One thing to keep in mind when opening and running a child care facility is your break-even number. It’s important to keep track of enrollment, rates and expenses to ensure that you are covering your basis or – hopefully! – taking home a profit.
To get started, you’ll need to review your monthly expenses – rent/mortgage, payroll, supplies, utilities, insurance, equipment leases, etc. Adding up these items will give you your Monthly Expenses
Divide your Monthly Expenses by 4.33. This will give you your Weekly Break-Even Number.
Monthly Expenses / 4.33 = Weekly Break-Even Number
EX: $40,000 / 4.33 = $9,237.87
So with a Monthly Expenses of $40,000, you would need to make $9,237.87 a week to break even.
So, how many children do you need to have enrolled to hit that number?
Divide your Monthly Expenses by (4.33 times Your Tuition Rate). This will give you your Break-Even Enrollment.
Monthly Expenses / (4.33 x Tuition Rate) = Break-Even Enrollment
EX: $40,000 / (4.33 x $125) = 88.6
In order to break even, you would need to have a minimum of 89 children enrolled in your center.
So your goal in this scenario would be to keep your enrollment at 90+
If you can’t meet the enrollment goal, you have a few options to make sure you are seeing a profit – for example, you can reduce your monthly expenses (reduce payroll, inventory, etc) or increase your tuition rates.
Something to keep in mind when looking at your child care business and making sure it is successful!