If you are thinking about starting your own in-home daycare business, you probably love children and want to be around them all the time. Amazing! Starting a business is a completely different animal.
Here are the 8 steps to starting a home daycare business:
- Research the Rules of Childcare in Your State
- Insurance and Financial Planning
- Legally Organize Your Business
- Training and Instruction
- Get to Work
Starting any business takes an entrepreneurial spirit, some risk-taking, and the ability to think like a business owner.
Ask yourself some questions. What kind of space do I have? How many children can I handle? Am I willing to hire others to help me?
What do I want my hours to be? Is there a need for better childcare in my neighborhood? How do I get customers?
Get those answers down on paper. Think about your short-term and long-term goals and write them down. It is ok if you do not know the answers to these questions right now. The information in this article will help you get there.
Step 1: Research the Rules of Childcare in Your State:
Caring for children comes with rules and regulations. The laws vary state-to-state so you should contact the appropriate agencies within your state for requirements. Some of these laws could require licensing, certifications, special training, and more.
Research child-to-caregiver ratios, CPR and emergency certifications, and other disaster and emergency training.
Always keep the concerns of your potential customers (i.e., parents) at the forefront of your mind. Think about what you would be looking for if you were trusting another person to care for your child(ren).
Nothing is more important to a parent than their children and they are trusting you to keep them safe and happy.
Step 2: Insurance and Financial Planning:
Investigate your state, local, and federal laws regarding insurance and tax law. Homeowner’s insurance does not usually cover business activities.
General liability insurance for accidents and unforeseen lawsuits for other mishaps also needs to be researched.
Commercial auto insurance should be in place if you plan on transporting children. Field trips, anyone? You could face a major legal issue if you use your personal vehicle for business purposes, and heaven forbid, you are in an accident with a child in your car.
There are laws in place for a reason. They are designed for your protection as a business owner and the protection of the children, your staff, and your property.
Do you need alterations to your home to accommodate children? You may be subject to a home and property inspection before you can start accepting children.
What is your budget for toys, supplies, and food?
Do you have a way to keep track of your income and expenses?
Do you have a CPA to help you determine how you are going to account for income expenses, how you will be taxed, and what you can and cannot deduct for a home-based business?
These are just some of the financial considerations that can help determine how much you will need to charge parents to cover expenses and earn some profit.
After all, you do not want to work for free.
Learn more about how much it costs to get started HERE!
Step 3: Legally Organize Your Business:
There are certain ways to set up your business that can protect you from certain liabilities and taxation by organizing it as a separate entity.
If you are looking to grow your business and hire staff, a Limited Liability Company might be the way to go.
Consult your CPA and attorney for recommendations that will suit your personal situation.
This is also a good time to start thinking about a name for your business and creating marketing materials to promote your business. Be creative! How do you want the world to see you?
Step 4: Funding:
Starting any business can be costly, even if you have saved up some cash to put into it.
The good news is, there are organizations out there that may be able to help you get started.
There are usually local, state, and federal grants that may be available. The Small Business Administration may also be able to give you a loan to help with startup costs.
Step 5: Training and Instruction:
Some states will require training and instruction before you can apply for a license to start a home-based childcare business.
It behooves you to become properly licensed if you want parents to trust you with their children.
You will also want to consider a teaching curriculum program certification. Childcare is not just group babysitting.
Most parents need help from private childcare providers when their kids are between the ages of 0 and 5 years old. These years are crucial in the child’s cognitive development.
Parents want childcare providers to help set their children up for pre-kindergarten and kindergarten.
A majority of what, and how they learn, rests with you!
A lot of states require a certain framework for childcare providers regarding education or teaching certifications.
You will need to research your specific state’s criteria.
Step 6: Safety:
Obviously, when caring for young children, safety is of the utmost importance.
The first step is to safety-proof your home. If you have your own children, you have probably already done this.
Things like outlet covers, securing bookshelves to the wall so they cannot be pulled down, child-proofing sharp corners on tables, and making sure cabinets with cleaners or other hazardous chemicals are secured with child-proof latches or locks.
Be prepared for any medical emergencies, as well. CPR and choking training, administering allergy medication, and having emergency plans in place are paramount.
You do not want yourself or your staff to be caught off guard in the event of an emergency where time is of the essence.
Running fire drills and having an action plan in place is also a great idea.
Step 7: Inspection:
Most states will have to inspect your physical property to certify that it is suitable for childcare. This includes the yard, any play equipment, and the room where the children will be in for the day.
If you have followed all federal, state, and local laws that you previously researched, you should pass with flying colors.
Step 8: Get to Work:
Now that you have all your legal and financial ducks in a row, it is time to get to work.
We are talking about advertising and marketing to get customers now. Create a logo and design your business cards. Vistaprint is inexpensive and they have many templates to help you create your vision. Use colors that stand out. If you look at a business card display, you will notice that they are mostly white and boring. Create something that will catch people’s eyes. Take your time on this creation because you will want it to reflect not only what you do but who you are. Think first impressions.
Even if people are not looking for a childcare provider at the time, they will remember your card and may very well take one. You want to be memorable.
Do a google search for “daycare providers” in your area and see what pops up. Chances are, there are local websites or newspapers that you may be able to contact to advertise your service with. There are many, many free publications nowadays.
Check your local libraries or other community centers that provide programs for children. Ask them if you can leave your business card on the counter in a display case.
Create a website. Add your business to a Yelp directory. Create a free “Google my business” listing on Google Maps. Many people search for local businesses. Google maps will allow your business to show up when people search for things like “childcare providers near me.”
Use social media. Create a free Facebook business page and get on LinkedIn. These are the fastest-growing ways to advertise your business, network, and help you get noticed.
Tell your family and friends and ask for referrals. Word-of-mouth is usually the best way to get clients, but you cannot have only one marketing source.
Volunteer at community centers, religious organizations, and other family-centered organizations to network.
Leave business cards wherever you go. The businesses you frequent are a great start. The local coffee shop that you visit every morning, your dry cleaner, deli, or any other place you patronize where everyone knows you. All you have to do is ask them if it is ok to leave your business card on their display. You spend money at their establishments, they should be willing to help you out.
Create a customized pitch to tell people what you do. We call this an “elevator speech” in the business world. It should be a 15-20 second blurb about what you do and what makes you great at it.
The goal is to spark a conversation. You want people to ask you more questions about the services you provide and what makes you different from the rest of your competition.
You now have a simple 8-step process on how to start your own in-home daycare business. Remember to do your research, take advice from your CPA and attorney, and invest in marketing.
How Long Will It Take For My Business to Become Profitable?
Building a profitable business takes some time depending on the needs of your customers (i.e., supply and demand). Some things you can control, some things you cannot. You must dedicate yourself to making your business work. You must be willing to “pound the pavement” to build your clientele. It takes discipline, commitment, and hard work. Remember that you will never know success if you do not experience failure. Being a business owner has many ups and downs. Believe in yourself and your vision and never give up on your dreams!
What Do I Need to Know if I Have to Hire More Caregivers?
This is a great problem to have because it means that your business is growing! However, it comes with additional costs. You will need to pay your employees, obtain worker’s compensation insurance, and cover employer payroll taxes. This will impact your bottom line. You may need to figure out how much you can pay your employees and whether you will have to adjust your tuition rates to accommodate the new expenses.
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.
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