daycare business recession ready

Is Your Daycare Business Recession Ready?

What is a recession? A recession is when there’s a decline in economic activity such as spending and sales. Once spending and sales decline, it causes the loss of jobs and the permanent closure of some businesses. According to, “there have been 11 recessions since 1948, averaging out to about one recession every six years.” Every time a recession occurs, families tend to find ways to cut their monthly expenses, and daycare services are usually the first to be cut, causing many daycares to close their doors permanently because they don’t have the resources to stay open. To prevent the closure of your daycare business, don’t wait until the recession affects your business to take action. Here are some ways to prepare for a recession:

Evaluate Your Finances

The first thing any daycare business owner should do before a recession occurs is evaluate their business finances. As the owner, you should know the minimum cash flow (the breakeven point) needed to operate your daycare business on a day-to-day basis so you can make the necessary adjustments when a recession occurs. Once you know the breakeven point, it will help determine the price to charge for each child enrolled in your program and help set a budget to prepare for a recession.

Expand Services Offered

When a recession occurs, the number of children enrolled drops. As the daycare owner, look into ways to maximize your income by expanding the services you offer. For example, you may want to offer weekend care. You can charge a separate price for each weekend day you decide to offer childcare services. If, for some reason, a parent(s) is affected by a recession, they may not be able to afford weekly prices, but they may want a break on a Saturday or Sunday. Other services include tutoring, date night, holiday care, parenting classes, etc.

Reduce Expenses & Spending

Even if it’s not a recession, make it a habit to evaluate monthly expenses to determine where money can be saved and look into cash or easily converted assets to pay off any business debt.

Monetize Unused Space

Be open to the possibility of renting out unused space in your facility. Ways to make money off unused space include:

  • Rent a room in your home
  • Rent entire home when it’s not in use
  • Rent out the basement space for special events
  • Rent out storage space
  • Rent out parking space
  • Host a foreign exchange student
Continue Marketing

When a recession hits, childcare programs often look for ways to cut monthly expenses, and marketing may seem unnecessary during these difficult times. However, it’s imperative to continue to inform current and potential parent(s) that you’re still open for business. You don’t want to wait until enrollment is low or the recession is over to start marketing because a parent(s) usually goes through multiple phases before deciding to enroll their child in a childcare program. Marketing your childcare program will create brand awareness, so when a parent(s) is ready to decide, your childcare program will be at the top of their frontal lobe.

Be More Accommodating

You probably already established your policies and procedures, and that’s great! However, you don’t want to be too strict during a recession because the goal is to keep slots filled. You don’t want to give parent(s) any reason not to enroll their child or to withdraw their child. During this time, try to be more accommodating to parent(s) and inform a parent(s) that you can accommodate them until a specific date and have them sign an acknowledgment form. This acknowledgment form should state that a particular service is available for a limited time.

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