Creating an annual business plan

Step 1: value proposition 

Your value proposition is the answer to, "Why should families choose my child care program?" For example, “Families love coming to Tammy’s Tiny Tots because it's welcoming, the classes are small, and it feels like home.” 

Start by answering these questions: 

1. Where do you serve families and children? 

   This could be in your neighborhood or in your city or across a county or region. 

2. What age groups do you serve? 

   Do you serve infants and older kids? Or just preschoolers? What about after-schoolers? 

3. What do parents, children, and staff love most about your business?

   What makes families and staff come back? There may be many reasons including they like the family care provider or the director of a small center, your location, or something else. 

There are no right or wrong answers. If you’re not sure, ask families who attend your program! It never hurts to say that you're planning how to make your program better and want their thoughts. This can be a casual conversation at pick-up where you say, “Hey, I’m working on how we can improve our services this year. What do you like most about having your child here? What does [child’s name] like most? Is there anything you wish that we did better? If you've had your child in other programs, what do we do better, or worse?" 

To get feedback from staff, you can use a short, anonymous survey or a comment box.  

By starting with your customers and staff, you're building your plan on the most important foundation: the people who use and pay for your services, and those who help you provide those services. Many child care providers rely on referrals from families and staff. 

Step 2: assess the current situation 

Take a look at the feedback you received in step 1. Make a list of what's working well and areas that may need improvement. 

Here are some things to consider: 

1. Customers (families)

   How will you support them this year?

2. Team (staff)

   How can you attract and retain staff to keep your program running?

3. Market (competitors, other things)

   What outside things affect your goals?

4. Finances

   Make a plan to see where your money is going. You can use tools such as a monthly budget and a 12-month cash flow. 

Now look at the answers from parents and staff, your financial records, and answer the following questions: 

1. What do parents like most? What did they like the least?
2. What do staff like most? What did they like the least?
3. Will you make a profit this year?
4. Are you worried about low enrollment in any months? Will some children be going to kindergarten soon? 

This helps you plan for the year and creates talking points to use as you run your business. So now, when you look at the information, ask these questions: 

1. What is going to keep you profitable throughout the year? 

   Do you need more children enrolled now, or mid-year? Will some children exit for kindergarten? How many slots will you need to fill? Do you have a growing wait list? If you’re anticipating growth or are at capacity, do you want to consider expanding?

2. What do families want and need, and can adjustments be made to meet those needs? 

   Are there ways that you can easily meet those needs? Maybe families want hours that are open later or a certain service.

3. What about staff? 

   Would they like additional pay or benefits? Are you having any trouble finding staff?  

Step 3: conduct a “SWOT” analysis 

Now it's time to do a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats and is a simple way to categorize your ideas. Strengths and weaknesses are positive and negative things about your business now. Opportunities and threats are future things that could help or hurt your business.  

Try this: Draw a square on a whiteboard or paper and divide it into four smaller boxes. Label each, "strengths," "weaknesses," "opportunities," and "threats." If you have employees, do this activity together. Each person should contribute to each area. 

A strength can be, “my business is open longer hours than other providers nearby.” A weakness can be, “we have issues with staff turnover.” An opportunity can be, “we have room for to enroll more children.” A threat ccan be, “there is a new provider opening nearby.” 

Once you have statements in each box, think about (or discuss with your team) which are most important. This will give you a clear view of your business as you make your business plan.  

Step 4: use information to build a plan 

The last step is to build your plan. Start off by reviewing the past year and look ahead at how this year may go. Make your goals SMART (Specific, Measurable, Achievable, Relevant, and Time-bound). Your goals should be reasonable and not so much that they feel overwhelming. 

Use the template below to start creating your business plan! 

Introduction and value proposition 

In step 1 above, you wrote your value proposition and gathered feedback from families and staff. Now, you can plug the information into a simple sentence such as: 

“I/We serve children and families in [neighborhood/region], [neighborhood/region], and [neighborhood/region] between the ages of [starting age] and [age limit]. What our families and children love most is [value/characteristic 1], [value/characteristic 2], [value/characteristic 3].”  

The sentence is simple but reminds you why children and families love coming to your program. This reminds you of your program’s value and why your program is special as you talk to potential families and your staff.  

Our families 

A successful child care business commits to attracting and keeping its families (customers). Write down how you plan to support families in the upcoming year that allows you to sustain or grow your business. Use the feedback you’ve collected about what families like and what you can improve on. Write another simple sentence using your information such as:

“Based on feedback we’ve collected, families are looking for [feature 1], [feature 2] and [feature 3]. We're able to meet family needs because we [have the list of features, are located in an in-demand area, have built a client base, etc.]. To further meet the needs of our families and [maintain or increase] program enrollment, our plan is to [added/enhanced feature 1], [added/enhanced feature 2], and [added/enhanced feature 3].”  

Our staff 

Successful child care businesses commit to attracting and keeping their staff. Write down how you'll support your staff during the upcoming year that allows you to sustain or grow your business. Use the feedback that you’ve collected about what staff like and what you can improve on. If you don’t have staff, think about how you support yourself. What commitments do you make to yourself every day that help you sustain your business? Write this information down in another simple sentence like the following:

“Based on feedback we’ve collected, child care staff are looking for [feature 1], [feature 2] and [feature 3]. We can meet our current and potential staff needs because we [have the list of features, are located in an in-demand area, have built a client base, etc.]. To further meet the needs of our current and potential staff and our goals of [maintaining or increasing] program enrollment, our plan is to [staff retention/recruitment strategy 1], [staff retention/recruitment strategy 2], and [staff retention/recruitment strategy 3].” 

Our market 

Use your SWOT analysis here from step 3 above. 

Our financial plan 

Include your annual budget and 12-month cash flow analysis in the financial plan. Keep an eye on this throughout the year and make sure your predictions stay on target. If they aren't staying on target, make sure you understand why and then adjust. Your plan should include any increases to enrollment and revenue you expect. It should also reflect staffing levels, compensation, and benefits.  

Our goals 

This section is your plan to improve or expand your business based on the information that you’ve gathered. Include a finish date so your plan feels real. You can either use the following three-element format: 

1. The "what"
2. The "how"
3. How you're going to know it worked

or you can use the SMART format introduced in step 4 above. An example of the SMART format is:

If you need to enroll more children mid-year because some will be going to elementary school, you may want to say, "I will work with our current enrolled families and ask them to make referrals so we can get five new families enrolled by August 1st."  This states how you'll enroll new families (by asking current families) and what you'll do (ask for referrals).  Your goal is to increase enrollment by five children, and you'll know your strategy worked if you have five new children enrolled by August 1st. 

Both formats keep you on track and accountable. 

Your goals can be clear cut and straightforward, like, "We'll buy new toys for the playground this year," or “I'll buy new toys for the playground by the end of July." 

Also think about a goal that will push you further to build your business over time. The stretch goal can be very complex, such as entering the QRIS system, or increasing your quality rating. It could also be simpler, like being able to refurnish the room in your house that's primarily used for child care, or creating a new playground. An example stretch goal is: 

“We're going to create a new playground so that our children have brand new outdoor equipment to use, and we're going to do it within two years.”  

This goal goes beyond the annual plan, but it may help you stay on track and think about what to do now and for your next steps.  

Disclaimer 

The information contained here is for educational purposes only and is not intended to constitute legal, tax, or financial advice.