12 Step Guide to Start a Daycare

Are you passionate about caring for children and helping them to learn and grow? Do you like the thought of running your own business where you can lead an entity and also do what you love? If you answered “yes” to both of these questions, starting a daycare could be the right venture for you!

Here is our 12 step guide to start a daycare.

1. Learn about daycare licensing requirements in your state.
2. Write a business plan for your daycare.
3. Locate your future daycare facility.
4. Fund your daycare.
5. License and register the daycare.
6. Get insurance to cover the daycare center.
7. Write your daycare handbook.
8. Hire staff members to help run your daycare.
9. Choose a daycare software program.
10. Create a marketing strategy for your daycare to succeed.
11. Host a daycare enrollment day.
12. Decide your daycare’s grand opening day!

Starting a daycare can cost anywhere between $1,000 to $5,000 depending if you are running a home daycare or a daycare facility. Learn how to fund your daycare while getting it legally ready to operate.

1. Table of Contents

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   Learn About Daycare Licensing Requirements in Your State

Learning about general licensing requirements is the first vital step to opening a daycare in your state. Educate yourself as an upcoming Daycare Owner by searching your state government’s website about the specific licensing requirements that you must follow when licensing your daycare facility.

Here’s a general idea of what many states require for daycare licensing. 

General Requirements

When you license your daycare, most states will have you complete tasks such as:

• Apply for a daycare license through your state government’s website.
• Have you and your staff all undergo background checks.
• All staff receive a medical physical before starting work at your facility.
• Have you and your staff members all undergo a Mantoux/Tuberculosis exam.
• Require extensive training for all staff that teaches about child development, proper protocol to follow when working in a daycare center, what to do in an emergency at the facility, and more.
• Receive an inspection at your daycare before licensing.

Do some daycares not need licensing?

Home daycares where 4 or less children are under the care of the Daycare Owner (these children must not be related biologically, by marriage, or via adoption) for 4 hours or less per day usually do not require licensing.

The limit of 4 children in the Daycare Owner’s care does not include children that are related to the owner. Hence, you could have 4 children not related to you at your home daycare, but also still include your 2 biological children and 1 adopted child in the daily daycare schedule, too.

Which daycares do need licensing?

Home daycares where 4 or more children are being watched for up to 8 hours per day must be licensed.

Since average daycare centers have 20-100 children in their care, they must also be licensed to be sure that the children are receiving professional and tailored care for their developmental and educational needs.

2. Write a Business Plan for Your Daycare

Writing a business plan for your daycare will pave the way to its success. You will have a road map for forecasted sales to reach your monthly and yearly goals and templates for financial statements to use in order to prepare them for tax season.

The business plan will be something that you always reference even as you continue to run your daycare.

• Remind yourself of your daycare’s mission and vision.
• Look at the target market section to think of new ways to market to that group.
• Use the current plan as a template to update it in order to reflect modern trends in case you need funding in the future.

Daycare Business Plan Format

Format your daycare business plan like this.

1. Executive Summary
   1. Summarize your business description.
   2. Give a snippet of your target market.
   3. What are the highlights of your financial plan?
2. Opportunity Analysis
   1. State the problem you want to solve.
   2. Provide the solution.
   3. Who is your competition?
   4. State your competitive edge.
3. Expectations
   1. Sales forecasting
   2. How much financing you need to start your daycare
4. Execution Plan
   1. Marketing plan
   2. Sales plan
   3. Operations
      1. How many locations
      2. How many facilities
   4. Milestones and metrics
      1. Your social media presence
      2. How many children you care for at your daycare
      3. How many children currently signed up for your daycare.
5. Company Description
   1. Company Overview
   2. Business entity and company structure
   3. Management team
   4. Their salary
6. Financial Plan
   1. Trends and forecasting
   2. Revenue, expense, and net profit charts
   3. How you will use your funding
   4. All your funding sources
   5. Financial statements
      1. Projected sales
      2. Projected loss
      3. Balance sheet
      4. Cash flow statement
7. Appendix
   1. Any supporting documents
   2. Flyers for enrollment day
   3. Funding letters from those who already gave you funds
   4. Etcetera

Read this daycare business plan sample to get inspired in writing your own plan. Use the same template and add pertinent information and sections as needed based on your daycare’s niche.

3. Locate Your Future Daycare Facility

Find a location for your future daycare facility. If you are operating a home facility with 4 or less children, you can skip this step as you will be operating out of your household.

Tips to Find the Best Location

Here are some tips for finding the best location.

• Locate your daycare nearby where the most people go to in your city of operation.
• Look for buildings for rent in that central area.
• As you enroll children for your upcoming daycare, take note of where parents go to work and base your final decision on which location is closest to parents’ jobs.
• Make sure the building accommodates the maximum number of children that you want in your care at the facility.
• Ask for the fire department to zone your potential locations to see which one fits the number of kids you want enrolled at your facility.

What if there are no open locations for rent in my city’s central area?

If you cannot find a location directly near the central area of your city, you can try to:

• Locate your daycare within a 5-10 mile radius of most parents’ jobs.
• Go to a town or two over to see which buildings for rent are available.

4. Fund Your Daycare

There are multiple sources that you can use to fund your daycare, especially for startup costs and for building a savings pool for paying the company bills going forward. Use a variety of resources to collect the most funding that you possibly can to start your daycare off on the right foot monetarily.

Crowdfunding

Use a crowdfunding platform such as GoFundMe to gain funding for your daycare. You can:

• Share the crowdfunding campaign on your personal social media page and daycare’s pages, too.
• Spread the crowdfunding campaign by word-of-mouth marketing.

Grants

Grants are a great funding resource for daycares because they do not have to be paid back. These are payments that you receive because the grantor has seen that you will be doing something important and life-changing for your community by receiving this funding.

US Grant Applications

The U.S. Department of Health and Human Services funds the federal grants on the US Grant Applications website. It is recommended to personally teach yourself more about grant writing or have a professional help you with it, so that you have higher chances of your grant request being approved.

Local State Government

Check your local state government’s website for information on current grants for daycare centers. Check often and when an opportunity comes up, apply immediately to take advantage of the potential spike in funding.

Subsidized Assistance

Federal programs provide funding to daycares to be able to help low-income parents who may need child care for their children as they go to work.

USDA Child and Adult Care Food Program

You can receive funding from this parent to serve healthy meals at your daycare. As long as you serve nutritious meals at your facility, you can receive reimbursements on the ingredients you used to prepare the meals.

Subsidized Daycare Assistance for Parents

Check your local state government’s website to see how you can apply for and receive funding to be able to serve low-income parents and take care of their children. This would be a great resource for being able to serve your target market, especially if it does mostly consist of low-income families. 

5. License and Register the Daycare

Licensing Your Daycare

Learning the licensing regulations from step 1 will help you to complete this step. Follow these steps to license your daycare.

• Complete the daycare licensing application on your state’s website.
• Finish all the other steps before you receive approval.
  • Background checks on employees.
  • Physicals and Mantoux/Tuberculosis testing on employees.
  • Rigorous training on child development and professional childcare practices.
  • Undergo a daycare inspection.
• Once you have completed all the steps, wait the allotted average time period before your license is approved.

Registering Your Daycare

Registering your daycare in your local county and state will make sure that you are operating legally and paying the appropriate taxes to the government for the payment you receive for providing daycare services.

Go about registering your facility by following these steps.

• Choose a Business Entity for the Daycare

Choose to become a Sole Proprietor or Limited Liability Company (LLC). A Sole Proprietorship is run by one person which would be just yourself. You are personally liable for the expenses and company debts. By choosing a LLC, you and your partners will not be personally liable for the debts that your daycare accrues.

Home daycares with 4 or less children should be a Sole Proprietorship. If you are running a larger home daycare with 4 more children, choose LLC. Daycare facilities should definitely be LLCs because of the many partners and employees working there.

Learn more about business formation by visiting LegalZoom.

• Apply for a “Doing Business As” (DBA) for Your Daycare

Register your business with a “doing business as” (DBA) application. Only do this if you want a different daycare for your name than using your legal name.

If your name is Mary Smith and you name your facility “Mary Smith’s Daycare”, you do not have to apply for a DBA. If your name is “Tender Loving Care Childcare Center”, you must register for a DBA.

6. Get Insurance to Cover the Daycare Center

In the event of an employee or a child in your care suffering from an unforeseen accident or if your property is damaged for a reason out of your control, it’s best to cover your daycare center with different types of insurance.

Daycare Business Owners Policy

According to NetQuote, you can purchase a Business Owners Policy that combines General Liability and Property/Building coverage.

• General liability protects your business if someone suffers bodily injury at your facility or if your property is damaged.
• If natural causes or criminal activity cause your building to be damaged, the Property/Building insurance will cover the costs.

Daycare Workers Compensation Insurance

Taking care of children can cause unforeseen events to occur. If your employee suffers an injury while taking care of the children, the workers compensation insurance can pay your employee while he or she is out of work.

Daycare Insurance Not Required, But Good to Consider

Accident Medical

If a child suffers injury while in your care, the Accident Medical Insurance will cover his or her hospital expenses if their family does not have health insurance of their own for the child.

Umbrella Liability

Umbrella liability is the last resort to be sure that your daycare is fully covered. If any of your other insurance policies cannot fully cover an accident or incident, then the umbrella liability policy will cover more of the expenses. This will help your facility to have a lesser amount of direct out of pocket expenses if the liability insurance cannot cover the rest of the debt.

Find out more information about these additional insurance policies by visiting Markel North American Insurance Group.

7. Write your Daycare Handbook

The daycare handbook outlines company policies, important information that parents should know, and your plan for emergency procedures. These are all important resources for parents to remain informed on what will happen if a certain situation occurs at your facility.

Company Policies

• Mission and vision statement.
• Ages of children in which you care for at your facility.
• Enrollment process.
• Grounds for expulsion
  • Bullying and name-calling constantly.
  • Hitting/biting (3 strikes and the child is expelled).
  • Continuous absences without proper reasoning.
• Holidays that your daycare is closed. 

Daycare Information for the Parents

• Hours of operation.
• Penalties and fees if picking up their child(ren) late.
• Parent authorization form for pictures to be taken of their child.
• Tuition costs.
• Daycare schedule in the classroom.
• If you provide meals or want parents to send meals daily.
• Daycare’s curriculum.

Emergency Plan

• Evacuation plan for fires.
• Shelter in place procedures for intruders.
• Detailed plan for natural disaster survival.

8. Hire Staff Members to Help Run Your Daycare

Hire staff members that are not only knowledgeable about child development and general childcare practices, but they also exude a passion for caring for and helping children to grow and succeed.

Look for staff members with these qualifications.

Daycare Teachers

• 2-3 or more years of child care experience.
• 2-3or more years of teaching experience.
• An Associate and/or Bachelors degree in Early Childhood Education or related field.

Daycare Teacher’s Aides

• 1 or more years of child care experience.
• 1 or more years in a support role for children or related experience.
• Currently working on a degree in Early Childhood Education or a related field.

Daycare Substitute Teacher’s Aides

• Childcare experience of any kind whether at home or on the job.
• Ability to transition into a substitute role seamlessly.
• Can come in on short notice as most individuals in this profession are on-call to cover staff who call out at any time.

9. Choose a Daycare Software Program

Daycare software simplifies your daily business tasks and reduces time spent on certain duties, so you can all focus on caring for the children.

What Are the Functions of a Daycare Software Program?

• Provide your customers with the option to pay daycare tuition online.
• Keep digital copies of student information, parent contacts, and more.
• Maintain proper and professional accounting records.
  • Balance sheet
  • Cash flow statement
  • Profit and loss statement
• Contact parents via text message and email besides just the normal phone call.
  • Send daycare newsletters electronically.
  • Teachers can give parents updates about their children throughout the day.

Daycare Software Programs You Can Try

• EZCare
• Brightwheel
• HiMama
• Kangarootime

To learn more about daycare software programs and to discover which one works best for you, visit our blog post where we highlight (insert title of software program post).

10. Create a Marketing Strategy for Your Daycare to Succeed

Market your daycare as early as you can before opening day to start spreading brand awareness about it to the local community. Form as many types of marketing into your strategy as possible to reach many parents in your target market.

Daycare Social Media Accounts

• Create and maintain social media accounts to connect with potential and current parents
  • Facebook: Post about upcoming events, any changes in schedule for the day (such as an early closing), a fun themed activity the kids did at the daycare that day, and more.
  • Pinterest: Post articles about general questions about daycare, fun activities to do with your kids at home to reinforce the early childhood curriculum, and more.
• With every social media post, include an image or a video for visual marketing purposes.
• Update your page 2-3 times a day for optimum engagement with your audience.

Daycare Flyers at Partner Small Businesses

• Ask local small businesses such as child consignment shops, toy stores, children’s clothing stores, laundromats, and more if you can post a flyer about your daycare in their business.
• In return, you can market their business at your daycare.

Daycare Word-of-Mouth Marketing

• When you are on-the-go spread your daycare’s information to other people you may meet.
• Encourage your staff to do the same.
• This will keep enrollment rates high.

11. Host a Daycare Enrollment Day

Speaking of high enrollment rates, host a daycare enrollment day to bolster how many children are in your care on opening day.

• Give a tour to participating parents.
• Answer their questions at the end of the tour.
• Provide light refreshments as a courtesy.
• Have copies of enrollment packets available for parents to take.
• Give parents the option to have an enrollment packet sent to their email. Provide a sign up sheet for this perk.
• Let the children have a mock trial.
  • Visit the classroom in which he or she would be placed based on age.
  • Stay for 30 minutes playing or having lunch with their potential classmates.

12. Decide Your Daycare’s Grand Opening Day

Once your daycare has been licensed, registered, and inspected, decide the grand opening day. Be sure that you pick a date in which it gives you enough time to:

• Finish hiring staff members.
• Furnish your daycare classrooms.
• Enroll as many children as possible.
• Get your social media pages professionally ready.
• Complete and launch your daycare website.

Daycare On!

It’s a thrilling adventure that is your own as you become a Daycare Owner. Do it for the kids and you will see your dream of business ownership come true.

Starting a Daycare Related Questions

• How do I start a daycare with no money?

You can start a daycare with no money by finding as many funding resources as possible. Also, put away personal savings that you can put towards your business as much as you can while you get everything ready to open up your business.

• What are other ways to market my daycare?

Other ways you can market your daycare include:

• Go to community days and set up a table.
• Put an ad in the newspaper.
• Put an ad on local online classifieds websites.

Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.

To learn more on how to start your own daycare checkout my startup course and documents here.