How to Start a Daycare Business [In 7 Simple Steps]
Learn how to start a daycare business with these few crucial steps, including researching the market, creating strategies, and obtaining permits.
- The daycare industry is growing, with potential earnings between $35,000 and $75,000 annually.
- Starting a daycare requires significant upfront costs, including location, supplies, staff, and licenses.
- Effective marketing, unique selling points, and thorough market research are critical for success.
- A well-prepared business plan and proper emergency procedures are essential for managing a daycare.
Starting a business can be challenging in and of itself.
Worse, starting a business where you have to care for children can be even more complicated.
It’s not just about dealing with the little tykes; it’s about getting the parents to trust you.
And with competitors already dominating the market, you need to ensure your service is superior and trustworthy.
This leads us to the question: how to start a daycare business? Plus, how to make it successful?
Today’s guide will take you on a little journey to teach you everything you need to know about starting a daycare business.
How Profitable Is Owning a Daycare Business?
If you’re considering starting a daycare business now, you’re not alone—the industry is booming with demand!
According to IBIS World, the daycare industry will be worth $61.6 billion in 2023. They’re also expecting to grow by 1.3% through 2023.
The primary factor affecting this industry’s growth is the fierce competition in the market.
Unfortunately, this can make it difficult for you to succeed and make a living.
If you manage to prove yourself, though, you can make up to $75,000 annually!
Glassdoor says a daycare business owner can earn between $35,000 and $75,000.
The most likely salary is more than $50,000, which is still good.
What You'll Need to Start a Daycare Business [& Associated Costs]
Opening a child care facility can be a hassle, especially if you don’t know what you need and how much it would cost.
To make it easier for you, here’s a list of the main costs you should keep in mind:
1. Location
The location of your day care center is paramount to its success. You need a spot that’s accessible, affordable, and, most importantly, safe.
On average, it could cost you anywhere from $2000 to $15,000 to rent one, depending on the space.
It can go up to $50,000 or more if you're considering buying.
2. Supplies
From office supplies to coloring books, you’ll need a lot of material to start your daycare center.
On average, these little items can cost anything from $2,500 to $10,000, depending on the amount you need.
3. Marketing
Getting your name out is one of this market’s biggest challenges.
You’ll need to invest in a solid marketing agency, which could cost you no less than $90 per hour.
4. Legal Work
Unlike many industries, your business directly deals with children.
As such, you’ll have to obtain proper licenses and certificates from your state. It’ll involve many inspections and fees, but it shouldn’t cost you over $2,500.
5. Staff
As your business is just blooming, you won’t make much profit.
Hence, you should keep around $10,000–$20,000 to cover your staff’s first month or two of wages.
6. Furniture
tiny chairs, tiny tables, and tiny sofas are all essential parts of a successful daycare facility.
Luckily, the prices are as tiny as the items themselves! Fully furnishing your day care center can cost $5,000–$10,000.
Do I Need a License or Certificates to Start a Daycare Business?
Yes, you need several certificates and permits to start a daycare business.
Here are some of the main licensing requirements:
- Child Care License
- General Business License
- Food Handler Certification
- First Aid and CPR Certification
- Tax Identification Number
Why You Should Consider Starting a Daycare Business As a Side Hustle
Side-hustling a venture you own is an excellent idea for several reasons.
For instance:
Flexibility
With the restraints of a 9–5 gone, you can work whenever you want!
You can also choose to work from home or the daycare. This allows you to get work done without the stress of constantly being in an office environment.
Low startup costs
Compared to many businesses out there, starting a daycare is relatively inexpensive.
It could take you less than $25,000 to create one! This means you don’t have to worry about getting into debt to fund your day care business.
Create a legacy
As we grow up, most of us turn back to our school memories with fondness.
We remember the teachers, friendships, and all the little adventures we had created.
You can provide this feeling to other families and make a name for yourself that could last generations.
No Pressure
besides the fact that it’s a side hustle, it’s your side hustle.
This means you won’t have a boss over your head controlling your every decision and telling you what to do. This allows for creativity in your ideas, teachings, and business decisions.
How to Start a Daycare Business in 7 Simple Steps
Now that you know what expenses you’ll pay and what benefits you’ll enjoy, it’s time to see how to start a childcare business!
Here’s the main outline you’ll need to follow:
1. Enhance Your Knowledge
The first step in starting a successful child care facility is enhancing your knowledge of children and their development.
You can do this by reading up online, seeking an Early Childhood Education (ECE) Degree, or taking courses.
This will help you understand what you’re in for and how to serve your clients better.
2. Research the Market and Competition
Once you’ve read up on the subject, it’s time to research the market itself.
First, you must look at other daycares and see what they offer the public.
Doing this will give you an idea of what the market needs and how you can take advantage of that.
Also, don’t forget to research your location to ensure you’re not starting up in an area saturated with similar businesses.
You want to avoid unnecessary competition whenever possible.
3. Create a Business Plan
Your daycare business plan is the outline that’ll help you get everything in order.
A successful business plan involves at least some of the following:
- An executive summary that gives a brief overview of your goals
- A detailed description of your company, its goals, legal structure, and services
- Details of all your services and how much they’ll cost
- Analysis of the market, your competitors, and target audience
- Breakdown of the startup costs, operating expenses, and possible profit
4. Hire the Right Staff Members
Of course, you can’t run a daycare business on your own.
You’ll need teachers, administrative staff, and even security.
To get qualified individuals, write detailed job descriptions containing everything you need.
Then, prepare your interview questions and make them pointed! Ask about child development, their general feelings about kids, and their previous experiences.
5. Write Down the Contract
Your business contract is the connection between you and the client.
It should involve the following details:
- Communication policy
- Services outline
- Payment schedule
- How you’ll handle late payments
- The name and address of your business
- Hours and days of operation and days off
- The start and expiration dates of the contract
- Vacation and sick days policy
- Procedure for terminating the contract
- When should the parent drop off and pick up their kids
Of course, many other factors could go into the contract, but these are the essential ones.
6. Market Your Daycare
The last step before opening your daycare business is marketing it correctly.
Ask yourself this: what do parents look for in a daycare? Of course, they want their kid safe, happy, and well-taken care of.
Yet, that’s almost what any other daycare provider offers.
This means you need to find a unique selling point with which you can attract clients.
For example, you could try something like free child transportation services or extended hours for busy parents.
Things to Consider When Building a Daycare Business
Knowing how to open a daycare business and actually starting one are two different situations.
That’s because there many things you need to consider before taking that final step, including:
Can You Run a Daycare Business by Yourself?
Take a moment to ask yourself this question and analyze your answer.
Running a daycare business as the sole manager can be challenging.
You’ll deal with worried parents and pesky kids. Are you ready for this?
Do You Have a Plan for Handling Emergencies?
Dealing with kids is as unpredictable as the weather. One day everything is sunny, and the next, a kid is running around with a booboo!
That’s why you need an emergency plan covering everything from accidents to illnesses.
Do You Like Kids?
Many daycare owners and workers forget to ask themselves this question, and for a good reason.
We are often told that we’re born with an instinct to love children, which grows as we age.
But is that truly the case in your situation? Can you handle all the kids running, screaming, sniffling, and even crying?
Inspiration: Daycare Business Ideas
Considering that you’ve reached this far into the guide, we’re guessing you’re pretty adamant about starting this venture!
To help you out, here are a few ideas that can attract parents:
After-Hours Daycare
Not everyone out there works from 9–5. In fact, many parents work unconditional schedules or ones that constantly change. So opening a daycare that caters to their needs can be an excellent start to your business.
Specialized Daycare
Though this one might need a few extra papers, it’s worth it!
Parents already find it hard to leave their kids with strangers, and even harder when their child has a special need.
You can make it easier for the parent by caring for their kids and their unique requirements.
Themed Daycare
Do you like sports? Do you like dancing?
Whatever your passion is, there’s probably a kid out there that shares it and a parent who supports it.
A sport-focused daycare, for example, can be an excellent way to help kids learn about sports and be active.
Frequently Asked Questions
How Do I Attract Parents to My Daycare?
There are many ways in which you can attract parents to your daycare facility, including the following:
- Offer flexible hours and programs so that you can draw as many parents as possible
- Develop a solid online presence to ensure your services are seen and heard
- Start a business relationship with the local schools to join the community
- Open your daycare on certain days to allow visitors to see the facility for themselves
What is a Good Age to Start Daycare?
Well, children can start joining daycares when they’re 12 months old.
For you, on the other hand, you can begin your daycare business no matter how old you are!
You're all set as long as you’re over the legal age, passionate about children, and willing to help kids and parents with whatever they need!
Wrapping Up
Now that you’re full of new information, do you think you know how to start a daycare business?
Hopefully, your answer is yes—we’d love to hear your thoughts in the comment section too!
To freshen up your memory, starting a daycare business isn’t as tough as people make it out to be.
You’ll need to prepare the space itself, obtain a few licenses, and market yourself to the public.
Most importantly, don’t forget to first ask yourself if this is something you can handle.
Good luck!