How to Set Up a Budget for a Small Preschool

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Developing a solid budget plan for your preschool allows you to focus on what matters: the children.
Developing a solid budget plan for your preschool allows you to focus on what matters: the children. (Image: Comstock Images/Comstock/Getty Images)

There is much work involved in setting up a preschool. Many steps must be followed to bring the school to life, from choosing the community to serve and securing licensing to setting the business up as a legal entity. To succeed, a prime focus must be the preschool’s budget. The budget, or as the Small Business Administration refers to it, the “financial management plan,” is crucial to developing realistic projections regarding start-up and operation of your preschool.

Develop a start-up budget using information provided by your state health department and licensing facilities. These agencies' requisites help you determine what supplies and equipment are needed. A major factor of the start-up budget is securing facilities and ensuring those facilities are up to code. Factor in equipment such as office and playground equipment, as well as supplies for office work, housekeeping, food service and educational programs. The Small Business Administration suggests including 60 to 90 days of your operating budget within the start-up budget.

Estimate the operating budget. Types of income are tuition fees, grants, state child care subsidies and fundraising. Calculate approximately how much income you expect, keeping in mind the capacity of your school when it is full. Speak with other child care centers in the area for insight on utility payments. Develop a spreadsheet breaking down expenditures into categories such as personnel, occupancy costs, supplies, equipment, administration, staff development and miscellaneous expenses.

Formulate a budget for the first year. This budget is similar to the standard operating budget but works on the assumption that the school will not be at full capacity. Much of the school’s income is reliant on tuition fees. According to a resource paper from Child Care Inc., most schools operate only at 50 to 60 percent of full capacity for the first year. First-year staff costs may be less than when the school is operating at capacity as well as costs, such as food and supplies.

Conduct consistent audits of your budget. Whether you do it yourself or hire an accountant to look at your budgets, it is important to stay aware of where your money is going. Taking stock of the school’s priorities regarding education, health and safety within the budget audit ensures those priorities are receiving proper attention.

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