A Step by Step Guide to Starting a Childcare Business

kids playing at childcare center

Are you looking to make a career change? Do you love kids? If so, opening a daycare center could be the perfect career shift for you.

Opening an in-home daycare or a daycare center is a great way to become your own boss and to capitalize on your passion for taking care of children. 

Wondering what starting a childcare business entails? Follow this step by step guide and you’ll be in business!

1. In-Home or Daycare Center?

The first question you’ll need to answer is what kind of daycare do you want to open. 

If your house is spacious and you have a decent-sized yard, then you may want to run a daycare facility out of your home. This option is especially attractive to those who want to or are already taking care of their own kids. In-home daycares usually have fewer kids than daycare centers.

Another option is a private daycare center. This is a great option for those who are looking to run their own business on a larger scale than an in-home daycare. If you want to open a private daycare center you’ll need to get your own building, hire staff, and enroll more kids.

The last option is to purchase a daycare franchise. This option comes with more red tape as you’ll have to conform to the licensing requirements, curriculum, and standards of the franchise brand. It also costs more upfront because you need to buy into the franchise.

The choice of what kind of daycare you open comes down to your beliefs about childcare, how big you want your business to be, and how much money you have to work with.  

2. Research Licensing Requirements 

Once you’ve decided what kind of daycare you want to open, you’ll need to research the licensing requirements.

Almost all states require that every kind of daycare facility conform to certain standards and regulations. These standards and regulations vary by state and by what kind of facility you’re opening. In-home daycares have very different licensing requirements than daycare centers and daycare franchises.

Almost all states require some kind of child care training as part of their licensing requirements. Make sure that you have completed the training required by your state before you start setting up your childcare business.

You won’t be able to open your daycare until you meet all the licensing requirements. Make sure you have a full understanding of these requirements before you proceed.

3. Scope out the Competition and the Market

Whenever you’re opening a new business, it’s essential to know the competition. You need to figure out where you fit in the local market.

Start by looking up the childcare facilities in your area. Check out what kind of facilities there are. Try to find out how many kids go to each facility and how big their class sizes are. If you can, find out what each of these childcare businesses is charging for tuition. 

All this information will help you figure out how you can set your daycare apart from the rest.

Next, research the childcare market in your area. Use census data to find out how many families with young children are in the area. Interview the parents you know about their childcare needs and what’s lacking in the current daycare options.

This information will help you understand whether there is a need for another daycare facility in your community and whether opening a childcare business is a profitable endeavor. 

4. Create a Business Plan 

As with any business, you’ll need a business plan before you get started. A well-thought-out and well-written business plan is especially necessary if you’re going to be seeking funding.

Your business plan will need to include all the details about how you’ll run the daycare, the operating budget, what you plan to charge for tuition, and how you’re getting funding.

In the section about how you’ll run the daycare, you should include operating hours, how many staff members you’ll need, how many children you plan to enroll, the childcare philosophy you plan to adhere to, and an example of a daily schedule.

The budget section should lay out all the expenses to open and operate the daycare on a monthly basis. This section should also include what you plan to charge for tuition, which should be enough to cover monthly operating expenses. Lastly, include information about how you plan to get the money to open your childcare business, like whether you have the money or whether you’ll be getting a loan. 

5. Choose Your Location 

Once your business plan is all set to go, your funding is secured, and you’ve met all the licensing requirements, it’s time to choose a location! 

If you’ve decided on an in-home daycare then this step is already done. Move on to the next step about setting up your facility.

If you’ve chosen to start a private daycare center, then you need to hunt for a suitable building. Be sure that you’re familiar with your state’s licensing requirements for building specifications. 

If you’re purchasing a daycare franchise then you’ll likely be purchasing an already functional daycare center. In this case, choosing your location will be about finding the existing facility that meets your needs in a profitable market.

6. Set Up Your Facility and Purchase Supplies 

When your location is all set, it’s time to start setting up your daycare facility!

First, you’ll need to contact the city where your facility is located to schedule a building inspection. For an in-home daycare, this means a representative from the city will be inspecting your home. Make sure that your building will pass the inspection required by your state’s licensing requirements before you start setting up your facility.

Once your location has passed inspection, you can start getting the space ready for kids! This means different things for different kinds of facilities. For an in-home daycare, this may mean reorganizing rooms in your home to be play and activity spaces. It may also mean getting playground equipment for your yard. 

For a daycare center, setting up your facility is a bit more work. You’re starting with an empty building, so you’ll need a lot of vision! You’ll need to purchase all the equipment, toys, and furniture. Then you’ll need to decide how to arrange it in a way that encourages safe, educational play. 

Regardless of what type of childcare facility you’re opening, you’ll need to head to Staples or a similar store for lots of crayons, markers, paper, scissors, and other arts and crafts supplies.

7. Market Your Daycare and Enroll Kids!

Now that you have a functional daycare facility, it’s time to start marketing.

Choose what kinds of advertising you want to do. Research parenting sites and blogs that target the local area and see if you can run ads on their sites. If there’s a local newspaper, consider purchasing an ad. Leaving business cards or flyers at local playgroups and kids’ events is another great way to get enrollments.

Sometimes the best marketing for childcare facilities is word of mouth. Talk to the parents you know and ask them to tell the parents they know.

You should start marketing your facility a few months before you plan to open so you have time to enroll a sufficient number of children to cover your operating expenses.

Is Starting a Childcare Business Right for You?

Starting a childcare business is definitely a lot of work. And it takes the right kind of personality to care for multiple kids day after day. But if you’ve got that personality and you’re willing to put in the work, opening your own daycare can be a very rewarding and profitable career move.

For more information about starting your own business, check out the Business and Finance section of our site.