1
Define your school's legal structure and location
Decide on LLC, S-Corp, or nonprofit status and confirm the property address or search area. Your entity type affects tax treatment, grant eligibility, and the licensing application form required by your state.
💡 Nonprofit status opens access to foundation grants and Head Start contracts but adds governance overhead — model both structures financially before choosing.
2
Research local licensing requirements before writing
Contact your state childcare licensing agency to confirm required staff-to-child ratios, indoor/outdoor space minimums, director qualifications, and inspection timelines. These requirements directly determine your capacity, payroll, and facility costs.
💡 Request a pre-application meeting with your licensing office — many states offer this and it typically cuts application errors and delays by 4–6 weeks.
3
Map local demand and competitor supply
Use US Census Bureau data to count children ages 3–5 within a 3-mile radius, then list every licensed childcare and preschool provider within the same radius with their published capacity and tuition rates.
💡 Call two or three competitors posing as a prospective parent — their waitlist length tells you more about unmet demand than any report.
4
Select and document your curriculum model
Choose a specific program model (Montessori, Reggio, play-based, academic, bilingual) and describe how it aligns to your state's early learning standards. Include a sample daily schedule and list any proprietary materials or training required.
💡 Lenders rarely evaluate curriculum details, but licensing boards and sophisticated investors do — a named, documented model signals operational readiness.
5
Build your staffing plan and payroll budget
List every position by classroom, the required qualification, and the budgeted annual salary. Calculate total payroll including employer taxes (typically add 12–15% for FICA, FUTA, and SUTA) and benefits.
💡 Model the payroll cost at 50% enrollment, 75% enrollment, and full capacity — you must pay staff at licensing-required ratios even when seats are unfilled.
6
Develop the enrollment funnel and ramp schedule
Set monthly enrollment targets from opening month through Month 18, tied to specific marketing activities. Map each target to a conversion assumption — for example, 40 tours per month at a 35% deposit conversion rate yields 14 new enrollments.
💡 Model a conservative ramp where full capacity is reached no sooner than Month 12. Lenders expect this; hitting it faster is upside, not the baseline.
7
Build the three-statement financial model
Model monthly P&L and cash flow for Year 1, then annual for Years 2–3. Start from enrollment count × monthly tuition rate for revenue, then subtract payroll, rent, food, supplies, insurance, and licensing fees.
💡 Include a minimum 4-month operating reserve in your funding ask — state licensing agencies in some jurisdictions require proof of reserves before issuing a license.
8
Write the executive summary last
Compress the plan into 1–2 pages by pulling the single strongest data point from each section: unmet demand figure, program differentiator, break-even enrollment, and funding ask with milestone.
💡 If your executive summary exceeds two pages, a lender or investor will stop reading. Cut everything that is not a number or a differentiator.
