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How to Open your Own Daycare

How to Open your Own Daycare: Daycare facilities provide kids a head starts on healthy growth and development. They might hold the secret to your financial security and fulfilling work for you.

Opening a daycare facility is more difficult than ABC, 1-2-3. There are several factors to take into account, including your region, the economy as a whole, operation costs, licensing requirements, insurance coverage, and more.

Everything you need to know about starting a daycare center and the nine stages you can take to get your business off the ground is covered in this comprehensive guide.

How to Open your Own Daycare
How to Open your Own Daycare

Daycare Stand in the Current Economy

The need for childcare has always been paramount. However, many childcare programs were negatively impacted by the COVID-19 outbreak.

More than two thirds of formal childcare institutions in the United States are either closed or operating at a reduced capacity to comply with social distancing requirements, according to a USA Today study. Additionally, when many corporate employment moved to remote work, many families no longer needed daycare.

Daycare facilities also continue to struggle with inflation, which has an impact on the price of rent, electricity, food, supplies, employee wages, and tuition. Even though all of this may seem overwhelming, the daycare sector is once again expanding.

The need for childcare has increased as a result of the relaxation of COVID-19 laws and the return of parents to their workplaces. According to the U.S. Bureau of Labor Statistics, the employment prognosis for childcare professionals between 2021 and 2031 is 6%, which is on par with the overall national average. Even though any sector can swiftly experience negative effects from the economy, starting a daycare facility has a number of advantages to take into account.

The Advantages of Starting a Daycare Facility

Personal childcare, financial independence, tax advantages, and a fulfilling job are some of the key advantages of starting a daycare center.

Personal Child Care

Parents of small children must think about childcare when they leave for work. Who will look after their kid(s)? What will the price be? Will they be able to deliver and receive them? These queries are answered for you by starting a daycare center. If you already care for your own children at home, opening a childcare center could expand your financial flexibility.

Financial Flexibility

The majority of employees in the business world depend on their managers and supervisors for their paychecks. You gain financial independence and control over your income when you open a daycare facility. Making decisions to advance your company and secure your financial future is another benefit of owning a business.

Tax Advantages

You can save money on taxes by starting a daycare. For instance, as a business owner, you can deduct some daycare costs, such as your vehicle and childcare supply costs, as well as your utilities bills.

You might be able to deduct a portion of your rent payment when you submit your taxes if you start an in-home daycare.

Rewarding Career

There’s no denying that a lot of daycare operators and employees like working with and encouraging youngsters. Early childhood development—cognitive, physical, and social-emotional—requires daycare. Teachers have a direct influence on how students think and act.

Consider your motivations before deciding to operate a daycare. Are you passionate about promoting young children’s development, for instance? Do you desire to assist local families? Your motivation throughout the process and the success of your business will come from thinking about the reasons why you want to open a daycare.

What is the Starting Cost of a Daycare?

You might find it helpful to understand the financial commitment you’ll be making before we go over the processes for opening your daycare center. An average daycare center costs $50,000 to launch and maintain. The usual range depends on a variety of variables, including location, daycare size, child population, and staff, and is between $10,000 and $100,000.

Since you don’t need to acquire a facility, home-based daycares typically have lower startup costs. On the other hand, depending on your area, medium to large daycares can cost up to $50,000, and the biggest daycare facilities can cost up to $100,000. The following expenses are usual in the operation of a daycare facility:

Utilities and Rent

You might decide to run a childcare facility from your house, which might be less expensive to run than leasing a commercial space. The typical business rent ranges from $0.60 to $2.50 per square foot. Electricity, water, heating, TV, phone, and internet are examples of utilities.

Employee Compensation

If you intend to operate a daycare, it is essential to hire both teaching and non-teaching staff. As of February 2023, statistics indicates that the average annual wage for childcare professionals in the United States is between $33,000 and $42,000. However, depending on your location as well as the employee’s training, credentials, and years of experience, this range can be different.

License costs

State-by-state variations exist in licensing regulations and costs for daycare businesses. To find out what permits are necessary for your business, contact the early childhood education department of your state.


Depending on your exact policy and area, annual insurance prices might range from $3,000 to $5,000. Liability insurance, property insurance, workers’ compensation insurance, and errors and omissions insurance may all be required of you.

Equipment and Supplies

At your childcare center, you’ll need a ton of instructional materials in addition to a variety of furniture and equipment. Costs often range from $30,000 to $40,000. Your facility needs both indoor and outdoor furnishings, including playground equipment, cribs, tables, changing tables, mats, seats, and computers. Your budget should also account for household necessities like cleaning supplies, diapers, and wipes, as well as educational goods like age-appropriate toys, books, and art tools.


You will also need to budget for the price of food as well as other kitchen supplies and equipment like plates, cups, and napkins if your facility serves meals. The Child and Adult Care Food Program dietary requirements, which must be followed by most centers, are described on the USDA website.

Marketing and Advertising

For both new and established daycare services, marketing and advertising are essential. The overall cost of marketing and advertising may be between $1,000 and $1,500. These costs frequently consist of items like the cost of a website, printed flyers or other marketing materials, or social media advertisements.

Use this information to project your daycare’s monthly budget and costs before launching.

How to Open your Own Daycare: Nine Stages to Opening a Daycare Center

Careful planning is necessary before starting a daycare. To start a daycare in your area, take these actions:

  1. Learn about the standards for daycare licenses.
  2. Create a business strategy for a daycare.
  3. Locate a space for your childcare.
  4. Get insurance for your daycare business.
  5. Prepare your daycare facility.
  6. Create policies and guidelines.
  7. Take on support from employees to run your daycare.
  8. Invest on childcare software.
  9. Advertise your daycare center and look for applicants.

To maintain your business compliant and aid in the smooth operation of your daycare, carefully follow these instructions in accordance with your local and state regulations.

1. Learn about the Standards for Daycare Licenses.

Daycare companies sometimes begin small. You can decide to start your own childcare company after babysitting and nannying. You must adhere to all local and state laws in order to make that shift.

Check out Child Care Aware of America’s licensing requirements for childcare and daycare providers to ensure that you are in compliance with the rules and regulations that apply in your state. You can use this resource to learn more about the regulations in the state and city where you live.

Contact your state’s Department of Children and Family Services (DCFS) or equivalent organization if the data for your state isn’t available. You normally need to complete particular educational and training criteria in order to receive a childcare license, though the requirements vary depending on the region of the country.

A Child Development Associate (CDA) credential or years of experience dealing with children may be required in some jurisdictions, but others may only require a degree in child development, or an area connected to it.

2. Create a Business Strategy for a Daycare.

Writing a childcare business plan will provide you a significant edge and serve as a roadmap for the next phases of starting.

Choose a name for your daycare and a mission statement to get started. You must also decide on your marketing strategy, organizational structure, personnel needs, and budget.

The costs associated with effectively establishing a lucrative daycare business must then be investigated. Think about your childcare startup’s financial strategy: are you utilizing your own funds or looking for a small business loan? Have you researched child care grants?

Running a profitable business requires identifying and creating financial goals. Realistically set your goals and estimations because in business, everything costs money.

3. Locate a Space for your Childcare

Are you opening a daycare in your home? Are you trying to rent a daycare facility that already exists? Are you preparing to launch a brand-new childcare operation with a brand-new facility?

In real estate, the adage “location, location, location” is frequently used. When looking for the location of your daycare center, keep this in mind. It should be noted that every family will probably have a choice for where to send their child. Some people might prefer a calm neighborhood to a busy city. Some families could be concerned about safety and security if a facility is close to a roadway. When looking for a location that meets the demands of your business, keep these things in mind.

How to Open your Own Daycare
How to Open your Own Daycare

4. Get Insurance for your Daycare Business

You will require a variety of insurance plans depending on the kind and size of the daycare you’re running.

Daycare facilities must get a license from the state’s Department of Health and Human Services (DHHS) in the majority of states. Obtaining liability insurance is a requirement in the licensing procedure. If someone is hurt on your premises, liability insurance will protect both you and your company. When taking care of other people’s children, it is crucial.

Workers’ compensation insurance, which can help if an employee is hurt at work, and commercial property insurance can help if your childcare center or other assets need to be fixed or replaced are damaged.

Insurance can be challenging. Check your local childcare provider licensing regulations for advice and see what coverage is necessary.

5. Prepare your Daycare Facility

What is required to start a daycare center? If you’re preparing to create a daycare center, you’ll need furnishings and materials. Make use of this list as a roadmap while you prepare.

Safety equipment:

  • Fire extinguishers
  • Emergency preparedness kit
  • Emergency plan
  • First aid kits
  • Smoke detectors
  • Carbon monoxide detectors

Cleaning Products:

  • Hand sanitizer
  • Sanitation plan
  • Cleaning supplies (all-purpose cleaner, vacuum, rubber gloves, etc.)
  • Bathroom supplies (sponges, bucket, mop, etc.)

Furnishings and Equipment:

  • Nap mats and/or cribs
  • Step stools
  • Shelves and/or storage system
  • Tables
  • Chairs
  • Highchairs and/or boosters

Playing Tools:

Ages 0-1

  • Rattles
  • Floor gyms
  • Crib mobiles

Ages 1-2

  • Nesting cups or boxes
  • Stacking rings
  • Large play vehicles

Ages 2-3

  • Musical instruments
  • Puzzles
  • Dolls and stuffed animals

Technology in childcare:

  • Daily event tracking and recording
  • Digital check-in/check-out system
  • Attendance tracking
  • Automated billing

After acquiring the required equipment and materials, preparing the area also entails making sure it is childproof. Although having safety supplies and precautions in place is a crucial first step, you must go farther. Large appliances and furnishings should be mounted to the wall. Cover electrical outlets with covers. To prevent choking, don’t store toys and small stuff around the building.

The wellbeing of the kids is the top priority while starting a daycare. Therefore, put in the effort and utilize the right tools to build up a secure, legal daycare facility.

6. Create Policies and Guidelines

Create policies, processes, and handbooks for your staff and families with daycare forms and templates.

Daily reports, staff evaluations, and enrollment forms are three crucial forms.

  • The staff can update parents on their child’s progress using daily report forms.
  • Utilizing staff evaluation forms gives you the chance to promote the professional growth of your staff members while also monitoring their performance at your facility.
  • Last but not least, enrollment forms are frequently a parent’s initial contact with your company. Create the messaging with care to portray a friendly, inclusive environment for families and their kids.

You’ll also require emergency and sanitation plans when getting your daycare facility ready. In accordance with the guidelines provided by your state’s laws governing child care licensing, you should create a disaster or crisis management plan. Your crisis management strategy should cover rules for nutrition, safety, privacy, and health.

7. Take on Support from Employees to Run your Daycare

Remember that a daycare facility is only as good as its workers when making childcare hiring decisions.

Check the staff ratio criteria for daycare licensing. The child-to-staff ratio, which is influenced by elements including the children’s ages and the size of the childcare facility, guarantees that all children receive proper care. The number of kids you can house in your facility will be constrained if you intend to manage the daycare business alone.

You will also need details on the educational backgrounds and other credentials needed for teachers in order to obtain a license. Staff members who work with children may also be subject to fingerprints and criminal background checks. Therefore, thoroughly check references and educational backgrounds to avoid using phony credentials.

8. Invest on Childcare Software

Utilizing the wonderful daycare technologies at your disposal is one of the best methods to launch a profitable daycare. Your administrative responsibilities can be streamlined to free up more time for you to concentrate on offering families a top-notch daycare experience.

9. Promote your Daycare Center and Look for Applicants

For your childcare center, you’ll need a marketing plan that include promotional materials and an online presence.

Here are some suggestions for promoting your daycare:

  • Participate in your neighborhood’s daycare or preschool enrollment fairs and list your company in local childcare directories.
  • Promote your business by using neighborhood organizations, parent groups, events, and well-known blogs about childcare.
  • Try well-known websites for early education.
  • Launch a social media strategy that is targeted towards your target market.
  • Plan a huge opening celebration to draw in families.

Once you’ve managed to fill your initial child roster, keep up your marketing initiatives to ensure that you’re consistently attracting new clients.

How to Open your Own Daycare
How to Open your Own Daycare

Frequently Asked Questions

What does it cost to license a daycare center?

State-by-state differences in licensing fees for daycares might range from $100 to $200. This amount excludes any out-of-pocket costs for fulfilling any additional needs, such as meeting state-specific standards for your facility or house or fulfilling any additional educational, training, or certification requirements.

How much time does it take to obtain a license for daycare?

Depending on the locality, it can take several months on average to get a childcare license. If you don't have enough experience or documents to meet your state's criteria, this process can take longer.

Are childcare facilities profitable?

The profitability of your childcare facility is influenced by a variety of factors, including your location, operating expenses, tuition prices, and personnel remuneration. Daycare facilities can usually charge more for tuition in locations with higher cost of living.

How much can you charge for daycare services?

In the US, center-based daycare typically costs between $10,000 and $12,000 a year. However, a number of variables, such as your company' location, regional costs, the average state tuition, and the age of the child, will affect the price you charge for daycare. The type of child care you offer and whether you provide full-time, part-time, or after-school care can also affect your pricing.



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