Evaluate Your Advertising Expenses

December 27, 2021

Is the money you’re spending on advertising for your childcare business giving you a return on your investment? Let’s evaluate your advertising costs. Too many childcare business owners are spending too much money on advertising, failing to get a return on their investment, spending money on the wrong types of advertising, or a combination of all these factors. In this article, learn about the importance of setting up and sticking to your marketing budget, tracking your return on investment, and spending money on the right types of advertisement for your childcare business.

Your Marketing Budget Matters

Your childcare business budget is the heartbeat of your company. Your budget is crucial for helping you track income and expenses. Without it, you would have no way to monitor the financial well-being of your company. Your marketing budget is no different. The money you allocate for marketing and advertising must be closely monitored in order for you to determine if you’re spending over-budget, spending on the wrong types of advertisements, and whether you’re getting a return on your investment.

Here are some best practices to consider when it comes to your childcare business marketing budget:

  • Allocate a percentage of your monthly revenue for marketing and advertising. Your accountant can help you figure out what this looks like for your childcare business. In general, 1% to 3% of your total monthly revenue is a good benchmark for your marketing budget.
  • Decide what marketing and advertising expenses you expect to pay. Whether you plan to pay for a print advertisement, a Google Ads campaign, a Facebook Ad, printed marketing materials, and so on…price out these items and services and plan for them in your monthly marketing budget.
  • Track your return on investment (ROI). If you don’t measure the results of your marketing and advertising efforts, how will you know whether they are worth the investment? We’ll cover ROI in more detail next.
  • Stick to your marketing budget and adjust as needed. As with all things pertaining to your childcare business budget, it will take some trial and error for you to figure out what kinds of marketing and advertising avenues work best for your childcare business. That’s why tracking your results is so important. You can quickly discover what’s working and what isn’t and pivot your spending plan accordingly. And please remember – stick to your budget!

Tracking Return on Investment is Key

The key to a successful marketing and advertising plan for your childcare business is figuring out your return on investment. Whenever you run an advertising campaign of any kind, you should be tracking ROI. Here’s how to calculate it:

ROI = (Net Profit/Costs) x 100

Let’s take a look at an example.

Danielle’s childcare business makes an additional $10,000 in revenue in January from new students. She spends $700 on marketing and advertising that month and she also accrues additional monthly business expenses totaling $6,500 related to the costs to serve the new students. Danielle wants to calculate her ROI for January:

ROI = (10,000 – (700 + 6,500)) / (700 + 6,500) X 100 = 38.9%

From this calculation, Danielle can see that she is getting a good return on investment for her marketing and advertising costs.

It’s important to continually calculate your ROI on a monthly or quarterly basis and especially when you pursue a new advertising avenue. This way, you can see whether your marketing and advertising dollars are being spent in the right places.

That brings us to the next point, spending your marketing money on the right types of marketing and advertising campaigns.

Are You Spending Marketing Money on the Right Things?

Every childcare business will have a marketing plan that is unique to the needs of the business, but a good marketing plan should be rooted in solid business goals. If you don’t create goals for your marketing and advertising campaigns, how will you know whether you have achieved success? Figure out what you are trying to accomplish:

  • How many new children do you want to enroll?
  • What is your timeframe?
  • Who is your target demographic?

The more specific you can be with your goals, the more you can zero in your marketing dollars on the right campaigns to help you achieve them.

A common issue we see a lot with our clients is childcare business owners who are spending lots of money on marketing and advertising even though they have a waitlist of children ready to take spots that aren’t currently open in their programs. Advertising to put more students on your waitlist won’t magically turn those prospects into enrolled students unless you have room for them in your program. In other words, those marketing and advertising dollars aren’t giving these clients a good return on investment.

Another common issue we see a lot with our clients is childcare business owners who are spending marketing money on the wrong pursuits. For example, instead of paying a web developer to build a functional, eye-catching business website, they might be paying out tons of money for Facebook ad campaigns that aren’t converting to newly enrolled students.

These issues can be picked up on quickly when you set business goals, decide on a marketing budget and stick to it, and calculate your return on investment.


The experts at Honest Buck Accounting can help you develop a realistic marketing and advertising budget that works for your childcare business. If you’re interested in learning more about our financial services, schedule a call with us. Our accountants can help you strategize your financial game plan and grow your childcare business in 2022.

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