Spoke with an accountant about center with 13 kids. $70,000 startup quote

[yulandop]

An accountant told me I would need $70,000 startup for a small daycare. Center with 13 kids. I thought that was kind of steep for a small facility. I was thinking of around $20,000.
I was just going to rent a small place, possibly a storefront.
Am I underestimating?
My business plan must have been short

[Willow]

Depends on where you set up, if there need to be any sort of renovations to get it childcare ready, safe and accessible, what you'll all need as far as the guts of your set up (tables, chairs, bookshelves), related equipment and materials/toys, utility expenses - phone, electricity, gas etc. etc. etc.

$70,000 could be way over or under kill depending on all of that.

If I were starting from scratch there are entire houses in the town just 5 minutes away I could rent for under $500/month and there would be no way I'd need $20,000 to get set up. I wouldn't even need half that!

[Sugar Magnolia]

I spent $70,000, but 30 was the down payment on the real estate. 8 grand for city conditional use permit and rezone. 4 grand for architects, 15 grand for a parking lot install, 3 grand for ramp. The rest was for furnishings and everything else. Its pricey.

[yulandop]

Was that purchasing or renting?

[allsmiles]

Depends on where you set up, if there need to be any sort of renovations to get it childcare ready, safe and accessible, what you'll all need as far as the guts of your set up (tables, chairs, bookshelves), related equipment and materials/toys, utility expenses - phone, electricity, gas etc. etc. etc.

$70,000 could be way over or under kill depending on all of that.

If I were starting from scratch there are entire houses in the town just 5 minutes away I could rent for under $500/month and there would be no way I'd need $20,000 to get set up. I wouldn't even need half that!

exactly!! thats why a home is gonna be my route to go!

[allsmiles]

I spent $70,000, but 30 was the down payment on the real estate. 8 grand for city conditional use permit and rezone. 4 grand for architects, 15 grand for a parking lot install, 3 grand for ramp. The rest was for furnishings and everything else. Its pricey.

o m g

[Crystal]

You need to keep in mind that, in addition to the fees for the faciltiy, utilities, staffing, etc. that you will need AT LEAST three months cash reserves to cover all of those things, because you won't be running at capacity from the very beginning. This may be where your accountant is getting the figures from.

[Sugar Magnolia]

Was that purchasing or renting?

Purchasing! 2005 height of the Florida real estate boom. 320 K for a historic home. A 1 , 2 bath house. Crazy. But its commercial now, doubling the value. Funny, Zillow says is worth 90 k. Not funny actually.

[Sugar Magnolia]

You need to keep in mind that, in addition to the fees for the faciltiy, utilities, staffing, etc. that you will need AT LEAST three months cash reserves to cover all of those things, because you won't be running at capacity from the very beginning. This may be where your accountant is getting the figures from.

Word.

[allieannarbor]

It is hard to answer the question of cost just as that varies by region as much as tuition but there are some ways to break it down.

To start you want to look at property cost, if you are a in a larger community or city than a site like loopnet can give you an idea of commercial property cost. For our new project we are looking at $12 a square foot and at least 2000 square feet for a 32+ child program. You negotiate a contract with your broker but you want to budget for a deposit and however many months it will take to get started (for instance 2 months of remodel or set up time without tuition coming in, also assume you will not be full at the start). The nice thing about a commercial lease is that you can get a long term lease, 3+ years and the property owners may be inclined to pay for build out costs or let you go a few months rent free.

You mentioned store front, you may want to start your research by looking at licensing and your city's zoning laws. For instance, in my state of Oregon (and the case with many) you are required to provide outside play area. Most storefronts cannot provide this. Second zoning specifies where a child care or preschool facility can be located, there are rules about the amount of parking and location. You cannot often be located in a residential area unless you live with the program OR go through the time and costs associated with a conditional use permit. A conditional use permit is a process where you get a property rezoned from say residential to commercial or commercial to an E occupancy (as in my city), this generally takes time and involves appeals to the planning department and gives neighbors a change to complain that your program's existence while ruin the community vibe.....

Build out costs can eat up a lot of your budget. If the building requires remodeling to meet licensing regulations than you will pay for that, for instance in my state you need a toilet for every 15 people. Once you have more than a 50 person occupancy by the fire code (in my city, varies by city) than you have to install a full alarmed fire sprinkler system. Also anytime you remodel and pass a certain cost (again varies by community) you must budget 25% of your remodeling budget to go towards ADA improvements. This means things like an accessible bathroom, a handicap ramp, replacing door frames with wider ones....

Supplies and be pricey but only as much as you want them to be. You are in charge of what kind of investment you want to make, so you have a choice between say plastic chairs (used on Ebay?) or wood chairs from Community Playthings. We budget $200 per student on cubbies, toys and other supplies.

The other costs are such things as taxes, insurance (you will want a commercial liability insurance policy), and other city fees.

Sorry I went on and on, probably more than you wanted, but we are currently in the process of opening a new space so this is where my head is at. Even with all of that being said 70000 for 13 children is pricey, we are looking at $50,000 for a 42 child program in a city environment. It comes down to property selection, we are working with a commercial broker. Find someone with knowledge of this area and zoning familiarity for daycares. A broker is an invaluable resource, they are also FREE to you, they help you find the property and the landlord ends up absorbing their cost (they only make money if they help you find what you need and negotiate a good deal, the property owner always pays the commercial broker). They can help you find a space that ideally needs like to no re-zoning, has low costs (no NNN or low NNN), and needs little build out (already ADA improved).

Does your state allow 12 children in a residential program (many do)? We live in a state where you can have 16 children in home if you have the square footage, so we rented a verrrrrrrry large house and have our personal living space upstairs and in the basement and house a full preschool program on the main level. Costs are much lower and the process is faster, comes down to finding a landlord that will let you do such a thing. Our startup costs were $11,000 but we chose to use high end products for furniture so the cost could be less.

Good luck! I learn something each day in this process!

[Sugar Magnolia]

o m g

Don't be scared off by those numbers! This is a wealthy LaLa land and everything is overpriced. Real estate in 2005 especially.

[Sugar Magnolia]

It is hard to answer the question of cost just as that varies by region as much as tuition but there are some ways to break it down.

To start you want to look at property cost, if you are a in a larger community or city than a site like loopnet can give you an idea of commercial property cost. For our new project we are looking at $12 a square foot and at least 2000 square feet for a 32+ child program. You negotiate a contract with your broker but you want to budget for a deposit and however many months it will take to get started (for instance 2 months of remodel or set up time without tuition coming in, also assume you will not be full at the start). The nice thing about a commercial lease is that you can get a long term lease, 3+ years and the property owners may be inclined to pay for build out costs or let you go a few months rent free.

You mentioned store front, you may want to start your research by looking at licensing and your city's zoning laws. For instance, in my state of Oregon (and the case with many) you are required to provide outside play area. Most storefronts cannot provide this. Second zoning specifies where a child care or preschool facility can be located, there are rules about the amount of parking and location. You cannot often be located in a residential area unless you live with the program OR go through the time and costs associated with a conditional use permit. A conditional use permit is a process where you get a property rezoned from say residential to commercial or commercial to an E occupancy (as in my city), this generally takes time and involves appeals to the planning department and gives neighbors a change to complain that your program's existence while ruin the community vibe.....

Build out costs can eat up a lot of your budget. If the building requires remodeling to meet licensing regulations than you will pay for that, for instance in my state you need a toilet for every 15 people. Once you have more than a 50 person occupancy by the fire code (in my city, varies by city) than you have to install a full alarmed fire sprinkler system. Also anytime you remodel and pass a certain cost (again varies by community) you must budget 25% of your remodeling budget to go towards ADA improvements. This means things like an accessible bathroom, a handicap ramp, replacing door frames with wider ones....

Supplies and be pricey but only as much as you want them to be. You are in charge of what kind of investment you want to make, so you have a choice between say plastic chairs (used on Ebay?) or wood chairs from Community Playthings. We budget $200 per student on cubbies, toys and other supplies.

The other costs are such things as taxes, insurance (you will want a commercial liability insurance policy), and other city fees.

Sorry I went on and on, probably more than you wanted, but we are currently in the process of opening a new space so this is where my head is at. Even with all of that being said 70000 for 13 children is pricey, we are looking at $50,000 for a 42 child program in a city environment. It comes down to property selection, we are working with a commercial broker. Find someone with knowledge of this area and zoning familiarity for daycares. A broker is an invaluable resource, they are also FREE to you, they help you find the property and the landlord ends up absorbing their cost (they only make money if they help you find what you need and negotiate a good deal, the property owner always pays the commercial broker). They can help you find a space that ideally needs like to no re-zoning, has low costs (no NNN or low NNN), and needs little build out (already ADA improved).

Does your state allow 12 children in a residential program (many do)? We live in a state where you can have 16 children in home if you have the square footage, so we rented a verrrrrrrry large house and have our personal living space upstairs and in the basement and house a full preschool program on the main level. Costs are much lower and the process is faster, comes down to finding a landlord that will let you do such a thing. Our startup costs were $11,000 but we chose to use high end products for furniture so the cost could be less.

Good luck! I learn something each day in this process!

We should chat!

[yulandop]

Thank you, I'm encouraged!