse via employer taxes. Yet, how much can a daycare business raise the weekly cost of childcare? How much can a parent pay a provider before the cost of having a child in care is more expensive than the salary they'll earn by going to work?

For an independent person who only wants to run a daycare and make a salary, with no eye toward diversifying and expanding...the challenge to retain a decent salary from this business is daunting. Or the challenge to plan for financial stability when you're older. 

For a more aggressive company, the challenges are realized in the required growth to make a strong dollar...controlling the quality of programs, keeping up with state oversight, retaining even more workers which adds to increased wages, and juggling multiple leases, landlords, relationships etc. all to make a salary that doesn't equate to much more than a vested employee at a good company. Granted, freedom from being an actual employee is nice, but it comes at a heavy cost.

Thankfully, since COVID centers have been given opportunities to receive grants from federal government to help with multiple expenses. Hopefully the grants continue because it is the sensible way to pave a future path for there to be more daycare entrepreneurs (which are needed) in the mix to answer the demand and solve a childcare dilemma that plagues businesses and parents of young children. It's time to start recognizing why people who run childcare programs do what they do...mostly it is because they love and respect children and want to provide for them. Business leaders and childcare workers in the industry should not have to suffer financial loss and burden just to do what they love most.

If you are considering starting your own childcare program as a means to making ends meet, do your homework first, and consider what resources you will need presently and in the future to live the life you want.