This post may contain affiliated links, which means I’ll receive a commission if you purchase through my link, at no extra cost to you. Read the full disclosure statement here.
This blog post is about what you need to know before opening a daycare.
So, you're considering opening a daycare? How exciting! You're probably asking yourself is owning a home daycare worth it? How do I get families? What do I charge? Do I need a license? What if I fail?
If you're feeling this way, don't worry; you're not alone, and this is normal!
Opening a daycare is the most rewarding career you can choose for yourself and your family. However, you need a solid plan in place to be successful while protecting yourself.
This blog will be directed towards a home daycare business; however, it will give you an overview of the other options as well.
OPENING A DAYCARE
What Is Daycare
Daycare is a business where you provide a safe, nurturing, loving, educational, and structured environment for children to learn, play, and grow. It's not babysitting ~ it's a place where you help build social skills, explore new concepts, build oral language, and grow through play, all while feeling at home.
There are several different types of daycare: you need to determine which one is right for you before moving on to the next steps.
- Home Daycare~ where you run the daycare business out of your home
- Center Based Daycare ~ large facility in a commercial building with several employees and children, lots of overhead fees
- Faith Based Daycare ~ daycare in a home or center that centers God around everything they do
- Montessori Daycare ~ follows the Montessori method, child-led, hands-on learning activities, in-home or a center
- Nature Based Or Outdoor Daycare ~ the learning is taken outside, where kids learn through exploring in outdoor play
- Parent Co-op Daycare ~ a program where parents take turns running the daycare, can be in-home or a facility
- Drop-In Daycare ~ Part-time care for emergencies where children are dropped off as needed
What Are The Pros & Cons
As a home daycare business owner, there are many pros and cons to opening a daycare business. If done correctly, the pros heavily outweigh the cons.
Pros
- home with children
- flexibility to keep up with household chores
- relationships with other children
- snuggles from babies
- bring in income while a "stay-at-home mom"
- own boss
- charge your worth
- dress how you want
- tax deductions (HUGE savings)
- active role model for small children
- no negative co-workers or boss
Cons
- home all day
- no adult interaction
- illness
- house looks like a play cafe
- cooking and cleaning all the time
- wear and tear on the home and items
- no manager to deal with the difficult tasks
- long days
- affects the whole family
- your children won't get our undivided attention
Daycare Licensing Requirements
Now that you have a better idea of what type of daycare you're opening, you need to look at your state requirements. Every state has its own set of licensing requirements to open a daycare. Some states don't require you to have a license if you watch minimal children, while others require a license with one child.
You must know your state's requirements before you start opening a daycare. At childcare.gov you can click on what state you live in, then click the box titled Understanding and Finding Childcare Resources, and then click Childcare Licensing. This will guide you with a step-by-step guide on how to open a daycare.
If you're in Kansas reach out I can help guide you on what steps to take!
How Much Does It Cost To Open A Daycare
If you're opening a center, that is going to cost thousands. Commercial buildings are expensive, and state guideline requirements come with hefty price tags. Then, you need to factor in employee wages, training, and equipment.
Opening a daycare in your home will cost much less than opening a center. You already have the building and the majority of the supplies! Most likely, you're the only employee.
Before opening a daycare, you need to create a budget. You don't want to start your business in debt or in a negative hole that you can't dig yourself out of.
Listed below are a few items to think about when creating your budget. These are not exact numbers or an exhaustive list.
- Licensing & Legal Fees ~
- Licensing applications~ $50-200 (depending on state)
- Background & fingerprint checks~ $20-100 per person
- CPR & FA certifications~ $30-100
- LLC registration~ $50-100 (depending on who you use)
2. Insurance
- Liability insurance~$300 + per year
- Homeowner's/Renters insurance~Check with your provider
3. Safety Equipment
- Fire extinguisher & smoke alarms~ $50-100 one-time purchase, however, annual maintenance
- Baby gates, outlet covers, cabinet locks~ $50-150
- Fencing (if required)~ $500 +
4. Furniture
- Cribs, pack-n-plays, or nap mats~ $20-150 each
- High chairs & booster seats~ $30-100 each
- Child-sized table & chairs~ $100-300 each
- Storage shelving~ $50-200 each
- Plates, bowls, cups & sippy cups~ $10-25 each
5. Learning & Play Materials
- Puzzles & books~ $5-25 each
- Blocks, dolls, cars, & play kitchen~ $10-150 each
- Outdoor play~ $50 plus
- Arts & craft supplies~ $10-100 each
6. Marketing & Enrollment system
- Daycare software~ $45-100 a month, depending on the software
- Website~ $25-100 (this is not necessary for home daycare)
- Business flyers~ $20-40
- Social media ads~ $30 + (not necessary for home daycare)
Start small, use what you have, and only buy what is necessary to keep start-up costs down in the beginning. You do not need to compare yourself to the Pinterest boards. Utilize the Facebook marketplace for used toys and furniture. Is there a daycare closing near you? Negotiate purchasing their items in bulk. Use free advertising; you can read more about that here.
Business Plan For Daycare
As with any business, you need to have a business plan! Especially if you intend on getting funded by a bank. If opening a licensed center, you will be required to have a business plan to gain funding.
The business plan should include:
- Executive summary
- Company description
- Products & services
- Market analysis
- Competitive analysis
- Marketing Plan
- Operational Plan
- Financial Plan
- Management & Organization
- Funding Request
A home daycare business plan doesn't need to be as fancy or in-depth if you do not intend on getting loans, which I do not recommend taking out loans! However, it's a great idea to have a budget and understand the risk factors of starting a home daycare.
In Home Childcare Rates
Your competitive analysis will guide you in finding the correct answer to this question. You will need to call other home daycare providers in your area and find out what they are charging. Ask what services they provide and their hours. How many kids do they have? Do they offer transportation? If so, is that an extra fee? Do they offer a curriculum, or is it play-based learning? How many miles are they from you? Keep track of all of this information in your free competitive analysis spreadsheet.
The answers to the questions above help you determine a gap in services near you. Are you willing to close that gap by offering those services or some of them? You don't want to overcharge yourself and not get families, but you also don't want to undercharge and not get the right families. I add more value to my program due to my experience and degrees, faith-based, and completing preschool activities, so I charge about $15 more per kid per week than my competitors and have great success!
I have found that most providers are friendly and want to see others succeed. They are willing to answer questions and give guidance! Hey, they may even refer you to families when they get calls and don't have openings, free advertisement!
Once you figure out what services you're going to offer and the rates you're charging, you need to put them in a parent policy handbook and contract. You want to be professional by treating your business like a business and protecting yourself. You can grab your editable tax spreadsheet and professional daycare contract, policies, and handbook bundle here!
Opening a daycare is an exciting and scary adventure. There is no failure, just lessons. When you learn a lesson, apply it so you continue to grow as the professional business owner that you are.
Related posts:
How To Start A Daycare At Home
Designing A Daycare? Check Out These Daycare Design Ideas
Daycare Advertising Ideas That Work
The Best Tips Guaranteed To Make You Understand Daycare Taxes Like A Pro
The Best Daycare Schedule Tips: Balancing Babies, Toddlers & Preschoolers