Is Daycare Business Profitable in Canada?
- swaraj prasad
- Dec 29, 2024
- 5 min read
Updated: Jan 21
Daycare business in Canada plays an important role in supporting the families by providing safe and nurturing environments for children during early developmental years. With increased demand for childcare services through dual-income households and expansion of workforce participation, the daycare centers are catering to children from infancy to preschool age. They have well-structured learning programs with social interaction opportunities and specific care according to the age group's developmental needs.
In this informative blog, we will discuss types of daycare models, restrictions, the income statement of a daycare, and grants or subsidies for a daycare business.
Here is a complete breakdown of what to expect
Daycare Business: What does it include?
Home vs Commercial Daycare Business
Home-based Child Care
Commercial Daycare Business
Daycare Business: Restrictions to Consider
Why is it the most in demand?
Cost of Operating a Daycare in Canada
Additional Requirements for Daycare Business
Subsidies and Grants Available for Daycare Businesses in Canada
Conclusion
Daycare Business: What Does it Include?
Understanding the requirements of a daycare business
Daycare business in Canada includes different types of daycare services, such as:
Babysitting: A structured and casual form of childcare often delivered out of a resident’s home, making it more popular with families in Canada.
Licensed Childcare Centers: Care and educational arrangements of children in standardized settings, may contain programs for different age groupings.
Home-Based Daycare: Smaller and at times less authoritative care settings operate from the provider’s premise and are preferred by families due to the flexible nature of its setting.
Preschool Programs: Services that are educational care services for children between three to five years and school readiness programs through learning by play.
Before-and-After School Care: For children in school age to provide a gap between home care in the parent working hours.
Drop-In or Casual Care: A form of childcare that is more informal, temporary, and whose services people use when they need childcare for a few hours or days at a time when they have a shift or irregular working schedule.
Home vs Commercial Daycare Business
The two main daycare business plans in Canada are home-based and commercial daycare.
Home-based Child Care
Home-based daycare settings in Canada can be licensed or unlicensed depending on the province or territory, and the number of children in care.
In licensed home child care a provider is allowed to care for up to 6 children under age 13. The provider is often overseen by a licensed agency.
In an unlicensed home child care a provider is allowed to care for a maximum of 5 children under the age of 13.
Commercial Daycare Business
A commercial daycare business in Canada is a profit-initiating business that provides a structured form of childcare services in commercial centers. It presents a list of businesses that target people of different ages and offer educational and recreational programs to children. Operating legally and overseen by provincial authorities, commercial daycares have definitive laid-down requirements on safety, staffing and the program to be offered.
Daycare Business: Restrictions to Consider
Before starting a daycare business in Canada, one must gain insights into the restrictions and legalities associated with the business. Here are some restrictions on the daycare business in Canada.
Licensing Requirements: Must follow provincial regulations on safety, staff qualifications, and standards of the facility.
Child-to-Staff Ratios: Strict limits on the number of children per caregiver.
Zoning Laws: Facilities are required to follow local zoning and building codes.
Health and Safety Standards: Regular cleaning, food safety, and emergency protocol inspections.
Staff Qualifications: Caregivers often require certifications in Early Childhood Education (ECE).
Operating Hours: Restrictions on business hours are different in each region.
Insurance: Liability coverage is a must for accidents and injuries.
Capacity: Regulated on space and staff availability
Special Needs Accommodation: This is subject to the policy on accessibility and inclusion
Background Check: Mandatory for all employees working with children.
Considering other types of businesses? Here are more posts on our profitability series.
Why is it the Most in Demand?
The daycare business in Canada is in high demand as there is a long waitlist. Low barriers to entry also make it a popular choice as one can operate it from home as well. Providers have licensed and unlicensed options available to operate a daycare center. This business is best for newcomers in Canada as the daycare business can yield roughly $4,000 to $5,000 a month.
Cost of Operating a Daycare in Canada
The overall costs involved in operating a daycare center
The cost can significantly differ depending on the place, size, and daycare type, whether it's commercial or home-based. The overall cost of operating a daycare in Canada is as shown in the table:
For example, if the total revenue is $500,000.00. The expenses can be as follows: | ||
65% | Salaries | $350,000.00 |
11% | Lease | $55,000.00 |
3% | Utilities | $15,000.00 |
5% | Interest on Loan | $25,000.00 |
4% | Supplies | $20,000.00 |
2% | Insurance | $10,000.00 |
3% | Groceries | $15,000.00 |
Total Expenses | $465,000.00 | |
6 to 8% | Profit margins | $35,000.00 |
Additional Requirements for Daycare Business
Find the nearest agency for enrollment.
Get first aid training.
Food handling certificate
Get a police clearance certificate.
Office supplies and toys.
Subsidies and Grants Available for Daycare Businesses in Canada
Exploring the subsidies and grants for daycare centers
One of the major grant programs for daycare services in Canada is the “Canada-Wide Early Learning and Child Care (CWELCC) program”. The key points of this program are as under:
Objective: Make childcare more affordable and accessible across Canada.
Fee Reduction: Reduce the average cost of daycare to $10 per day by 2026.
Funding: Funding will be shared between the federal government and provinces/territories.
Eligibility: Eligible licensed providers include non-profit and for-profit centers.
Support for Providers: Provide funding to support operational costs for daycare centers.
Expansion of Spaces: Encourage the creation of new childcare spaces, especially in underserved communities.
Quality Standards: The standards enhance the quality of early learning with training and wage enhancements to staff.
Accessibility: The focus is on inclusive care in promoting Indigenous and special needs childcare services.
Provincial Agreements: Each province and territory has its implementation plan under the CWELCC framework.
Timeline: It will be implemented gradually, but some provinces have already reduced fees drastically in most regions.
Conclusion
In conclusion, opening a daycare business in Canada is profitable but it requires a careful consideration of several factors. Interested operators must get enrolled with a licensed agency and meet all the requirements. To be successful in this business, one must develop a proper plan and take account of restrictions as well.
Still confused about which business is most profitable in Canada? Consult our team today (free consult) and learn all the nuances of every option.
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