Because most parents work outside the home, most preschool children receive some form of child care. Although many children are cared for by babysitters, grandmothers, or other family members, about a quarter (23.4%) of kids under five participated in organized daycare.
It provides the world with opportunities for those who want to take the next step and start their own childcare business. Daycare can be personally and financially rewarding.
If you relish the children’s company, running a daycare business is a great way to make a living. There are many types of daycare centers, but two of them are generally very popular. If you want to accommodate a large number of children, the best option for you is to create a center-based business. On the other hand, if you’re going to take care of your loved ones or work from home, you should ponder setting up a Children’s Care Center. However, no matter which option you choose, you will need to know how to start and run your business.
Why start daycare?
Opening a daycare can be scary, but it can also be incredibly rewarding. While there is no roadmap to success, many child care business owners enjoy traveling. So whether it’s your passion or your desire to serve parents in your community, there are many legitimate reasons to open the daycare.
Most importantly, you should also consider your own unique reasons for opening a daycare as these will motivate you to pursue your dreams. Although you may encounter obstacles along the way, the daycare is definitely worth paying for.
Assess the need for a daycare center.
Before setting up a daycare center, your first priority should be to determine who offers this service type in your community. You can get this information in many ways. But the safest way to get it is to talk to your parents directly. This will allow you to specify the type of daycare specific to the region you are looking for. There are several steps you can take to begin the process of preparation for mediation.
Interview several families and ask parents what type of child care they would like to have in the area. Also, ask at what scale this type of service is already available in the local market.
Take a look at census data for your area to determine the number of families with working parents who have children who can be enrolled in your daycare, the number of recent marriages in the community, and the income distribution of those families. This information is available from several sources, including the U.S. Census Bureau or your local city government.
Let’s look at the steps to start a daycare business.
10 Steps to Starting a Daycare Center
1. Create a daycare business plan
When starting any type of small business, creating a business plan is critical. Having a business plan helps you define specific objectives for your business, organize your business structure, define your services, etc.
In your daycare business plan, you will describe your mission statement, operations and procedures, staff, and budget. This business plan helps you move and strive for success.
Think about how you plan to organize your business. Will you be alone, or will you hire staff? How will you secure the fund? Would you offer any other services besides babysitting (like tuition)? To help you plan your business, check out this in-depth guide from the American Small Business Association.
2. Choose a name for your business.
Choosing a name for your daycare is another crucial step in the process. Your business name will represent your services to the outside world. That’s why your daycare’s name should be attractive, easy to remember, and clearly indicate the type of service.
You should contact your local authorities to verify that the name you wish. Make sure the name you proposed is not yet registered or not used by another business.
3. Set a budget.
The most crucial thing to do during the preparation phase to start your own business is to create a budget. This will allow you to plan for your business’s future and ensure that it has a chance to succeed with the funds you have. To do this, you need to factor in convenience costs, monthly operating costs, and annual costs. When preparing your budget, you should consider the following expenses:
- Licensing, insurance and inspection fees,
- Costs of medical examinations and certificates,
- Safety devices (including fire extinguishers, smokers, first aid kits, carbon monoxide detectors, child protection equipment, etc.)
- Food, toys, and accessories for planning activities
- Salary of potential employees,
- Advertising Expenses, Legal Expenses, and Professional Services Fees,
- Rent, mortgage fees, and utilities.
4. Choose a type of business entity.
You can choose from a variety of legal structures when setting up your daycare, and each has its advantages and disadvantages. If you want to practice as a sole proprietor, it may be easier for you to file your tax return. However, suppose you are operating as a corporation or a limited liability company. In that case, you will be able to limit your liability for whatever may be involved with the funds you invest in running your business. That is, you will not be personally responsible).
You should seriously consider talking to a lawyer specializing in designing businesses to understand the different possibilities available to you better and choose one.
5. Learn about daycare licensing requirements
To start a full-fledged childcare business, you must meet the appropriate licensing requirements to be legal. That way, your daycare will be legitimate, and you won’t have any legal trouble accepting dependent children.
An excellent first step is to contact your state’s Department of Children and Family Services (DCFS) for more information about your specific regulations regarding child care providers. The second is a child care licensing agency in your area. You can usually obtain this information online.
You will also need current CPR certification, clean driving records, and additional documentation to demonstrate your commitment to providing quality childcare.
6. Choose a location.
If you decide to set up your daycare at home, then this issue is settled. If, on the other hand, you decide to open a separate establishment, you must choose a building that is well located and within your budget. Depending on the means at your disposal, you will also have to decide whether you want to rent or buy said premises. If you’re seeking a building outside of your home, consider the following factors to help you in your choice.
- Will the location suit parents?
- Is there a public transport service that serves the region in which your premises are located?
- Is the area secure?
- Does the space adequate for the type of activity you want to conduct?
- Does it have adequate kitchens, bathrooms, and facilities?
7. Get the insurance you need.
Generally, you will also need liability insurance as part of setting up your childcare business. You will need to take care of other people’s children, and for that, you will need to give them the best possible care and attention. Providing proof that your business is financially secure from any situation that may arise will provide your potential customer’s peace of mind.
Depending on the type of daycare you want to have, the competent authority in your municipality will be able to tell you what kind of insurance you need.
8. Buy the necessary equipment.
The equipment and materials you require to run your business successfully will largely depend on the type of daycare you want to open. Depending on their ages, children have different needs and interests. This implies that you will need to use multiple equipment and supplies for the service you will be providing to be effective. You will need to acquire some, if not all, of the items from the following list:
- Mini-size furniture (chairs, tables, desks, etc.),
- Arts and crafts equipment (pencils, paper, a pair of safety scissors, etc.),
- Toys (games, puzzles, dolls, figurines, Legos, construction games, etc.),
- Children’s books,
- Healthy and nutritious snacks or meals,
- Storage containers for personal belongings, coat racks, etc.
9. Develop a marketing strategy.
Every successful business supports an exceptional marketing strategy that aims to inform the public about the excellent services it provides. Before you start your promotion, take the time to think about what information you would like to convey. So, here are a few things to keep in mind.
Think about how you would like to describe the service you provide. How are you different from what is already available in the market? What age group are you targeting? What will be the opening hours of your daycare?
Considering the information gathered before the market, think about the prices you will offer to be competitive.
Think about the benefits your location offer: adequate parking, security, convenience, etc.
If you have a team, think about how to “market” them. What skills, qualities, or certifications do your employees bring to your company?
10. Advertise.
You need to start advertising at least three months before your daycare officially opens. If you can afford it, TV, radio, or newspaper ads will help you reach a bigger target. However, they are relatively lavish. There are still some options that are not too costly and which are more conventional.
- Word of mouth.
- Post posters in public spaces in your area (make sure you have permission from the owner of the place where you are putting your poster).
- Distribute brochures or business cards at bookstores, at church meetings, at parent-student meetings, in the neighborhood, etc.
- Advertise in the local newspaper.
Starting a daycare business can be intimidating, but it can also be incredibly gratifying. We hope this guide has given you tips to get started, as well as some incentives to launch your own daycare business.