Is childcare a good business to go into? 

Starting your own business and becoming your own boss is a dream that captivates many childcare workers, and it certainly can be an incredibly fulfilling journey.  

Before setting things in motion, however, the first question you might ask yourself is, ‘is owning a daycare profitable?’. In order to answer this question, it’s important to consider the realities of running your own childcare business. 

In this article, we’ll run you through just a few of the important details you might want to think about before deciding this is the right path for you. 

Operating Costs

Perhaps the first thing to think about when it comes to starting any business is finances. From licensing to staff, there are lots of hidden costs that need to be included in calculations for daycare startup costs and monthly expenses. 

Location costs 

Finding the right place to start your childcare business can be tricky business – somewhere that’s convenient for families but isn’t too close to competitors, and has enough space, can mean you need to spend more than you expect on securing a location for your business. Do your research on commercial spaces in your local area and come up with a realistic budget based on the vision you have for your business. 

Licensing and facility setup 

When setting up your childcare business, one of the major things you’ll need to address right off the starting block is the stringent regulations set by local authorities and state governments. In Australia, childcare providers must adhere to specific licensing requirements to ensure the safety and well-being of children. Apart from the standard licensing fees, there might be additional costs associated with meeting and maintaining these regulated standards. Renovation expenses to align the space with safety compliance and licensing regulations are crucial, and could add more to your initial start-up costs than expected – which is why it’s important to budget a little extra. 

Staff recruitment 

Assembling an amazing team of highly-trained childcare workers is definitely an exciting aspect of starting your own business. But this is one area which can shock you when it comes to daycare monthly expenses. In order to ensure your staff have the experience and qualifications to help your business become a success and provide the best level of care possible, you may need to pay a little more. During operations, you may also choose to use recruitment services for vetted workers to cover shifts on short notice, or to help you choose the right staff for your workplace. 

Renovation and safety compliance 

Aside from licensing regulations, you’ll also need to address Work Health and Safety regulations. This could also mean renovations or alterations to the space to keep you covered against accidents, injuries and lawsuits. 

Specialised equipment 

Once you have your space sorted, you’ll need to fill it up with equipment! That means cots and cribs, high chairs, booster seats, educational toys, changing tables, potties, safety gates, play equipment, eating supplies, first aid kits, sun protection, craft supplies and so much more. Kids have a lot of wellbeing, education and entertainment needs, so it’s vital to set aside a considerable budget for stocking a new business.   

Marketing 

In this day and age, a new business can’t afford to go without some community marketing. That could be as simple as making your own post on a Facebook page, but childcare entrepreneurs often turn to social media experts to help build engagement and trust with local families to get the word out there. At the end of the day, a childcare centre is just a room of toys without little ones to look after. 

Repairs and maintenance 

Plumbing, electricity, gardens — these things may break or need regular maintenance, and should be accounted for in monthly upkeep costs. 

Competitive Wages 

Childcare wages also rise according to various factors, from government policies and industry trends to general economic conditions. This can be handled by increasing the cost of childcare, but it’s a balancing act in order not to shut out families in your community from accessing childcare. 

Childcare salaries may also generally rise as workers gain more qualifications, and therefore become entitled to higher pay.  

Should you Franchise?  

Franchising can be a way to make setting up a childcare business in a streamlined way, but it also comes with setbacks. Here are a few pros and cons of franchising a childcare business. 

Pros: 

Branding

Franchising allows you to take advantage of your already established brand and expand it outwards.

Operational support

You’ll receive assistance and guidance in the set up and running of your centre. 

Proven business model

Most of the guesswork is removed – you’ll be using a business model that’s already been tested and proven to work in multiple locations. 

Marketing

You can join efforts with other centres and benefit from the high level of marketing and community following that the franchise has already built. 

Cons: 

Upfront costs 

Franchises often require a significant investment to start with, which usually includes franchise fees. 

Ongoing fees 

You’ll need to make regular payments in order to get the benefits of the franchise’s support. 

Limited freedoms 

Franchise guidelines and processes mean that you don’t have complete freedom to tailor your centre to things like local community needs, implementation of curriculum, and budget and investment decisions. 

Childcare industry outlook 

The Australian population is always growing and is projected to reach around 30 million by 2032. Population growth means more children and more need for childcare services. 

It’s also an industry that’s grown in revenue by 1.8% to $14.7 billion between 2018 and 2023, a number which is expected to grow to $17.2 billion by the 2028-29 financial year. These are promising predictions for the future of the childcare industry.  

Is owning a daycare profitable? 

So after all is said and done, is owning a daycare profitable? The answer really depends on you.  

Successful daycare owners usually emphasise quality care, a safe and stimulating environment, and effective management to attract and retain clients.  

Conducting thorough market research and financial planning is crucial to assessing the potential profitability of a daycare business. Staying informed about industry trends and local demographics can also contribute to making the right decisions for long-term success. 

If you do your maths well, and thoroughly assess the costs of starting your daycare centre as well as the ongoing costs of upkeep, licensing, labour and other fees, it’s absolutely possible to create a highly profitable business.  

If you’re thinking about starting a daycare, it’s a great idea to deepen your expertise and advance your skills. View our range of Early Childhood Education and Care courses, or call us on 1300 616 197 to learn more.