How To Start a Daycare Business Startup Guide

How to Start a Daycare Business – Startup Guide

While it may not be the hottest industry nowadays due to COVID, a daycare business is still a profitable business venture. Since the majority of parents work outside, childcare centers prove to be a massive help to preschool-aged children. While nannies and babysitters are still an option, most parents favor daycare centers due to the perks that it offers. Studies show that at least 25 percent of children under five attend an organized daycare center.

If you’re looking to take the next big leap by establishing a daycare business, you’re on the right path! Running a daycare business isn’t just financially rewarding, but it’s also fulfilling as well. So, if you genuinely love children and want to help them develop during their early years, this business is the right one for you.

But where do you start? How are you going to create and run a daycare business from scratch? It can be daunting at first, but all you need is a guide. This article will serve that purpose. We’ve created this step-by-step guide on how to open and run a successful daycare business. 

Why Choose Daycare?

Before you even think about other things, you need to figure out why you’re starting a daycare in the first place. While it can be pretty daunting at first, running a daycare center can be very rewarding. While there isn’t a tried-and-true success blueprint – as with other businesses for that matter – the real reason why people start a daycare, business is the entire experience of the journey.

You will meet different people and get a glimpse at the future generation. In addition, the kids that enroll in your daycare will one day grow up to become difference-makers in this world. That means you are in a prime position to influence what the future will hold. It may sound like a stretch, but daycare businesses are making a significant difference. So, if you’re planning to take this route, know that you’re not only earning, but you’re also paving the way for the future generation to succeed through your early guidance.

You should also consider your personal reasons for establishing a daycare business. For example, you may be fond of children, or you have a soft spot for teaching and sharing knowledge among the youth. On the other hand, it’s maybe because you just like to help other people – particularly the parents. Whatever your personal reasons are, make sure you acknowledge that as well as it will become your main motivating factor.

Benefits of Starting a Daycare Business

A daycare business can offer several advantages in different areas. For one, you will have the opportunity of starting your own business from the bottom and lead it towards success. You will have personal satisfaction and fulfillment along the way as you build your business from the ground up. There’s also the joy of spending time with children – if you’re up to the task – and some life-changing lessons to boot.

If you’re still doubtful about the potential that a daycare business can bring to the table, consider the following benefits:

It’s a Fulfilling Business 

Working with kids not only teaches you how to be patient, but you will also learn how to enjoy the simple things in life. In addition, you will also have the freedom of earning money your way instead of having to confine yourself to a traditional office job. Daycare presents an opportunity for you to make while gaining emotional fulfillment.

Financial Freedom

When you open a daycare center, you’re in full control of not only your time but also your income. You won’t have to rely on a typical paycheck since you’re running your own business. You can even maximize your earning potential by investing back into your business and helping it grow throughout the years. Once your daycare proves to be a massive success, you will achieve the level of financial freedom that you didn’t think you’d achieve.

Take Care of Your Kids

If you also have children, you can take care of them while also running your business at the same time. By enrolling your children into your daycare, you’re saving a lot of money in the process. It will also give your kids the opportunity to meet new friends, all while you are supervising them.

Continued Education

A daycare business isn’t just a set-it-and-forget-it type of business. It’s an area where you will need to grow and excel in growing your business and yourself as well. This type of business opens the door to new learning opportunities for yourself in the field of teaching and child care. You may either be presented with another job position or opt for additional education to further expand your knowledge of your business.

Earn a Substantial Income

Daycare is one of the most profitable businesses out there. With its demand constantly on the rise, the time is right for you to choose this business venture. Take advantage of parents’ interest in developing their children at a young age and see just how much money you can make from it. Since you’re also helping the parents free up some time to do work or other errands, you’re also doing other people a huge favor. That means this business is guilt-free while providing you with a hefty cash flow.

Tax Deductions

Since you’re running a business, you can write certain expenses as business expenses. By doing so, you are saving money whenever you file your taxes. These business expenses include the following:

  • A portion of your housing payment if you’re running an in-home daycare business;
  • Cellular bill;
  • Vehicle expenses;
  • Child care supplies;
  • And much more.

These are only a few of the plethora of benefits you can reap from starting your own daycare business. There are many more advantages that you will get once you choose this business venture.

Estimated Cost to Start a Daycare Business

Now that you know all of the benefits that you’ll get from starting a daycare center, the next thing you need to know is how much it’s going to cost. According to research from BizFluent, which is a small business website, the average cost to start a daycare center is between $10,000 to $50,000. But, of course, the cost varies by a lot of aspects.

For example, if you plan to establish a home-based daycare center, the cost will be much lower. But, on the other end, if you’re planning to lease a facility for your care center, then the cost would start to increase from there.

Don’t have the cost needed to start your daycare business? No worries! There are tons of small business loans available that you can apply for. Plus, there are even loans specific for business people who are planning to start a daycare center. In fact, several local businesses will offer financial rewards to support budding child care businesses. So, you should consider reaching out to your community if you want some financial support.

Cost Associated with Starting a Daycare Business

The total amount comprises several things that you will need to buy or rent to get your business up and running. These expenses include, but are not limited to, the following:

  • Daycare space leasing fee
  • Indoor and outdoor play equipment
  • Art supplies
  • Toys
  • Cleaning supplies
  • Business laptop
  • Child care supplies (e.g., wipe, diapers, powder, etc.)
  • Food (for meals and snacks)
  • Licensing fees
  • Bottles, plates, cups, and other utensils
  • Transport vehicle (optional)

Overlooked Steps in Opening a Daycare

Now that we know the benefits and the cost, it’s time to talk about the main highlight of this article: how to start your own daycare business from the ground up.

This guide will cover 15 crucial steps that you will need to take before you can establish your daycare center and start earning profit. Always keep in mind that starting a daycare – or any type of business for that matter – is a long and fulfilling journey. 

While we’ve outlined some essential steps, know that there isn’t a right way to achieving success. These steps are merely a guide that will help you get started. So, without further ado, let’s go over the 15 steps to starting your daycare center – even if you have little to no experience. 

Keep in mind that you don’t have to acquire all of these items, or the ones that weren’t mentioned, all at once. Over time, you can use the revenue coming in to help cover some of these expenses. You can also upgrade by investing in better supplies or equipment. Remember that it’s okay to keep things simple since you can always scale your way up once your business is up and running.

Step 1: Daycare Licensing Requirements

To start a full-fledged daycare business, you will need to meet the proper licensing requirements that come with it. That way, your business will become legal, along with your entire business operations. Having an adequate license means your daycare is legitimate, which will entice potential clients to enroll. In addition, you will not encounter any legal problems, particularly accepting children into your institution. 

To know the requirements, you need to comply with, reach out to your state’s Department of Children and Family Services (DCFS). Another option is contacting your local area’s child care licensing agency. Finally, you can find all of this information online.

As a heads up, here are several things you’ll need to obtain to get your license and start your daycare center:

  • CPR certification
  • Clean driving record
  • Additional documents that prove your identity
  • Documents proving your commitment to offering quality child care services.

Don’t be afraid to ask questions. In fact, make sure you ask as many questions as you need. Make sure everything is clear to you before you start complying with the requirements.

Step 2: Take Childhood Education Classes

As mentioned before, a daycare business involves continuous learning. In this case, you will need to consider taking early childhood education courses. While it’s not necessary to start a daycare business, having a level of understanding of early childhood development is highly encouraged. 

Keep in mind that you will be caring and nurturing young people. That’s why you need to know how to provide the right kind of care and support.

So, getting a degree in childhood education is a great way to start. You can find free classes online or in person – whichever suits you best.

Step 3: Create a Business Plan for Your Daycare

When you start any type of business, it’s always helpful to have a business plan ahead of time. Having this type of plan will help you set goals for yourself and your business. At the same time, you can also organize your business structure while outlining your services and so much more.

This plan will need to outline and define your business mission statement, operations, procedures, budgeting, and staffing. By having a business plan for your daycare business, you are on track towards achieving success.

Step 4: Find the Ideal Location for Your Daycare

If you plan to run your daycare from home, this step shouldn’t be difficult. However, if you plan on running your daycare business in a different location, you’ll need to determine which is the right place to rent for your facility.

There are many buildings, local businesses, schools, and even churches with available spaces to host a daycare center, typically for a monthly rental fee. You can search online, ask within your network, or even search the newspaper to find potential options in your area.

Once you pinpoint the ideal location, the next thing you need to do is check your local area’s licensing and zoning laws guidelines. Make sure your chosen location is compliant with these guidelines to avoid dealing with legal issues along the way.

Step 5: Insurance is Essential

As a business, you need to get insurance. The majority of daycare centers need different types of insurance to keep their business and clients protected. These policies include:

  • Liability coverage
  • Property coverage
  • Workers’ compensation
  • Business insurance

If you’re not sure what type of insurance you should get, you can always check with your local licensing office for child care providers for proper guidance.

Step 6: Seek Funding

As we mentioned in the previous section, there’s a corresponding cost associated with starting a daycare business. Therefore, if you don’t have the funds necessary to cover your initial startup costs, you will need to look for funding.

There are many funding and grants available to help you cover your initial costs. There’s also a Small Business Association loan that you can take out. But you’ll need to comply with certain requirements to get the grant. You can also consider community fundraising by asking the local folks to help you start your daycare.

Step 7: Make the Necessary Preparations

Once you’ve got a location and the proper equipment and materials in place, it’s time to prepare your daycare center.

First, make sure you clean your facility from the inside out. With health being a major issue in today’s trends, you must sanitize your soon-to-be daycare center as well. Next, you should take the necessary steps to childproof your daycare. You can look online for these steps according to the age of the children you’ll be caring for.

Finally, set up your play and amusement equipment. Layout all the toys around the play area. You can use storage boxes to keep everything neat and organized. You can always mix and match your layout according to your needs.

Once everything is set, do a full inspection to make sure everything is in order. Is it ready? If so, you’re all set to open your doors for enrolment.

Step 8: Create a Daycare Contract

As a small business owner, it’s always a great idea to put everything into paper. That’s why you should create a contract for your daycare. The parents coming to your facility are your clients, so you want to negotiate with them using a proper contract. Not only will it protect you from legal issues, but it will also guarantee that your clients will pay you.

We recommend seeking out a licensed lawyer to draft up a contract according to your needs and requirements for this step. Here are some important questions to consider when creating your daycare contract:

  • How do you expect to get paid?
  • What time should parents pick up their children?
  • What services will you provide?
  • What’s your policy when it comes to children who are ill?
  • Do you offer refunds? If yes, under what conditions?
  • What happens if a child gets hurt or injured at your facility?
  • Are there any consequences for late pickup?
  • How will you handle late payments?

Step 9: Establish Policies and Procedures

A contract won’t be enough if you want to ensure seamless and fluid operation. To make sure everything runs according to plan, you need to set up policies and procedures for the families that attend your daycare. These procedures include an emergency plan, privacy procedures, safety protocols, and several rules for your facility.

With these procedures in place, you will keep your business and your clients safe. In addition, you protect your business from potential liabilities. When establishing your policies and procedures, always review your local child care licensing requirements to make sure you’re compliant with their rules.

Step 10: Invoicing

Of course, at the end of the day, the goal is to get paid and earn a living. So, make sure you have a proper daycare invoicing process in place to make sure your clients will pay you on time. To make things easier for you, consider automating your invoicing method with ReliaBills.

ReliaBills is a professional invoicing system that offers a plethora of features all geared to getting you paid. From creating a unique invoice to schedule, you can automate everything so that you won’t have to do everything manually. With you running your daycare business, invoicing will be a burden if you do it manually. So, make sure you take advantage of today’s technological advancements by automating your invoices with ReliaBills.

What Other Steps Do You Need to Take?

While there are certainly other things that you’ll need to deal with, these are the core steps that will help you establish your dream daycare business and start earning profit. Here are other things you need to deal with:

  • Hiring a staff
  • Marketing
  • Ensuring top-quality care service
  • Managing your business finances
  • Setting up security measures for your daycare.

Wrapping Up

Starting a daycare isn’t easy. You will encounter several hurdles along the way. Fortunately, with this guide, the entire process will be simple and easier to remember. Now that you know how to start a daycare business, you can get started right away. Just make sure to enjoy the whole process. Don’t frustrate yourself – always have a positive mindset, and don’t forget to make adjustments when necessary. Good luck!

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