Whether you have decided to open a home-based or a center-based daycare, one of the first things you should do is make a list of all the pros and cons of owning and operating each type to help you determine which one would be best for you, both personally and professionally!
While specific pros and cons may vary, the more general pros of operating a daycare include: earning extra income, being the boss, setting your hours and wages, as well as many more! The more general cons of operating a daycare include, but are not limited to: having to deal with difficult situations on your own, daily cleaning and organization, insurance requirements, and more.
To help you decide which type of daycare is right for you, throughout this article I will discuss in detail all of the potential pros and cons of owning and operating a daycare in general, as well as the specific pros and cons of both home-based and center-based daycares.
The Pros of Owning and Operating a Daycare
While there are many pros to owning and operating a daycare in general, which are the most common reasons why many people start a daycare service, however, there are specific pros to owning a home-based and center-based daycare as well!
Pros of Owning and Operating a Daycare in General:
- Extra Income – by owning a daycare service, you can provide your household with an extra source of income to help with any expenses, or just to save for the future!
- You’re the boss – when you own your business you are the one in charge and don’t have anyone else to answer to (except for your clients!).
- You set the hours – another great benefit of being the boss is being able to decide how many days per week you will offer your care, as well as the hours you will be open during those days.
- Decide your wages – as the owner, you get to decide what you charge for the services you provide, and ultimately decide how profitable you will be.
- Care for your children – when you own a daycare, you don’t have to worry about paying someone else to watch your children while you work because you can watch them yourself!
- You make the schedule – when operating your daycare, you get to decide when to serve snacks, play games, and take naps; you have the freedom to decide everything that happens throughout the day!
- Watching the children in your care grow – as an added benefit to watching your children, you also get to watch the other children in your care learn and grow during your time together!
Now that you understand the more general advantages of owning and operating a daycare, you can focus on the specific pros of owning a home-based or center-based daycare!
Specific Pros of Owning and Operating a Home-based Daycare:
- Lower start-up costs – opening a home-based daycare is ultimately more cost-effective than a center-based daycare because you do not need to pay rent and utilities on a separate building to provide your services!
- Tax write-offs – as a home-based daycare provider, you are eligible to receive multiple tax write-offs, such as the potential to deduct a portion of your rent or utility bills, as business expenses!
- Minimal education requirements – in-home daycare providers are not required to have a college degree or even a high school diploma to be able to work, although basic CPR training is usually required.
- No weekends or holidays – as a home-based daycare provider, you can choose whether or not you will work on weekends and holidays, so you can still have time to spend with your family!
- Lower overhead costs – one advantage of being a home-based daycare provider is that your overhead costs will be lower than that of a center-based daycare because you will not need a full staff to operate at capacity, and the Federal Food Program could offset the cost of providing food to the children in your care.
Specific Pros of Owning and Operating a Center-based Daycare:
- May be eligible for a grant – center-based providers could be eligible to receive a grant, especially not-for-profit providers, to help cover the start-up costs of your business.
- Care for more children – as a center-based daycare, you have the option to care for more children, which will greatly affect how successful your daycare will be.
- Does not interfere with your home – one advantage that operating a center-based daycare has over a home-based daycare is that you will not have to subject your home to the extra wear and tear that results from having more children in your care.
- You can sell a center-based daycare – at the end of the day, a decisive advantage that a daycare center has over an in-home daycare is that you can sell a daycare center if you choose to, whereas you cannot sell a home-based daycare because no one will want to run a daycare out of someone else’s home.
With this detailed list of pros provided above, you will gain a better understanding of which type of daycare can potentially be the most beneficial to you and the children in your care!
Find out more about owning a daycare HERE.
The Cons of Owning and Operating a Daycare
Now that you have completed your list of specific advantages that pertain to your daycare, you should begin to list the potential cons of operating a daycare to weigh against those pros to help you determine which type will truly be the most beneficial to you and the children you will be caring for!
As with the pros, there are cons to owning a daycare in general, as well as specific cons of owning a home-based and a center-based daycare, which are all listed below.
Cons of Owning and Operating a Daycare in General:
- Dealing with difficult situations – as great as being the boss may be, there are some downsides, such as being the only person able to resolve any difficult situations that may be presented by a client or child.
- Organization – all the spaces in your daycare must be well organized for the safety of the children in your care, as well as keeping track of and organizing all of your expenses and income for tax purposes.
- Client’s needs may change – it is important to keep in mind that situations and needs change frequently, so there is no guarantee that your clients will continue to need your services a few months down the road.
- Some children need to adjust – there may be some children in your care that aren’t adjusted to daycare and will require more attention than others to ensure that they are adapting to the change well and enjoy being in your care!
- Daily cleaning – you may find yourself cleaning up constantly throughout your day; picking up toys before children are dropped off, picking up and cleaning during the day, as well as cleaning after the children go home to provide a clean and healthy environment.
- Hours may vary – as a daycare provider, you must be open early enough for clients to drop off their children, as well as stay open late enough for the clients to pick up their children, which may cause you to not have a lot of time to yourself.
- Insurance requirements – whether your daycare is based out of your home or in a center, you will be required to obtain insurance that will cover any accidents or injuries that may happen during your care, such as Daycare Insurance which covers a vast amount of potential liabilities.
With the more general disadvantages out of the way, now you can focus on the specific cons to owning a home-based or center-based daycare to weigh against your specific pros!
Specific Cons of Owning and Operating a Home-based Daycare:
- Dedicated spaces for children – a major part of operating a daycare out of your home is ensuring that children have dedicated areas to play, nap, eat, and use the restroom; this could potentially take a lot of “personal space” away from you and your family.
- Little to no adult interactions – as the owner of a home-based daycare, you may not need to employ additional help, which means you will not have a lot of interactions with other adults throughout the day.
- Safety requirements – while it may be faster and more cost-efficient to operate a daycare out of your home, several safety precautions must be addressed such as putting up fencing around the yard, buying child-proofing locks, or even buying baby gates for stairs or doorways, which could be rather expensive depending on what you require.
- Affects your family – not only will operating a daycare affect your day-to-day life with the increased amount of children in your home, but it will also affect the rest of your family because of the reduced amount of space that will be available for your family to relax, which may cause more stress around your home.
Specific Cons of Owning and Operating a Center-based Daycare:
- Licensing regulations – state licensing requirements and regulations for a center-based daycare vary greatly, and may even require an administrator or director to be present at all times (which does require a degree in Early Childhood Development or a similar qualification).
- Longer start-up time – in comparison to a home-based daycare, it will take longer to get a center-based daycare up and running because of the research and planning required, as well as the time it takes to get approval for funding or any remodeling you may need to have completed.
- Greater operational expenses – other than rent, utilities, and insurance requirements, since you will have the ability to care for more children, you may also be required to employ more help to maintain an acceptable child-to-provider ratio, which will directly increase your operational costs.
- Higher start-up costs – for center-based daycares the average start-up expenses can cost anywhere from $50,000 to $100,000, depending on the building options available to you for sale, rent, or lease.
With this comprehensive list of pros and cons, and when weighed out properly, not only you will be able to determine which type of daycare would be more beneficial for you to own and operate, but most importantly, you will gain an understanding of which type will be more beneficial for the children that you will provide care for!
1. How much does it cost to start a daycare?
For a home-based daycare provider, the average start-up costs can be anywhere from $3,000 to $10,000 depending on how much you need to invest in safety precautions for your home; a center-based daycare service can cost anywhere from $50,000 to $100,000 depending on the size of the building you require.
2. How much do daycare providers make annually?
The average annual income of a daycare provider is approximately $23,000, or around $430 earned per week, although some of the more experienced daycare providers earn approximately $28,000 annually.
3. What are the basic insurance requirements necessary to operate a daycare?
The most basic insurance that is required to own and operate a daycare are most commonly general liability, accident, and property insurance; some states may require workers’ compensation or professional liability insurance to operate a center-based daycare.
4. Do you need a degree to own and operate a daycare?
For in-home daycare providers, CPR training is the only requirement needed to operate your business; to operate a daycare center, the minimum education requirements are a bachelor’s degree in early childhood development or education, and taking refresher courses for your certifications are also required to renew any licenses.
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.