Childcare Center Feasibility Study

What a good one includes

• A detailed assessment of local family demographics, including the number of dual-income households and children under age five within a five-mile radius.
• A breakdown of local and state licensing requirements, detailing mandatory indoor and outdoor square footage per child and strict teacher-to-child ratios.
• An itemized breakdown of initial costs, including facility renovations, safety equipment, age-appropriate educational materials, and licensing fees.
• A realistic revenue and expense model based on tiered enrollment capacity, showing the break-even point and projected cash flow.
• A structured staffing plan that accounts for qualified lead teachers, assistant educators, administrative staff, and competitive benefits to prevent turnover.
• An analysis of existing local preschools, daycare centers, and home-based cares to identify gaps in operating hours, specialized curricula, or age group offerings.

Common mistakes to avoid

• Underestimating the financial impact of mandatory staff-to-child ratios, which can quickly drain operating margins if teacher salaries are not modeled accurately.
• Overestimating the initial enrollment speed, assuming a center will open at full capacity rather than planning for a gradual phase-in over six to twelve months.
• Ignoring local zoning laws and outdoor play space mandates, which can result in costly lease agreements for properties that cannot legally be licensed as childcare facilities.
• Failing to allocate sufficient reserve capital for the pre-licensing phase, when you must pay rent and staff training costs before any tuition revenue is collected.

Frequently asked questions