Select Page

If you’re planning to start a daycare business or are in the process of writing your daycare business plan, conducting a SWOT analysis is an essential step. A SWOT analysis is a strategic planning tool used to identify and evaluate the strengths, weaknesses, opportunities and threats of you daycare business or project. By conducting a SWOT analysis, you can gain a better understanding of your daycare project’s internal and external environment and make informed decisions about its future.

daycare business plan and financial plan download

Strengths of a Daycare Business

The strengths of your daycare business refer to its internal resources, assets, and capabilities that give it a competitive advantage. A number of common strengths of a daycare business include:

  • Experience and expertise: If you have experience and expertise in early childhood education or have a team with the necessary qualifications and experience, this can be a significant strength. Prepare to highlight your resume and past experience, they will be quite handy.
  • Reputation and brand recognition: If you have a good reputation and brand recognition in the community, this can help attract customers and generate loyalty. This is particularly true for an established daycare business and probably less applicable if you are just starting out. In all cases, keep in mind that reputation is everything and can be a major strength for your daycare business.
  • Location: Location is crucial when it comes to the childcare industry. A daycare business located in a convenient location with easy access to transportation, schools, and residential areas can be a significant strength. Parents are often very busy, and proximity is definitely a key factor influencing their choice of daycare services for their kids.
  • Facilities and equipment: A well-equipped and safe daycare facility can be a significant strength, giving parents peace of mind and ensuring that children receive high-quality care.

Weaknesses of a Daycare Business

The weaknesses of your daycare business refer to its internal limitations, deficiencies, and areas that require improvement. Some of the weaknesses of a daycare business might include:

  • Lack of experience or expertise: If you or your team lack experience or expertise in early childhood education, this can be a significant weakness. No one would leave the care of their precious ones to an unqualified team.
  • Limited resources: A daycare business that has limited resources or that is underfunded can find difficulty in providing high-quality care or investing in necessary improvements. This is why raising enough money prior to the launch of the project is another contributor to the success of your daycare.
  • Inadequate facilities and equipment: If your daycare business has sub-par facilities or outdated equipment, this can negatively affect the quality of care and limit your ability to attract and retain customers.
  • High staff turnover: This is a common weakness among daycare businesses. If your daycare business has high staff turnover rates, this can negatively affect the quality of care and consistency of service. Parents are always unhappy when the caregiver taking care of their child is constantly changing.

Opportunities of a Daycare Business

The opportunities of your daycare business refer to external factors that can positively impact its growth and profitability. Here are a number of opportunities relevant for a daycare business:

  • Growing demand: Nowadays, with both parents employed and more families working outside the home, the demand for high-quality daycare services is growing. This is especially true in the post-covid era with most employers encouraging their staff to return to the office.
  • Partnerships with schools and other organizations: Establishing partnerships with schools and other organizations can generate new clients and increase revenue.
  • Government support: Government support in the form of subsidies or tax breaks can help reduce costs and increase profitability for daycares.
  • Diversification of services: Diversifying your services to include after-school care or summer / winter camps can help you increase sales and grow the business.

Threats of a Daycare Business

The threats of your daycare business refer to external factors that can negatively impact its growth and profitability. Below are a few common threats typically faced by a daycare business:

  • Competition: The daycare industry is highly competitive, and other providers may offer similar or better services at lower prices. You can mitigate this risk by offering top quality services, a differentiated value proposition and competitive rates.
  • Economic downturns: Economic downturns can negatively impact the demand for daycare services, as families may cut back on non-essential expenses.
  • Changing regulations: Changes in regulations, such as licensing requirements or new safety standards, can be costly and time-consuming to implement. These might affect your daycare’s business.
  • Health and safety risks: Health and safety risks, such as outbreaks of infectious diseases, can negatively affect the reputation and profitability of your daycare business.


Conducting a SWOT analysis is a valuable tool for assessing the strengths, weaknesses, opportunities, and threats of your daycare business. By identifying and evaluating these factors, you can make informed decisions about how to grow and improve your business, and better position yourself in a highly competitive industry.

In case you wish to develop a full fledged business plan, we recommend you check out our ready made daycare business plan template with automatic financials. Our solution will save you a lot of time and money.