Many new business owners shun budgeting because they are unsure about what sort of cost to budget for. This article will shed some light on the type of cost a new daycare business owner is likely to incur.
You’ve drawn up your business plan, decided on your marketing plan and even detailed your operations plan. Now you need to sit down to calculate how much money you will actually need. But how would you know how much you will need if you do not know what sort of cost you will incur? Whilst there are many types of setup costs for new businesses, here’s a list of costs that a new daycare start-up will likely incur.
1. Set up costs
These are one-time costs incurred for the setting up of your daycare facility.
First, let’s look at the physical centre. You’ll need to work out how much the renovations are going to cost you, and what sort of furniture and fittings as well as office equipment you are intending to purchase for your daycare centre. Don’t forget such as fire alarms, smoke detectors, cutlery, mats and decorative items such as notice boards, posters and clocks etc. Sometimes, these small items can add up to quite a lot so be a little careful in that area.
Next, think about all the paperwork costs such as licenses, permits, setting up of bank account, lease deposit, and commission paid to the property agent for helping you secure your centre. Basically any administrative cost.
2. Staff costs
Next, you will need to work out how many staff you are intending to hire and what it is going to cost you on a monthly basis. To have a more accurate gauge, you will need to do a forecast about the number of children you are expecting to have, which will in turn impact the number of staff you will require.
Based on the findings, calculate what you are intending to remunerate your staff. Next, you will need to look into the auxiliary cost such as health insurance, medical benefits, taxes, sick or vacation leave and bonuses. On average, such a cost will be about 15-20% of the salary.
3. Operating cost
Finally, list down what are the costs you expect to incur on a monthly or regular basis to operate your daycare. The first type of cost will be the administrative costs such as monthly loan/mortgage repayments, insurance for your centre, conservancy charges, hire purchase repayments, rental, utilities, food supplies, etc. You should also take into consideration costs which occur on a regular basis such as maintenance and repair.
Drawing up budgets is an exhausting affair but a good budget and forecast are absolutely necessary as it helps the owner to anticipate the amount of capital and operating cost he/she will need to set aside for the smooth running of the daycare centre. Finding the best loan companies? Feel free to visit their page to find more useful information.