Tuesday, June 07, 2005

Daycare (again)

I have been working at a small daycare for about a moonth and a half. It is considered "for profit" run by an individual.  She has no business plan, profit or loss information and not earning any money. She takes in infants which I have tried to convince her its not a money maker and has "toddlers and older (preschool age) about 30 iin all. She is broke already.   She has had to lay off folks and it makes it hard to run the  business this way. She is now talking about going "non profit". I would like to know the difference  and how can I help her make this daycare a success. She has 11 babies (under 12 months) and has 2 staff and sometimes 3 to work this room.  She and her partner say taking infants "brings em in" but she has to pay out in payroll. I see alot of  potential, but infants keep coming in and that makes it difficult because the younger the age the more staff has to be hired. Can she turn and go non profit now that she has been open for awhile? This is something she has wanted to do and I have observed she has not given it a whole lot of thought. I used to have my own daycare and would like to see this one do the full combination starting at 18monts to 2 1/2 or so and then 3's to 5's. She keeps bringing them in younger and younger. There are not alot of daycares in our town that offer this service. She is also way to cheap to make it worth while and hesitates whenever it is suggested to raise her rates. Please advise. Thanks J~

One of the reasons that are given for starting a daycare business is that this is a service that is always in demand.  In fact your post - where you say that there is a need for this service in your area - just proves my point.

What I don't understand is the specifics of whether or not the parents are being charged for taking care of their children.  The most major sore point of your whole post (and you are answering your own question) is the lack of planning!  The fact that you do have so many children that you are taking care of just goes to show that there is a profit potential here.  Why is she NOT making money?  How is she charging for her services?  What is she charging? 

The whole purpose of a business plan is to have a plan for your business.  In simple, basic math you have to make more money than you spend.  Your income - how much you charge - should be more than your expenses - how much you spend.  When I do a business plan for someone they are amazed at how simple a thing it can be.  There is no great mystery here - just a plan for your business.  One of the most important things is to decide the objective of your business.  Is it to be self-sustaining - in other words being able to earn a livable income from it?  If so then WHAT is the amount that you would have to earn annually?  Offset this against your expenses with the intent of having a profit.  That is what this person is going to have to do!

As far as profit vs non-profit - it is a matter of choice.  One of the most cited reasons for making one's endeavor a non-profit is that donations are tax-deductible.  You qualify for more grants if you are non-profit but by the very definition of non-profit there is a limit on how much and what kinds of profit are available to you.

Bottom line is that she has to have a plan!  Be it a business plan or just a day by day (not recommended)kind of plan - she is going to need one. 

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