By Monica Howard

 

Let’s be honest—most of us didn’t get into child care because we wanted to stare at spreadsheets. We opened our centers because we love kids. We wanted to help families. We had a vision to serve. But passion alone doesn’t keep your doors open. If you don’t know your numbers, you won’t be around long enough to make the impact you dreamed about.

 

This blog isn’t about fancy accounting. It’s about making budgeting easy. About giving you simple, practical ways to manage your money better and grow your business for the future. Because when your money is working, your mission can thrive.

 

 

Why Profit Isn’t a Dirty Word

Profit gives you options. It keeps your center open. It lets you buy better materials, invest in training, fix up your building, and grow your program. Without profit, even your best teachers can’t keep working for you.

And here’s the truth: money follows impact. When your programming is strong, when your teachers are excellent, and when families see real results—your revenue increases. Parents will pay for quality. They’ll talk about your center to others. But you have to be clear about the kind of program you offer. If you’re focused on education and a parent just wants a babysitter, be okay with letting that parent go. It’s not a match.

 

 

The Profit First Principle Changed My Business

In our company, we follow the Profit First method—and I promise you, it works. It sounds weird at first: take your profit out before paying your bills. But it forces you to be intentional with your spending. You set aside money for profit first, and then you operate your center with what’s left.

That means setting up separate accounts—for profit, expenses, payroll, taxes—and scheduling regular transfers. If all your money is in one account, it’s too easy to lose control. This system helped me stop reacting and start managing with purpose. Some days, I’d literally say, “I’m not paying bills today.” Not because they were late, but because I needed to pause and make intentional choices.

 

 

Know Your Revenue Streams

There’s more to your income than tuition. You’ve got:

• Subsidies (state or local assistance programs)
• Grants (non-repayable funds for quality improvement or special projects)
• Add-ons like diaper and wipe service, enrichment classes, extended hours, or bilingual programs

We offer a diaper and wipe service, and our families love it. We charge a flat monthly fee and partner with a supplier for bulk pricing. It’s convenient for parents and adds a steady revenue stream for us.

Ask your families what they want. You might find a new service they’d gladly pay for.

 

 

Budget with Purpose

Your budget should reflect what matters most in your center. Spend on what moves the needle.

Start by understanding your expenses:

• Fixed costs: rent/mortgage, insurance, base salaries, licensing, and software subscriptions
• Variable costs: food, classroom supplies, utilities, substitute teachers, and marketing

Use the 50/15/20/5/10 rule to allocate your funds:

• 50% Staffing
• 15% Facilities
• 20% Operations
• 5% Marketing
• 10% Profit

This helps ensure you’re not overspending in one area at the expense of another.

And always evaluate your vendors. If your parent communication app isn’t serving your staff or families well, it might be time to switch. We regularly audit everything—from software to supply contracts—to make sure we’re getting the best value.

 

 

Teach Your Team the Financials

Your leadership team, especially your directors, need to understand where the money goes. If you don’t talk about it, they’ll make assumptions. I’ve had staff look around the building, do the math—”200 times $100″—and assume we’re making all kinds of money. But they don’t see the expenses behind the scenes.

We did a powerful exercise with our directors where we gave them a blank P&L and asked them to guess the monthly costs. One guessed our rent was $0. When we showed them the real numbers, they were stunned.

After that, when I said, “We need to hit 90% enrollment before we can do XYZ,” it clicked. They got it. They saw what I saw. That level of understanding changed everything.

 

 

Use Your Data to Plan Like a CEO

Look ahead—not just behind. Create a 12-month budget. Plan for enrollment dips.

At our centers:

• High enrollment (Oct–Nov, Feb–Mar): 95–97% full
• Normal enrollment (Dec–Jan, Apr–May, Sep): 90–94%
• Low enrollment (Jun–Aug): 80–87%

Save more during the highs so you can stay stable during the lows. Know your cost per child—infants cost nearly twice as much as preschoolers. That matters when you’re deciding classroom structure or pricing.

And use dashboards to track:

• Enrollment trends
• Revenue vs. expenses
• Classroom occupancy
• Cash flow projections

 

 

Invest in the Right People and the Right Tools

You don’t need more staff—you need the right staff in the right places. Schedule strategically. Stagger morning shifts. Combine rooms in the afternoon. Use nap time for planning.

We teach our teachers how to read ratios so they know when to consolidate rooms. That frees up our directors to lead—not scramble.

When hiring, we use a 4-step process:

• Phone screen
• Executive interview
• Director interview
• Classroom observation

If they make it through, they’re likely to stay.

We also reward performance:

• Up to $720 in quarterly bonuses based on KPIs
• Clear improvement plans for missed benchmarks
• Mental health days and wellness stipends
• A career ladder that values both experience and growth

Some of our best teachers didn’t go to college—but they run circles around those who did.

 

 

Track Every Dollar and Celebrate Every Win

We track everything:

• Subscriptions
• Utilities
• Supplies

One month, our water bill jumped from $2,000 to $5,500. A toilet had been running nonstop. We fixed it, showed proof, and got a credit. But only because we were watching.

Celebrate milestones with your team:

• Post charts in the breakroom
• Offer training opportunities as rewards
• Give staff referral bonuses when they bring in new families

These small things build culture—and momentum.

 

 

Build Reserves and Grow Intentionally

Start by saving one month’s operating costs. Then three. Then six. That kind of financial cushion lets you grow without fear.

And before you expand?

• Make one center profitable
• Prove it works
• Document your systems

Then—and only then—consider adding a second location.

 

 

Final Thoughts: You Have to Know Your Numbers

This business doesn’t work on love alone. It takes strategy, discipline, and systems. You’ve got to track your dollars, plan for the future, and teach your team what it really takes to run a thriving center.

When you take control of your finances, you stop reacting and start leading. You stop surviving and start growing.

This isn’t just about making money. It’s about building something sustainable. Something that lasts. Something that truly makes a difference.

Your Turn: What’s one money habit you can start—or stop—this week that would move your center forward? 

Need help to determine your highest pay off activities? Book a call with us and we can talk through it together. https://childcaregenius.com/free-coaching-call