How to Start Your Own Daycare Business

Few people can spend their precious time doing something that brings joy and satisfaction to their lives. For the majority of people, creating a space that allows them to work passionately and put their skills to good use is much more fulfilling and rewarding than having a salaried position that feels purposeless.

This is probably why you’re looking to start your own daycare business. You’re passionate about kids, and the skills you have honed and are most proud of—compassion, empathy, and patience—are all perfectly suited for a position working with children. Most importantly, you love caring for children and helping them grow and learn new skills.

A daycare business allows you to help parents who work outside their home with childcare responsibilities. That means you get to put your skills to good use and help others while enjoying freedom, doing something you love, and generating income. Here’s how you can start and run a successful daycare business:

Look into Licensing Requirements

You’ve probably invested a lot of time in educating yourself how to babysit and care for children and feel you’re ready and prepared to run your own daycare business. Don’t start marketing yourself before you obtain the necessary permits and licenses.

Save yourself legal trouble by contacting your state’s Department of Children and Family Services or local childcare licensing agency to find out the licensing requirements you must meet before getting started. Keep in mind that daycare regulations and licensing requirements vary by state and city, and it’s important that you follow them to the later. Don’t cut corners.

Conduct Competitor Research

After checking with your local regulatory agency and seeing what’s required of you, the next step should be to identify other daycare businesses within your locality. Competition is inevitable in today’s business landscape, which is why you need to look into already existing daycare services to see if there are any community needs that aren’t being met.

When conducting competitor research, make sure you list competitor rates for services, location, operating hours, curriculum offered, ages of enrollment, and enrollment numbers in each daycare within your area.

Your goal should be to identify a gap between the existing daycare services and what your community needs. Knowing your competition will also help you strategize and set yourself apart from other daycare providers in your area.

Create a Business Plan

As with every business, you need to take the time to detail your daycare business goals and how you’re going to achieve them. And this is where a daycare business plan template comes in. Whether or not there are other existing daycare services in your area, it’s important that you write a business plan that will keep you on track and serve as a roadmap towards success.

Business planning might be intimidating but it’s certainly a helpful exercise that helps you identify opportunities in the marketplace, plan ahead, and anticipate potential roadblocks that could easily result in business failure when they’re ignored. Your business plan should include your mission and objectives, a description of the services you plan to provide to customers, an overview of your industry and target market, staffing requirements, sales strategy and sales forecasts, and financial projections.

Find a Great Location

You should know that your daycare facility— regardless of whether it’s in your own home or on a rented property— must meet your state’s zoning, fire, and health and safety requirements. Now, unless you intend to run your childcare business out of your personal residence, you’ll need to find a suitable location for your daycare.

First, you need to choose a facility that’s situated along major highways so it’s easier and more convenient for parents to drop-off and pick-up their children on their way to and from work. Secondly, you should choose a facility that’s not only child-friendly but also centrally located for easy access. Finally, it should have enough space to accommodate your projected enrollment.

Get Insurance for your Daycare Business

It’s important that you protect yourself and your daycare business legally and financially against unforeseen events. Start by checking with your local childcare provider licensing office to find out what types of insurance your daycare center will need. These insurance policies typically include commercial property insurance, commercial general liability coverage, workers’ compensation coverage, business interruption insurance, and professional liability insurance.

It’s recommended that you talk with a reputable insurance agent who can guide you on the policies that will meet your needs.

Determine Where You’ll get Your Funding

Once you’re adequately insured, the next step is to determine how you’re going to cover your startup costs and ongoing operating expenses. If you already have enough money in your savings account, this is going to be straightforward. However, if you don’t have adequate finances, you’ll need to seek out funding from other sources. Possible sources of funds include community fundraising, support from family members and friends, taking out an SBA loan, applying for grants, and financing from banks or credit unions. Doing your due diligence for any funding method is a must to keep your daycare business financially stable. For instance, if you decide that taking out SBA loan packages is the right move, be sure to check up on the requirements your business needs to meet, as well as the terms, conditions and interest rates that apply.

Invest in the Right Equipment and Supplies

Your daycare center will definitely need learning materials, furniture, first aid kits, computers, playground equipment, cleaning supplies, and other necessities for it to be up and running. Your exact purchases will vary depending on the size of your daycare, your projected enrollment, and the age group you’ll be serving.

You don’t have to purchase or lease expensive equipment and supplies when starting out. Keep things simple and be sure to take safety into account when sourcing for your supplies/equipment.

You can look for readily available software tools like Student Management System, Invoicing App, etc. for managing your operations.

Draw up a Contract and Policies

Create a legally binding document that outlines what your childcare center will provide and what you expect from your clients. Failure to create a solid contract could expose your daycare business to legal issues, and you don’t want that to happen. Consider working with an attorney to make sure the terms and conditions in your contract documents are fair to both your business and your clients.

Build a Team

Once you create a contract, it’s time to set up your space for opening and start building an amazing team for your daycare business. You may have to start by working alone to save on the initial startup costs. However, as you market your business and clients begin to show up, you’ll need to bring onboard additional childcare providers. Therefore, it’s important that you create some room for hiring additional staff in your budget.


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