Do you enjoy children and have a passion for child care? Has the thought of starting your own business crossed your mind? Have you thought about both at the same time? If starting a daycare business sounds right, but you do not have any ideas on how to start, do not worry! We have put together a simple 5-step guide for setting you in the right direction for starting a successful daycare business.
Here are 5 steps on how to start a daycare:
- Step #1 Define Your Purpose
- Step #2 Prepare with Research
- Step #3 Develop Your Plan
- Step #4 Design Your Brand
- Step #5 Market with Passion
1. Define Your Purpose
Why is it important to define your purpose?
Your purpose is what will motivate you to get out of bed. It is the very source from which you will pull your creativity and energy into getting things done. It is your mission in life and it is the legacy you want to leave behind. It will strengthen bonds with others, drive decisions, and guide you toward greater success.
Before you begin building a daycare, you must first ask yourself personally, what do you want to contribute to the world? If the answer is caring for children and starting a daycare will fulfill this purpose, congratulations! Then being a daycare owner might be the next best step.
If you are not sure, that is ok, but before starting any kind of business you must deeply understand it is a difficult and challenging road. Your motivation to succeed must always overcome the number of times you will fail. If you are ready, then begin by preparing yourself with research.
2. Prepare with Research
The most important question is never asking what you know, but always asking, what you do not know. When we ask ourselves, what do we not know, we begin to really cut at the edge of our knowledge? This opens the door to a vast world of potential directions. The question exposes weaknesses or blind spots we may not have seen before. When opening a daycare, you need to see the whole picture. When you can see the whole picture, you can make better decisions as to how you will move your idea into action.
According to the U.S. Bureau of Labor Statistics, about 50% of small businesses after 5 years will fail, and a quarter will survive after 10 years. Prepare with research to increase your odds. You will want to identify the challenges before starting. If you have ideas as to how you can solve these challenges now, then when these challenges show up, you will be able to address them quickly or avoid a problem altogether. Chron.com identified 6 common challenges for daycares, we have listed them below with summaries as to how you can address each one.
These 6 Challenges Are:
Keeping Children Healthy: Small children frequently become sick/ill and carry viruses. There needs to be a strong policy against contagious diseases.
Maintaining Clarity and Trust: Communication is key for everything; a daycare business is no exception. The difference between a job well done and a poor job depends on the level of clear expectations understood before the job started. Parents need to trust their care providers, which means your staff needs to develop strong relationships with those families who entrust their family in your daycare. You want to eliminate any surprises for the parent, for example, reporting to them if their child has scraped a knee or being able to locate their child immediately when they arrive. There can be no ambiguity or dishonesty, it will ruin the daycare as a child-first enterprise.
Licensing: Every state has its own requirements. Licensing can be different from state to state. Research what is needed before you open your daycare business. Make sure you have a plan to successfully acquire the license and maintain the license. If you do not comply with the state, the possibility of a shutdown could be real. It is not unusual for some states to conduct unannounced inspections. If you have a plan to maintain your facility up to licensing standards there will be nothing to worry about.
Staffing: Staffing can be difficult, but it does not have to be. Setting up talent pipelines and a hiring process based on state requirements will allow for your daycare to operate smoothly. States often will require staff-to-child ratios, education levels for teachers, and demonstrated competencies for Directors. Additionally, states will often require a criminal background check for all workers. Always when in doubt, refer to your state’s needs for keeping your license.
Toys: There are a lot of options for toys. Daycares should consider the educational value, safety, age-appropriateness, cleanliness, and maintenance of the toy. Children will benefit from playing with the right toys and potentially hurt themselves when playing with the wrong ones. Make sure your toys are not liable for hurting the children you care for.
Incident Reporting: Like counselors who have mandated reporters of individuals who plan on harming themselves or others. The Daycare workers have also mandated reporters of child abuse, including the abuse from parents and guardians. It is important you, your staff, and the families you serve understand your reporting policy and the role your daycare plays in the reporting of child abuse. Any suspected incidences of abuse must be reported to the proper authorities or else your daycare will be held liable.
These are only a few challenges that you may encounter when starting a daycare. Once you feel comfortable after preparing yourself with research about these challenges, the next step is to develop your plan.
3. Develop Your Plan
You have finished researching the essential needs of starting a daycare business. You have identified potential challenges for overcoming common daycare problems. Now you need to develop the daycare business plan. A good template to follow when developing a daycare business plan can be seen below, each section is linked to give you a strong start:
Daycare Business Plan Template:
- Executive Summary
- Company Overview
- Industry Analysis
- Customer Analysis
- Competitive Analysis
- Marketing Plan
- Operations Plan
- Management Team
- Financial Plan
After you have completed the above sections, make sure to take inventory of all your resources, this includes social capital (friends, colleagues, family, local businesses you have a strong relationship with, etc.). You want to look at how you can strengthen your daycare’s position when entering the market. If you have a strong network of friends and colleagues, do not hesitate to utilize your network to accomplish your daycare’s goals. Also, be mindful of business partnerships, building relationships between other businesses who may benefit from your services can be a great way to grow. These relationships can help sustain your daycare business while reinforcing it in the market you have decided to a position in.
4. Design Your Brand
You have developed the plan, submitted your articles of organization, and have been approved as a legal entity under state law. The next step is to design your daycare brand and package services.
Branding: According to Hubspot.com – a brand is a feature or set of features that distinguish one organization from another (name, tagline, logo or symbol, design, brand voice, and more). It is the message and feeling you want your customers to experience when engaging with your daycare. Branding provides market visibility and delivers a strong sense of connection. The customer will begin associating your brand image to your daycare’s reliability and friendly service. Designing what this will look like and how your daycare will present itself to the market is very important to the overall success of your daycare.
Services: What you offer may differentiate you between another daycare and win customers. A key to a successful daycare business is by winning customers and retaining their loyalty to your brand. When thinking about services, you might think about offering a movie night on Fridays or date night daycare to give Mom and Dad the night to appreciate each other. The more unique offerings you have for providing Mom and Dad a breath of fresh air will surely keep families coming back.
Check out our tips on picking the perfect business name HERE!
5. Market with Passion
There is only one step left after your daycare plan has been completed, your daycare brand has been designed, and your daycare’s location/equipment purchased. The decision to take your daycare to market with passion. There needs to be a certain degree of fire inside of you when going to market with your daycare business. You must show others how committed you are to the success of your daycare or they will not believe in it. Once you show others why they should believe in your daycare business, then implementing some of the market strategies below might be best for gaining traction in your local market.
Word of mouth: The original marketing and advertising strategy. The word of another based on their experience with your service will create buzz and it will establish trust within the community quickly. Word of mouth is at times one of the most powerful marketing strategies, however, it can take a while to catch fire and those talking about it are not always talking about it at the right times.
Social media: Living in the digital age most people are always connected by phone to their social identities online. Some people have even figured out ways to capitalize on their following which has generated an industry titled, “Influencer”. Influencers on social media and social media itself can be used to market your daycares brand and the services you provide the community. If you hire the right influencer you can reach a specific audience who will be looking for your daycare services, increasing the chances of receiving a return on your investment.
If you hire a social media manager, you can create consistent online chatter about what your daycare is up to and how others might contribute to the daycare’s mission. You might also spend money on the platform itself which will increase your daycare’s visibility across the platform based on its marketing algorithms. However, there is no one way to use social media for marketing, it is a powerful tool to grab the right attention for ensuring your daycare is successful.
Partnerships: Partnerships were mentioned before in the article and again can be utilized in marketing. For example, your daycare could offer watching children while their parents ran at a local charity marathon. This event would introduce your daycare’s brand to families attending the race, and it would support a cause it agrees with, showing the community where your daycare stands as a valuable contributor to the community’s future. Additionally, the organization you partner with might have families within its operations that might decide to use your services having now partnered on a similar goal. This of course is only one way to use partnerships as a part of your strategy.
Community events: Hosting community events or participating in community events and encouraging your team to participate as well is great for marketing. The more exposure you and your team can create in the community, the more people will know who you are, why they should trust you, and what you are doing for anyone who works with you.
Hosting events allows you and your team to engage with the community on a professional level. Participating in community events allows you and your team to engage with the community on a personal level. Both are important for winning customers to choosing your services when thinking about starting a successful daycare business.
After following these 6 simple steps you can begin to watch your work come to life in the community you love! Remember, define your purpose for staying motivated and staying on track, prepare with research to get a greater picture of what needs to happen before planning anything, develop your plan and submit the necessary legal documents to establish your business, design your brand for others to see what makes you different while keeping your business running smoothly, and finally go to market with passion.
Overall, if you invest in a well-trained staff, establish expectations for all involved, maintain a balance between business and customer needs, while keeping your families happy, you will find success in owning a daycare business.
How much money will I need to start a successful daycare business?
The average start-up cost for a daycare business can range from $10,000 to $50,000. According to Forbes, “To make any money in the child care business, you need economies of scale. This means accommodating at least 80 children, says the President of Child Care Resource Center in Van Nuys, Calif.” This means the cost will be at least $30,000.00.
How far will families travel to an early care and education center?
On average families will travel 4.6 miles (Children 0 < 3 years) and 3.9 miles (Children 3 < 5 years), according to NSECE. This is important to know because it gives you an idea of your starting customer base. Depending on the age you accept at your daycare there will be at least a 3.9-mile radius to work within for reaching potential customers.
What equipment will I need before I launch?
Here is a list of items developed by Child Fun to begin the process:
Cow Rocker (toddler) with washable cover
Easy Grip Paintbrushes
Flannel board with scenery
Infant Bouncer Car
Large Felt Boards (30″ x 40″)
Lightbox Desk & Chair
Observation Activity Table
Play structures both indoor and outdoor
Play Houses that are big enough
Red Boppy with Animals and Arc
Round Lego Table & Chair
Riding Objects such as tricycles
Safety Mirror/Baby Mirror
Sand & Water Table with lid
Sandbox with Lid
Small Table with 2 Chairs
Tool Box with Tool Rack
Transportation Activity Rug
Tri-fold Beauty Shop & Stool
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.
Meet Shawn Chun: Entrepreneur and Childcare Business Fan.
I’m a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online daycare business resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a childcare business owner, I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Daycare Business Boss: I want to help childcare business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.