Creating an annual business plan

Step 1: your value proposition 

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

Your value proposition is important because it reminds you why children and families like your program. It also helps you recruit new families.  It can help you decide how to set your prices, find good staff, and get more families to enroll. You could write pages and pages about these ideas, but  you should keep it simple. Specifically,  answer these three questions: 

1. Where do you serve families and children? 

This could be in your neighborhood or in your city.  reach is wider: 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 them come back? It could be you. Many people they come back because of the family care provider or the director of a small center. It could be your location or something else. 

There’s no right or wrong answers. If  you’re not sure, ask some parents! It never hurts to say that you're planning how to make your program better and want their thoughts. This could just be a 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.  

These questions can help you plan. 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 them. They're not just customers and staff. They can be your best salespeople. Many child care providers rely on referrals from other families and staff. 

Step 2: assess your current situation 

Now, look at how your business is doing and the feedback you received. Make a list of what's working well and what you need to improve. Here's what to think about: 

• Your customers (families): What do you want to do to support them this year?
• Your team (staff): How you can attract and retain staff to keep your program running?
• Your market (competitors, other things): What outside things affect your goals?
• Your finances: Make a plan to see where your money is going and how to reach your goals. You can use tools as a monthly budget and a 12-month cash flow. 

First look at the answers from parents and staff, then your financial records, and answer these 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? 

You're not just planning for the year. You're also creating talking points you can use as you run your business. So now, when you look at the information, ask these questions: 

• What is going to keep you profitable throughout the year? For example, do you need more children enrolled now, or maybe 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?
• What do parents want and need, and how will you adjust your services to meet those needs? Are there ways that you can easily meet those needs? Perhaps families want hours that run a little bit later, and you can shift your hours. Maybe they want a certain service or opportunity.
• What about your staff? Do they report wanting additional pay or benefits? Are you having any trouble finding staff?  

Step 3: conduct a “SWOT” analysis 

After looking at your current situation, do a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This is a simple and effective 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.  

The goal is to have a clear vision in each area so you can build your business plan.  Draw a big square on a whiteboard or paper and divide it into four boxes. Label them Strengths, Weaknesses, Opportunities, and Threats.  

If you have employees, do the SWOT analysis together. This will help you collect and visualize your ideas. Each person should contribute to each area. 

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

Once you have statements in each box,  consider (or talk about together with your team) which are the most important. These will give you a clear view of your business and help you focus as you make your business plan.  

Step 4: use your information to build your plan 

The last step is building out your plan.  First, look at how the past year went. Then, look at how this year might go.  From this, find goals to keep your business strong. 

Make your goals SMART (Specific, Measurable, Achievable, Relevant, and Time-bound). This will keep you on track. Your goals should be reasonable.  Don't make a list that's too long, or they feel too overwhelming. 

Use the template below to start creating your business plan. 

Introduction and value proposition 

First, you wrote your value proposition, the “why you”. You’ve gathered feedback from families and staff. Now, you can put it into simple sentence: 

Example: “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].”  

This sentence is simple, but it's not simplistic. It will remind you why children and families love coming to your program. This will not only help you to remember your program’s value, but again, it will help you reinforce why your program is special as you talk to potential customers and  your staff.  

Our families 

A successful child care business commits to attracting and retaining its customer base. Write about what you plan to do to support families in the year ahead that will allow you to sustain or grow your business. Use the feedback you’ve collected about what families like and what you can improve on. 

Example: “Based on feedback we’ve collected, families are looking for [feature 1], [feature 2] and [feature 3]. We are 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 

If you have or want to hire staff, know that successful child care businesses commit to and plan for attracting and retaining staff . Write about what you plan to do to support your staff for the year that will allow 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 will help you sustain your business in the long run? 

Example: “Based on feedback we’ve collected, child care staff are looking for [feature 1], [feature 2] and [feature 3]. We are able to 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.]. However, to further meet the needs of our current and potential staff and to meet 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 

Here is where you will input your SWOT analysis. 

Our financial plan 

You want to include your financial forecast. This includes your annual budget and 12-month cash flow analysis. You want to keep an eye on this throughout the year and make sure that what you predicted is staying on target. And if it isn't, ensure you understand why and adjust. Your financial forecast should include any increases to enrollment and revenue you expect. It should also reflect the staffing levels, compensation, and benefits.  

Our goals 

This section states what exactly you plan to do to improve or expand your business, based on the information that you’ve gathered. Include the date you want to finish. This makes your plan real and tells you what it is that you’ll need to do. You can use the SMART goal format or the three-element format: 1) the what, 2) the how, and 3) how you're going to know that it worked. Both will keep you on track and keep you accountable. 

Example SMART Goal: 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. 

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

Example stretch goal: You should also think about a goal that will push you a little bit further to help build your business over time. The stretch goal can be something very complex, such as entering the QRIS system, or increasing your quality rating. It could also be something very simple, such as being able to refurnish the room in your house that's primarily used for child care or creating a new playground. 

“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 can help you stay on track and think about what you need to do now and your next steps.  

Disclaimer 

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