Why is starting a daycare center business such a good idea? Because there is, and always will be, a steady need for child care services. Owning your own daycare center is something that will be rewarding and profitable, but you’ll need to make sure you know what the requirements are for starting a daycare center business.
The requirements to start a daycare center business need to be taken very seriously. So, let’s look at this in a step-by-step fashion.
- Complete education.
- Decide on in-home or separated daycare center.
- Create business plan.
- Secure necessary licenses and permits.
- Have background checks performed.
- Attend an orientation session.
- Complete first aid and CPR certification classes.
- Obtain food handlers’ certifications.
- Appoint daycare center director (when applicable).
Knowing what things are required to get a daycare center business started will help you to flow through the process smoothly. It can be tough to get any kind of business off the ground but don’t get overwhelmed. Let’s go through the requirements one step at a time so that you can feel confident that you know what you need to do to open a daycare center.
For many people, this step can be skipped because they’ve already done it. However, it’s important that we talk about your education. Most states will require that you have either your high school diploma or a General Educational Development (GED) certificate.
Before you move forward with any of the other steps, you need to make sure you’ve covered this one. Most places will not grant you the licenses or permits needed to open a daycare center if you have not completed your basic education. There are plenty of online programs for acquiring a GED if you did not graduate from high school with a diploma.
In most cases, you’ll find that the more education you have, the better off you’ll be. There are many cities and states that don’t require daycare center owners to have college degrees, but there are also some that have regulations requiring the daycare center to be run by someone with a college degree. You will be doing yourself a favor by continuing your education and getting a degree in something having to do with education or child development.
In-Home or Separate Daycare—The Decision Is Yours
Your next step is to figure out what kind of daycare center you want to open. Are you going to open the daycare in your personal home, or would you rather keep things completely separate and look for a commercial space to open the daycare center in? There are some things you need to consider before you make this decision.
If you are thinking about opening an in-home daycare center, here are some things you should consider:
- No separation of work and home life
- Members of the household have to be fingerprinted and background checked
- Home will have to be health and safety inspected
- Parents typically expect to pay less for this option
Things you need to think about when you are looking at opening a completely separate daycare center are:
- More expensive to start
- Regulations governing this type of daycare are more stringent
- You’ll need to research zoning and licensing laws when choosing your location
- Operational costs will be higher
- Scheduling may require that age groups are separated out
Once you’ve decided what kind of daycare center business you want to open, you will start to layout your business plan. You’ll need to look at your budget, how big you want your operation to be, and everything you need to do before you can open your doors and start caring for children.
Creating Your Business Plan
While there isn’t an actual law or regulation for stating that you have to have a clear business plan to open a daycare center, you are going to find that it’s an unwritten requirement.
You may find that you want to secure funding from a bank to open your daycare center, or that you want to try to attract investors. If this is the case, you will most certainly have to provide the details of your business plan to get the powers-that-be to say yes to giving you the money that you need to get started.
You’ll also be applying for licenses, permits, and certifications. Without a clear business plan, you won’t know exactly which ones you will need to open your daycare center. Also, the authorities who grant those items will likely request a lot of information about the business you plan to operate. If you don’t have a solid business plan laid out, it will be difficult to answer the necessary questions to obtain whatever licenses and other pertinent documents that are required in your area.
So, what’s included in a good business plan? According to Quickbooks.Intuit.com, there are seven key components that need to be a part of every good business plan. They are as follows:
- Executive summary – This details the overall picture of your daycare center business. This section will have snippets from all the other parts of the plan rolled into one concise summary.
- Company description – This will let anyone reading it get to know your business. What do you do? What are your values? You should include your mission statement here.
- Market analysis – You will discuss the competition in your area here. You’ll point out how you will be different than those around you and where your daycare center fits into the market.
- Organization and management – In this section, you will talk about yourself and your credentials, as well as your experience. You can also discuss your staff members in cases where you will be employing others.
- Sales strategies – This is where you will be discussing your marketing strategies and how you plan to take your daycare center business and make it profitable. You will layout your pricing here also.
- Funding requirements – Here is where you’ll need to state clearly how much money you need to get started. Or, if you already have that covered, you can simply layout your established budget.
- Financial projections – The last section is where you will discuss what your profits should look like once you’re in business. You’ll need to show what you expect things to do and why.
Secure the Necessary Documents
There are a number of different licenses, permits, and certifications that you may be required to obtain before you can open your daycare center business. Some of them will be pretty much standard across the board, but it is up to each state, and sometimes the city you are doing business in, what you are required to have to operate your daycare center legally.
In some states, you will have to have a general business license. You’ll also very likely have to have some kind of license that is specifically for opening a daycare center. An in-home daycare will have a separate license that is designated just for that type of daycare situation, in many cases.
One of the things that is of the highest importance when it comes to opening a daycare center is the health and safety of the children that are being cared for in your home or another facility. Because of this, there are standards that will have to be met in terms of safety and health guidelines. Most states will require that an inspection of the location be performed and approval be given before you can open your daycare center business.
You need to do the research to find out what is required to open a daycare center in your specific city and state. You can find out what you’ll need by visiting the National Database of Child Care Licensing Regulations website. It’s a great resource for anyone who is looking to open a daycare center business.
You Need Background Checks
You will need to have a background check performed on yourself, as well as anyone else that will be working in your daycare center. You will likely need to submit to fingerprinting also. This is to ensure that anyone who has access to the children that will be in your care has the right to be there and will not be a danger to them.
If you are going to be opening an in-home daycare, all of the adult members of your household will also have to have background checks and be fingerprinted. If there is someone in your household that has a criminal past or some other red flag on their background check, you will not be permitted to open a daycare in your home.
Background checks can provide details about a number of things. Some items that may be on the background check are employment history, educational achievements, criminal records, driving records, and even credit information.
Orientation Sessions and Fees
Some states will require that you and your employees attend an orientation session before you will be granted the licensing you need to open your daycare center. There will be a fee associated with the course and it will be your responsibility to pay for that. If you have employees that will be working for you, it is best if you spring for the fee for their sessions also.
The orientation sessions are basically to make sure that everyone involved in caring for children at your daycare business knows how to do so effectively and safely. You and your staff will learn about supervising children and providing guidance for their growth and well being. It will also cover professionalism in the workplace and the ethics involved in a child care business. And there will be information about how to interact with parents so that your daycare center can provide a healthy and positive environment for them and their children.
First Aid and CPR Certifications
Those who are caring for young children on a professional basis will almost always be required to be certified in first aid and CPR. Though it is rare, there are times when emergencies present themselves in cases where children are being cared for. All of the members of your staff need to know how to handle an emergency with a confident and calm demeanor.
There are courses offered through different agencies that will teach you and your staff what to do in the case where one of the children or daycare workers needs medical attention. Once you are certified, you will be able to perform some first aid procedures and CPR, should a situation present itself. There are cases where this could save someone’s life, so it is highly important that these certifications be taken seriously and that they are kept up-to-date throughout your operation cycle.
For more information regarding first aid and CPR training, visit the American Red Cross website. You will be able to find classes in your area so that you can get certified.
Food Handlers’ Certifications
A food handler’s certification may not be necessary for all daycare center businesses to have. This is dependent on your business plan.
You will have to decide if you’re going to be preparing food on-site or not. We will use an example here to clarify what is meant by preparing food. If you are only ever going to be feeding children things like whole fruits and vegetables or prepackaged food items, then a food handler’s certificate will not likely be required.
This certification will become a requirement if you are going to be doing anything to the fruits and vegetables. If you will be chopping these items up and making salads or serving them as mixed fruit cups or something similar, then you will probably need to obtain food handlers’ certificates for all of the members of your staff that will be involved in the food preparation.
Appoint a Daycare Center Director
This step may not be necessary for your daycare center business. An in-home daycare center is usually run by the owner of the home, which is most likely you. In the case of a separated, freestanding daycare center though, you might need to appoint another individual as the director of the daycare center.
This requirement is based on education guidelines. Some states will require that the person responsible for running the daycare center has a degree in something like child development or early childhood education. If you have that, then you can be the director of your daycare center. If you do not, then you will be required to hire someone else who does. This is the person who will run the business on a daily basis.
There is often a license that is associated with the daycare director position. You will need to make sure you know what is required for your director to have and take the necessary steps for the person you choose to acquire the appropriate documents.
Requirements Are Developed With a Purpose
You may find the requirements for opening a daycare center business to seem extensive. They can be, depending on the plan for your daycare center. But keep in mind that the requirements have been developed out of necessity and with purpose. Use this article as guidance and go down the list of requirements. Get educated, develop a plan, obtain the necessary certifications and licenses, submit to background checks, complete any training and orientations required, and appoint a director if one is needed. You’ll then be on your way to opening the daycare center of your dreams.
Are there different requirements for an in-home daycare versus a freestanding daycare center?
Yes, there are. They will all be geared toward the same end result but the requirements will be different. In general, there are fewer guidelines and requirements when it comes to opening an in-home daycare. That’s not to say that you won’t be governed by any laws, it just means that they are not as strict.
Does it cost a lot of money to start a daycare center?
It can cost a lot to start a daycare center of your own. It depends on what kind you want to open and how big of a daycare you plan to operate.
In-home daycares typically cost less than separate, freestanding facilities. You can start one for about $10,000 to $50,000. The amount will vary based on if you need to acquire equipment in your home or if you need to make some upgrades in the home to make it safer.
Other daycare centers can cost from about $60,000 all the way up into the millions. The scale of your operation will determine a lot of the cost, as well as, your decision to buy into an established daycare franchise. There will be far more that you have to pay to open a commercial daycare center. One of the biggest cost differences is, of course, the building that will house your daycare business. Where an in-home daycare is housed in something you are already paying for or have already purchased, a separated daycare center is not.
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.
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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.