I’m Starting a Preschool. Who’s My Competition?

To fully understand how you should structure your preschool to bless your community, you first need to understand more about the great need for high-quality preschools in our world, as well as the types of preschool programs that are readily available.

Can you imagine how this world would change if preschools filled every town in the world or were available online and every 3- to 5-year-old could attend a high-quality preschool?

Our past president, Barack Obama, also realizes the huge impact that a preschool education offers. In a recent speech, he said, “Early education is one of the best investments we can make. Not just in a child’s future, but in our country.”

When children ages 3-5 attend high-quality preschools, we see dramatic and lifelong benefits, including higher attendance rates and higher grades in middle school, according to a study on the Tulsa, OK, Head Start program.

Similarly, Nobel Peace recipient, James Heckman, proved that states that invested in high-quality early education spent less money on criminal justice and remedial education. Truly, the world would change dramatically for the better if more children had access to high-quality preschool education.

If preschool can have such powerful positive effects, one might assume that most families would enroll their children into preschool, right? Unfortunately, no.

According to a recent study from the U.S. Census Bureau, only 54% of all children ages 3-4 were enrolled in preschool. I believe there are three main reasons why less than half of the nation’s preschoolers are not attending school:

• No Value: Some families, regardless if they can or cannot pay, do not place a high enough value on an external early childhood education program to enroll their child.
• No Money: Some families can’t afford to pay for preschool, and they don’t have access to free or subsidized preschool.
• No Options: Some families can afford to pay for preschool, but they don’t want their children to attend the preschool or daycare programs in their area.

PRESCHOOL TARGET MARKETS

We believe each of the reasons above represent a specific group of people called a target market. To understand a target market, imagine you are standing in the middle of a crowded shopping mall, holding a plate with a delicious, steaming cinnamon roll above your head.

Most people—the “no value” target market—would walk on by, not even noticing you, because they had just eaten at the food court and were full. They found “no value” in the food you were offering.

Some people—the “no money” target market—would smell the cinnamon roll as they passed you and would want it, but ultimately, they would pass on by because they didn’t bring any money.

But some people—the “no options” target market—would see that cinnamon roll from the top of the escalator because they would have been searching for a cinnamon roll to eat and, after they would see it, they would buy it right away.

“No Value” Target Market (#1 above):

They don’t find value in what is being offered. They either will educate their children themselves at home, or they won’t. Simple as that. In any case, if you showed them your preschool, they wouldn’t care about it, because they wouldn’t value it. In the case of our home preschool business model, they are not your target market.

“No Money” Target Market (#2 above):

They are interested, but unable to take action. They would love to put their child in a preschool program, but they can’t find one that offers free or subsidized tuition in their area or online. Or, if they do find one, it’s full. If you showed them your preschool, they might want it, but they can’t afford it. They are not your target market.

“No Options” Target Market (#3 above):

They are seeking a solution, and they are ready to act as soon as it meets their needs. They are searching for a preschool program that meets their needs in their area. If you showed them your preschool (and it met their needs), they would enroll. They are your target market.

TYPES OF PRESCHOOL PROGRAMS

Thankfully, most parents will be able to find some preschool programs within their area; but, as mentioned above, some of those programs are not what they’re looking for. The three most common preschool programs in America (similar programs are also found around the world) are:

• Federally-funded preschool programs, offering free or sliding-scale tuition rates.
• State- or grant-funded preschool programs, offering free or sliding-scale tuition rates.
• Facility or home daycares with preschool classes offered during the day.

Do you remember the target markets we discussed earlier with the story about a cinnamon roll? Each of these three preschool programs serve a specific group of people with a specific set of needs.

What we’re proposing, as we’ll show you below, is that there is a completely different target market whose needs are not being met with these three current preschool programs, and, thus, they need a different preschool program altogether. At the end, we’ll show how a “strictly a preschool” program offers a solution for our unique target market.

1. Federally-Funded Preschool Programs:

Head Start is a federally-funded preschool program in America. Usually held in a school building, the Head Start program allows children to attend preschool for free if they meet Head Start’s developmental delay or lower income levels criteria. Then, if space allows, they allow other children to enroll and ask them to pay based on a sliding-scale fee.

Head Start’s target market is children with developmental delays or children in impoverished situations. Often, the program fills up with just those children, and other families who didn’t meet those criteria are left without options.

Unfortunately, Head Start is such a huge program that it’s difficult for every location to maintain high-quality standards. In fact, a simple search of “Head Start losing funding” in Google shows multiple locations in almost every state at risk to lose their funding because they violated quality standards.

Steven Barnett, director of the National Institute for Early Education Research (NIEER), had this to say about Head Start: “Low quality standards and funding levels in most states means too many kids will start school ill-prepared to succeed or even to behave.”

Because of the varying levels of quality in Head Start locations, some families choose not to enroll their children there, even if it is an option for their family. Your target market is not looking for a free preschool program. They are looking for a high-quality preschool program and they will pay you for it.

2. State- or Grant-Funded Preschool Programs:

As federal funds alone can’t meet the needs of every state’s early childhood education programs, each state has the option to fund its own preschool programs. They can allocate any amount they choose, but early childhood education is often on the budget chopping block, especially because it’s not a required program in every state.

Each state’s budget varies dramatically as well. According to NIEER, Washington, DC, invests almost $17,000 per child while Nebraska invests less than $2,000 per child. What’s most shocking is that seven states spent nothing at all on early childhood education in recent years.

When state funds aren’t enough (or aren’t even available), some cities choose to get grant funding instead. Depending on the size of the grant, one city might be able to get enough funding to teach just 24 students that year in its entire town, while its neighboring city is able to enroll 200+ students.

The biggest problem with any grant, however, is still finding the space to teach the preschoolers. Often, cities look to the school districts for room. Unfortunately, most schools are either full or overcrowded, and extra rooms are rarely available. With these giant hoops to jump through, most cities don’t take the leap to create their own preschool programs.

In both state- or grant-funded preschool programs, their target market is any child ages 3-4 that lives within a certain boundary. Some preschool programs are specifically only for children ages 4 and up.

Depending on the program’s funding, it may be free or it may charge a sliding-scale fee. All of these programs are created to meet the greatest needs of their community, and often, the greatest need is childcare.

In any case, it’s important to note that even with the mention of “free,” there’s still a large portion of families that choose not to attend. As the Annie E. Casey Foundation explains, in Alabama, only 25% of 4-year-olds attended the state’s free preschool program in 2017, even though it was available to all.

Several preschool owners have expressed concern when a “free preschool” option such as these showed up in their city. They thought they would lose all their business because, as they explained, “Why would anyone pay for my preschool when they could go for free somewhere else?”

We helped them understand that just because it was “free,” it didn’t mean that it met everyone’s needs. Some families don’t want their children to wait to go to preschool until they are 4; some want to find a preschool when their children are 3.

Also, some families want an experience with more than just preschool classes. They want a community with events, field trips, and a warm, personal touch. And lastly, some families don’t need childcare, so why would they put their child into an all-day program, even if it was free? Again, your target market is not the free crowd… your target market is the families who want more offered than just preschool.

3. Facility or Home Daycare Programs:

If we had to ask you to list two to three daycares in your town, you could probably do it. There’s usually one on every busy corner. Often, facility daycares are all we really see as far as child-related businesses in our town.

Home daycares are usually less easy to spot because most can’t put signs in front of their homes advertising their business, and they rarely advertise. In both cases, their target market is families who work and need their children to be taken care of during the day by loving childcare providers.

While daycare owners usually accept infants through school-age children, they do their best to provide for the specific needs of each age group. In the preschool age group, that means preparing them for kindergarten.

Unfortunately, too often childcare providers are not educated in developmentally appropriate practice, a term coined by The National Association for the Education of Young Children (NAEYC).

To understand developmentally appropriate practice, imagine you were caring for an infant. You wouldn’t try to make the infant walk before he/she could crawl, would you? No, because you know there are certain milestones that each person must hit before they move on to the next milestone. An infant must first crawl, then walk.

Similarly, preschoolers should not be expected to do kindergarten-level work in preschool. Yet, all too often, we see daycares holding “preschool” by sitting 20 kids at a table and having them all do worksheets for 30 minutes.

In this instance, worksheets would not be considered developmentally appropriate, because children need to first develop their fine-motor skills and print awareness before being expected to write letters, and that skill is not usually developed until kindergarten.

That being said, we don’t mean to imply that every daycare runs their preschool time like this. On the contrary, we know that many daycares take early childhood education seriously and do an amazing job of following best practice and hiring educated, qualified providers.

We applaud these daycare owners for their commitment to excellence. We have found that these daycares, however, are rare, and are usually full.

While daycares are perfect for full-time working families, daycares don’t often meet the needs of stay-at-home moms or part-time working families looking solely for preschool.

These families want their children to go to preschool for just a few hours a day, unlike the long hours of daycare. Because of the rarity of daycares with high-quality part-time preschool programs, some families are left without options.

4. Facility Preschool Programs:

We didn’t list facility preschool programs on the list previously because they’re extremely rare to come by, but we will still describe them here. These programs are perfect for stay-at-home moms or part-time working parents because they are “strictly a preschool” teaching children ages 3-5 for a few hours each day.

These are often your elite preschools (I’ve got my eye on you, New York City!) that require you to apply for admission pretty much as soon as you know you’re pregnant. They have long waiting lists, high tuition rates, and exist primarily only in large cities, so these are typically not an option for your target market.

After our preschool grew, our second location became exactly what we just described: a facility preschool. However, we wanted to keep our warm, homelike environment so we chose to renovate an entire home and turn it into a schoolhouse. It has an entirely different feeling than the cold brick-and-mortar facility establishments you see today.

We believe my preschool became so successful because we offered the professionalism one finds in a facility preschool, but we did so in such a warm manner that you never knew we were a big preschool.

The close community that we created in our little home preschool is exactly what we continued to foster as we grew. We may have had a big schoolhouse, but we never lost the small preschool feeling where you knew you were cared for as if you were our family.

As we’ve shown, there are several preschool programs available, but not all of them meet the needs of our very unique target market. These stay-at-home moms and part-time working parents are looking for a high-quality program that is strictly a preschool and not a daycare; they are also looking for a program that offers more than just preschool.

They want an experience, a family, and a community. As the popular saying goes, “It takes a village to raise a child,” and these parents are looking for that village (i.e. your preschool).

So, what are these parents to do when their children’s only preschool options are free/sliding-scale fee programs, facility/home daycares, or facility preschools? They can choose one of those options, or they can search for a preschool that meets their needs. And when they see such a preschool, they’ll hone in on it, just like they did with the steaming hot cinnamon roll in the middle of the crowded shopping mall.

When these parents find a “strictly a preschool” program that they feel comfortable with, you will often hear them say:

• “I love that you only teach preschool and you’re not a daycare.”
• “I love the warm, friendly environment.”
• “My child wishes he could come to preschool every day!”
• “I love how my child gets lots of 1-on-1 time with you because of your small class sizes.”
• “This is the perfect transition: from home… to home preschool… to school!”
• “Every year, I look forward to coming to all of your fun events!”
• “When I’m at your preschool, I feel like I’m family!”