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Developing Your Business Plan

Developing your Business Plan

Child Care Provider Expansion Initiative: Developing your Business Plan


A main component of your application for the Child Care Provider Expansion Initiative will involve answering key questions outlining your business plan for your new or expanding child care business. These plans will be scored, and results will impact which applicants ultimately receive funding, so we recommend that you take steps to ensure you have thoughtfully prepared your responses. To help you with this preparation, this guide will help you to understand key components of a successful business plan, explain the scoring process, and also provide you with the specific questions you will be asked in your application.

Please note that this guide only covers the business plan portion of the application. For a complete application overview, please view the Application Guide.

Getting started: Understand the Key Components of a Successful Business Plan

At the heart of the application for the Child Care Provider Expansion Initiative is creating a business plan outlining your expansion or opening efforts. Everyone, regardless of where they are at with their expansion, will be required to answer questions about their business plan in order to be considered for this Initiative. The questions included in the application are critical because they give you an opportunity to communicate your vision for your new or expanded child care program and will help you to have a plan to stay on track. Business plans can take many formats, but in this case, you will be asked a series of detailed questions about key components of your child care business plan as part of your online application. These components are ones that will help to project the likelihood of success and sustainability of your new or expanded business and impact both the scoring of your business plan as well as the overall implementation of your program.

It is important that your business plan answers cover your entire start-up or expansion, not just the aspects you hope to pay for by applying for this Initiative. The following sections will outline key components of a successful business plan to guide you through your planning process.

Knowing Your Market

One of the most important parts of a business plan is understanding your market. In other words, you should know what the demand is for your child care services in your area and why parents would select you over your competitors. For example, you will want to identify if there are families in your area who will use your services once you open or expand. Are there enough families who need your services to fill your classrooms? To help answer that question, consider the following indicators of demand for care:

  • Parent and Caregiver Demand: The best way to understand the market is by identifying, and even talking to, potential customers. This includes parents and family members who may use your business, both current and prospective. If you are expanding, you may already know parents who want to use your services. If this is the case, ask them to join a waitlist or make a similar commitment that helps you understand how quickly you may be able to fill additional child care slots. If you are starting your business, you can also ask potential parents to sign a form applying for future care.

If you do not know enough families who may use your services, ask around. Talk to other families in your community to learn who needs care and what type of care they would be looking for, including hours, cost, and ages of their children. This information is critical for understanding whether the type of care and child care slots you will be offering are in demand among parents and caregivers in your area.

  • Inherent Demand: Additionally, consider changes in the child care landscape or situations that indicate an inherent demand for child care. Some examples include:
    • Being located in a child care desert: Child care deserts are assumed to have demand in their area due to the scarcity of existing care.
    • Providing infant care: Infant care is known to be harder to come by.
    • Offering non-traditional hours: Providing care at times when care is needed but fewer care options exist can indicate demand for services.
    • Increase in members of the workforce: This could include new factories or other large businesses opening in your area.
    • Closing of alternative child care providers: If you know of business closing in your area, include this information as this will result in an influx of families looking for care.
  • Service Demand: Finally, it is also a good idea to understand what other child care options exist in your community – are there other programs close by, and are they at capacity? What types of hours and care are they offering? For example, if there are a large number of providers offering infant care in your area that are not at full enrollment, you might consider offering care for other age groups. Alternatively, finding that there are no infant care providers in your area would indicate a potential demand for those slots. Do your hours, proposed ages served, and type of program match what these families would need? The more information you can gather about your market, the better decisions you can make in regard to your business plan.

Pro tip: Check out the Child Care Availability Portal for providers in your area and their availability, which can help you learn more about the market.


In addition to understanding your local market, you should also consider your physical location. Securing a location is a crucial step in opening or expanding your child care business that can have many impacts on your future success. When thinking about your location as part of your plan, be sure to consider the following points:

  • Cost: There are several things you should consider in regard to location. First, what will the rent or mortgage cost for this location? Think about what the cost will be to operate in that area and whether you would be renting or owning your facility. You will also want to consider utility costs and other monthly expenses so that you can build this into your budget.
  • Proximity: You also should consider how close your business is to families interested in your care, how far they would need to commute, and how convenient it is to access your location. Is it close to where they live, or where they work? Adequate parking and ease of pick up and drop off should be reviewed as well.
  • Space: Of course, a crucial component of your location is the space available for care. Is the location already designed for serving children? Check out the areas for indoor care as well as outdoor play and ensure your space will meet requirements for licensing. You can learn more in the Minimum Standards for Licensed and Registered Child-Care Homes or for Child-Care Centers. Will you require major renovations, minor renovations, or other physical modifications to the building? If so, what will those be, how long will they take, and how much would they cost? You will want to factor that information into your decision, timeline, and budget.
  • Adaptability: You also should think about how long you plan to remain committed to operating at this location and how difficult it would be if for some reason you needed to move your business. Consider the liabilities if you needed to end your lease early or sell a property.


The child care industry is extremely competitive in regard to securing top quality staff for your business – especially in today’s economy. As you plan to open or expand your business, you will likely need to look for new staff. As such, it is essential that you have a strategy for hiring as part of your business plan, whether you are a new business or an expanding one.

  • Positions and Roles: First and foremost, it is important to understand the types of staff that you need to hire. Do you need to look for teachers, a director, or other supporting staff? Next, what roles will these staff members play in your new or expanded business? Will they be full- or part-time? Know what you need before you start looking so that your search can be both efficient and effective.
  • Qualifications and Experience: You will need varied qualifications and experience from each of your new hires depending on the needs of your business and the responsibilities that each staff member will have. It is important to be clear about what types of qualifications might be needed to staff your classrooms as this will help to guide your search.
  • Hiring Plan: You have determined the guidelines for who you want to hire, and you’ll want to have a plan in place for how to find them. How and where will you post your available jobs? How will you identify who you want to hire? Determine your next steps early on in the process so that you can move quickly from preparing to hire to securing the talent that you need to be successful.
  • Attracting and Retaining Staff: Lastly, think about what will make your ideal candidate want to work for you, instead of another child care program, local school, or other company. Finding your employees is only half the battle, especially in today’s market. For instance, you will want to know how much pay you can offer your employees and what their benefit package might look like. These are all important questions to consider because you will need qualified staff in order to open or expand your program successfully. Check com and other sources to see what the going rates are for the type of workers you are seeking, if you are not sure. You can also find several step-by-step guides on ways to attract and retain staff at

Budget, Pricing, and Cash Flow

A solid financial plan is absolutely critical to the success of any business plan, especially one geared toward growing or starting a business. Take extra care when developing the financials of your business plan as the impact of a well-developed financial plan can make or break your business.

  • Budget: An annual budget is a critical tool for managing your child care business. It helps you plan for what you will spend and allows you to monitor your actual revenue and expenses to keep you on track. If you are an existing business, you will want to think about how your expanded operations will impact your budget. If you are a new business without a budget, you will want to create one. To learn more about creating a budget, visit Making a profit is part of your business and helps you prepare for unforeseen events, provide incentives to staff, replace equipment, and improve facilities over time. Most importantly, a profit can give you the funds you need to ensure you are providing the best quality classroom supplies, teachers, and care for children that you serve.
  • Income: Tuition and Pricing. As a child care provider, most of your income will come from tuition and parent fees. Setting tuition rates for the families enrolled in your child care business can be challenging but is critical to running a sustainable business. Your rates should be determined using the cost of providing the type of child care you will offer (cost of care), and the going market rate in your area. When calculating your pricing, it is imperative that you have a solid budget, as your budget will drive the cost of care, and in turn, guide your pricing decisions. You will want to determine if you will accept subsidy and build this in, as well. Make sure to include both start-up and ongoing costs in your calculations. Visit to learn more details about setting rates for your child care business.
  • Expenses. As mentioned, when calculating your tuition and pricing, it is important to understand all of your expenses so that you have enough income to cover them. In order to set your rates properly, you need to know your expenses. Take some time to understand your bills, including your monthly rent or mortgage, utilities, insurance, maintenance, taxes, and staffing costs (including payroll, taxes, and benefits). You also should think about advertising, equipment, food, and anything else that you may need. Learn more in our guide, Building a Monthly Budget.
  • Cash Flow and Profitability. In order for your business to remain strong and solvent, you will need to know when you are profitable. Profit isn't a dirty word and making a profit does not mean you are overcharging families with children in your care. A cash flow forecast is a great tool to understand how healthy and strong your financing is. A cash flow is less about budgeting, and more about balancing your incoming money with your bills and expenses. Understanding your cash flow is crucial for start-up businesses because you are shelling out lots of money to get your business open and up to par, often before you receive one dollar of revenue. It could take six months or more before your new business breaks even, so are you prepared to withstand that? If you need help determining your cashflow, you can see our Six-Month Cash Flow Workbook on

Implementation Plan Timeline

Finally, it is important to develop an implementation plan as part of your opening or expansion activities. Your implementation plan will outline the key activities and their timing so that you can make sure everything happens that needs to happen, and that it happens on time. The details in your plan will differ from one organization to the next, but all successful implementation plans will include everything that is critical to opening or expanding your business. This can include all the steps needed to secure a location, hire staff, purchase materials, sign up for utilities, and market to families. There is no detail too small to consider when you are first getting started. In fact, it is better to be too detailed and trim your implementation plan than to miss something and regret it. As you capture these details, be sure to build a little flexibility into your plan as rarely do things happen on time or as expected.

Create a detailed timeline of the most important steps in expanding or opening your child care business including when the activity will start, who’s responsible for it, and your goal end date.

Understanding the Scoring Process

The Business Plan Section of your Child Care Provider Expansion Initiative application allows you to explain your plans for your child care business,

Pro-tip: If you already have a business plan, you may have the answers to many of the questions already, feel free to copy and paste what you have into the application.

If you do not have a written business plan, you can consider starting a Word or Google Docs document to write out your plan and then copy and paste your responses into the application or use the spaces provided below to jot down your responses to copy.

This will help you think freely and make your application writing go a bit smoother.

including what you already have in place and how you plan to operate in the future. Keep in mind that your business plan is a written document that describes your child care business and is the roadmap for where you see the business growing in years to come. The business plan section of the application includes a list of questions that you must complete in order to be considered for funding through this Initiative. For many of the business plan sections, you will receive a score, which will impact your application outcome. However, those that score below the funding cut-off will have an opportunity to work one-on-one with a business coach to review, refine, and resubmit your business plan for another review.

The exact questions you get will vary, depending on whether you are a home- or center-based provider, and if you are an existing or new business. While the questions will be slightly different, they will cover the same topics:

Value Proposition (not scored): This is a brief statement that explains “why you.” Why is it that families choose or will choose your child care program over your competitors? This is your opportunity to share what you feel makes your business special.

Experience (10/100 points): These questions ask about the owner’s relevant experience in the child care field. You should make sure to highlight any experience that you have as an owner and/or director, including relevant experience such as previous work in Early Childhood Education or K-12 education or any experience in business, management, or as a program director. Your previous experience in each category will be considered, so you will not automatically be disqualified if your experience is not all in child care. Also, if you do not have the relevant experience but plan to hire someone who does, you can note this in the Operations & Personnel section of the application and highlight it during your interview. Applicants will be scored on business experience, child care experience, and education separately, but scores for each experience type will be combined for a maximum of 10 points for the section. This will ensure that qualified applicants have the opportunity to receive fair scores as long as the experience that they hold is relevant to a successful child care business start-up or expansion.

Market and Location (25/100 points): Here, you should demonstrate that you truly understand your market and the demand for your child care business in the location you intend to serve. You will be asked to describe the geographic area you are serving, what types of care you are offering, and your hours of business. You will be asked about enrollment trends in recent years, if applicable, and will be expected to demonstrate how and why you know there is demand for your new or expanding child care business. Here, you should include more than one example of the demand for your program, as you can earn points for showing multiple examples. Similar to experience scoring, applicants can receive points for demonstrating parent demand, changes in the landscape (such as nearby child care businesses closing or the opening of a large, new factory), providing high-demand care during nontraditional hours or to serve infants, or being located within a child care desert.

This section also includes questions on your physical space, and you are expected to demonstrate your understanding of the space you need to open or expand your business. You may be asked about any possible plans for a build out, new construction, or renovations to existing space and should provide details on those plans, including the timeline when possible. While construction and major renovations will not be covered with award funds, it’s important that you describe them, if needed and that you have the funding needed to carry them out. While you do not need to have secured a location when completing your business plan, you will need to have one secured before you receive any funding, so you will need to include that information and the steps you’ll take to secure it in your business plan.

Operations and Personnel (10/100 points): In this section, you’ll be asked about your need to hire additional staff and what specific roles they would fill. You should be ready to explain exactly which roles you will need to fill in your new or expanded child care business and what your plan is for recruiting, securing, and retaining the staff you need. You also will need to explain your plans for training new staff members and how much it will cost.

After answering questions in these sections, all providers will answer the same questions regarding the financials and timeline associated with their expansion plan. This section is critical as it helps to guide the future success and sustainability of your new or expanded child care business. Include as much detail here as possible to demonstrate the thoroughness of your financial plan. If you are a home-based provider with no employees simply explain that you will not need to hire any staff for your start-up or expansion.

Financials (30/100 points): You will be asked about your planned rates for your expanded program and how they were set. Here, you should demonstrate a clear understanding of the child care market in your location and be able to explain the reasoning behind your proposed rates. Be as detailed as possible. For example, specific rates articulated based on historic numbers or a cost-of-care analysis will generate a higher score than an answer that leaves questions on how your rates were determined.

You’ll also be asked to upload your anticipated start-up budget for your first six to twelve months of operations and will be expected to submit a narrative explaining your proposed budget in detail. Sole proprietors can include their pay in their budget and can follow the Paying Yourself guide to learn how to do this. For more support, see our Project Budget Narrative Template. Your budget narrative will be where you will show the total expansion budget and what parts will be paid for with award funding and what parts (i.e. construction) will be paid by other sources.

You’ll also be asked about your cash flow for the first year of your new business or expansion. You will be asked to describe the anticipated cash position of the business for the first year and will have to submit a project cash flow statement to support your description. More information about creating a cash flow statement can be found at

The Initiative application also includes questions about your funding needs. If you plan to use additional monies, other than this initiative, to fund your start-up or expansion business, be prepared to explain those funds. The additional monies could include your personal funds, a business loan, tuition increase, additional fees, or other sources. You will need to list the estimated amounts, the source of the funds, how the funds are to be used, and share if these funds have been awarded or have yet to be secured. If no additional funding beyond the Initiative is needed, then share that also. Be sure that your budget is realistic.

You’ll also be asked to upload your business tax returns for the last three years. If you are a sole proprietor, this is Schedule C of your 1040. If you are not yet in business, you will need to upload your personal tax returns for the last three years.

Timeline (15/100 points): The questions in the section are designed to make sure you understand the timeline for opening or expanding your business. If you have not yet received your new or modified license, you’ll be asked to provide a timeline of the most important steps in expanding or opening your business, including start and end dates for all items. If you have received your new or modified license, you’ll be asked to provide a historical timeline of the most important steps in expanding or opening your business, including start and end dates for all items. You’ll also be asked to include anticipated start and end dates for the steps that have not yet been completed, as best you can estimate. Your goal should be to show that your start-up or expansion plans can be implemented within six months. Lower scores will be awarded for timelines that will be implemented within nine to twelve months. For more support, see our Project Timeline Template.

Preparing to Apply: Interview

For all applicants, we are looking for providers who have given thought to their opening/expansion and have taken care to prepare themselves for success as much as is possible!

Interview (10/100 points, plus an opportunity to receive up to 10 bonus points): While your application will be key in determining whether you receive funding from the Initiative, the interview will be your opportunity to meet with staff and confirm or clarify aspects of your business plan for expansion.

The interview should last about 30 minutes and the questions are designed to prompt providers to talk about the key details of their business plan that will set them up for success. Articulation of your plan details will count toward 10 out of 100 points on your application. Your interviewer may talk through areas of your business plan that need either clarification or will need further development with you and refer you to coaching to help address those areas. During your interview, you can supply additional details on any information that may be missing from the application you submitted online. You may have the opportunity to earn up to 10 bonus points for explanations you provide on other scored areas where points were previously lost, however total scores cannot exceed 100.

Business plan refinement coaching will be available after application submission for those who do not receive “passing” scores. Those providers will work one-on-one with a coach for an average to three sessions to work on those areas of their business plan that were identified for development.

For more detailed information on scoring, you can review the Child Care Provider Expansion Initiative Scoring Protocol which show the actual scoring process that will be used to score each application. For questions, please email

Developing your Business Plan

The following templates include every question that you will be asked to fill out in your application in relation to the business plan. To work on the business plan that is right for your specific child care business, please view the following templates. You may also print your plan.

Is your business plan for a: