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Jan 23, 2025 7 min read

How to Build a Daycare Center Budget Forecast

Leah Woodbury By: Leah Woodbury
Woman plans budget forecast for a daycare and child care center

This blog was first posted on March 23, 2021, and was updated with new information on January 23, 2025.

To ensure your child care center is profitable, you need to create a daycare center budget plan. That’s the only way you’ll be able to manage your business income and expenses effectively.

One of the key components of your child care center budget is forecasting.

What is Forecasting?

Forecasting, as it relates to your child care center’s budget plan, is the process of predicting the financial future of your child care business. How much money will you make by the end of the month, quarter and/or year? What expenses will you incur over that same time?

By analyzing past financial performance, as well as current revenue trends, you’ll be able to estimate business profits with a high degree of accuracy.

Why is Forecasting Important?

Forecasting takes a bit of effort, but is so beneficial that you shouldn’t avoid it. Here are three reasons why forecasting is important:

1. Budgeting

An accurate financial forecast will help you stick to your daycare center’s budget plan. When you understand how much money is coming in, you can better regulate how much money goes out.

This will allow you to manage cash flow effectively and avoid overspending — two essential things for every business owner.

2. Planning

Budget planning helps run a child care center and daycare.

Forecasting will also help you plan for the future.

For example, many child care centers drive less revenue between June and September because of family vacations or summer camps. If you predict, based on previous years, that your center’s revenue will drop by 20% this summer, you can plan for it.

Maybe that means you set aside money in March, April and May to help carry you through the lean months. Or perhaps you can use extra revenue generated in the spring to better market your child care business and secure new customers over the summer.

3. Financial Assistance

If you plan to apply for funding, either to get your early childhood education center up and running or expand operations, you’ll need to provide your lender with a financial forecast. Check out the Procare Solutions page on child care funding, programs and other resources with a state-by-state breakdown to look for grants and other funding options.

They’ll want to know how much money you’re currently making, what you project to make in the future and how you plan to grow your business. That way they can feel confident that the money they lend you will be paid back in full.

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How to Add Forecasting to Your Daycare Budget Plan

Forecasting may seem complex, but it doesn’t need to be difficult. Follow the four-step process we outline below and you’ll be able to start forecasting in no time.

1. Gather Your Financial Records

You can’t forecast the future without looking into the past. With that in mind, gather your financial records from previous years. These include your profit and loss statements, balance sheets, payroll reports, and accounts payable and receivable details.

This is easily done using child care management software, which can pull up the statements in seconds.

If you’ve just started your child care business and haven’t created a budget plan, don’t worry. You can still forecast using current income and expense numbers, industry growth standards and your own intuition. Just keep an eye on your projections and adjust them as needed.

2. Choose Your Forecasting Type

There are two kinds of forecasts you need to be aware of: historical forecasts and research-based forecasts. In all likelihood, you’ll use a blend of both.

  • Historical forecast: A forecast that uses historical data (previous income statements, balance sheets, etc.) to predict future financial performance
  • Research-based forecast: A forecast that uses industry trends and competitor research to predict financial growth in the future

Historical forecasting is easy to perform and typically doesn’t take a ton of time. But because it doesn’t account for your entire industry, it’s not always completely accurate.

For example, your own data may reveal that your child care business has grown by 20% year over year. But if the child care industry as a whole experiences significant changes (like a worldwide pandemic), your historical data alone won’t help you prepare.

Researched-based forecasting, on the other hand, analyzes data from an entire industry. These kinds of forecasts give detailed information about company growth potential, which is why many lenders like to see them. But they can also be expensive to conduct.

Most daycare budget plans should start with historical forecasting. Once you know the numbers for your own business, do your best to analyze the child care industry in your geographic location. Then use these details to help predict your finances down the road.

3. Create Your Financial Forecast

woman creates a budget for her child care center

Now it’s time to sit down and actually add forecasting to your daycare center budget.

First, analyze your financial records for the past few years. How has your business grown in that time? If you notice, for example, that your business revenue has increased by 10% every year for the last three years, you can probably assume another 10% jump this year.

Second, take a look at the entire child care industry. Do you foresee any massive changes? Are COVID regulations in your area making it harder to find new customers? Take these things into account and adjust your revenue growth numbers if necessary.

Third, assess your personal goals. Are you happy with the standard 10% boost in revenue or do you want to grow at a faster pace? What would it take to do this? A bigger marketing budget? More employees? Estimate what it will cost to grow your business.

Fourth, add up all your expenses. This includes all your ongoing expenses such as rent, utility bills and food, as well as estimated costs to reach your new revenue goals.

Finally, add all these details to a spreadsheet so that you can easily see your projected revenue, gross profit, operating expenses, and net profit numbers in one place. Or if you have child care management software like Procare, you can pull all this information with a few clicks of your mouse.

4. Analyze Your Financial Forecasts

The 2024 Child Care Management Software Industry Trends Report from Procare Solutions found that 44% not using child care management software reported relying on paper and pencil to run their programs. This can make it difficult to properly analyze your financial forecasts.

You need to analyze your forecasts on a regular basis. Are you on track to hit your goals? If you’re falling short, investigate why. If you’re making more money than expected, develop a new child care center budget to make sure you spend the extra funds wisely.

Remember, forecasts are projections of what your business might make. You need to compare your actual results to your estimates to properly manage your business and ensure future forecasts are as accurate as they can be.

How Procare Can Help!

You pursued a career in early childhood education because you love children and are an educator – not an accountant! – at heart. 

For over 30 years, Procare Solutions has been dedicated to empowering early childhood educators by providing products and services that enable them to focus on the care, safety and education of children. 

We recognize the responsibility that comes with nurturing and educating children, which is why our child care management solutions are designed to automate business processes, help ensure safety and compliance, communicate with families and provide educational resources and training to help teachers and children thrive. 

Over 40,000 satisfied customers have chosen Procare Solutions as their trusted partner in providing exceptional care for young minds.

Procare gives you a real-time view of all center financials and receivables in the integrated dashboard that shows you tuition charges and balances tracking/calculations, multi-family billing options and fee transparency so you can understand what you’re paying per transaction and why. And it gives you the tools to plan for the future.

Want to know how much time and money you could save by using Procare’s secure and effortless child care payment processing? Calculate your potential personalized savings by entering some details into this online calculator!  

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Calculate your potential cost and time savings by using Procare’s all-in-one child care management software. All we will need from you is some information about your child care location*: Calculate your potential cost and time savings by using Procare’s secure and effortless child care payment processing. All we will need from you is some information about your child care location*: Calculate your potential cost and time savings by using Procare’s classroom management. All we will need from you is some information about your child care location*:

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* Our data model is based on our experience working with over 100,000 child care centers, before and after school programs and youth organizations since 1992.

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The cost and time savings shown here are what the Procare all-in-one solution will help you save at your child care organization. Fill out the form below to see the full breakdown.

We understand that smaller centers and in-home daycare providers are operating on a tight budget, and that is why we provide all these features for the affordable price of just $25 per month. Let us handle the business of child care so you can get back to caring for your children.

To learn more about Procare home version, click below.

*Please note that the report you see only factors in cost and time savings for the in-home solution features. For Procare home version users that are interested in seeing how they can benefit from Procare’s full suite of capabilities, contact us today to speak to a Procare representative.​ *Please note that the report you see only factors in cost and time savings for the in-home solution features. For Procare home version users that are interested in seeing how they can benefit from Procare’s full suite of capabilities, contact us today to speak to a Procare representative. *Please note that the classroom management functionality is not available for in-home users. For Procare home version users that are interested in seeing how they can benefit from Procare’s full suite of capabilities, contact us today to speak to a Procare representative.

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Number of Staff
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Hourly Rate
Savings per Month

For over 30 years, Procare Solutions has helped child care businesses big and small tackle their biggest operational challenges.

From contactless check-in, attendance tracking and staff management to family engagement, tuition collection and extensive reporting, we have the solutions that child care professionals want most.

More than 37,000 child care businesses choose Procare because we give them everything they need to focus on what they love—providing amazing experiences to the children in their care.

Our data model is based on our experience working with over 100,000 child care centers, before and after school programs and youth organizations since 1992.

Learn more at procaresolutions.com

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ABOUT THE AUTHOR

Leah Woodbury

Leah Woodbury is the head of content at Procare Solutions. Her job includes writing about topics that matter to child care professionals and finding ways to help them do their important work. She’s a mom of two who loves getting updates about what her preschooler is doing during the day via the Procare child care mobile app!

Leah Woodbury