Advice on how to fund and run a successful daycare centre

Early childhood development (ECD) centres – also referred to as daycares, educares, preschools and crèches – are widely regarded as being some of the most important building blocks of society. In South Africa, where early intervention can help solve problems such as illiteracy, ECDs play a vital role in determining the country’s socio-economic future.

With greater access to working capital and funding, entrepreneurs in this sector have a unique opportunity to make a positive impact within their communities.

Over the years, David Morobe, executive general manager for Impact Investing at Business Partners Limited, has drawn much inspiration from the tenacity and determined spirit of business owners in South Africa’s educare industry. “Many of the ECD entrepreneurs we engage with regularly see the work they do as a vocation, rather than just a job or commercial pursuit. These entrepreneurs are important contributors to social development, both in terms of the children whose lives they change as well as the jobs they create.

“Like any small business, getting an ECD business off the ground is not easy. But with the right level of guidance and the financial backing needed to ensure the ECD is equipped and optimised for safe caretaking, daycare owners can earn both profitable returns while serving an all-important purpose in society,” he says. 

In an ECD, funding can be used to buy property or for renovations. It can also be used to cover the cost of play equipment and supplies, or to cover running expenses such as utilities, staff salaries and property rates.

A South African success story

A prime example of how access to funding can provide ECDs with the boost they need to become fully operational is the Hapidays Daycare Centre, owned by teacher, mother and entrepreneur, Megan Hendricks. The centre, which is based in Stellenbosch, Western Cape, currently provides a safe learning and care environment for around 45 children.

After buying the daycare in early 2015, Hendricks and her husband approached Business Partners Limited for the funding needed to breathe new life into the centre and support its ongoing operation. Shortly before applying for finance, Hendricks had become a mother of her third child and had started studying for a Bachelor of Education (Early Childhood Development: Foundation Phase) qualification from UNISA. 

At a time during which Hendricks was called upon to fulfil multiple roles, the funding provided by Business Partners Limited enabled her to meet the demands of being a mother, business owner and student.

Today, Hapidays boasts three individual classrooms, two secure outdoor play areas and a fully operational kitchen that supplies daily meals for the children in its care. It also provides employment for eight permanent staff members. 

As Hendricks says: “Funding is a pressing need for many ECDs across the country. As a business owner, access to capital has allowed me to improve my facilities and access the resources needed to provide a high-quality service that is both financially sustainable and personally fulfilling. This is crucial from a health and safety perspective as well in terms of the regulatory requirements that are prerequisites for obtaining the relevant licences to run a daycare.”

Advice on how to thrive in the local ECD sector

Offering her advice for newcomers to the industry, Hendricks explains that financial support as well as a consistent source of expert advice are essential to building a sustainable venture in the ECD sector. Currently, 1.6 million children under the age of 6 are enrolled to attend an early learning programme in South Africa, which serves as a training ground for their schooling years. 

Before the COVID-19 pandemic, this figure was closer to 2 million – an indicator of how significantly the industry was impacted by the pandemic. For Hendricks, overcoming the obstacles of the pandemic years was a gruelling task – as it was for many other business owners in other sectors.

Over this period, the number of children enrolled at Hapidays dropped by 75%. But a robust business model and a steadfast conviction that numbers would once again return to normal has helped Hendricks keep her daycare centre afloat. 

“The team at Business Partners Limited has also gone above and beyond the financial aspect of support and have walked much of my entrepreneurial journey with me, providing invaluable advice and guidance along the way. It’s important to have access to mentors and industry experts who have a keen understanding of the unique hurdles faced by small businesses. Access to this wealth of knowledge and experience has been invaluable to me as an entrepreneur,” she concludes.