If you love children and want to become a small business owner, opening a day care can be a rewarding career path. This will give you the opportunity to make money while contributing to the positive development of young children (day care centers generally cater to kids aged 5 and younger). You'll also be helping grateful parents who need a hand caring for their children.

Note that there are specific requirements for starting a child care business depending on the state in which you live. Find out how to start a day care below.

Do You Need a Degree to Start a Daycare?

While there are no set educational requirements to start a day care, you can benefit from taking early childhood education classes if you want to open this type of business. This will not only provide you with practical skills needed to effectively manage kids but it can also make you more marketable as a child care provider. You can get a formal degree (like a bachelor's or master's degree) in early childhood education with either in-person or distance courses, which are both offered by universities and colleges.

While you don't need a formal degree to start a day care, you will need a license issued by the state. As part of the licensing requirement, your state will likely require that you fulfill some basic safety training, like first aid and CPR. You'll find more details on licensing requirements below.

What Goes Into Planning Your Day Care?

Starting a day care takes careful preparation. Writing out a business plan can help you get organized. This document includes essential details like a description of the services you will offer, the type of business structure you will set up (e.g., sole proprietorship, corporation, etc.), a market analysis, a marketing plan, and financial projections. The U.S. Small Business Administration (SBA) offers additional guidance for writing business plans.

Decide on a Type of Day Care

The first step in setting up a day care is determining what type of child care facility you will run. You can run an in-home day care from your house, a stand-alone day care facility at a commercial space you rent/lease/buy, or a franchised day care affiliated with a brand like Montessori. If you opt for a branded day care, you will have to work directly with the overseeing company to ensure your facilities, curriculum, and child care programs align with theirs.

You also have to consider what age range you want to cater to. Some child care centers serve all preschool-aged kids (up to approximately age 5). Others work specifically with infants, while others focus more on toddlers. This depends largely on your skills, resources, and preferences. Serving all preschool-aged kids allows you to reach a wider market.

Determine Your Pricing Model and Draw Up Contracts

The type of day care you set up may also impact pricing. If you run a day care out of your home, you will have lower overhead costs - and may opt to charge less. As of 2020, the average national cost of a day care center was $991 per month for infants and $771 per month for preschool-aged kids (up to about age 5).

Once you have a pricing model, you can figure out what methods of payment you will accept and how often families should pay (e.g., weekly versus monthly). You can then draw up contract templates for your day care. It's best to have a business attorney review these. In addition to the fee structure, contracts should include policies for parents, such as what vaccinations their children are required to have to attend your day care. Your state may provide guidelines on this point.

Figure Out Startup Costs and Funding

You also have to consider the number of children you can handle on your own (keeping in mind state regulations regarding staff-to-child ratio) and enrollment. Will you run your day care alone or hire help? If you hire staff, you need to vet them thoroughly. It's best to run a background check on anyone you hire to provide child care services.

In addition to employee wages, there are other startup costs to keep in mind, such as:

  • Space: Will you rent, lease, or buy a commercial space? If you plan to run the day care out of your home, will you need to renovate for safety reasons?
  • Safety: What tools do you need to keep kids safe (e.g., baby gates, child-proofing for cabinets and doors, a first-aid kit)?
  • Toys and educational tools (including those for outdoor use if you have an outdoor space you plan to use)
  • Meal prep and serving items, like kid-friendly cutlery, bottles, highchairs, etc.
  • Sanitation and cleaning items
  • A computer for managing your business
  • Licensing fees

If you need funding to cover these startup costs, you can use your business plan to approach potential lenders for business loans. You can secure funding from private sources, commercial banks, government agencies, or grant programs. Local and state government agencies may offer financial assistance and child care resources for small businesses like yours. There are also federal funds available for child care operators.

Opening Your Day Care

Once you have the basic infrastructure, staff, and equipment in place to start your day care, you can take the final steps in preparing for operations.

Get Needed Licenses and Business Insurance

You will have to obtain a license from your state to legally work as a day care provider. Check the U.S. Department of Health and Human Services (HHS) website for the contact information of your state's or territory's child development fund administrator for more information. You can also review the National Database of Child Care Licensing Regulations to see what's required in your state.

Depending on the state, licensure is based on various criteria. The government will want to make sure you are capable of safely caring for little ones.

The state or local government may send an agent to check details like:

  • Safety: Are the premises you intend to use as a day care safe and kid-friendly?
  • Nutrition: Do you have the capacity to provide healthy meals for kids?
  • Staffing: Will you have an appropriate staff-to-child ratio? Have you vetted staff?
  • Sanitation: What requirements will you have in terms of hygiene, such as for diaper changes? What immunizations do kids at your day care need to have?
  • Training: What qualifications do staff have? Some states may require all workers to have basic first aid and CPR training, for example.

This is just an overview of some basic criteria. Different states will have different guidelines. As part of the licensing process, you will likely also have to provide proof of certain insurances, such as professional liability insurance and commercial property insurance. This helps cover damages in case a child is injured on your day care's premises.

Establish Your Day Care as a Legal Entity

Establishing your day care as a formal entity offers numerous benefits. For example, a formal entity helps protect your personal assets in case of liability issues. Options for a day care might include a sole proprietorship, corporation, partnership, S corporation, or tax-exempt center. This last option would apply only if you are established as a federally funded, nonprofit center to provide child care.

When you register your business entity, you'll be asked to choose a formal business name. Consider this point carefully. Your business name should be unique and memorable and distinct from any competitors' names. You will use it on your marketing and branding materials, as well as on formal documentation like contracts.

Once your business is legally registered, you can use this documentation to open a business bank account. This is important for separating your family child care services income from your personal finances. It will streamline bookkeeping and tax filing down the line.

Start Marketing Your Day Care

With the formalities taken care of, you can move on to marketing. This is how you will attract your first customers and is an exciting step for any business owner. First, build a website. This is a great way to provide potential clients with the basic information they need about your day care, like pricing and the age range served. You can create your own platform using a tool like Squarespace or Wix or opt to hire an expert web and graphic designer via a work-for-hire platform like Upwork.

When you create your website, make sure to uphold a distinct brand. You should have a professional logo and a consistent color palette you use across all your branding and marketing materials, including your website, business cards, signage, brochures, and more. A consistent brand makes you recognizable and memorable to clients.

Your brand should also be upheld in any social media marketing you may do. Platforms like Facebook and Instagram can be a great way to connect with parents and their kids and start building a community around your day care. Just be sure to follow best practices when it comes to sharing photos from your own day care. For example, you should never post a picture of a child without the parents' express permission. It's a good idea to draft up a photo release agreement.

You may also opt to set up pages for your day care on Google My Business and Yelp. These platforms allow customers to provide reviews of your business. This can be a great way to get testimonials from parents for free. Such referrals are a handy word-of-mouth marketing tool.

Operating Your Day Care

Now, the fun part starts: You can open your doors and start welcoming kids to your day care. You also have to take care of some less exciting elements of business operations, however. Running a day care requires that you stay on top of paperwork like billing and tracking payments from parents. You should also keep receipts for any expenses you incur as part of your operations, such as food, toys, and cleaning supplies you may purchase. These might be tax write-offs.

While the administrative part of running a day care isn't as fun as getting to interact with the kids, it's vital to ensuring you get paid and have a steady cash flow. Skynova can help make the job easier with handy business templates and accounting software. This will allow you to organize all of your financial data in one place, streamlining the process and simplifying tedious tasks like bookkeeping and recording payments.

Start Your Own Child Care Center With Skynova

If you love kids and have a knack for child care, a day care can be a wonderful business opportunity. However, you can't just open your doors and commence operations. As the above guide makes clear, it takes careful planning and preparation to start a day care. The effort will be well worth it once you've established a business that you truly enjoy.

Trust Skynova to help you with the administrative side of starting and managing your new business and transforming it into a successful day care. With comprehensive accounting software and business templates, we minimize financial stress. This gives you more time to focus on making your day care business a success. See how our other software products can help you as a day care owner.