How to Start a Daycare Business in 2024
Last Updated: 12/17/2023
Starting a Daycare Business: The Complete Guide
If you love kids and are considering starting your own business, opening a daycare could be a great option. Seeing those little ones laugh, play, and learn new things every day is so rewarding. But be prepared — launching a successful daycare takes tons of hard work. This guide will give you the inside scoop on everything you need to know to get your own daycare up and running.
Choose a Business Structure
First things first — decide how you want to set up your business. Most daycares choose between being a sole proprietorship, partnership, LLC or corporation. Weigh the pros and cons of each when it comes to legal protections, taxes, and costs. Many opt for an LLC to get liability protection without the higher expenses of a corporation. Talk to an accountant or lawyer to pick the best structure for your needs.
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Create a Solid Business Plan
A detailed business plan is super critical for any new business, but especially daycares. Map out every aspect of your future daycare in writing. Be sure to include:
- Your philosophy and vision for the daycare
- Ideal location and facility requirements
- Estimated startup and operating costs
- Competitive pricing and student enrollment goals
- Daily schedules, curriculum plans, activities
- Marketing strategies to spread the word
- Financial projections for the first few years
- Potential risks and how you’ll address them
This will serve as your roadmap and also help attract investors if needed. Do your homework and make it thorough!
Fund Your Dream
Starting a daycare is unfortunately not cheap — between securing a spot, renovations, furniture, toys, supplies, permits, insurance, etc, costs typically range from $10K to $30K. Figure in a few months of operating costs before you expect to break even.
Explore loans, your own savings, help from family and friends, crowdfunding, grants, and subsidies to get funding. Apply early, since it can take time to get approved. Creative financing solutions can help make your dream daycare a reality.
Find the Perfect Space
Your daycare’s location and facility are super important for success. Look for a space large enough for classrooms, play areas, kitchen, offices, parking, etc. Make sure it’s clean, safe, and updated. Having a warm, inviting vibe is a plus for little kids. Being near your target families is ideal for convenience.
Leasing commercial space is one option, or you may be able to use approved rooms in your home. Check local regulations for home-based daycares first. The location will impact your startup costs, so choose carefully!
Get Licensed and Accredited
Every state has legal requirements to open a daycare — make sure you know the steps for licenses, permits, taxes, and insurance. Here are some key things you’ll likely need:
- Business license, tax IDs, and permits
- Liability and accident insurance coverage
- Regular safety, fire, and health inspections
- Food safety training if serving meals
- Meeting teacher-to-child ratio rules
- Background checks for staff
- Following curriculum standards
Look into getting accredited through the National Association for the Education of Young Children. Accreditation can attract parents but does have some additional standards to meet.
Build an A+ Staff
Your staff will truly make or break your daycare. Hire experienced pros who adore working with little ones. Vet them thoroughly with background checks. Have a mix of lead and assistant teachers based on your number of students.
Follow all state requirements for teacher qualifications and ratios. Train everyone on policies, curriculum, and goals. Clear employment agreements are a must. Pay competitively to attract top talent.
Price Your Services
Set tuition rates that cover costs and are in line with competitors. Offer sibling or monthly discounts. Charge extra fees for transportation, meals or special activities.
Have tiered pricing for infants, toddlers, preschoolers, and school-age kids needing aftercare. Build in modest annual increases as needed, but stay affordable.
Spread the Word
Start marketing early, well before opening day. Some solid tactics:
- Create an awesome website to promote your programs, philosophy and teachers.
- Advertise in local parenting magazines, newspapers and Facebook groups.
- Use social media for updates, photos and events.
- Host an open house for families to tour and meet staff.
- Offer free trial days so kids can try it out.
Highlight what makes your daycare unique. Build buzz around the warm environment you’ll provide kids.
Running a daycare takes major dedication, but it’s so worth it. Guiding children during those critical early years is such a gift. Follow these steps and you’ll be on your way to a thriving daycare business!
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Daycare Financial Forecasts
Startup Expenses
Monthly Operating Expenses
Revenue Forecast
Frequently Asked Questions
What qualifications do I need to open a daycare?
At minimum, you usually need some early childhood education or child development courses. Most states require daycare directors to have at least an associate degree in child development or a related field. Some states require a bachelor’s degree. All staff will also need background checks, CPR/First Aid training, and continuing education.
Do I need a license and special insurance to operate a daycare?
Yes, you will need to apply for a daycare license through your state health department. You’ll also need liability insurance and accident insurance for the children. Following state child care regulations is mandatory.
What should I include in my daycare business plan?
Your business plan should cover your daycare philosophy, target market, facility details, equipment/staffing needs, curriculum, safety procedures, marketing plan, competitive analysis, and 3–5 year financial projections. It’s essential for planning purposes and securing funding.
What are the steps for finding a good daycare location?
Ideal locations have ample indoor and outdoor space for activities and meet safety and health codes. Look for vacant commercial buildings or areas zoned for home daycares. Ensure it’s affordable and located conveniently for your customer base. Inspect carefully and get any necessary renovations done early.
How much does it cost to start a daycare?
Startup costs typically range from $10,000-$30,000 including: licensing and permits, lease, renovations, furniture, equipment and supplies, 6+ months of operating costs, insurance, marketing. Grants or loans can assist with startup funds.
What strategies work best for marketing my daycare?
Start by creating a website highlighting your philosophy, curriculum, and teachers. Advertise in local parenting magazines, newspapers, online parent groups. Host an open house event before opening. Offer free trial days. Use social media and flyers to spread the word on your unique program.
How much should I charge families for my daycare services?
Look at the rates of competitors in your area for each age group. Infants cost more due to increased needs. Offer sibling and monthly discounts. Build in potential for modest annual increases. Extra fees can apply for transportation, meals, and special activities.
What credentials and training should I look for when hiring daycare staff?
Seek warm, caring staff with qualifications like a CDA credential or early childhood education degree. Screen thoroughly with background checks. Hire both lead teachers and assistant teachers. Provide training on policies, curriculum, and expectations before opening.
