home day care business plan

Little Sprouts Learning

Home Daycare Business Plan

This page may contain affiliate links. Learn More.

Do you love children? Do you want to do something that really matters? Maybe home daycare for you. Check out this home daycare business plan and see if it’s financially viable. If you want to run a home daycare , start there.

Working from home can be awesome. Being able to stay home with your own children is a blessing too. Being your own boss and setting your own hours and pay are great too. If you love that idea and you are a kind and patient person with lots of empathy for others, home daycare might be a great plan for your life.

For more about how to start a home daycare click here.

For a downloadable printable home daycare business plan worksheet , click here.

Home daycare is going to be growing by leaps and bounds after the year we’ve gone through so far. There is going to be a huge need for daycare since many small businesses folded this year. Home daycare is a special type of business that has fairly low overhead and is customizable to put your own personal spin on what you do.

I don’t agree with most people’s ideas of how to teach kids. I have my own brand of teaching. I march to the beat of my own drum. I’m very passionate about why I choose to teach my kids the way I do and I want to be able to chart my own waters. This isn’t possible with working for someone else.

Giving my kids the very best of me is the number one reason why I love working for myself. I get to study, learn, and do my very best for my families.

Home daycare is fun! There is a lot of hard work, little respect, and lots of messes. But it’s also different every day. You never get bored because you don’t know what you’re going to get. You get to set the tone of your environment. It’s a great place to be.

The first step in starting a home daycare is to find out about how to get licensed of what the rules are for your area. Click on the highlighted text to see more about whether a license is required. Once you determine that, it’s time to do some other research to find out if home daycare is a viable income for your family.

A big part of the cost of providing care will have to do with the regulations you have to follow. Some licenses cost. Some are free. Some states require a substantial expense in getting your home up to code. Some have very few requirements.

Some things you may have to change is fencing, hiring staff, meeting fire regulations, getting medical exams, and acquiring more education, training, or certificates.

Also, consider local zoning laws. Do you rent? Is your landlord okay with a home daycare in their property? Do you own? Is there a homeowner’s association? Do they allow businesses in the neighborhood? It’s important to consider your neighbors for sure.

Daycare business plan

Now that you know if you can open, you need to consider what you can make. Look at existing facilities, homes, and centers in your area. What do they charge? What do they offer? What do you want to offer? Do you plan to have a specialization that you can charge more for?

How many children will you be allowed to keep and of what ages? In Oklahoma, we can keep 7 kids over the age of 2. We can keep 6 kids if 3 are under 2. We can keep 5 if they are all under 2. So, a big determination in how many kids you can keep is what age of children need care in your area and what ages you will enjoy caring for. I LOVE babies, but I don’t love keeping them 10 hours a day. I like to run and play and do activities. I don’t want to hold an infant all day. So, I don’t keep them. For 20 years, I kept all ages from birth to 12, but over the years, I scaled back.

As I got older, it was more difficult to do everything for everyone, so I changed some of my home daycare rules to suit me better at the age I am now. Believe me, home daycare is far easier when you are 24 than when you are 49. I promise!

Now think of your location. Is it a good area that people will be happy to take their kids to? Or will you have a more difficult time getting clients in that area because of some stigma? In my town, there is an east and west side. For some reason, people think the west side is bad. There are good and bad areas on both sides, but home daycares on the west side always struggle. It’s a stigma, not a real problem. But it does affect business.

When doing your research, find out if there are some gaps in care that many people need. Here there is ALWAYS a big need for very young infant care. None of our centers in town take kids under 10 months. And there are always lots of babies being born. If you wanted to open an infant only facility, it would do well.

You could also specialize in early morning or late-night care. What about weekends? Lots of people here work shift work and they need good care at night. Find out who provides what and what people need. You can look on Facebook and find out what people are asking for. You can ask in a community group or a mom group. You can ask the principle and the electuary school what they have heard.

Is afterschool care with transport from the school a huge need? That could be your niche. Think about providing care during all the school breaks but most of the year only doing it for an hour or two after school? There’s always a great need for that. If you like older kids and like helping them with homework, you could be a godsend to many families.

In our state, we have resource and referral agencies that can provide this information to you all in one place. You can ask if you have anything like that when you contact your licensing agency for regulations in the beginning.

Now to make a specific business plan.

Home daycare salary

How many children will you care for? What will be the minimum and maximum age you’ll take? Will you charge a different price for different ages? What time will you be open? Will you provide all meals for children? Will you provide diapers and wipes? Will you need to hire staff to help you? What about an accountant or bookkeeper? Housekeeper? Lawn service? Think about all the expenses you may have because you’ll be busy working with kids so many hours a day.

Next, you need a name and a philosophy. Potential parents will want to know your ideals and what you stand for. What are your beliefs about providing care? Will you be play-based? Montessori? Nature-based? Have a strict school readiness goal?

You’ll also need policies and a contract . This is a super important step in your business plan. You may be tempted to skip it, but don’t. You will regret it.

Next, you’ll need a budget . You can use this printable business plan to record all the information you’ve collected and figure out what your budget might be. You’ll have to consider start-up expenses and must-have items to work. And you’ll also have to consider the price of every day supplies such as food, replacement toys, repairs, paper products, and so on.

There are other expenses or charges you may not think about such as are listed below.

Charges for families:

• Registration fees
• Waitlist fees
• Supply fees
• Curriculum fees

Expenses for you:

• Construction costs
• Software costs
• Training costs
• Bank charges

Then you’ll have to figure out the income you’ll be making. What will you charge per child and how many children? Figure up your potential earnings and add it to the printable business plan to come up with your home daycare salary.

Check out what home daycare essentials you really need here.  

Home daycare insurance

Don’t forget about home daycare insurance. Obviously, you’ll have to have homeowner’s insurance and auto insurance for your vehicles, but did you know that neither of those covers your business?

Many insurance companies won’t offer it, so you’ll have to look around. If you can’t find any, ask around to other home daycare providers and see if any of them have a suggestion.

Lastly, before you can open, you’ll have to find a way to market your home daycare. Check out these advertising ideas to get you started.

Home daycare website

Don’t forget if you want to make a daycare website to advertise and share information with your clients about what’s going on at daycare, you’ll need to figure in the cost of that as well. You can get wonderful website design help and custom made forms from daycare time solutions here. 

Get your home daycare business plan worksheet here.

Get your home daycare menu planning guide here.

Get your home daycare licensing checklist here.

For a planner made JUST for home daycare providers , this jewel will help you get all of your business organized-AND, it’s gorgeous! There are tons of great provider helps on this site. I wish resources like these ladies have were available when I started. There was no help for home daycare providers back then. But don’t forget to always take care of yourself so you can take care of others!

Similar Posts

Advice for Daycare Providers During Times of Crisis

If you have a home daycare, you know we are on the front lines every day. Firemen and police officers are heralded as heroes, but you never hear a word about people like us who are giving our all during times when everyone else is running the other way. But what if we have to close our daycare because of crisis?

Cheap Lunch Ideas for Daycare

Feeding a daycare full of kids requires not only affordable ingredients but also nutritional balance, simplicity, and of course, flavors that will appeal to young palates. When planning daycare menus, you need plenty of cheap lunch ideas for daycare.

How to Get a Home Daycare License

The types of license, certification, or permit you will need to open your own home daycare will depend on where you are located.

9 Reasons to Choose a Career in Home Daycare

Every child deserves a great place to be so I have taught kids for over 20 years. There are some GREAT reasons to choose a career in home daycare.

The New CACFP Meal Requirements for Childcare Made Simple

Are you overwhelmed about the new CACFP Meal requirements for childcare that take effect October of 2017? I have broken them down into easy to follow steps.

How to Cut Down Food Waste with Kids

Don’t you hate cooking a meal and feeling like you are throwing too much of it away? Cut down food waste with a few simple changes.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed .

A great resource. Thank you so much for sharing.

Thank you for checking it out!

The Daycare Business Plan Blueprint (Examples + Template)

April 14, 2022

Adam Hoeksema

Starting a daycare business can be a daunting task. There are so many things to think about and plan for. You need to find the perfect location, get the right licenses and permits, hire qualified staff, and, most importantly, create a daycare business plan. 

Creating a daycare business plan is one of the most important steps in starting your business. A well-thought-out business plan will help you get funding, attract investors, and operate your business effectively. 

The bad news is that there is a lot of advice out there on writing a business plan. With so much information and tons of daycare business plan examples to choose from, it can be overwhelming to know where to start. 

The good news is, we've got you covered. In this article, we'll give you a comprehensive guide on how to write a daycare business plan. We will also provide some examples and a free daycare business plan template to get you started. 

But First...Is a Daycare a Good Business to Start? 

Before we talk about how to create a daycare business plan, let's first answer the question: is starting a daycare a good business to get into? 

The answer is a resounding yes! The daycare industry is growing rapidly. It is one of the few businesses that are not only recession-proof but also thrives in uncertain economic times. 

According to the National Association of Child Care Resource & Referral Agencies (NACCRRA), the demand for child care services has increased by 26% over the last decade. This demand is only expected to grow in the coming years. 

When it comes to profitability, the daycare industry is very attractive. According to IBISWorld , the average profit margin for a daycare business is around 15%. That's higher than the average for most other industries! 

If you're thinking about starting a daycare business, know that you are getting into a very profitable and in-demand industry. Now let's talk about how to write a daycare business plan that will help you start and grow your business successfully.

How to Create a Daycare Business Plan 

A daycare business plan is as simple as a word document with the following sections:

• Business Description
• Market Analysis

Business Model

• Location and Facility
• Marketing Plan
• Financial Plan

Executive Summary

This article will provide context of what to include in each section of your daycare business plan. As you work on writing your business plan, you will want to grab our daycare financial projection template as well in order to complete the financial plan section.

Your daycare business plan should be an elevator pitch in itself. It should be attractive to potential partners and investors. Basically, it should give them a clear idea of your business, where it is located, what services you offer, who your target market is, and how you plan to make money. 

Creating a daycare business plan doesn't have to be complicated. In fact, the cheapest and easiest approach is to simply start with a blank word document and work through each of the above sections, it can be pretty easy. Here is a step-by-step guide on how to create a daycare business plan: 

Create a Compelling Business Description

Your daycare business's unique selling point (USP) should be the first thing you include in your business plan. What is it that makes your daycare center different from all the others? 

This description should be the foundation of your marketing efforts as well.

There are a few questions you should answer in your company description. They include:

What's your Curriculum Based On?

Potential investors, partners, and even customers will be interested in knowing what your curriculum is based on. This will help them understand the environment children will be in a while under your care. 

When describing your curriculum, make sure to include:

• What age ranges do you cater for?
• The type of care you offer (full-time, part-time, drop-in) 
• Your educational philosophy 
• The activities and programs you offer 

For example, if your daycare is unique by offering a Montessori curriculum, you will want to highlight that.  In fact, you can learn more about how to start a Montessori program here . 

How Big is Your Facility? 

The size of your facility will say a lot about the type of operation you're running. Are you a small, home-based daycare or a large center with multiple classrooms? 

This section of your business plan may include: 

• A floor plan of your facility 
• The capacity of your facility 
• The number of employees you have 
• Type of equipment and furniture you have 

Who Is Your Target Market? 

You can't market to everyone, so you must identify your target market. This will help you focus your marketing efforts and ensure that you're reaching the right people. 

Below is a daycare business plan example that shows how your business description should be:

“ABC Daycare is a small, home-based daycare located in San Francisco, CA. We cater to children aged 0-12 years old and offer full-time, part-time, and drop-in care. 

Our curriculum is based on the Reggio Emilia approach, emphasizing hands-on learning and collaboration. Activities and programs include arts and crafts, music, and outdoor play. 

Our facility can accommodate up to 12 children at a time. We have a staff of four employees who are all CPR and First Aid certified. 

Our target market is working parents in the city who need quality child care but can't afford the rates of larger daycare centers.  We've created an affordable subscription-based pricing model for our target market to fulfill the demand. We generate revenue through monthly subscriptions and have low operating costs due to our small size. 

Our suppliers are local businesses that provide us with food, toys, and other supplies.” 

Do a Thorough Market Analysis

After writing a compelling description of your business, you need to do a thorough marketing analysis. This analysis will help you determine your target market, what type of advertising and promotion will work best, and how to price your services. 

You should also research the competition and see what they are doing right and wrong. This information will be invaluable as you create your daycare business plan.

Keep these things in mind when doing a market analysis:

The Size of Your Market

This is determined by the number of potential customers in your area who need or want your services. 

For example, if you live in a small town with only a few thousand people, there may not be enough demand to support a large daycare facility. 

On the other hand, if you live in a city with hundreds of thousands of people, there may be room for multiple daycare facilities. 

Your target market is the segment of the population that is most likely to use your services. This includes factors like age, income, education, and location. 

After you've identified your target market, you need to show how you plan on fulfilling the demand. This is where your business model comes in. 

Your business model is a detailed description of how your daycare will operate daily. It should include: 

• How do you plan on acquiring customers? 
• What are your pricing strategies? 
• How will you generate revenue? 
• What are your operating costs? 
• Who are your suppliers? 

Your business model should be detailed and easy to understand. It should also be realistic and achievable. 

Here is a daycare business plan example of a business model for a small daycare center: 

“The daycare will be open Monday through Friday from six in the morning to six at night. We will offer care for children ages six weeks to twelve years old. 

Our rates will be $50 per week for one child and $40 per week for each additional child from the same family. We will offer a discount of $20 per week for families who enroll their children for an entire year. 

We will generate revenue by charging weekly rates for our services. Our operating costs will include rent, utilities, supplies, and salaries for our employees. Also, we will acquire customers through online advertising and word-of-mouth.” 

As you can see, a business model is a detailed description of how your business will operate. It's essential to have one in place before promoting and selling your services. 

One thing you should not forget to include in your daycare business plan is the location of your business and your rental agreement. If you are renting a space, including the terms of your agreement and how long you have the space. If you are purchasing a property, include information on the property, such as square footage and any special features that will help your business stand out. 

This daycare business plan example shows you how to include this vital information: 

“The daycare will be located at 123 Main Street in a commercial space currently leased by the owner. The lease agreement is for three years with an option to renew for an additional three years. The monthly rent is $2000, and the security deposit is $3000. 

The daycare will have exclusive use of the main floor, including a large open play area, a small kitchen, two bathrooms, and four classrooms. The daycare will also have access to the outdoor playground.

80% of our space will be used for childcare, with the other 20% used for our administrative offices and staff lounge. 

We have chosen this location because it is close to several residential neighborhoods and has easy access to public transportation. The space is also large enough to accommodate our future growth.” 

There are many daycare business plan templates you can use to help you get started. This is a basic outline of what should be included.

Daycare Marketing Plan

Most daycare business plan templates will include a section for your marketing plan. Most people overlook the marketing aspect of their business, but it is one of the most important pieces of your puzzle. 

In your business plan, you need to outline your target market, your marketing strategies, and how you plan on executing those strategies. 

You also need to set aside a budget for your marketing efforts. Many people make the mistake of thinking that they don't need to spend money on marketing, but that couldn't be further from the truth. 

The following daycare business plan example shows you how you should describe your marketing efforts:

"Our target market is working for families with children between six weeks and five years old. We will reach our target market through online and offline marketing efforts. 

Some of the offline marketing strategies we will use include print advertising, flyers, and word-of-mouth referrals. We will use a mix of SEO, content marketing, and social media for online marketing. 

We have set aside a budget of $500 per month for our marketing efforts."

As you can see from the example above, your marketing plan should be clear, concise, and to the point. Don't forget to include a budget!

Daycare Financial Plan

Your business plan should include a financial plan section. This is where you'll lay out how much money you need to start or grow your business. Be specific and include dollar amounts. If you're seeking a loan, including information on how much you're requesting and how you'll use the funds.

You should also include a detailed budget in your business plan. Your budget should include all of your projected income and expenses for at least the first year of operation. Creating a budget will help you get a clear picture of what it will cost to start and operate your business.

This section should include projected costs for:

• Rent or mortgage payments
• Advertising and marketing
• Operating expenses such as utilities, supplies, and more. 

Startup costs are another vital item to include in your business plan. This is the money you need to purchase equipment, furniture, or any other items to get your business up and running.

If you plan to secure a loan, your lender will want to see a detailed business plan with information on how you plan to use the loan funds. Ensure you include this information in your business plan to increase your chances of securing funding.

If you're seeking funding from investors, you'll need to include information on how they will be compensated. This is typically done through equity, a percentage ownership stake in your business. 

For example, if you seek $100,000 in funding and offer a 20% equity stake, the investor will own 20% of your business. 

Make sure you use a daycare business plan template that includes a section on funding to ensure you include all the necessary information. If you’re planning to get a loan or seek investment, you’re going to need full financial projections. Our daycare financial model will provide up to 5 years of projected income statements, cash flow and balance sheet forecasts.

Next I want to answer some key financial questions for you as you consider how to forecast your daycare financials. I am going to hit on:

• Daycare Startup Costs
• Daycare Revenue 
• Daycare Facility Operating Expenses
• Daycare Profitability

Let’s dive into some key questions. 

How much does it cost to start a daycare? 

It costs between $10,000 and $50,000 to start an in-home daycare business according to Bizfluent . 

It costs between $59,000 and $3 million dollars to start a daycare facility according to Bizfluent . 

So obviously this is a huge range in startup costs.  The main thing that will determine your startup costs is your daycare facility.  Depending on how large your daycare is, whether you are buying, building, or leasing the space, and how much renovation needs to be done, your startup costs can vary drastically.  

Some tips to help you estimate a cost of a daycare facility:

• A daycare facility should have 35 square feet of open floor space indoors per child. 
• So if you wanted a facility that could care for 100 children you would need 3,500 square feet of indoor space for children, plus additional space for offices, kitchen, bathrooms, etc.  Let’s assume that you would need at least 5,000 square feet of space for a daycare facility that served 100 children.  
• A daycare center would cost at least $295 per square foot to construct in the U.S. based on data from Levelset . 
• Constructing a new 5,000 square foot daycare center would likely cost at least $1,475,000 based on $295 per square foot.  
• Now you might not be constructing new, rather you might rent an existing facility which could require renovations.  You will need to get a specific quote for the specific renovations that you need for your space. 

How much revenue can a daycare business make?

A daycare facility can generate $17,680 in revenue per year per child according to Zippia .  

A daycare business with 100 children can generate over $1.75 million per year in annual revenue based on our average revenue per child of $17,680. 

How much does daycare cost?

The average cost of daycare is $17,680 per year, per child in the U.S. according to Zippia . 

This means that the average monthly cost of daycare in the U.S. is roughly $1,475.

What is the typical child to staff ratio for a daycare? 

The typical child to staff ratios for a daycare are:

• 1 adult staff for every 4 infants (age 0 to 12 months)
• 1 adult staff for every 6 toddlers (age 1 to 3 years)
• 1 adult staff for every 10 pre schoolers (age 3 to 5 years)
• 1 adult staff for every 12 school aged children (5+ years old)

Source - Childcare.gov

These ratios will help you estimate how many staff members you will need.  Our financial projection template makes this easy.  Just enter in your ratios and the number of children you expect to have in each age group and the model will automatically calculate the number of staff required to maintain your ratios.  See the input daycare staffing table below:

What are the typical operating costs for a daycare? 

Your largest operating expense for a daycare facility is likely to be your rent. 

It should cost between $20 and $30 per square foot to rent a daycare center space based on available spaces on Loopnet . 

Other operating costs for a daycare center include:

You can see how you can enter in your operating costs into our financial model below:

How much profit can a daycare make? 

The average daycare profit margin is 6.5% according to Daycare Business Boss . 

Once you complete your projections you will want to take a look at our At a Glance tab to make sure that your projected profit margins aren’t way out of line with the industry norms.  You can find projected profit margins for your daycare below:

This is an important aspect that you may not find in most daycare business plan templates, but it's still essential. An appendix includes any additional information to help you understand your business plan. This might include things like your:

• Business licenses 
• Insurance policy 
• Lease agreement 
• Sample contracts 
• Staff bios 

This section adds credibility to your daycare business plan and shows that you've done your homework. Including all of the necessary details in your appendix will give investors peace of mind and show that you're serious about starting a daycare center.

An executive summary is a brief overview of your business plan and is often considered the most important section. It should be two pages long, with a clear description of your business, your goals, and why you will achieve them.

There are several key elements to include in your executive summary:

• Business Name: This is the name you have chosen for your business.
• Location: Include the city, state, and country where your business will be located.
• Business description: Describe what type of business you will be operating.
• Target market : This is the group of people you will be targeting as customers.
• Competition: Who are your competitors, and how will you compete with them?
• Product or service : What product or service will you be offering?
• Sales and marketing: How will you generate sales?
• Financials: Include a five-year income statement, balance sheet, and cash flow statement.
• Management team: Introduce your management team and their experience.
• Exit strategy : This is the plan for how you will eventually sell or otherwise exit the business in case you decide to retire or move on to other projects.

The executive summary is the most crucial section of your business plan because it gives investors and lenders a quick overview of your company and its prospects. Be sure to include all of the key elements listed above, and keep it under two pages in length.

What Are The Benefits of Creating a Daycare Business Plan?

Research shows that a business plan helps business owners make better decisions, turn abstract goals into tangible objectives, and track progress over time. But what does this mean for those who want to open a daycare? 

Creating a business plan forces you to think through every step of starting your company. It's a valuable exercise that can save you time and money in the long run. Even if you don't end up following your business plan to a tee, the process of writing it will help you better understand your business and what needs to be done to make it successful. 

There are many benefits to creating a daycare business plan, including: 

Gives You a Roadmap to Follow

As with any journey, it's always helpful to have a map. A business plan is that map for your daycare business. It will give you a clear idea of where you want to go and how you can get there. 

Helps You Secure Funding

A business plan is essential if you're looking for investors or loans. It will show potential lenders and investors that you've put thought into your business and have a solid strategy for making it successful. 

Ensures Your Daycare Business is Feasible

When you're starting a business, it's easy to get caught up in the excitement and overlook potential problems. A business plan forces you to take a step back and assess whether your business is truly viable. It also helps you identify any areas where additional research is needed. 

Final Thoughts

A daycare business plan is a valuable tool to help you make your business successful. 

It is worth noting that your business plan is not a one-time exercise but should be updated regularly as your business grows and changes. This document is meant to be a living document that evolves as your business does. 

If you're unsure where to start, there are plenty of resources available to help you, including daycare business plan examples online, books, and daycare business plan templates. 

You can also use our daycare projection template to get your financial plan ironed out and ready for your business plan.

The most important thing is just to get started. The sooner you create your business plan, the better prepared you will be for success.

You can get the Daycare Facility financial projection template here!

The template is simple to use and will save you loads of time while still producing professional looking daycare projections. ProjectionHub has helped more than 50,000 businesses create financial projections so you can be confident that you can do it too.

The daycare business projection template includes:

5 Year Daycare Facility Pro Forma Financial Statements

CPA Developed & Completely Customizable

Free Support & Projections Review

Compatible with Google Sheets

Free expert review of your completed projections

The template is easy to use and you do not need to be an excel wizard to fill it out. Editable cells are highlighted in blue, a video guide is included, and our team is available to answer any questions you have.

You can see the complete walkthrough and demonstration of the daycare business forecast template here:

Get the template today for just $79

If you have any questions before purchasing, please feel free to begin a live chat or email us at [email protected]

100% money back guarantee in accordance with our terms and conditions

‍ Photo by Pixabay

About the Author

Adam is the Co-founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors, lenders and internal business planning. Since 2012, over 40,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections.

Other Stories to Check out

How to know if your financial projections are realistic.

It is important for financial projections for a small business or startup to be realistic or else an investor or lender may not take them seriously. More importantly, the founder may make a financial mistake without a reliable plan.

How to Finance a Small Business Acquisition

In this article we are going to walk through how to finance a small business acquisition and answer some key questions related to financing options.

How to Acquire a Business in 11 Steps

Many people don't realize that acquiring a business can be a great way to become a business owner if they prefer not to start one from scratch. But the acquisition process can be a little intimidating so here is a guide helping you through it!

Have some questions? Let us know and we'll be in touch.

• Credit cards
• View all credit cards
• Banking guide
• Loans guide
• Insurance guide
• Personal finance
• View all personal finance
• Small business
• Small business guide
• View all taxes

You’re our first priority. Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners .

How to Start a Day Care: A Step-by-Step Guide

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

If you’re a teacher, former teacher, or simply have years of experience caring for children — and an entrepreneurial streak — you might have considered starting your own day care center, either from home or in a dedicated facility. And at an expected job growth of 7% over the next decade, working in child care is a stable career choice. So, if you’re seriously wondering how to start a day care center, you’ve come to the right place.

As is the case starting a business in any industry, however, your passion for your craft alone — or, in this case, your students — isn’t quite enough to ensure that your day care business is copacetic, either financially or legally. You’ll need to do a good amount of due diligence when looking into how to start a day care business, paying special attention to licensing requirements, and ensuring that your facility and program aligns with your state’s health and safety codes.

If you’re a pro at educating, training, supporting and generally corralling large groups of small children, you should be pretty unperturbed by the work it takes to start a day care business. Here’s what you need to know.

How to start a day care business

Although every path toward starting a business looks different for every business owner, there are a few steps that every aspiring day care owner needs to think about when it comes to how to best start a day care.

1. Decide what kind of day care business you want to start

Before you can even get to writing a business plan for your day care business, you need to decide what kind you want to open. Look into whether you want to start a day care business at home, or whether you want a more commercial facility — there might be different permits required in your municipality depending on which you choose. You also need to decide what age groups you want to focus on.

Next up, you'll have to decide on a business entity, which will have huge effects on the way you're taxed and how you operate your day care business. Will you have partners or open your business on your own? Additionally, you'll want to consider whether you want a business entity that offers you some protection. Making your day care center a limited liability company might be a good move, since the business will take on liability should anything go wrong.

You might also decide to buy into a day care franchise opportunity. This option will significantly streamline the steps you need to take in opening your day care.

Once you narrow down these details about your business, you can move on to the next step in starting a day care business: writing a business plan.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

2. Write a day care business plan

This is a step you have to take when starting any business and it can be quite a bit of work, especially for anyone looking to get moving quickly on their business. When you start writing a business plan, start with an outline of all the things you want to include.

Your plan should include a summary, an overview of the company, a market analysis that includes an assessment of the need for a business like yours, a marketing and sales plan, and a financial plan along with financial projections. Don't worry, though, you can always add to it as your business grows.

One thing you should include, though, is market research. The last thing you want to do is go through all of these "how to start a day care business" steps, only to find that there isn't a market for one or that there are already too many day cares in that area to make it a viable business.

Your business plan should also include a budget. The costs associated with opening and running your day care center can never be accurately totaled, but nailing down a budget will give you some parameters to work within (and some peace of mind).

In your budget plan, don’t forget to factor in:

Your startup costs, including day care equipment, food, toys and educational tools, wages, insurance and licensing.

How much tuition you’ll charge.

Your predicted revenue over the next two to three years.

When you’ll break even.

Also know that day care centers can claim certain tax deductions, which can ease your annual financial burden.

You'll also want to include a marketing plan. If you’re seriously researching how to start a day care business, it’s likely that you’ve already been caring for children in your area for some time and have built up a network of local parents. That’s one valuable method of attracting customers (aka word of mouth) covered. Still, implementing even a basic marketing plan can help define and legitimize your business — and if you need to implement a waitlist as a result, that’s great too!

Your marketing efforts can be relatively simple and low-cost. You can start by creating a Facebook page for your day care center and building a business website, making sure to include your contact information and a little bit about your business. If possible, plan to include pictures of your facilities and testimonials from happy customers.

If you’re a fan of social media, it also can’t hurt to create an Instagram, LinkedIn and/or Twitter account to keep both current and prospective customers updated on your business. Just be sure that once you do, you receive permission from parents or guardians before posting pictures of their children, of course.

Analog marketing techniques would work well here, too. If possible, consider distributing flyers or brochures to nearby libraries, schools, places of worship or any other local gathering spots.

3. Obtain the necessary certification and licenses

You may not need a master’s degree in education to become a day care teacher, but each state does require some combination of licensing and certification when it comes to how to start a day care. Visit your state’s Division of Child Care Services (or its equivalent) to find out the training, experience and credentials you need to legally operate a day care facility.

In New York State, for instance, the head of the day care facility must have one of the following:

An associate degree in early childhood education or an equivalent.

A CDA credential (child development associate) and at least two years of experience caring for children.

A high school diploma and at least three years’ experience caring for children.

You'll probably find that there are some other requirements that usually come up when you're looking up how to start a day care business at home or in another facility. Your state may require that you and any staff you hire are CPR-certified, for one. Another point of safety to remember is that you should be trained in at least basic first aid for children. You and your staff might also need to be fingerprinted and undergo background checks before being cleared for work.

Even if your state doesn’t require that you obtain a license, you should consider doing so, as your licensing course will go over all the boxes you need to check to operate your day care in your state — including health and safety regulations, proper food preparation and the required child-to-adult ratio.

4. Find a (safe) day care facility

In certain states, in order to obtain the proper licenses or registration to start your day care business, you’ll first need to show that your day care facility meets your state’s health and safety requirements.

So whether you choose to open your day care facility in your own home, or buy or lease a new property, you’ll need to make sure your facility meets zoning, fire, and health and safety laws. When it comes to how to start a day care at home, you may need to make alterations to your house to comply with day care requirements in your state, so be sure to factor them into your budget.

5. Get insured

Another requirement for obtaining your license? Getting insured. In certain states, you’ll need to be licensed by the Department of Health and Human Services to run your day care center, but to do so, you’ll first need liability insurance.

The exception is home-based day care centers, which don’t need insurance to be licensed by the DHHS. Still, those opening day care centers at home should seriously consider obtaining small business insurance. You always run the risk of a lawsuit when you’re running your own business, but that risk increases when caring for other people’s children — so protect yourself whenever possible.

There are several types of insurance that cover day care businesses — general liability insurance, workers’ compensation, property insurance, abuse and molestation insurance and others — so contact an insurance broker to help you decide which coverage is best for your business.

6. Get a business checking account and credit card

Get a business credit card and a business checking account early on to help you keep your business expenses separate from your personal expenses when first starting a day care.

It’s crucial to separate your personal and business expenses for many reasons, not the least of which is to reduce your (or your accountant’s) burden come tax season. It’s simply the most professional way to conduct your business, too. Set yourself up for success now by signing up for a business credit card and opening a business bank account, and be diligent about using both solely for your day care’s finances.

Having a business credit card can help you increase your business credit score, too. By paying the card off on time — or early if you can — you can boost your score, which will help you late on when you need a loan or other financing for your day care business.

7. Get financing

Most entrepreneurs bootstrap their businesses at the beginning, as it’s difficult for brand-new businesses with limited credit history to secure a business loan, either from a bank or from an alternative lender.

Your financing options aren’t limited to your own purse strings (or your friends’ and family’s). Here are a few other ways to get funding and loans for a child care business:

SBA microloan

Although most SBA loans are available only to businesses with a few years of experience under their belts, SBA microloans are actually designed to help startups get off the ground. They’re especially accessible to women, veterans, minorities and business owners in low-income areas. And unlike most other SBA loan programs, SBA microloans are disbursed by nonprofit lenders, rather than banks.

As the name suggests, SBA microloans tend to be on the smaller side, with amounts capped at $50,000, but they may be as low as $500. (For more context, the average microloan amount was $14,000 in 2017.) And because microloans are designed for new businesses, business owners with average or even challenged credit may still be accepted, as long as other aspects of their SBA loan applications are in good shape.

SBA community advantage

These loans from the SBA have all of the advantages that come with SBA microloans but the community advantage loans are specifically for businesses that are serving traditionally underserved communities. These loans are generally for a higher dollar amount than the microloans and can go a bit further for your business.

Government grants

You might be able to obtain financial assistance to start and run your day care through state or federal funding programs for early childhood education providers. For instance, you can contact your state’s Child Care and Development Fund Plan to look into startup funds, or your state’s school meal contacts to seek funding for your day care center’s meals.

Take a look at the Administration for Children and Families Office of Child Care’s list for a more comprehensive overview of federal and state financing programs for child care centers .

Business credit card

It’s important to use a business credit card to keep your day care’s expenses separate from your own. Of course, using a credit card is also the most convenient way to pay for your daily expenses. And since credit limits for business credit cards tend to exceed those of consumer cards, you can spend more liberally without worrying about maxing out your card.

Another bonus? Using your business card responsibly (by which we mostly mean paying off your balance in full and on time, every month) can help you build business credit. And with a healthy business credit score, you’re in a better position to secure business loans with great terms down the line.

If you opt for a card with a long 0% intro APR period, you can essentially use that introductory grace period as an interest-free loan. Look into the American Express Blue Business Plus card, which, at 12 months, carries one of the longest interest-free introductory periods in a business credit card right now.

After your 12 interest-free months are up, though, a variable APR kicks in at a rate depending on your creditworthiness and the market. Check the issuer's terms and conditions for the latest APR information.

8. Hire staff

You may be planning on running your day care facility solo, but depending on your state and the number of children you’re looking after, that might not be an option — every state sets a required ratio of staff to children to ensure that every child receives adequate care. They also dictate the maximum number of children permitted in a group.

Adult-to-child ratios and class sizes depend on the age of the children, but they might also depend on the size of the day care facility, or face further restrictions based on municipality. For a day care center in New York state, for example, the state requires one adult for six children under school age. However, in New York City, there must be two teachers or one teacher and one assistant to every six children aged 2 to 3, with a maximum of 12 students allowed in a single group. Your own children may or may not be included in that count, too.

So, while hiring really depends upon your state’s requirements, it makes sense to leave room for hiring staff in your business budget. That way, you’ll be prepared for growth, without worrying about your operation shutting down because you’re not properly prepared for it. (Just keep in mind that any staff you hire needs to be appropriately licensed or trained for it, and potentially undergo a background check.)

Start Your Dream Business

9. Write your day care contract and policies

To further legally protect your business, it’s crucial that you draw up a contract, write out your day care policies, and require that potential clients (or, more likely, the parents of potential clients) review and sign both documents before accepting their patronage.

If you're just starting to read up on how to start a day care business, you might not be clear on the distinction between these two documents. To clarify, your contract is the document stating that you’ll provide child care, be compensated for providing care according to the payment terms you specify, and have the right to terminate providing care.

Your policies, on the other hand, provide parents with important logistical information regarding how you’ll run your day care center. There, you can outline protocol regarding vacation, illness, inclement weather, drop-off and pickup times, curriculum, field trips, and anything else you believe is important for your clients to understand and agree to about your day care center.

On a similar note...

How to Write a Business Plan for a Daycare: Complete Guide

• January 30, 2023

👇 Check all our resources on daycares 👇

Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) for your daycare, you will need to prepare a solid business plan.

In this article we go through, step-by-step, all the different sections you need in your daycare business plan. Use this template to create a complete, clear and solid business plan that get you funded.

1. Executive Summary

The executive summary of a business plan gives a sneak peek of the information about your business plan to lenders and/or investors.

If the information you provide here is not concise, informative, and scannable, potential lenders and investors will lose interest.

Though the executive summary is the first and the most important section, it should normally be the last section you write because it’s the summary of the different sections included in your business plan.

Why do you need a business plan for your daycare?

The purpose of a business plan is to secure funding through one of the following channels:

• Obtain bank financing or secure a loan from other lenders (such as a SBA loan )
• Obtain private investments from investment funds, angel investors, etc.
• Obtain a public or private grant

How to write an executive summary for your daycare?

The executive summary of your daycare business plan should include the following important information:

Business Overview

Introduce your company (its name, its mission) and the history behind it: why did you decide to create a daycare in your area today? Why you? 

Also, that’s where you should expand on the business: where will the daycare facility be located? How old are the children you target? How many children will you be able to take care of? What are the amenities (classrooms, playground, cafeteria, etc.)? 

Market Overview

Provide here a deep market analysis that backs your decision to open a daycare business in your area today. Why would your business succeed given current market conditions? 

For example, the market analysis should include information like: what are your competitors in the area? What are their characteristics, strengths and weaknesses ? Who are your target audience (parents and children)? Is that in line with the demographics in your area?

Management & People

Who is the management team? What is your/their experience in the daycare industry?

Financial plan

What is your expected revenue and profitability for the next 5 years? When do you expect to break-even? Simply include here a chart of your key financials (e.g. Revenue, Gross Profit, Net profit )

Funding Ask

What loan/investment/grant are you seeking? How much do you need? How do you intend to spend the money?

Daycare Financial Model

Download an expert-built 5-year Excel financial model for your business plan

2. Daycare Business Overview

The business overview section of the daycare business plan summarizes the basics of your facility, including the background information, business model, services, target audience, and legal structure. 

a) History of the Project

When you launch a daycare business, you want it to grow and even become the best in the region if possible. One small element that can catalyze your company’s growth is its history. You don’t have to exaggerate the information here, but try to include useful details that will make your daycare business stand out. 

For a business as sensitive as daycare, trust overrides anything else. So, make sure to include in your business plan your experience and passion for children to demonstrate to investors you are qualified and the right person to successfully run a new daycare facility.

Also, flesh out the history behind the project: why are you starting a daycare now? For example, you may have noticed a lack of child care services for toddlers and infants in the city.

b) Business Model

Next up is the business model. This is the revenue-generating plan that identifies how your business operates. A daycare business model should be succinct and address specific things about the business. 

For instance, is it a commercial daycare facility or a family daycare? Is it an independent facility or a partnership? And should you opt for a daycare franchise? 

Keep in mind that daycare facilities vary by the target age group. So, you can opt for a childcare center, a family daycare, a kindergarten/pre-school, or a nursery school.

c) Daycare Services

It takes a lot to raise a child. So, be clear on the services you want to offer in your newly founded daycare facility. The quality of services will make your business more attractive. But an even bigger factor will be the type of services you provide at the facility.

Indeed, a lot happens inside a daycare facility, from hands-on learning (classrooms, private tuition) to field trips, games and community events. 

d) Pricing Strategy

Age is a key factor when setting the prices of your daycare services. On average, parents across the US pay about $9,400 per year on child care per child. Of course, the actual figure will vary based on a number of factors, but this is a great starting point when getting into the industry. 

An accurate pricing strategy can help you outshine your biggest competitors. However, don’t forget that setting cheaper prices isn’t necessarily the best strategy, just in the same way overpriced services may turn off potential clients. 

e) Target Audience

Daycare centers are so named because they are about a child’s well-being. However, the final decision rests with the parents, who must buy into your idea and long-term vision for the facility. 

For this type of business, you have a definite target market . And all you have to do is ensure your facility is closer to a busy neighborhood with many children. Find out if the families truly need child care services, why they need these services and the children’s average age. 

Finally, make sure your services are aligned with your target audience. For example, you wouldn’t necessarily succeed with a daycare operating 9am – 4pm in an area where parents typically work long hours in the city and need time to commute back to their neighborhood to pick up their kids.

Same goes for pricing: if you offer high-quality expensive daycare services, make sure your daycare is either located close to offices or in an area where affluent parents work or live.

f) Legal Structure

Finally, your business overview section should specify what type of business structure you opt for. Is this a corporation or a partnership (LLC)? Who are the investors? How much equity percentage do they own? Is there a Board of Directors? If so, whom? Do they have experience in the industry?

3. Daycare Market Overview

In the market overview section of your business plan, you must cover 2 important areas:

• Market trends : how big is the daycare industry in your area? How fast is the market growing? What are the trends fuelling this growth (or decline)?
• Competition analysis : how many competitors are there? How do they compare vs. your business? How can you differentiate yourself from them?

a) Daycare Market Trends

How big is the daycare industry in the us.

It’s always helpful to base your business decisions on the latest trends in the US market. For instance, the US daycare market had a value of approximately $54.3 billion in 2019 . And it is projected to grow at an annual rate of 3.9% from 2020 through 2027. 

According to reports, the high number of parents occupying full-time and part-time jobs is a major driving force behind the increasing demand for daycare services. No matter how you look at it, these statistics make the daycare business even more lucrative, provided you get all the basics right through your business plan. 

How big is the daycare industry in your region?

After the US, assess the size of the daycare market in your city or area. Focus on the zone where you plan to offer daycare services.

Naturally, you might not be able to get the data for your specific city or region. Instead, you can estimate the size of your market, for more information on how to do it, read our article on how to estimate TAM, SAM and SOM for your startup . To give you an example, let’s assume you plan to operate in an area where there are already 10 competitors:

As we know the US daycare industry is worth $54 billion today, and there are about 230,000 child care centers , therefore the average annual turnover per child care center is around $235,000.

Now, we can safely assume that the daycare industry is worth $23 million in your area (10 centers).

How fast is the daycare industry growing in your region?

Growth is an important metric for assessing the status of the daycare industry in your region. 

Here if you don’t find information online or via your research, you can calculate growth using the total number of competitors in your area. 

For example, assuming there were 8 daycare competitors in the region in 2018, and 10 in 2022, the annual growth rate is 6% per year.

b) Daycare Competitor Analysis

At the very least, your competitor analysis should answer all the questions below:

• How many daycare businesses are the area where you plan to open yours?
• What type of daycare businesses are there: home-based vs. center-based home care, early care vs. early education & daycare, etc.
• What age range do they specialise in?
• What services do your competitors offer?
• What amenities do your competitors have (playground, classrooms, etc.)
• What’s their average price (daily rate / monthly rate)?
• What is the child / staff ratio of your competitors?

4. Sales & Marketing Strategy

For some existing daycare facilities, marketing isn’t the most important aspect of running the business. But you’ll probably have to implement a few marketing strategies at the beginning to attract the first families , especially if you’re starting a new daycare facility.

a) Daycare Market Channels

A daycare business doesn’t have diverse marketing channels like retail stores or other businesses. So, this may limit your options when it comes to new marketing channels. 

Apart from word of mouth, other marketing channels include;

• Social media
• Online listing (Google business, Facebook business page)
• Word-of-mouth

b) What are Your Unique Selling Points (USPs)? 

Daycare facilities offer pretty much the same services, and it’s not easy to stand out from the competition. However, a few factors can be useful when evaluating your opportunities in a competitive market, including:

• Target age group : You may cover a unique age group as opposed to your competitors
• Opening hours : you may offer longer opening hours to accommodate for different parents’ jobs and availabilities
• Price : Your services may be cheaper than your competitors
• Quality & amenities : Quality services and extra amenities (outdoor playground, etc.) will make your daycare facility more attractive vs. competitors
• Services : Your services may go beyond the standard hands-on learning and kid games 

5. Management & People

The 5th section of your daycare business plan should be about people. It should include 2 main elements:

• The management team and their experience / track record
• The organizational structure: what are the different teams and who reports to whom?

a) Management

Here you should list all the management roles in your company.

Of course, the amount of details you need to include here varies depending on the size of your company. For example, a small daycare business run by 1 or 2 persons doesn’t need the same level of detail vs. a large center with 50 children or more.

If you plan on running your business independently, you may write a short paragraph explaining who are the co-founders and/or senior managers (if there are any in addition to yourself). It’s important to highlight their experience in the industry and previous relevant professional experiences.

b) Organizational structure

No matter how many leadership roles there are, you should now explain how you intend to run the company from a management standpoint.

What are the different teams (management, childcare staff, cooking staff, human resources, finance, etc.)?

Note that you should include these details even if you haven’t hired anyone yet. It will show lenders and investors that you have a solid hiring and management plan to run the business successfully.

A great addition here is to add an organizational chart that list all the roles, from Directors to managers, key supervisory roles and employees. Make sure to highlight with reporting lines who manages/supervises whom.

6. Financial Plan

The financial plan is perhaps, with the executive summary, the most important section of any business plan.

Indeed, a solid financial plan tells lenders that your business is viable and can repay the loan you need from them. If you’re looking to raise equity from private investors, a solid financial plan will prove them your daycare is an attractive investment.

There should be 3 sections to your financial plan section:

• Your historical financials (only if you already operate the business and have financial accounts to show)
• The startup costs of your project (if you plan to start a new daycare facility, or add capacity to an existing daycare center, renovate your facilities, etc.)
• The 5-year financial projections

a) Historical Financials (optional)

In the scenario where you already have some historical financials (a few quarters or a few years), include them. A summary of your financial statements in the form of charts e.g. revenue, gross profit and net profit is enough, save the rest for the appendix.

If you don’t have any, don’t worry, most new businesses don’t have any historical financials and that’s ok. If so, jump to Startup Costs instead.

b) Startup Costs

Before we expand on 5-year financial projections in the following section, it’s always best practice to start with listing the startup costs of your project.

For a daycare, startup costs are all the expenses you incur before you open the space to your customers. These expenses typically include: renovation costs, equipment and furniture, etc.

The startup costs for opening a child care center depend on various factors such as the location and size of your daycare facilities, the capacity (the number of children you plan to have), the quality of the amenities, etc. 

We’ve identified that it costs anywhere between $130,000 to $490,000 to start a daycare business with 50 children . See below the cost estimates.

Note that these costs are for illustrative purposes and depend on several factors which might not fully apply to you. Let’s first start below with startup costs. 

c) Financial Projections

In addition to startup costs, you will now need to build a solid daycare financial model over 5 years.

Your financial projections should be built using a spreadsheet (e.g. Excel or Google Sheets) and presented in the form of tables and charts in your business plan.

As usual, keep it concise here and save details (for example detailed financial statements, financial metrics, key assumptions used for the projections) for the appendix instead.

Your financial projections should answer at least the following questions:

• How much revenue do you expect to generate over the next 5 years?
• When do you expect to break even?
• How much cash will you burn until you get there?
• What’s the impact of a change in pricing (say 10%) on your margins?
• What is your average customer acquisition cost?

You should include here your 3 financial statements (income statement, balance sheet and cash flow statement). This means you must forecast:

• The number of children over time ;
• Your expected revenue ;
• Operating costs to run the business ;
• Any other cash flow items (e.g. capex, debt repayment, etc.).

When projecting your revenue, make sure to sensitize pricing and the number of members as a small change in these assumptions will have a big impact on your revenues.

When it comes to the costs, consider both startup and operating costs. For more information, read our complete guide here .

7. Funding Ask

This is the last section of the business plan of your daycare center. Now that we have explained what type of daycare services your company would offer, at what price, your marketing strategy , management and people, this section must now answer the following questions:

• How much funding do you need?
• What financial instrument(s) do you need: is this equity or debt, or even a free-money public grant?
• How long will this funding last?
• Where else does the money come from? If you apply for a SBA loan for example, where does the other part of the investment come from (your own capital, private investors?)

Use of Funds

Any business plan should include a clear use of funds section. This is where you explain how the money will be spent.

Will you spend most of the loan / investment to buy the real estate and do the renovations? Or will it cover the cost of the salaries of your childcare staff and other employees the first few months?

Those are very important questions you should be able to answer in the blink of an eye. Don’t worry, this should come straight from your financial projections. If you’ve built solid projections like in our daycare financial model template , you won’t have any issues answering these questions.

For the use of funds, we recommend using a pie chart like the one we have in our financial model template where we outline the main expenses categories as shown below.

Privacy Overview

• Skip to main content
• Skip to primary sidebar
• Success Stories
• Search this website

The Work at Home Woman | Legit Work From Home Jobs

We help women find work-at-home jobs and home-based businesses that feed their souls. Find out how to start working from home today.

This post may contain paid and/or affiliate links. Please refer to our disclosure policy for more info.

10 Steps to Starting a Home Daycare Business

Author: Kara Wilson

February 22, 2021 Leave a Comment

Starting a home daycare business can be an excellent opportunity if you love kids and the prospect of being your own boss. Because you would be working from home, the startup costs can be low compared to many other businesses. Additionally, the rewards, both emotionally and financially, are potentially high. 

There are many considerations when starting a home daycare business, and the requirements for such will vary from state to state. For a start, you will need to have some knowledge, or be willing to study, early childhood education so as to provide a suitable learning environment. You will also need to handle the business side of things, from licensing, regulations, and taxes. 

If you feel like you have what it takes, whether you have your own children at home or not, let’s dive into the 10 steps involved in starting a home daycare business.

Step 1: Create a Business Plan

Before you even get started, it’s imperative to start thinking of it as a business, and the best way to do that is to create a business plan. Here is how to write one, plus a bonus  free template . 

Step 2: Structure Your Business

There are many different ways to legally structure your business, so talk to a legal or financial professional to help you determine which structure is best for your situation. You may wish to open your business as a sole proprietorship, LLC, S Corp, or Corporation. To discover the pros and cons of each structure, read  What Business Structure is Right For Your Business?  

Step 3: Secure the Funding

There are many small costs in setting up a home daycare that adds up considerably. For example, you’ll need educational supplies, toys, cleaning supplies, first-aid and CPR training, insurance, legal forms, a website, and registration. If you don’t have savings, check your local and state websites to see if there are any available grants or subsidies. The US Department of Health and Human Services is a good resource for where to get grants.

Step 4: Design Your Brand

To help your home daycare stand out, choose a great name and image for your business. You’ll need to consider brand colors, create a logo, and open social media accounts. You might find this article,  11 Branding Tips for Your Home-Based Business  useful for getting started. 

If you’re starting your home daycare business on a budget, check out Canva . It’s a free online design tool that can help you create a logo, brochures, social media images, and more! Best of all, it’s easy to use and will make you look like a pro! Just know that you won’t be able to trademark your image if you use a Canva template, as you don’t own the rights.

Step 5: Create a Budget

Now we’re getting into the nitty-gritty of running a business. Create a thorough budget of all your running expenses, and work out how many children and how much you will need to charge to cover the costs and provide a profit. The number of children you can take on will depend on staff-to-child ratios based on ages and criteria established by your state government. Read more on what these are on  OPM.gov .

Step 6: Get an Insurance Plan

Accidents can and will happen, particularly in a daycare setting. You need to ensure that you’re business is covered for things like slips, falls, and any other unforeseen events. You’ll want to shop around and compare different business insurance plans (don’t forget to add this to your business budget). 

Step 7: License Your Home Daycare

It’s in your and the prospective families’ best interest to license your business. Parents want assurance that they’re leaving their children in the best hands, in a place that meets all the standards for health and safety. In many locations, you will be expected to contact the department of child welfare or a similar agency to request an information pack.

Some jurisdictions may also include inspections as part of the application process. Also, check whether you need a separate business license by contacting your local department of licenses and inspections. Head to  Daycare ’s website for your state’s licensing laws. 

Step 8: Decide on a Learning Approach

Learn about various childcare approaches and philosophies, and determine which one is right for your daycare setting. Some of the more common ones include  Montessori ,  Reggio-Emilia , and  Waldorf.   Geteduca  has a library of early learning curriculum goals, government, and state early learning guidelines, frameworks, and quality standards. 

Step 9: Safety-Proof Your Home

Minimize accidents and be prepared for them by completing a first-aid course (such as the  Red Cross  training), having a fire emergency action plan in place, covering all electrical outlets, and securing furniture to the walls. The safety of the children should be your top priority. 

Step 10: Get Paid

The last part of the equation is getting all of your financial ducks in a row. Work out how you will collect tuition, and open a business bank account. Find an accounting system that works for you and makes it easy to track payments and expenses, and send invoices. As a business owner, you’re responsible for paying quarterly self-employment taxes, be sure you understand all of your financial responsibilities.

Next Steps in Running Your Daycare Business

Now that you know the steps to start a home daycare business, you might be wondering what happens next.

As your business grows, you may consider hiring someone to help with some of your duties. You’re not just a group babysitter, so you will need to plan activities each day. Allocate time weekly to create lesson plans to engage and nurture the children in your care.

Parents will expect daily communication from you about their child, so you could either write reports or use an app that updates them in real-time and includes photos.

You’ll be required to replenish classroom supplies and furniture, so to reduce costs, keep an eye out online for second-hand furniture or free loose parts for play. 

To get the word out there, you will need a good marketing strategy. You might like to distribute brochures locally, use social media, join local parenting Facebook Groups , list on a directory like  Yelp , or advertise through Google. 

Once you’ve become an established home daycare business, you might like to take it to the next level. By becoming accredited, parents will know that you’re following all of the necessary guidelines, and you may also be eligible for funding opportunities. Many states offer a Quality Rating and Improvement System (QRIS). Accreditation proves to parents that you’re among the best in your community, which of course, you want to be! 

Free Business Plan Template

Would you like to start a home-based business, but you're not sure where to start?

Grab our FREE Simplified Business Plan Template , which will walk you through the questions and steps you need to take to get your business off the ground!

About the Author

Kara Wilson

Kara Wilson has been an enthusiastic freelance writer for over 8 years. She is also a web content editor, infant sleep educator, and mama to two young children. When she isn't building forts with her kids, or hiding in her office to write, she loves to cook, read, and fantasize about traveling. If you're looking for a professional writer for your parenting website or blog, you can contact her at [email protected] .

You'll Also Love These Posts

Reader Interactions

Leave a comment cancel reply.

Your email address will not be published. Required fields are marked *

Home Daycare Business Plan [Template + Example in 2024]

Home daycare businesses need a business plan whether they are just starting out or already in operation. Home daycare business plans are essential, especially if you need funding or business partners to grow your business. Ultimately, starting and running a home daycare business takes a lot of resources. Business plans can help you attract partners and secure funding by giving you a credible image.

Therefore, a solid business plan is equivalent to a good start. The plan will assist you in setting goals, knowing how to start, and knowing what measures to take. Creating a business plan with so many sections and terms seems daunting. Our template and example will make it easy for you.

Throughout this article, you'll learn what to include in your business plan for a home daycare. Here are some examples we made to help you understand. With this guide, you'll understand what to write and how to create a business plan for your home daycare business to help it start, run, and maintain.

Without further ado, let's get into it!

How to Write a Home Daycare Business Plan?

Every Home Daycare business plan must have the following sections:

• Executive Summary
• Business Overview
• Products and Services
• Market Analysis
• Marketing Strategy
• Financial Planning
• Operations Plan
• Management Team

Now, let's discuss each section in detail together with examples.

1. Executive Summary

It's always an excellent idea to start with an executive summary when preparing a business plan. This section explains what your business offers in general terms.

The executive summary should include a description of the problem you are trying to solve and your plan for resolving it.

Writing your summary last is advisable once the other sections are finished and settled since it's an overview of the entire plan.

More and more families are now dependent on two incomes, increasing the need for childcare. In addition, the growing demand for safe, educational environments indicates that more kids need them.

The success of Safe Haven Home Daycare depends on providing childcare services to any home within the scope of the business. Our goal is to provide a safe, informative, and enjoyable experience for kids while assisting parents in feeling confident about the care their children receive.

Safe Haven Home Daycare provides the most needed childcare services to any home within a 30-mile radius around Central Islip. The service is available to clients full- and part-time, depending on the necessary working hours.

2. Business Overview

Your business plan contains a Business Overview, which provides general information about your company. Thus, it should include essential information such as your business structure, mission, and values.

You must demonstrate your competitive edge in a Business Overview to attract business investors, funding, and grants. A business plan answers why yours will be better than other businesses and how it will stand out.

In the beginning, the company will be solely owned by its founders, who have the fundamental proprietorship rights for the business.

Depending on the interests of the company and the best way to serve them, the owner may decide that reregistering as a corporation or a limited liability company is best.

3. Products and Services

As its name suggests, your business plan's Products and Services section describes what you offer. If a business's Products and Services Section is detailed, it will be an excellent addition to any business proposal or investment invite.

The process by which your product will be manufactured, sold, or delivered must be explained in detail. Additionally, you can show clients how your services will be delivered. Therefore, you must evaluate your product's position on the market, cost, and suppliers.

The childcare market on Long Island, New York, is one of the most competitive in the country. As a result, the city has more than 300 unique facilities. In general, facilities can be divided into two categories.

Corporate franchise centers often manage the larger franchise centers. This facility offers both regional and national services.

According to current data, 28% of the childcare market is controlled by the top four centers in the United States.

Many colleges and universities operate on a smaller scale and are locally owned and operated. For this reason, Safe Haven Home Daycare services cater to childcare services at home rather than in an institution.

4. Market Analysis

An analysis of the market is another essential component of a business plan. In this section, you will explain how your marketing strategy will be implemented. Using this section to describe your competitors, target market, and marketing strategy is a good idea.

For this reason, this section should contain the following information:

• Competitive Analysis: To determine who your competitors will be
• Customer Analysis: To determine your target audience
• Industry Analysis: To show how the industry is currently doing

There are more than 300 childcare centers in the neighborhood. According to market share, KinderCare has the most. However, they can't cater to families whose kids need home daycare.

They can compete well because of their excellent reputations in the consumer sector. With Safe Haven Home Daycare, clients can enjoy a one-to-one interaction, focusing on their child rather than in school.

In addition, the business keeps childcare rates between five and ten percent lower than the average for major commercial chains.

Children from needy families can get childcare at Safe Haven Home Daycare within a 30-mile radius of Central Islip. Our program accepts part-time and full-time kids.

The facility's efforts to get licenses and certifications give it an edge in the childcare industry. People are subjected to a thorough background check before they're hired.

5. Marketing Strategy

Using the marketing strategy, you can explain to your readers how you plan to market your products. This way, you can explain how to gain and retain customers. You will find information in this section about reaching your target market, motivating them, and making them want to buy your products.

The key differentiator will be customer service benchmarking. Customer-centricity will be infused into the entire organization. Additional funds will be invested in training and attracting the best employees at Safe Haven Home Daycare.

The staff is the one who interacts with the children and their parents. Therefore, their chances of becoming devoted clients and enthusiastic advocates of the facility are excellent in this situation.

Several social media platforms will be used in the campaign, including LinkedIn and Facebook. Professionals will respond to public inquiries about child care. As a result, we demonstrate our competence to the public. Additionally, we will allow customers to leave reviews and communicate with us.

6. Financial Planning

Another part of your business plan you should include is the Financial Planning section. In this part, you will describe your business goals and the process.

Therefore, all possible expenses should be included in a defined timeline. This section aims to demonstrate how you would handle your finances to ensure growth and avoid problems.

Families where both parents work or are required to work are ordinary for children. Therefore, as parents work, they can leave their child at home with someone who can cater to childcare services, teach, and interact for fast learning.

If they cannot be with their children in an emergency, parents must have someone trustworthy they can leave them with.

Our service values the "safe mentality." Our clients appreciate that we have subject matter experts on hand to address their questions. We will not make a special effort to provide advice since we expect people to seek our advice if they need it.

We intend to invest $30,000 in the launch of our business. Our startup costs will also be covered by each owner's contribution of $15,000.

7. Operations Plan

Your business plan's Operations Plan details the entire operation of your business. As such, it should outline the steps your entire staff will follow to ensure you achieve your goals. It is essential to put information about each department employee's daily, weekly, and monthly responsibilities.

Providing quality care to children will generate enormous financial benefits for Safe Haven Home Daycare.

Since Safe Haven Home Daycare will be based on clients' homes, word-of-mouth marketing will make it profitable within the first year. Every six months, the company expects its client base to double in the first 16 months.

Most of the funds will be dedicated to the childcare service providers of the business. This way, they can undergo special training and gain licenses to conduct home daycare services.

Since the client's home will be the place of operations, they can add travel expenses to the bill. It's a safe space for kids, and parents will rest assured of the kids' safety with the licensed providers.

8. Management Team

You should also include a section devoted to your management team in your business plan. The purpose of this section is to summarize the entire staff you currently have and any future staff you plan to hire.

Workers are one of the most vital parts of a business, so anyone reading your plan should know who works there and how they contribute to the company's success.

You should highlight your team's skills, abilities, and experiences to boost your company's credibility.

In addition, you need to demonstrate how you will distribute responsibilities and tasks to ensure each person has an opportunity to grow while maintaining the business's steady development.

Safe Haven Home Daycare will be supervised by seasoned childcare professionals Myrcella Smith and Stephanie Rivers.

Myrcella has eight years of experience in sales, marketing, and management from The Children's House Daycare. During Myrcella's tenure at the company, the company's annual revenue increased from $75,000 to nearly $3.9 million.

Myrcella's partner Stephanie Rivers has a finance and administration degree. Before joining Safe Haven Home Daycare, Natasha worked for The Joyous Place, one of the country's largest childcare providers.

She increased operational profits at The Joyous Place by 112% during her tenure as Chief Financial Officer, which is uncommon for a company in this field.

Home Daycare Business Plan PDF

Do you want to download a Home Daycare business plan example in PDF?

Here is the download link.

Let us know if you have any questions!

Home Daycare Business Plan FAQs

Below are some of the frequently asked questions you may have about Home Daycare Business Plans:

What Is a Home Daycare Business Plan?

Home Daycare business plans showcase the entire structure, function, goals, and any other information relating to a particular business.

Home Daycare business plans present the business's problems, solutions, and functions. In addition, your business plan can provide detailed information about your company, attract investors, and secure funding.

The business plan shows the company's structure and operations. The report also describes the operation's finances, marketing, and management.

The cost of operating a business, market research, mission statements, and succession plans can all affect the launch of a business. Therefore, these things should be clearly stated in a business plan.

Why Is a Home Daycare Business Plan Important?

Home daycare businesses must have a business plan. It outlines a company's goals and structure as a business plan. Moreover, once you have an outline for your project, you can adjust it as needed.

A home daycare business plan would be helpful if you want to hire and train staff, seek investors, or adjust your pricing strategy. Even if your business has yet to launch, you should create one.

Is Owning a Home Daycare Profitable?

The need for home daycare businesses is always present. In this regard, owning a home daycare business is a business that has a vast potential for success and growth.

The key to being profitable is to plan, execute, and maintain your business efficiently. As a result, it's crucial to have an effective business plan to set you up for success.

Our business plan template can help you create a plan that suits your home daycare business. You'll enjoy a profitable home daycare business if you create an effective plan and execute it well.

Home daycare business plans are essential for anyone planning to open one. With such a plan, you can identify your strengths, analyze your competitors, identify your target audience, attract potential customers, and set a goal for success. Moreover, if you need funding, a solid business plan can help you secure grants or investors.

The Home Daycare Business Plan template includes all the necessary information and elements. Using the examples we provided, you can develop your business plan.

• 4,818 founder case studies
• Access to our founder directory
• Live events, courses and recordings
• 8,628 business ideas
• $1M in software savings

I'm Pat Walls and I created Starter Story - a website dedicated to helping people start businesses. We interview entrepreneurs from around the world about how they started and grew their businesses.

Join our free newsletter to get unlimited access to all startup data. We just need your email:

Check your email

If there's a Starter Story account associated with that email you'll get an email with a link to automatically log in. The link will expire in 15 minutes.

Your existing password still works, should you want to log in with it later.

With Starter Story, you can see exactly how online businesses get to millions in revenue.

Dive into our database of 4,418 case studies & join our community of thousands of successful founders.

Join our free newsletter to get access now. We just need your email:

Daycare Business Plan Template

Written by Dave Lavinsky

Business Plan Outline

• Daycare Business Plan Home
• 1. Executive Summary
• 2. Company Overview
• 3. Industry Analysis
• 4. Customer Analysis
• 5. Competitive Analysis
• 6. Marketing Plan
• 7. Operations Plan
• 8. Management Team
• 9. Financial Plan

Daycare Business Plan

You’ve come to the right place to easily complete your daycare business plan.

We have helped over 100,000 entrepreneurs and business owners create business plans and many have used them to start or grow their daycares.

How To Write a Daycare Business Plan & Example

Below are links to each section of your daycare business plan template:

• Executive Summary – This is a brief overview of your daycare business plan. The executive summary should be no more than 2 pages long, with brief summaries of other sections of the plan.
• Company Overview – This is where you provide a business description, including your company history, business structure, and any pertinent information about the daycare center.
• Industry Analysis – The industry analysis describes the daycare industry, including market size and trends.
• Customer Analysis – This section of your daycare business plan describes your target market and potential customers. You will detail the demographics, needs, and wants of your target audience and how you plan to meet those needs.
• Competitive Analysis – The competition in your local area will be described here, along with how your daycare business will compete in the market.
• Marketing Plan – Your marketing plan will describe your daycare’s marketing strategy, including your advertising and promotion plans.
• Operations Plan – This section of your business plan describes how your daycare will be operated on a day-to-day basis. It may also include your long-term plans for expansion and the milestones you want to achieve to get there.
• Management Team – The management team section of your business plan should describe the experience and qualifications of your management team including the director, teachers, and support staff.
• Financial Plan – The financial plan section of your daycare business plan should include your financial statements, such as your income statement, balance sheet, and cash flow statement.

Next Section: Executive Summary >

Daycare Business Plan FAQs

What is a daycare business plan.

A daycare business plan is a plan to start and/or grow your daycare business. Among other things, a good daycare business plan will outline your business concept, identify your target customers, present research about the child care industry, detail your marketing plan, and provide your financial plan.

You can  easily complete your daycare business plan using our Daycare Business Plan Template here .

What Are the Main Types of Daycare Businesses?

There are different types of daycare businesses that parents can choose from for their child's needs. A traditional daycare center is most sought after by working parents since it provides child care during regular work hours. There are also in-home daycare centers that are licensed to provide child care in a home setting with fewer children. Other child care centers provide hourly care services by trusted babysitters or nannies and are operating on an as-needed basis.

What Are the Main Sources of Revenues and Expenses for a Daycare Business?

The primary source of revenue for a daycare business is its child care services.

Some key expenses for a daycare business is rent, salaries for staff, utilities and snacks expenses for the children.

How Do You Get Funding for Your Day Care Business Plan?

A daycare or child care center is typically funded through small business loans, personal savings, credit card financing and/or angel investors. This is true for a business plan for daycare or a childcare business plan.

What are the Steps To Start a Daycare Business?

Starting a daycare can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Day Care Business Plan - The first step in starting a business is to create a detailed child care business plan that outlines all aspects of the venture. This should include market research on the childcare industry and potential target market size, information on the services you will offer, marketing strategy, pricing strategies and detailed financial projections.

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your daycare business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your daycare business is in compliance with local laws.

3. Register Your Daycare Business - Once you have chosen a legal structure, the next step is to register your daycare business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 

4. Identify Financing Options - It’s likely that you’ll need some capital to start your daycare business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 

7. Acquire Necessary Daycare Equipment & Supplies - In order to start your chlidcare business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your childcare   business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising to reach your target audience.

Learn more about how to start a successful daycare business:

• How to Start a Daycare Business

Where Can I Get a Daycare Business Plan Example PDF?

You can download our daycare business plan PDF template here. This is a business plan template you can use in PDF format.

Upmetrics AI Assistant: Simplifying Business Planning through AI-Powered Insights. Learn How

• AI ASSISTANTS

Upmetrics AI Your go-to AI-powered business assistant

AI Writing Assist Write, translate, and refine your text with AI

AI Financial Assist Automated forecasts and AI recommendations

• TOP FEATURES

AI Business Plan Generator Create business plans faster with AI

Financial Forecasting Make accurate financial forecasts faster

Strategic Planning Develop actionable strategic plans on-the-go

AI Pitch Deck Generator Use AI to generate your investor deck

See how it works  →

AI-powered business planning software

Very useful business plan software connected to AI. Saved a lot of time, money and energy. Their team is highly skilled and always here to help.

- Julien López

• BY USE CASE

Starting & Launching a Business Plan your business for launch and success

Validate Your Business Idea Discover the potential of your business idea

Secure Funding, Loans, Grants Create plans that get you funded

Business Consultant & Advisors Plan seamlessly with your team members and clients

Business Schools & Educators Simplify business plan education for students

Students & Learners Your e-tutor for business planning

• Sample Plans
• WHY UPMETRICS?

Reviews See why customers love Upmetrics

Customer Success Stories Read our customer success stories

Blogs Latest business planning tips and strategies

Strategic Planning Templates Ready-to-use strategic plan templates

Business Plan Course A step-by-step business planning course

Ebooks & Guides A free resource hub on business planning

Business Tools Free business tools to help you grow

• Sample Business Plans
• Education & Training

Daycare Business Plan

With the majority of parents staying out of the home throughout the day, the daycare (childcare) business has turned into an extremely bankable one in recent years.

If you have the right resources and more importantly, are good with children. If you have ever dreamt of starting a daycare business , then you are at the right place!

Though certain sections are common to all business plans, you’ll need to customize the outline as per the needs and requirements of your business.

Industry Overview

The U.S. childcare market size was valued at USD 54.3 billion in 2019 and is expected to expand at a compound annual growth rate (CAGR) of 3.9% from 2020 to 2027.

This rise in demand has come from the increasing number of working parents. Earlier parents had to quit their careers to take care of their children, but that has changed due to better daycare facilities.

Now, if you plan on entering this competitive childcare market, you must know that the daycare business is based on the foundation of trust more than anything. Hence, providing quality services and having a clean image in the market is of utmost importance.

Studies show that a lot of daycare businesses fail in their first three years due to reasons ranging from poor management to lagging finances. You can combat all of these and many more troubles if you enter the industry with a well-rounded daycare business plan.

Say goodbye to boring templates

Build your business plan faster and easier with AI

Plans starting from $7/month

What is a Daycare Business Plan?

A daycare business plan is an equivalent of a roadmap in your business journey. A plan helps you understand what you’re getting yourself into.

It helps you understand the market, figure out where you stand in it, know your target audience better, and formulate better marketing and financial strategies.

Overall, it makes your decision-making process faster and more effective and prevents you from feeling clueless at any point in your business journey.

Moreover, it also helps you get investors and helps your employees and partners understand what your business stands for. It gives the people in your business a feeling that you have a vision and know what you are doing with your business.

Also, you get to set clear goals that give you a direction to work and put your efforts in.

Why is a Daycare Business Plan Important?

Everything you do for your business should add value to it. And here’s how a daycare business plan can add value to your business:

It gives you a sense of direction

There are several ways you can go with each business decision. A business plan helps you understand what would work best for your business then.

Also, it gives a set of tangible goals to look forward to when you work on your business.

It helps you understand your target audience better

Planning your business gives a better form and structure to your research. Which at the end of the day helps you understand your customers better. It also helps you analyze what it means for your business.

Making and upgrading your product or service for your customers serves the biggest purpose at the end of the day.

It helps you understand your competition better

Imagine there’s a popular daycare center in your city and several parents swear by it. Now, this could mean several things for your business.

You’ll have to pick a different location, know the daycare service’s weaknesses and offer better services by working on that area for your business.

You can also pick the things they are doing right, and inculcate the same in your strategies.

A business plan can help you do all of the above and more through a competitive analysis.

It helps you convince your investors

Though making the right prediction is difficult, having a rough idea of your business’s sales and financial potential is important to get investors on board.

Investors want to know the scalability of your business before they invest in it. A good and realistic prediction of returns makes it easier to convince investors.

And a business plan can help you make realistic financial predictions.

It keeps you updated with the latest business trends

A business plan is a living document that grows alongside your business. It also helps you have a foresight of changing trends and act on time for getting the best results for your business.

This also makes it important for you to keep updating your plan as your business grows.

What does a Daycare Business Plan Look Like?

If you are planning to start a new auto or car repair shop, the first thing you will need is a business plan. Use our sample Daycare Business Plan created using Upmetrics business plan software to start writing your business plan in no time.

Before you start writing your business plan for your new auto repairing shop, spend as much time as you can reading through some examples of Children’s & Pet business plans .

Moreover, business plans come in different forms to fit the current state of your business.

Apart from that, there are a few major sections that should be included in every business plan.

Daycare Business Plan Outline

This is the standard business plan outline which will cover all important sections that you should include in your business plan.

• Executive Summary
• Keys to Success
• Company Summary
• Timothy Bernard Kilpatrick
• Start-up Summary
• Locations and Facilities
• Service Description
• Competitive Comparison
• Sales Literature
• Fulfillment
• Future Services
• Industry Analysis
• Market Segmentation
• Market Analysis
• Market Needs
• Market Trends
• Market Growth
• Business Participants
• Competition and Buying Patterns
• Main Competitors
• Strategy and Implementation Summary
• Value Proposition
• Competitive Edge
• Positioning Statement
• Pricing Strategy
• Promotion Strategy
• Marketing Programs
• Sales Forecast
• Sales Programs
• Strategic Alliances
• Web Plan Summary
• Website Marketing Strategy
• Development Requirements
• Management Summary
• Organizational Structure
• Timothy B. Kilpatrick
• Carolyn Steverson
• Candice Harris
• Management Team Gaps
• Personnel Plan
• Projected Profit and Loss
• Projected Cash Flow
• Projected Balance Sheet

What to Include in Your Daycare Business Plan?

A good daycare business plan consists of a certain number of well-defined sections, the following sections can help you in writing an excellent business plan.

1. Executive Summary

The executive summary section is one of the most important sections of your business plan because it not only forms the first section of your business plan but also acts as a pitch for potential investors who can provide you with funds for your daycare business.

It consists of your company’s vision and mission, its USP, objectives, and also expected revenues.

Writing the executive summary section of your plan at the very end, so you can sum up your plan properly is a good tip to remember.

2. Services

In this section, you should give out a clear idea of what your services are and whom it caters to. You should define your target market, your niche, the area your services will be extended to, etc.

As a daycare center, you should have a clear idea of the age group you will cater to, what is the preferred location of your target audience, how you come off as a service to your customers, and so on.

3. Market Analysis

Market analysis can be of great help to any business, it can help you understand what you are getting yourself into, who your competitors are, what your client base expects out of you, and where you stand in the current market situation.

Hence, market analysis immensely improves your understanding of the industry you are getting into. In the case of a daycare center knowing the best practices of childcare that exist in the market can be of great help.

4. Web Plan

In today’s internet-based world, most busy parents looking for a daycare center online. Hence, having a strong and reliable web presence is crucial to the success of your daycare business. Thus, including a web strategy in your business plan is necessary.

Always remember, as a daycare service coming off as a trustworthy and reliable institution is crucial for your business to work.

5. Management and Organizational Structure

Having a well-structured management system is especially crucial for a daycare service. It not only helps your business run smoother, but it also makes you look more responsible and reliable in front of the parents or the primary caregivers.

In this section, you should include the structure of your organization, details about people on various levels in your company, a solid system for tracking everyone’s work and progress, the areas your team is excelling at, and the areas your team is lagging in.

6. Financial Plan

One of the chief reasons for several daycare services running out of business is poorly managed finances or running out of funds to keep going.

Planning your finances in the early stages of your business saves you from encountering such a problem later on.

Hence, planning your finances is mandatory while writing a business plan.

Download a sample daycare business plan

Need help writing your business plan from scratch? Here you go;  download our free daycare business plan pdf  to start.

It’s a modern business plan template specifically designed for your daycare business. Use the example business plan as a guide for writing your own.

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks and automatic financials make it easy.

Daycare Business Plan Summary

In conclusion, apart from having a good image as an organization, a well-managed team, a clearly defined niche, thorough research of the market and an excellent financial plan is crucial to the success of a daycare business.

After getting started with Upmetrics , you can copy this sample daycare business plan into your business plan and modify the required information and download your daycare business plan pdf or doc file.

It’s the fastest and easiest way to start writing your business plan.

Related Posts

School Business Plan

Daycare Financial Plan

After-School Program Business Plan

Swim School Business Plan

Key Components of a Business Plan

Business Plan Outline Creation Process

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

Plan your business in the shortest time possible

No Risk – Cancel at Any Time – 15 Day Money Back Guarantee

Popular Templates

Create a great Business Plan with great price.

• 400+ Business plan templates & examples
• AI Assistance & step by step guidance
• 4.8 Star rating on Trustpilot

Streamline your business planning process with Upmetrics .

SMALL BUSINESS MONTH. 50% Off for 6 Months. BUY NOW & SAVE

50% Off for 6 Months Buy Now & Save

Wow clients with professional invoices that take seconds to create

Quick and easy online, recurring, and invoice-free payment options

Automated, to accurately track time and easily log billable hours

Reports and tools to track money in and out, so you know where you stand

Easily log expenses and receipts to ensure your books are always tax-time ready

Tax time and business health reports keep you informed and tax-time ready

Automatically track your mileage and never miss a mileage deduction again

Time-saving all-in-one bookkeeping that your business can count on

Track project status and collaborate with clients and team members

Organized and professional, helping you stand out and win new clients

Set clear expectations with clients and organize your plans for each project

Client management made easy, with client info all in one place

Pay your employees and keep accurate books with Payroll software integrations

• Team Management

FreshBooks integrates with over 100 partners to help you simplify your workflows

Send invoices, track time, manage payments, and more…from anywhere.

• Freelancers
• Self-Employed Professionals
• Businesses With Employees
• Businesses With Contractors
• Marketing & Agencies
• Construction & Trades
• IT & Technology
• Business & Prof. Services
• Accounting Partner Program
• Collaborative Accounting™
• Accountant Hub
• Reports Library
• FreshBooks vs QuickBooks
• FreshBooks vs HoneyBook
• FreshBooks vs Harvest
• FreshBooks vs Wave
• FreshBooks vs Xero
• Free Invoice Generator
• Invoice Templates
• Accounting Templates
• Business Name Generator
• Estimate Templates
• Help Center
• Business Loan Calculator
• Mark Up Calculator

Call Toll Free: 1.866.303.6061

1-888-674-3175

• All Articles
• Productivity
• Project Management
• Bookkeeping

Resources for Your Growing Business

The ultimate guide to starting a daycare business.

Why Start a Daycare?

Advantages to starting a daycare, can you start a daycare from home, how much does it cost to start a daycare, 15 steps to starting a daycare center, resources for daycare owners, bottom line.

Since most parents work outside the home, most preschool aged children receive some form of child care. While many are cared for by nannies, babysitters or other family members, nearly one-quarter (23.4%) of children under age five attend an organized daycare center. 

This presents a world of opportunity for those looking to take the next step and start a child care business of their own. Starting a daycare center can be both personally fulfilling and financially rewarding.

Do you want to open your own daycare center in the U.S.? Follow along with this guide as we reveal the step-by-step process for opening a successful child care business. 

Opening a daycare can be intimidating, but it can also be incredibly rewarding. While there is no blueprint for success, many child care business owners find joy in the journey. So whether it’s your passion for kids or desire to serve parents in your community, there are many valid reasons to open a daycare. 

What’s important is that you also need to consider your own unique reasons for wanting to open a daycare, as these reasons will then motivate you to follow through on your dream. Even though you will face obstacles along the way, the payoff of opening a daycare is certainly worth the struggles.

Starting your own daycare business can be advantageous on multiple levels. For one, you’ll have the personal satisfaction of starting your own care center from scratch. Then, there’s the joy of spending time with children and learning life-changing lessons along the way.

If you’re still on the fence about starting your own daycare, consider these likely advantages:

• Emotionally rewarding: Working with kids teaches you to be patient and enjoy the simple things in life. You’ll also have the flexibility of having your own business versus being confined to a traditional day job.
• Financial freedom: By opening a daycare, you’re in control of your income rather than reliant on a typical paycheck. You can maximize your earning potential and make investments back into your own business.
• Personal child care: If you have your own child, you can care for them while you’re running your daycare. This will save you money and give your offspring opportunities to make friends with other kids. 
• Continued education: Opening a daycare can open the door to new opportunities in the field of child care. You may be presented with another job position or choose to pursue additional education of your own accord. 
• Extra money: Rather than stay home and care for your own children for free (assuming the original plan was to be a stay-at-home parent), why not make some extra money by caring for other children at the same time? 
• Tax deductions: As a business owner, you can write of certain expenses as business expenses, saving you money on your taxes. These expenses can include a portion of your housing payment (if you have an in-home daycare), your cell phone bill, your vehicle, child care supplies and more. See Tax Deductions . 

These are just a few of the many advantages of starting your own daycare center. Now let’s address some common questions you may have about being a daycare business owner. 

Yes, starting a care center from your home is an option and may even be the more affordable option. This is because there are different options at the local, state and federal level that provide grants and funding to in-home daycare centers.

If you already have the space to run a child care business out of your home, it’s worth looking into Small Business Administration (SBA) loans to help you fund your endeavor. Remember, at the end of the day, you may be eligible for tax cuts and other benefits.

According to small business website bizfluent.com , the average startup cost for a daycare center is $10,000 to $50,000. This can vary widely depending on whether you’re opening a home-based daycare or leasing a separate facility for your care center. 

If you don’t have $10,000+ in your bank account, don’t worry. There are many grants and loans available to child care businesses. In fact, some local businesses will offer financial incentives to support budding child care centers. Consider reaching out to your community for support.

Now, let’s get to the good stuff: how to start your own daycare business from start to finish!

Starting a small business in general is always a journey. While we’ve outlined a few steps to getting your business up and running, know that there is no one “right” way to achieve success. You’ll learn many lessons along the way and are likely to pave your own path.

That said, here are 15 steps to starting your daycare center, even if you have zero experience.

1. Learn About Daycare Licensing Requirements

You might have started off as a babysitter or a nanny, but in order to start a full-on daycare business, you need to meet the proper licensing requirements in order to be legal . That way, your daycare will be legitimate and you won’t run into any legal trouble accepting children into your care. 

A good first step is to contact your state’s Department of Children and Family Services (DCFS) to learn about their specific regulations for child care providers. Another option is your local area’s child care licensing agency. You can usually find this information online. 

To obtain a license to start a daycare center, you’ll also need a current CPR certification, a clean driving record and additional documents that prove your commitment to providing quality child care. Don’t be afraid to ask your local agency questions to ensure you’re satisfying all requirements.

2. Consider Taking Early Childhood Education Classes

While you don’t need to have professional child care experience to start a daycare business, having some understanding of early childhood development is strongly encouraged. You’ll be caring for young lives, so you need to know how to provide the right kind of support and care.

Getting a degree is early childhood education is a good place to start. You can typically find classes in-person at your local community college or online. Through this degree, you’ll gain a greater understanding of how children think and behave, and what they need in order to be properly cared for. 

Beyond that, you’ll have the skills to set your business apart from your competition. You’ll be better prepared to offer the services parents are looking for and keep them coming back time and time again.

3. Create a Daycare Business Plan

In starting any type of small business, it helps to have a business plan. Having a business plan helps you set tangible goals for your business, organize your business structure, outline your services and so much more.

In your daycare business plan, you’ll define your daycare’s mission statement, operations and procedures, staffing and budget. This business plan works to keep you on track and striving toward success. 

Consider how you want your business to be organized for you plan. Will you be solo or hire staff? How will you secure funding? Will you offer services beyond child care (like tutoring)? For help in creating your business plan, check out this detailed guide from the U.S. Small Business Association .

4. Find a Location for Your Daycare

If you plan on running your daycare out of your home, this step should be pretty straightforward. If not, you’ll need to find a location for your child care facility.

Many recreational centers, churches, local businesses and even schools have space available to host a daycare, typically for a monthly fee. Search online, in your local newspaper and within your network to find options in your area. 

Once you’ve found a good fit, you need to check your city’s zoning laws and licensing guidelines to make sure your chosen location is compliant. That way you can avoid some legal headaches down the road. 

Ideally, you’ll need to find a location that’s centrally located, easily accessible and child-friendly. Consider what children and their parents will be looking for in a child care center. You might not find the perfect option, but you can make it work with a little TLC.

5. Get Insurance

Most daycare centers need several types of insurance in order to keep children (and their businesses) protected. These policies typically include liability coverage, property, workers’ compensation and business insurance.

Not sure what type of insurance you need? You can always check with your local child care provider licensing office for guidance.

6. Seek Out Grants and Funding

As we covered already, there are certainly costs associated with starting a daycare. If you don’t have the money you need to cover your initial startup costs, you’ll need to get creative when it comes to acquiring funding.

There are many grants available to help you cover your startup costs. You might also consider taking out an SBA loan or doing community fundraising. Know that the goal is to use these funds as an investment that will yield profitable returns in your business.

Costs Associated with Starting a Daycare

There are several things you’ll need to buy or lease in order to get your business up and running for day one. These expenses include but are not limited to:

• Renting a daycare space
• Indoor and outdoor play equipment
• Art supplies
• Cleaning supplies
• Child care supplies (like diapers and wipes)
• Business laptop
• Licensing fees
• Food (for snacks/meals)
• Bottles, cups, plates, utensils, etc.
• Car or reliable transportation (optional)

You might think of some additional items you’d like to have at your daycare. Over time, you can use the revenue coming in to help cover these expenses and invest in better equipment/supplies. It’s OK to keep things simple and then scale your way up. 

7. Prepare Your Daycare Center

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

First, clean your facility and sanitize with an effective disinfectant. Then, take the needed steps to childproof your daycare according to the ages of the children you will be caring for. Follow this childproofing checklist for help.

Finally, set up play equipment and lay out toys. You might decide to use storage boxes to keep everything organized. You can always rearrange your layout according to your needs.

Is your daycare ready for service? Give it another once-over and you’re ready to open your doors for day one of business!

8. Draft up a Contract

As a small business owner, having a contract is always a good idea. The parents that come to your facility are essentially your clients, and you want to have a solid contract in place to protect yourself from any legal issues.

We recommend seeking out a trusted contract lawyer to draft up a contract according to your needs and unique business requirements. Your contract will then be used to outline your expectations for your clients and their children.

Here are some important questions to consider when creating your contract:

• How do you expect to be paid?
• How will you handle late payments?
• What time should parents pick up their children?
• Are there consequences for late pick up?
• What services will you provide?
• What is your policy when it comes to sick children?
• Do you offer refunds? If so, under what conditions?
• What happens if a child is injured at your facility?

Whether you seek help from an attorney or write the contract yourself, you should have a contract in place before accepting business. Once signed, you can then send professional daycare invoices to get paid by your clients. 

9. Establish Policies and Procedures

Establish policies and procedures for the families that attend your daycare and your staff. These procedures may include an emergency plan, safety procedures, privacy protocols and rules for your facility.

Having these procedures in place will help you keep the children safe and protect yourself from liability (in some instances). In establishing your policies, be sure to review your local child care licensing requirements to ensure compliance. 

10. Research Possible Tax Credits

If you’re opening an in-home daycare, you may be eligible for certain tax reductions based on the fact that you’re using your residence for business purposes. This means you can essentially write off a portion of your housing cost. This can be the case even if your daycare space serves as a family room after hours. 

11. Hire Staff as Needed

When you’re first getting started, you may just be a company of one, as you might want to save the cost of hiring unnecessary help. But over time, you may need to hire help to take care of the kids during the day.

This is especially true if you find yourself running up against the required ratio of staff to children, as outlined in your local daycare licensing requirements. Be sure to review these to make sure you have enough staff for the number of children you plan on caring for.

Also, make sure all child care staff undergo criminal background checks and provide references to ensure the safety of the children. Make your hiring decisions carefully to keep your facility safe and maintain a stellar reputation.

12. Market Your Daycare

You have your daycare set up and open for business, now how do you get families in the door? As with any small business, you’ll need to market yourself to attract potential clients.

There are many ways to market your daycare. One method is to create flyers and post them around your local community—at businesses, schools and coffee shops. You can also run paid ads on Google or Facebook to draw in families from your local area.

To establish your daycare as a professional business, consider building a website that provides more information about your services. A basic website can cost anywhere from $10 for a WordPress template and set up, to $2,000 or more for a custom design.

With a website, you can then use search engine optimization (SEO) to attract organic traffic from Google. That way, when families search for a daycare near them, your business is likely to show up in the search results.

13. Promote Your Daycare on Social Media

Another effective marketing tool for daycare centers is social media. Platforms like Facebook, Instagram and LinkedIn can be used to promote your business and draw in potential clients.

Create a business Facebook page to post more information about your daycare, collect client testimonials and keep families up-to-date with events at your daycare. You can also post on Instagram and LinkedIn, with targeted hashtags, to attract families in your area.

As your business grows, you might decide to invest in paid marketing services. A digital marketing agency or consultant can help you increase your business’s presence online, outrank your local competitors and attract new clients. 

14. Provide Top-Quality Care

The success of your daycare depends on you providing top-quality care to your families. If the kids at your facility are properly cared for, and, even better, enjoy coming to your daycare, you’re likely to attract more referral business.

Positive reviews can work wonders to attract new clients. Ask families to review your business on Facebook, Google, Yelp and other review sites to improve your daycare’s reputation in your community.

Always look for ways to improve your daycare. Ask families for feedback, invest in additional education and hire fantastic staff to make your daycare the obvious choice for families in your area. 

15. Manage Your Business Finances

Many small businesses fail due to poor money management. If you want your business to succeed, you’ll need at least a basic understanding of business accounting and how to manage your expenses.

Staying on top of your business finances is more than just tracking revenue in and expenses out. You’ll need to plan for taxes—typically around 30% of your revenue, after expenses—and make informed decisions when it comes to how you’re going to allocate your funds.

Professional daycare accounting software can help you send invoices, track revenue, manage expenses and more. It can even send reminders to parents for late payment and accept credit card payments with ease.

The more you know, the easier it will be to make smart financial decisions. Stay on top of your business finances so your business is not only surviving but thriving . 

Congratulations on taking the first step to starting your own daycare business—reading this guide! By now you have a general blueprint for how to start your own business and get up and running. 

Need more help getting started? Check out these reliable resources for aspiring daycare business owners:

• Child Care Aware of America: licensing guidelines for child care and daycare providers
• United States Department of Health and Human Services: childproofing checklist
• Early Childhood Training and Technical Assistance System (ECTTAS): child care resource guide
• Office of Child Care: list of state licensing agencies
• Child Care Resources Inc.: early educator training

Starting a daycare business can be challenging but also incredibly rewarding. The process is made easier by having a general roadmap for how to get started. Hopefully, this guide has provided some guidance on how to get started, plus inspiration for you to finally launch a business of your own.

RELATED ARTICLES

Save Time Billing and Get Paid 2x Faster With FreshBooks

Want More Helpful Articles About Running a Business?

Get more great content in your Inbox.

By subscribing, you agree to receive communications from FreshBooks and acknowledge and agree to FreshBook’s Privacy Policy . You can unsubscribe at any time by contacting us at [email protected].

👋 Welcome to FreshBooks

To see our product designed specifically for your country, please visit the United States site.

How to Write a Business Plan for Daycare and Preschool

• brightwheel
• Running a business

Writing a daycare or preschool business plan is a big task, but due diligence and hard work will help you understand what you’ll need to launch and run a daycare or preschool successfully.

What do daycare investors want?

Your local government will have rules and regulations you’ll need to follow as a small business owner and childcare provider. Start by reviewing the childcare licensing guidelines for your state and city. Once you’re clear on licensing guidelines, you’re ready to start writing your childcare business plan.

The purpose of a business plan is to help secure funding. You’ll likely need financing to launch your preschool or daycare, especially if you want to avoid the monthly repayment of a loan. 

Investors provide businesses with money in exchange for partial ownership. As a result, they expect a larger return on their initial investment. Because many investors work in business, they prefer to invest in an established company.

Most investors look for:

Industry background and experience

Financial performance and promise.

Investors want to make money. Therefore, they are more inclined to work with experienced entrepreneurs and business owners to guarantee a return on their investment. 

This might sound discouraging for those with little experience or without a business management background, but the opportunity doesn’t end there. You could consider bringing on a partner with a business background. Additionally, many investors act as a source of business advice. 

You need to demonstrate that your business will make money. Investors will likely want to see signs of business growth before they give you money. 

Additionally, investors will want to know about your financial stability. Questions an investor might ask are:

• What do you plan to do with the money?
• Has your business been up or down in recent years?
• Is your company losing money? Are there signs of growth for the future?
• How do you plan to repay your investment?

Of course, every investor is different, so they’ll consider various factors. While experience and financial promise are at the top of the list for most investors, they might also look for uniqueness, business readiness, an effective business model, and more.

Writing a daycare business plan

We’ve discussed licensing and investors. Now, you’re ready to begin the framework of your business plan for daycares and preschools. Here’s what you’ll need to get started:

Business description

Needs assessment, insurance policies, operating policies and procedures, marketing strategy.

Start with the basics: what does your daycare do? Detailing the service you’re offering will help you create a clear business plan. Next, you might want to write some goals or even a mission statement outlining your purpose and motivation.

Start by looking at general daycare or preschool industry trends, then narrow your scope to the preschools or daycares in your local area. Next, you’ll need to figure out who your target customers are and confirm that there is a need for a business like yours in your community. 

Are there a lot of young families in your neighborhood? Are you located somewhere convenient for commuting parents? Does your business offer a specific service that your competitors don’t, like early check-in or extended hours? 

Also, check out the competition. Research the existing daycare or preschool options in your community. Look at current preschool or daycare business plan samples. What makes your daycare or preschool unique? 

Developing detailed budgets will help you run your small business. You’ll need to compare your current cash flow and expenditures to determine whether you’ll make a profit.

Build a budget for unexpected costs. For example, how many children do you need to serve to be able to pay your bills and stay afloat? Child Care Aware of America offers some terrific budgeting resources for this process.

Depending on the type and size of your preschool, you’ll need insurance policies of several different types, including liability, property, workers’ compensation, and business insurance. Check the licensing requirements for guidance in building this part of your preschool business plan.

Create a comprehensive handbook for families and staff that includes you center's policies and procedures. For instance, you'll need to develop an emergency plan , daycare sick policy , and other safety protocols according to your local childcare licensing requirements. 

Your staff handbook will be a helpful resource your employees can reference and include all your employment policies including work and pay schedules, benefits, and information about professional growth and development. You can also include information on your center's philosophy and curriculum, classroom procedures, and expectations for working with children and families.

Your marketing strategy is the key to attracting customers. Decide what type of advertising you will use in front of potential customers. For example, list your school in local directories and participate in parenting and kid-friendly community events. Run a social media campaign focusing on your target population.

Another big part of childcare business marketing is differentiating yourself from other preschools. These days adopting daycare software is a surefire way to attract families with young children. A tool like brightwheel's center management feature will streamline your center's admission process, record keeping, and reporting, saving you up to 20 hours per month. 

You can also use brightwheel for recording and tracking daily events and activities, and sending real-time updates to families throughout the day. It also offers secure, digital check-in/check-out and a paperless billing system. This is a great way to keep your families looped in on daily activities and handle all of your administrative tasks in one place.

Your business is ready!

Writing a business plan can be stressful, but it doesn’t have to be. Once you secure the proper licensing, use the information in this article to guide you through creating a solid daycare business plan that drives investors and financing to your business.

These are just the basics to get you started. For further information, the U.S. Small Business Administration’s website has detailed instructions on creating each necessary part of a successful business plan. 

Childcare and Preschool Supply List

A list of everything you need to start an early education program.

Subscribe to the brightwheel blog

Recent Posts

• Navigating Childcare Grants and Other Funding Resources in New Mexico May 17, 2024
• The Basic Concepts and Practices of the Montessori Method May 17, 2024
• Understanding Learning Styles and Multimodal Education May 17, 2024
• Navigating Childcare Grants and Other Funding Resources in Minnesota May 16, 2024
• Navigating Childcare Grants and Other Funding Resources in Mississippi May 16, 2024

Posts by Tag

• Running a business (199)
• Child development (164)
• Curriculum (83)
• Financial health (51)
• Staff development (47)
• Family engagement (40)
• Small business funding (38)
• COVID-19 (30)
• Technology (27)
• Family communications (15)
• Staff retention (15)
• ECE career growth (13)
• For Parents (10)
• Diversity and inclusion (9)
• Enrollment (7)
• Staff appreciation (7)
• Marketing (6)
• Public policy (6)
• Staff hiring (5)
• ECE current events (4)
• Family retention (4)
• Salary guides (4)
• Leadership (2)

Don't bother with copy and paste.

Get this complete sample business plan as a free text document.

Day Care Business Plan

Start your own day care business plan

Safe Kids Child Care

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">, opportunity.

There are an increasing amount of families who have become dependent on two incomes, which has created the necessity of the child care industry. Increasing need means that there are more children that are in need of a safe enriching place to go. 

Safe Kids Child Care will succeed by offering its clients’ children a safe and secure care environment, and close personal attention. The goals of the center are dual-sided: to help parents feel good about the care of their children, and to make it a safe, educational, and fun experience for the child. 

Safe Kids Child Care has a focus on meeting the local need for child care services within the 10-mile radius of Lynn. Children are taken in flexibly on either a full-time or part-time basis.

Competition

There are over 300 child care providers in the local area. The larger commercial chain child care centers, such as KinderCare, have a majority of the market share. These larger chains compete well because of a good reputation among the consumer market. Safe Kids Child Care offers a lower staff to child ratio, which is appealing to most parents. Additionally, the company maintains child care fee levels that are 5-10% below the average of that of the large commercial chain child care fees.

 Safe Kids Child Care offers a lower staff to child ratio, which is appealing to most parents. Additionally, the company maintains child care fee levels that are 5-10% below the average of that of the large commercial chain child care fees.

Expectations

Safe Kids is an exciting opportunity that provides safe and secure child care to the Lynn, MA neighborhood. Safe Kids will reach sustainable profitability over the next three years. Through a combination of well-priced services, outstanding customer service, and a well seasoned management team, Safe Kids will quickly gain market share and a reputation as a premier child care provider.

Financial Highlights by Year

Financing needed.

We plan on having $40,000 to start our business. Each owner will contribute $20,000 to our opening costs. 

Problem & Solution

Problem worth solving.

The child care market is quite competitive in the Boston area. There are over 300 different facilities. There are two general types of facilities. The larger style is commercially run, typically a corporate franchise center. These facilities are both regional and national. Currently, the four largest child care facilities in the USA account for 29% of the market. There are also many different smaller locally run and owned faculties. While the largest facilities can host between 20-100 children, the locally run centers typically have a maximum capacity of 20 children.

Target Market

Market size & segments.

Full-Time Working Couples

The company wants to establish a significantly large full-time regular client base in order to establish a healthy, consistent revenue base to ensure stability of the business. Customer relations are extremely important, as it is imperative to keep the parents pleased in order to keep their children in the daycare center.

Part-Time Workers / Drop-Ins

Part-time workers and drop-ins comprise approximately 20% of revenues. While this market is not the primary focus, sufficient flexibility to handle this secondary market is important to producing supplemental revenues.

Current Alternatives

Our advantages.

Child care competitive edge is the facility’s efforts in obtaining all appropriate licensing and certifications. Additionally, thorough pre-hire background screenings are performed on all individuals before hired for employment.

Keys to Success

Keys to success for the company will include:

• Maintaining a reputable and untarnished reputation in the community. 
• Quality care. 
• Competitive pricing. 
• Flexible hours.

Marketing & Sales

Marketing plan.

The differentiating effort will be benchmarked customer service. A customer-centric philosophy will be infused within the entire organization. Safe Kids will spend extra money to attract and train the best employees. This is especially important because it is the employees that interact with both the children and parents and will have the best chance to impress them enough to turn them into a loyal customer as well as to be vocal in telling their friends about their positive child care experience. 

We will have a Social Media Campaign which uses Facebook and Linked in. We will have experts answer child care questions if the public wants. This gives the public confidence that we know what we doing. We will have customer reviews and allow our customers to talk to us. 

Safe Kids Child Care will make a significant profit through the excellent care of children. Even though Safe Kids charges less, the company will see profit within the first year due to beneficial word-of-mouth advertising. The company expects to double its’ clientele every six months, for the first 18 months.

Locations & Facilities

The facility will originally consist of a 1,300 sq. ft. house in a quiet, residential neighborhood. The yard will be fully fenced in, to ensure no one can either come in or wander away. The yard will be furnished with safe, entertaining toys, as well as a sandbox.

Milestones & Metrics

Key metrics.

Our Key Metrics are: 

• Facebook page views, Twitter re-tweets, and new potential clients calling saying that a current client referred them. 
• The number of children we take care of daily 
• The number of children that are signed up for the monthly care 
• The amount of training our staff has to take care of children and keep incidents down to zero. 

Ownership & Structure

This business will start out as a simple proprietorship, owned by its founders. As the operation grows, the owners will consider re-registering as a limited liability company or as a corporation, whichever will better suit the future business needs.

Management Team

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

Personnel Table

Financial plan investor-ready personnel plan .">, key assumptions.

Our key assumptions are: 

• There are children from families where both parents work or need to work. The children need somewhere safe and enriching where they can grow and make friends while their parents get a chance to get back to him.
• Adults sometimes have emergencies and they need to have a place to leave their children when they can’t be with them 
• The community appreciates the it takes a village mentality. They appreciate we have resources and experts that will answer their questions. We assume they will come to us if they need help, we won’t go out of our way to advise. 

Revenue by Month

Expenses by month, net profit (or loss) by year, use of funds.

Our Start-up Expenses are $3000 including: 

Legal $1,000

Brochures $350

Stationery etc. $100

Activity Supplies $250

Food Preparation Supplies $300

First Aid Supplies $200

Cleaning Supplies $150

Nap Time Bedding $250

Sources of Funds

Our two owners will put up 20,000 dollars each, totaling 40,000. 

Projected Profit & Loss

Projected balance sheet, projected cash flow statement.

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

How To Start An In-Home Daycare Business

If you are thinking about starting your own in-home daycare business, you probably love children and want to be around them all the time. Amazing! Starting a business is a completely different animal.

Table of Contents

Here are the 8 steps to starting a home daycare business:

• Research the Rules of Childcare in Your State
• Insurance and Financial Planning
• Legally Organize Your Business
• Training and Instruction
• Get to Work

Starting any business takes an entrepreneurial spirit, some risk-taking, and the ability to think like a business owner.

Ask yourself some questions. What kind of space do I have? How many children can I handle? Am I willing to hire others to help me?

What do I want my hours to be? Is there a need for better childcare in my neighborhood? How do I get customers?

Get those answers down on paper. Think about your short-term and long-term goals and write them down. It is ok if you do not know the answers to these questions right now. The information in this article will help you get there.

Step 1: Research the Rules of Childcare in Your State:

Research child-to-caregiver ratios, CPR and emergency certifications, and other disaster and emergency training.

Always keep the concerns of your potential customers (i.e., parents) at the forefront of your mind. Think about what you would be looking for if you were trusting another person to care for your child(ren).

Nothing is more important to a parent than their children and they are trusting you to keep them safe and happy.

Step 2: Insurance and Financial Planning:

Investigate your state, local, and federal laws regarding insurance and tax law. Homeowner’s insurance does not usually cover business activities.

General liability insurance for accidents and unforeseen lawsuits for other mishaps also needs to be researched.

Commercial auto insurance should be in place if you plan on transporting children. Field trips, anyone? You could face a major legal issue if you use your personal vehicle for business purposes, and heaven forbid, you are in an accident with a child in your car.

There are laws in place for a reason. They are designed for your protection as a business owner and the protection of the children, your staff, and your property.

Do you need alterations to your home to accommodate children? You may be subject to a home and property inspection before you can start accepting children.

What is your budget for toys, supplies, and food?

Do you have a way to keep track of your income and expenses?

Do you have a CPA to help you determine how you are going to account for income expenses, how you will be taxed, and what you can and cannot deduct for a home-based business?

These are just some of the financial considerations that can help determine how much you will need to charge parents to cover expenses and earn some profit.

After all, you do not want to work for free.

Learn more about how much it costs to get started HERE !

Step 3: Legally Organize Your Business:

If you are looking to grow your business and hire staff, a Limited Liability Company might be the way to go.

Consult your CPA and attorney for recommendations that will suit your personal situation.

This is also a good time to start thinking about a name for your business and creating marketing materials to promote your business. Be creative! How do you want the world to see you?

Step 4: Funding:

Starting any business can be costly, even if you have saved up some cash to put into it.

The good news is, there are organizations out there that may be able to help you get started.

There are usually local, state, and federal grants that may be available. The Small Business Administration may also be able to give you a loan to help with startup costs.

Step 5: Training and Instruction:

Some states will require training and instruction before you can apply for a license to start a home-based childcare business.

It behooves you to become properly licensed if you want parents to trust you with their children.

You will also want to consider a teaching curriculum program certification. Childcare is not just group babysitting.

Most parents need help from private childcare providers when their kids are between the ages of 0 and 5 years old. These years are crucial in the child’s cognitive development.

Parents want childcare providers to help set their children up for pre-kindergarten and kindergarten.

A majority of what, and how they learn, rests with you!

A lot of states require a certain framework for childcare providers regarding education or teaching certifications.

You will need to research your specific state’s criteria.

Step 6: Safety:

Obviously, when caring for young children, safety is of the utmost importance.

The first step is to safety-proof your home. If you have your own children, you have probably already done this.

Things like outlet covers, securing bookshelves to the wall so they cannot be pulled down, child-proofing sharp corners on tables, and making sure cabinets with cleaners or other hazardous chemicals are secured with child-proof latches or locks.

Be prepared for any medical emergencies, as well. CPR and choking training, administering allergy medication, and having emergency plans in place are paramount.

You do not want yourself or your staff to be caught off guard in the event of an emergency where time is of the essence.

Running fire drills and having an action plan in place is also a great idea.

Step 7: Inspection:

Most states will have to inspect your physical property to certify that it is suitable for childcare. This includes the yard, any play equipment, and the room where the children will be in for the day. If you have followed all federal, state, and local laws that you previously researched, you should pass with flying colors.

Step 8: Get to Work:

We are talking about advertising and marketing to get customers now. Create a logo and design your business cards. Vistaprint is inexpensive and they have many templates to help you create your vision. Use colors that stand out. If you look at a business card display, you will notice that they are mostly white and boring. Create something that will catch people’s eyes. Take your time on this creation because you will want it to reflect not only what you do but who you are. Think first impressions.

Even if people are not looking for a childcare provider at the time, they will remember your card and may very well take one. You want to be memorable.

Do a google search for “daycare providers” in your area and see what pops up. Chances are, there are local websites or newspapers that you may be able to contact to advertise your service with. There are many, many free publications nowadays.

Check your local libraries or other community centers that provide programs for children. Ask them if you can leave your business card on the counter in a display case.

Create a website. Add your business to a Yelp directory. Create a free “Google my business” listing on Google Maps. Many people search for local businesses. Google maps will allow your business to show up when people search for things like “childcare providers near me.”

Use social media. Create a free Facebook business page and get on LinkedIn. These are the fastest-growing ways to advertise your business, network, and help you get noticed.

Tell your family and friends and ask for referrals. Word-of-mouth is usually the best way to get clients, but you cannot have only one marketing source. Volunteer at community centers, religious organizations, and other family-centered organizations to network.

Leave business cards wherever you go. The businesses you frequent are a great start. The local coffee shop that you visit every morning, your dry cleaner, deli, or any other place you patronize where everyone knows you. All you have to do is ask them if it is ok to leave your business card on their display. You spend money at their establishments, they should be willing to help you out.

Create a customized pitch to tell people what you do. We call this an “elevator speech” in the business world. It should be a 15-20 second blurb about what you do and what makes you great at it.

The goal is to spark a conversation. You want people to ask you more questions about the services you provide and what makes you different from the rest of your competition.

You now have a simple 8-step process on how to start your own in-home daycare business. Remember to do your research, take advice from your CPA and attorney, and invest in marketing.

Related Questions:

How Long Will It Take For My Business to Become Profitable? Building a profitable business takes some time depending on the needs of your customers (i.e., supply and demand). Some things you can control, some things you cannot. You must dedicate yourself to making your business work. You must be willing to “pound the pavement” to build your clientele. It takes discipline, commitment, and hard work. Remember that you will never know success if you do not experience failure. Being a business owner has many ups and downs. Believe in yourself and your vision and never give up on your dreams!

What Do I Need to Know if I Have to Hire More Caregivers? This is a great problem to have because it means that your business is growing! However, it comes with additional costs. You will need to pay your employees, obtain worker’s compensation insurance, and cover employer payroll taxes. This will impact your bottom line. You may need to figure out how much you can pay your employees and whether you will have to adjust your tuition rates to accommodate the new expenses.

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.

To learn more on how to start your own daycare checkout my startup course and documents here.

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.

1 thought on “How To Start An In-Home Daycare Business”

• Pingback: How Do You Become a Licensed Daycare? - Daycare Business Boss

Comments are closed.

• Skip to primary navigation
• Skip to main content
• Skip to primary sidebar
• Skip to footer

Legal Templates

Home Business Business Plan Daycare

Daycare Business Plan Template

Download our template and create a business plan for your daycare!

Updated September 22, 2023 Reviewed by Brooke Davis

When you are ready to start a daycare business, you need an effective plan outlining how to get there. High-quality child care is in high demand, but you must be prepared for the challenges of starting a new business.

A solid business plan will get you off on the right foot before you even open the doors of your new facility.

With these helpful tips, you can learn how to make a business plan for a daycare center. Whether you are looking to watch over young children or even need a dog daycare business plan, Legal Templates is here to help you get started.

Why You Need a Business Plan for Your Daycare Business

How to write a business plan for a daycare.

• Management Team

Daycare Business Plan Sample

A business plan sets the stage for how you will operate your business and how you will get it running. A daycare is no different. Opening a daycare requires intensive planning, legal compliance, and understanding of your market.

A daycare business plan template walks you through the steps to build a proper path forward. Every successful business is planned correctly, not as you go along.

A sample daycare business plan pdf or Word document lays it out for you. You can learn how to put it together and what you must include. Many business plans help you understand what you must do to prepare.

Some are designed to recruit potential investors to your cause. Either way, you need a business plan to prepare you for the challenges and successes ahead.

Knowing how to write your daycare business plan can be tricky without some help. You may not have done this before, but a daycare business plan example can help.

Follow these writing tips in each section to create a strong business plan for your future daycare.

1. Executive Summary

The initial section of your business plan is the executive summary. This part of your plan is an introduction for whoever reads it. It is designed to offer an overview of the remaining sections. It should be concise and add only summary details—this is not the section for intensive information or data.

The executive summary will highlight what your daycare business will look like and the most crucial section of your entire plan.

This section may provide information such as:

• A business address
• Phone number, email address, and other contact information
• List of owners
• Banking information
• Start date for the daycare
• Client base
• Market niche
• Factors for success

The executive summary lets you make a case for why your particular daycare will be successful and competitive. It is also the section that helps you sell yourself and your business to potential investors who may play a critical role in starting your daycare.

Provide a mission statement that reflects your goals for the daycare and your motivation for starting your business.

2. Management Team

Your daycare business plan should include important information about your management team. The first part of this section may address ownership of the business itself. It should outline all essential ownership details, such as:

• Legal names of every owner
• Each owner’s proportionate share
• The format of ownership percentage (i.e., stocks, capital investments, etc.)
• The format of the business (Corporation, LLC, etc.)
• Contact information for each owner

You want everyone who reads this business plan to know who has a stake and how their interests are represented. These details are a crucial part of business formation and preventing costly legal disputes in the future.

The management team section should also include the profiles of your management staff. These people will run the business daily, and they should be properly vetted before being put in charge.

Your business plan should list the management teams’:

• Names and positions
• Summary of responsibilities
• Credentials and education background
• Prior employment or experience
• Early childhood education licensing or other credentialing
• Management experience
• Salary and benefits
• Past success in a similar role

This information should demonstrate why these are the right people for the job. Not only does it help you know how your business will run, but it also shows others you have a proper plan in place for your daycare.

3. Products and Services

This section lets you talk about why you are starting this business in the first place. You will outline the services or products you intend to sell to consumers. For a daycare, it should outline the following:

• Who is being cared for: Children, elderly adults, or pets?
• Business hours
• Staff costs and required credentials
• Will you offer food, diapers, and other child-care products?
• How will you measure sales metrics

Daycare is typically considered a service, but product sales are also often a part of this model. Your plan should adequately account for how you will handle this dual purpose and how it fits into your business model.

4. Customers and Marketing

You must identify your market and how you will get customers into your daycare. This section will focus on your area’s need for daycare services and the types of customers you expect to get.

Identification of customers is a vital part of a business plan and should include details like:

• How many parents need childcare services?
• What costs can families be expected to pay for your services
• The community you will target
• Demographic data for potential customers

With your customers in mind, you can focus on your marketing strategies. You want to differentiate yourself from competitors and ensure the community knows your new business. The daycare business plan must outline how you will achieve these goals.

A marketing strategy should combine both traditional and digital marketing methods, including:

• Open houses
• Word-of-mouth advertising
• Advertisements in the paper or yellow pages
• Billboards or other ads
• Television, radio, or internet advertisements
• Social media pages

5. SWOT Analysis

A SWOT analysis will address your daycare’s strengths, weaknesses, opportunities, and potential threats. This analytical method examines your company and how it will operate.

It puts each of the four metrics into a visual matrix to help prospective business owners quickly identify favorable and unfavorable factors that may affect their business venture.

A SWOT analysis should focus on how your daycare services can perform against competitors. It may address factors like:

• Any threats the daycare may face
• Competitive advantages and why they would be successful
• Areas that may be improved over time
• Technology or resources the company may use to increase efficiency
• Internal factors that may affect economic success

Detailed SWOT sections show investors you have done your homework and give you valuable data to make informed business choices.

6. Financials

A business plan should address the unique financial situation you face. Your daycare business plan should demonstrate your break-even amounts and expected profit margins.

It will also address the costs and the areas of revenue you expect. You will want to address the following:

• Enrollment fees
• Payment plans
• Cost of supplies and materials
• Employee costs
• Regulatory costs
• Additional program offerings and revenue
• Necessary loans or capital improvements

A well-developed budget can demonstrate expected cash flows versus expected expenditures. Knowing how to handle these costs will be incredibly helpful in starting your daycare.

7. Operations

Your operational plan should outline specific procedures your business and staff will follow. It will list employees and those in management positions and their responsibilities.

As in your management section, a detailed “chain of command” is essential. Staff are an important part of your operations and should be detailed here.

One of the most important aspects of a daycare operation is its location. It would be best if you addressed the following:

• The facility’s address
• The type of area it is in (residential, commercial)
• The space available and amenities
• Why is it a prime location
• Accessibility to the community for drop-off

You should also list your business hours and the services you will have available at different times. Child daycare centers differ in when they offer care—whether during the day, evenings, or even on weekends.

If you are doing other forms of daycare, you may even utilize late or overnight hours. You can decide how you run your business, but operations should be clearly outlined in your business plan.

8. Appendix

The appendix section allows you to include other documents that add to your business plan. They may include legal documents like licensing credentials, insurance information, and business formation documents.

Additional documents in this area are meant to support your business plan. The appendix might also include the following:

• Reference letters
• Photographs of the facility, locations, or general area
• Market research data
• Compliance Requirements

The appendix is a flexible section that lets you add supporting documents and other relevant information. Only add details that are helpful to your business plan. The appendix does not need to be lengthy or filled with fluff.

Legal Templates has the daycare business plan sample you need to construct your plan. With this sample at your disposal, you can formulate a business plan for your daycare to show to investors or for your purposes.

You may also use a business plan builder template to help you construct your daycare business plan step by step. See the sample below to help you get started.

• Legal Resources
• Partner With Us
• Terms of Use
• Privacy Policy
• Do Not Sell My Personal Information

The document above is a sample. Please note that the language you see here may change depending on your answers to the document questionnaire.

Thank you for downloading!

How would you rate your free template?

Click on a star to rate

Everything You Need To Know

Home Daycare Business Plan

Sure, starting a home daycare seems simple enough – it’s just babysitting, right wrong.

Running an in-home daycare is running a business and you need to treat it as such. As a sole proprietorship business, you are liable for the well-being of every single person that sets foot on your property.

As with any new business, you need to have a detailed outline on how it’s going to run. This is known as a business plan. You’ll use it to figure out how you’re going to run your business and more importantly, make money. 

If you haven’t had a chance to check out the  Getting Started Page , go do that now.  You will need to start gathering information about specific licensing requirements for opening a family child care business in your area. Plus, you will want to get started on some of the paperwork for your business license, police records, and first aid. 

GRAB A COFFEE

Because we are going to cover a ton of information, jump to a section, business summary.

Who Are You? | What do you plan on doing? | What is going to make you stand out?

FINANCIAL PLAN

Rates | Start-Up Costs | Record Keeping | Payment Policies | Taxes

OPERATIONS PLAN

Designate Your Home Daycare Area | Develop a Parent Handbook | Schedules | Quality Control Checks | Interviewing Parents

MARKETING PLAN

Your own website | Flyers with tear off tabs | Word of mouth | Social Media | Newspaper Ads | Online Daycare Advertising Sites | Craigslist, Kijiji | Put a sign on your yard 

Let’s get started!

Home daycare business summary.

Start by briefly summarizing the following: who you are, what are you planning to do? What will set you apart from other child care businesses? You will use this summary over and over again during the planning process.

So NO CHEATING! Don’t skip this step.   

Who are you?

Simply state who you are and why you are qualified to open a home daycare. Don’t worry if you think you aren’t qualified. You don’t need a background in early childhood education to run an in home child care business. Chances are you are more qualified than you think, so take a deep breath and just go for it. The following are a few examples:

I am Liz, a stay at home mom of 2.

I am Sally, a preschool teacher taking a break from teaching to stay at home with my kids.

What do you plan on doing?

List the types of services you plan on providing. Think about who your ideal client would be and what services they would need. 

Ask yourself the following questions to identify your ideal client :

What ages of children do you most want to have in your home daycare?

Would you rather have sets of siblings?

Do you only want to take on full time children or do you prefer only part time children?

Take some time to really brainstorm your perfect home daycare situation and then write a summary.

For example:

My ideal clients would be a non-shift worker whose contracted hours are 8-5.  The children would be between ages 1-4.  

My ideal clients are teachers, who do not need care in the summer. The children would be between the ages of 1-4. 

Also think about the services you don’t want to offer. If drop- in care doesn’t work for your family, don’t offer it. You will have moments when you are tempted to change your services for parents, but adjusting services based on individual cases will only hurt your business. Make sure you are very clear on what you want to offer and what you don’t.  

Here are some examples:   

• Provide child care services for children between the ages of 1-5
• Provide Fulltime, part-time, drop in services
• Provide Before and after school child care 
• Provide 24 hour care for shift workers

What is going to make you stand out?

Try to find something that will set your home daycare apart from other comparable businesses in your area. Now don’t go all politician here and make some wild and crazy promises that you won’t be able to keep. It can be as simple as a weekly craft or newsletter. Specializations could include: 

• Do you speak another language?
• Do you have a special talent?  (Music, Art)
• Will you provide transportation?
• Will you cater to shift-workers who work odd hours?
• Will provide tons of outdoor time?
• Will you be an allergy friendly house?
• Will you serve only organic food?

We will go over more market research in the following section, but start asking around in local Facebook groups and social media groups for ideas. What are local parents looking for in home daycares?  You might be surprised by their answers. It can be as simple as wanting a home daycare to be open until 6 pm. Or something different like a home daycare that provides pet sitting. 

Now, put it all together in a brief summary. It doesn’t have to be perfect. At this point you can cut out what you don’t want to include or add anything extra you think will make your business stand out.  

Here are a few examples 

I am Liz, a stay at home mom of 2.  Liz’s home daycare is located in the Willowbrook area and provides care for children 1-6 years old.  We spend our days, exploring local parks and making crafts.   

I plan on opening a home daycare in the Berryhill area, with transportation services to Berryhill elementary and Markhill elementary.

Home Daycare Financial Plan 

In this section, we’re going to work out how much money you need to charge your clients in order to turn a profit. Let’s face it, having positive cash flow is kind of the point and if this venture isn’t going to provide you with the extra cash flow you want, what’s the point? And although there aren’t a ton of start-up costs for opening a home daycare, there are operating costs that can cut into your profits. Here we will create a budget for expenses, and touch on tax planning.    

Sure, we would all love to charge the highest rate possible. Who doesn’t want to make a fortune at their home business? but that’s not always feasible. In order to attract clients, you will have to charge rates that are competitive with other child care services in your area. Remember, that being a child care provider is a lot of work. You will be working long hours, with few breaks So, don’t undercharge yourself, either.

So how do you determine what to charge?

Start by conducting some market research about your competitors. 

You don’t need to break out the excel sheet but you should gather details about your other child care providers in your area. Start by calling different home daycares and child care centers to find out their rates and what they offer. After a few, you will start to see a general average rate for your area. 

Then ask yourself, does any daycare stand out more than the others? If so, what makes them unique? Are they charging a premium?  

Now, go back and revisit your business summary. Did you identify something that will make your home daycare stand out?  Did any of the home daycares you called offer something comparable? What were they charging? You may need to expand your research beyond your local area to find a comparable home daycare.  

Types of rates

Your rates should reflect how you plan on running your home daycare. If you haven’t thought about this yet, it’s a good time to start. Ask yourself if you would prefer to have your number of kids on a monthly basis or have a few full-time and a few part-time kids.  

Monthly Rate

Charging a monthly rate is fairly straightforward. This is a set rate for the whole month regardless of how many days are in the month. This rate should be a set amount and not fluctuate.  

Part-time rate 

You can do a few things with part-time rates. Charging a set rate for a certain number of days per week is one option. Another option is charging for a certain number of days per month.

2 days a week is x amount

3 days a week is x amount

Or 10 days per month is x amount

You’re only allowed to have so many kids in your care, so if you plan on taking on part-time kids make sure that it works in a way for you to be able to fill the other days. 

Sally comes three times a week only on Monday/Wednesday/Friday. You can then offer care to another child on only Tuesday/Thursdays. Although this system is more difficult to make work it is possible.   

Margo comes 10 days out of the month. Her parents let you know a month in advance what those 10 days are. With plenty of notice, you can fill those extra spots.   

Frankly if you want to have a steady income, only take on full-time kids. Or only take on 1-2 part-time kids in addition to 1-2 full-time kids.  

If you plan on having a drop-in service, make this your highest per-day rate. Drop-in’s can be a lot of work.  Often these kids are not used to daycares. 

Don’t expect to be at full capacity right away. Budget for 75% to 85%. 

Figure out your break-even point. Is there a minimum amount that you “need” to make it worthwhile for you to run a home daycare. For some, this will be $2,000 or other it will be $500.  

Say you need to make $2000 per month and through your research, the average price for childcare in your area is $750.  

You would need to take on at least 3 full-time kids to make your $2000. 

Desired income + monthly expenses / Your rate = How many kids you need to take on.   

***Important this calculation does not take in consideration that you still need to pay taxes on this and in Canada, you need to pay into the Canadian Pension Plan twice.  (See more on  Using Your Home for Daycare ) If this is a concern for you, adjust these amounts accordingly.  

Now if you are just running a home daycare to make some extra cash, this might not be such a concern to you, but remember your time is still valuable.     

Remember, if you are able to add more value to your services you should be charging more. Also, keep in mind, you should increase your rates every year to keep up with increases in the cost of living.    

Start-Up Costs

Although there are not a ton of start-up costs to running a home daycare, there are a few that will have to come out of your pocket before you can take on your first client. Here is a list of possible startup costs for opening your home daycare:  

• Business license
• Licencing fees (If required)
• First Aid Courses
• Police Checks
• Additional Home Insurance
• Additional Auto Insurance
• Operational Supplies  (Check out The Ultimate List of Home Daycare Supplies)
• Marketing/Advertising costs

Record Keeping  

Record keeping is so important when running a small business. Don’t fall behind on this.  Set aside time each day to record your attendance and some time at the end of the month to update your expenses and income reports. Get a binder or file folder to hold all your important documents.

You should record your attendance daily.  Keep a record of who attended each day, when they were dropped off and picked up. Depending on the type of services you offer the number of hours you work could vary daily or stay the same. Regardless you will need to know this for tax purposes.  

Record every time someone pays you. Use an Excel sheet, an online accounting program or a notebook.  

Let’s face it no one becomes a millionaire running a home daycare. You want to save as much as possible of what you do make.  And one way of doing that is paying less in taxes. Make sure you save your receipts and record all your expenses. The more you can deduct the less tax you will have to pay at the end of the year.    

Here is a list of typical operational expenses for home daycares:

• Supplies for activities
• Curriculum materials 
• Fees (e.g. licensing)
• Maintenance
• Office supplies
• Professional services (e.g.lawyer or accounting)
• Accounting Software
• Supplies (cleaning, kitchen and teaching)
• Telephone and Internet
• Utilities        

Payment Policies

How are you going to make sure you get paid .

You can require payment either monthly, bimonthly or weekly .  Also include how far in advance you want to receive payment. The first of each month is commonly used. However, you can choose to require payment two weeks in advance of services. You can match your payment schedule with the parents’ salary payment and get paid the same day they do.  

Decide how you are going to handle drop-in payments?  Will you require payment in advance? 

Are you planning on charging late fees?  If so, when do you plan on requiring payment.

For example:  

Payment for late fees are required within 24 hours from the occurrence or subject to termination of care

Payment for late fees will be added to next months payment.  

Inform parents what forms of payment you accept, most common are cash and Email Money Transfer (EMT).

You should state that fees are nonrefundable and services are subject to termination if not paid on time.

Develop a system for yourself to ensure you’re on top of getting paid and nothing gets missed. You don’t want to be working for free.  

For example you can make a policy that part-time parents need to have their required hours submitted by the 1st of every month. You can send a reminder email the week before to ensure you have enough time to fill any empty spaces.

You can you also use an application like Waveapp to create recurring invoices, send payment reminders and generate payment statements.  This program is free. 

What if a parent doesn’t pay?  

You need to decide before opening what your policies will be on non-payment. Unexpected bills and extenuating circumstances do come up for parents. However you have to remember you’re running a business here and you deserve to be paid. Simply put: don’t provide services without for free.   

The last thing you want is a big tax bill at the end of the year. Decide on how you plan on address paying your taxes. The easiest way is to put a little away each month in a savings account. You can always set up an automatic transfer, so you don’t forget.

Get a file folder to keep all your receipts in one place.   

Decide whether you are going to do your own taxes or have an accountant file your taxes for you.  If you go the accountant route, look for an accountant who is knowledgeable about home daycares. 

*Keep in mind the legal structure of most home daycares is that of the sole proprietorship. On the tax front, the business’s income and expenses are included in the tax return of the owner. Since the business is not legally separate from its owner, it is not required to file separate tax returns.

  Home Daycare Operations Plan

Your operation plan defines the nitty gritty details how exactly you are going to run your business.  While there are regulations that home daycare have to follow, you have a lot of freedom in how you run your home daycare. You get to choose your hours, days off, policies and even which children you take in.  

Designate your home daycare area

If you have not by now, figure out all the areas of your house you will be using for your home daycare. You should include a dedicated area play area, sleeping area, eating area and bathroom. Calculate the square footage and keep it handy for your taxes.  

Now start addressing your supplies needs for each area.  

You might already have everything you need but check out  The Ultimate List of Home Daycare Supplies . This post goes into detail on everything you possibly can think of to run a home daycare.

Develop a Parent Handbook – Policies and Procedures

If you want your home daycare to run smoothly from day one, you need to figure out your policies and procedures. While this sounds like a daunting task, it will be incredibly helpful when it comes to communicating your expectations with parents.       

A Parent Handbook is an easy way to share your policies and procedures. It’s an informational guide for parents outlining everything you expect from them. What they should expect from you, payment information, behavior policies and emergency information. A handbook sets you up for success by getting everyone on the same page, but it’s up to the parents to read it.

Hours of Operation

What hours do you want to work? 

What days do you want to be open?

Keep in mind the average person works 9-5 Monday through Friday and must commute to and from work. Yet there still is a market for part-time, overnight or even care on weekends.

It’s tempting to change your hours in order to sign a new client. But over time your work- life balance will suffer and you will end up burning yourself out.

Contracted Hours / Days

  You should insist on each child having contracted hours. Contracted hours are the time/days the parents will be dropping off and picking up their child. For example: If you have a part time child that comes on 3 days a week on Monday, Wednesday and Friday 9am to 5pm, you can schedule other part time children around those days to fill your Tuesday and Thursday time slots. If the clients need to change their contracted three days to a different three days, in your contract, specify that you can refuse such changes due to a conflict and have the right to end the contract.  

Contracted hours allow you to schedule activities. You will know approximately when each child will be coming, and you can plan around drop offs and pickups.

While late drop off and picks happen, you want to make sure that the parents know you are serious about open communication. Be sure to ask them, if they are going to late that they call or text you to let you know. You will soon find out that maintaining a schedule and following a routine is important.

Holidays   

What holidays do you want to observe?

It’s widespread practice for clients to pay regular fee for civic holidays. For example, your monthly rate is $800, so you would not give a discount because you’re closed for a holiday.

You can choose to either charge parents for your vacation days or not. But, you must make this completely clear to clients before they sign your contract.  

Be sure to state that if the parent decides to take a holiday or day off and pull their child out of your care for that day, they still pay your full monthly fee. They will not receive a refund or credit.  This is important because often you put out your own money for food beforehand. You don’t want to be losing money because a parent took a Friday off. Your time is valuable and there is a cost to holding a spot for them.        

Some providers also include a few paid personal days in their contract. This is 2-3 days that they would elect to take of during the year the parents would pay for. For example, you want to take next Friday off for a funeral. You would inform your parents that you will be taking a personal day. This would be one of your paid days off. This saves you the hassle of issuing refunds or credits for having to take a day off.

Pickup and Drop off Policies

Nothing is worse that a parent drop off a child early and you’re still in your bathrobe. Or you need to drop your kid off dance class and a parent hasn’t pick up their kid yet.

Most parents are good about picking up their children on time. Unless an emergency arises, you shouldn’t have a problem. But it’s always a good idea to have something written in your handbook about early/late drop offs. This is primarily so that you are not being taken advantage of. The chances that you are going to have to charge a late fee is slim, but it is a good idea to put a monetary value on being late such a $5 fee for every ½ hour the child is in your care past their contracted hours. Most large daycare centers have similar policies and strictly enforce them.  

Once a child is in your care, you are responsible for who you release that child to. You need to have it written in your handbook and contract, who is allowed/ not allowed to pick up a child. It is best to get this in writing, so in the case of a mix up you can prove you have done your due diligence. Specify that you will be asking for photo ID before releasing a child to anyone you have not met in person. 

Restraining Orders   

In the event of a court ordered restraining one parent from a child, you need to have a legal copy of the restraining order and a written note from the custodial parent. Without these items on file you can’t prevent the non-custodial parent from picking up the child. You don’t want to be in the middle of a messy divorce. 

Provider’s Sick Day Policy 

If you need to close on a given day because of illness, you need to decide if you will provide a refund for the day.  Most home daycares do not charge customers for their own sick days. Or have a number of sick days outlined in their contract.  

Illness Policy

You wouldn’t invite someone over to your house that had been up vomiting all night, so don’t do it with your home daycare. Parents will test you on your illness policy, but you need to stand firm. You may have to remind parents that bringing a sick child into a dayhome spreads the illness to not only the other children in your care, but also yourself, potentially rendering you unable to care for their child.  

Specify the symptoms you consider a child to be too sick to attend. Make a list of symptoms, then specify when a child is safe to return. Generally, a child should be well enough to take part in normal everyday activities.

What are you going to do when sickness develops during the day?

Outline what you expect parents to do. For example, will you call them and expect them to come pick up their child immediately? 

Ask parents to let you know as soon as possible if their child won’t be attending due to illness or for any other reason. This will allow activities to carry on as scheduled and help you know how many children you need to prepare meals for.

Medicine Policy and Procedure

Get parents to provide written consent before you administer any type of medicine. Parents should label all medicine with the child’s name, dose and dosage times before you administer anything. You should specify that you won’t administer any medicine not complying with the policy. 

Example of medicine policy:

Prior to administering any type of medicine to your child(ren), I require written consent by a parent. All medicine must be properly stored in a container labeled with the child’s name, dosage and times to be administered.  Medicine supplied in unmarked, unlabeled containers and/or without written consent will not be administered.   

Medical Emergencies

Minor bumps and scratches are inevitable. You should specify how will you handle minor injuries. Will you administer first aid, then let the parent know at the end of the day what happened? Or will you call the parents right away?

What are you going to do in case of an emergency injury or illness? Specify who is responsible for the cost of any emergency medical treatment/ transportation. 

Emergency Plan and Evacuation Plan

Provide parents with your emergency plan.  Where you are going to be and how to contact you.  What evacuation sites you are going to be at incase of fire, earthquake, flooding etc.

Behavior policy

  Give a brief summary of how you are going to handle children’s behavior. For example, do you plan on using the “time-out” method?  If a behavioral issue continues without resolve, how do you plan on handling such situations? Think about at what point would you want to end a contract over a behavioral issue.  It’s unfair to the other children in your home daycare if you spend your whole time dealing with one child.

Clothing Policy

Clothing can become a big issue if you don’t specify what you expect. Make sure parents know that you want children to be dress in comfy clothing that can get dirty. You don’t want to be responsible for any stained or ruined clothing. Older children should be able to operate their clothing themselves, without your help. Insist on at least one spare change of clothes regardless of the child’s age. You want to keep children happy and comfortable. Younger children should have at least two changes of clothing (including socks).  

Kindly remind parents that if outdoor apparel is not supplied, then everyone has to stay inside.   Often this can happen in winter time because of a lack of snow pants, hats or mitts. You can suggest that parents leave an extra set at your house to prevent this from happening.  

Meals and Snacks

Provide parents with a schedule of meals and snacks. Inform them if they drop off after a scheduled meal time, you expect the child to have eaten. You don’t have time to supply meals on demand.

Are you going to allow a child to bring food from home? Often parents will sneak snacks into a kid’s backpack,  in case their kid gets hungry. But this can cause conflict between kids and issues for you if another child that has allergies.  For special occasions like birthdays, you can decide on a case to case basis if you are going to allow special treats from home.   

What are your procedures for storing breast milk? Put in place a procedure for yourself, so that you never run out of breast milk or formula.  An example of this would be that you require to have at least half a can of formula on hand at all times. Are you going to be responsible for sanitizing the bottles? or do you expect parents to supply sanitized bottles every day. 

Food Allergies

You need to decide if you will allow children with food allergies to attend your home daycare.  

Can you guarantee your home daycare is safe from allergies? 

Are you comfortable administering an EpiPen? 

Decide which food allergies you will allow.  An allergy to mangos is a lot easier to deal with than a peanut allergy.  Also specify any allergies where parents need to supply the food. Such as in the case of a gluten allergy, you can ask the parents to supply bread, dry pasta or crackers.  Specially foods can be expensive, and you don’t want to blow your whole food budget on one child. 

Potty Training Policies

At one point in your home daycare career, you are going to have to assist with potty training. The key word here is “assist” with potty training.  Communicate with parents that it’s not your job to potty train their child. If they have a method that has been working for them, then you’ll try to continue with that method.  However, their child must wear clothing at all times and you’re unable to follow a strict timed potty schedule. (ex. taking a child to the potty every ½ hour). Children need to be able to pull down and up their pants themselves. Suggest “User friendly” clothing, such as shorts and pants with elastic waist.  Kindly mention if you run out of dry clothing, that you will be calling and expecting them to drop off more. 

Termination Policy

Decide on how much notice you need from a parent before they can terminate their contract. Two weeks’ notice is common, but some home daycares require a month notice.

Outline reasons to parents why you would to end a contract.

Here are some suggestions,

• Failure to provide payment for services
• Routinely late picking up their child
• Failure to complete the required forms
• Lack of parental cooperation
• Failure of child to adjust to the home daycare after a reasonable amount of time
• Physical or verbal abuse of any person or property
• Lack of compliance with handbook policies and procedures
• Serious illness of a child

Other policies and procedures you may want to consider including:

Indoor activities  

What activities are you planning to engage in, circle time, reading, singing.  Give parents a brief summary of daily activities you plan on doing.  

Outdoor activities

How much outdoor time are you planning on having?  Include what your weather limits are. How hot or cold do you consider to be unsafe to play outside?

Napping / Quiet time procedures

Give parents a brief outline of how you are going to handle napping/quiet time.  Do you require all kids to nap? If not, what do you expect from children during quiet time.  Remember this is probably the only time you will get a break during the day. 

Are parents responsible for bringing their own Pack and Play or are you providing beds?

Immunizations Policy

Consider if you need all children to be immunized/or not to attend your home daycare. This is a personal preference. 

Transportation  

Many home daycares provide before and after care for school aged children.  This sometimes includes transportation to and from school in their own vehicles.  Also, some home daycares offer field trips to local attractions such as a library, park or zoo. If this is something you want to provide consider the following:

Do you have a vehicle that could adequately fit all the children?

Do parents need to provide car seats?

What schools are you willing to provide transportation to?

Who is going to pay for admission to attractions?

House rules

Providing a set of house rules is a wonderful way to express your expectations of a child’s behavior.  For example: you expect no jumping/climbing on couches.  

Toys from home

Are you going to allow toys from home? Often these items cause fights among the other children.  An exception to this should be a comfort toy/blanket for napping. 

Two-week trial period

You can choose to implement a two-week trial period for both parties. This allows adequate time for a child to adjust to your home daycare.  At the end of the two weeks, either party can terminate the contract for whatever reason they see fit. Trial periods allows you to see how a child fits into your home daycare dynamic. 

While you can run a home daycare without a schedule, you will save yourself a ton of grief if you have at least a guideline of activities.  You can also include this in your parent handbook to give parents an idea of your daily activities.   

Kids thrive on routines and while you don’t have to have a strict routine, a schedule can help children navigate their day and ease the transition from one activity to the next.  For example, they will get to know that after lunch they go for nap.

Start by setting a time for breakfast, lunch, and snack time s.  Then think about naptime and activities. 

Quality control checks (Cleaning)

Kids are sticky, messy and germy but in a good way. Don’t forget, this is not only your place of work, but also your home and the last thing you want is to be sick all the time. If you take a sick day, you most likely are not getting paid so you should be motivated not to take too many. While you don’t have too much control over what kind of germs enter your home, you can control the spread of it.  

Put in place a cleaning routine. Just like any public washroom, keep a cleaning checklist.  There will be things that you have to do everyday. And other things you will only have to do once a week. Make your checklist as detailed or not as you feel like. 

Items to include:

Bathroom,  Floors,  Bedding &  Toys

Interviewing Parents

The interview process can be a bit scary when you first start out.  But remember you’re also interviewing them too.  

Never commit to taking on a child full time until you have met them.      

For any new prospective client, suggest a “meet and greet.” What is a meet and greet?

A meet and greet is an opportunity for prospective parents to come into your home and check out the space.  It gives parents time to ask you any questions and voice any concerns they may have. A meet and greet also gives you a chance to observe a child’s behaviour and ask them any questions you may have. Such as is your child a bitter? Has the child ever been in a home daycare before.  If so, why did you leave the last home daycare.   

Don’t be afraid to say “no” to a parent if you don’t think their child would be a good fit. You’re better off to be honest and up front. One child can completely change the dynamic of your home daycare and cause you and the other children in your care undue stress.  If you are unsure, then suggest a two week trial period before committing to a contract. Revisit the section of your business summary where you outlined who your ideal client would be. Be picky.  

Now, it’s time to get your first client.  

Home Daycare Marketing Plan

When starting a home daycare business, you don’t just sit there waiting for families to knock on your door. You need to get your name out there.   

If you’re just getting started, marketing your services may not be your strongest skill. Thankfully, there are many ways you can easily advertise your home daycare business.

Here are some ideas for home daycare advertising to give potential customers a better sense of your services.

Your own website

This is perhaps the most inexpensive way of reaching out to parents. A website should introduce your daycare by highlighting the basic information like name, size, location, and the age range you accept. Secondly, you should come up with a business name and logo that stands out from other family daycare services. Obviously, the website should sum up the services you offer.  And you can even outline your policies and procedures. Also list some features like meal/snack options, size of your space, outdoor play setup, fencing, and more. Besides that, you should include short endorsements from past customers so that parents can know their children will be under constant supervision.   

Flyers with tear-off tabs

This is the easiest home daycare marketing strategy. You should make colorful flyers (red, yellow or blue) that show the contact number, email, and services offered. Needless to say, they should be child-friendly – include some pictures of smiling happy children or clip art. It’s worth mentioning that you should not list the price on the flyers. This is because you want the parents to choose a family daycare based on the services, not price.  Flyers work best when they are posted in locations most likely to reach your target market. Where do parents frequent that they may see your ad? The best place to distribute them is in community centers, coffee shops, and libraries.

Word of mouth

Tell everyone about your new venture. You can notify your neighbors, family, co-workers, and friends. And if you already have clients, ask them to recommend a friend.

Social media

The strategy you use on your social media marketing should reach families looking for daycare centers. You should make Facebook page for special announcements, reminders and examples of fun activities. Most parents will appreciate a platform where they can see and share photos of their kids activities. But keep in mind not all parents what to have their kids faces on social media.  Make sure you have a photo release form signed before posting any child’s face.

Other social media platforms you can use include Instagram, YouTube, and Pinterest.

Newspaper Ads

You should include information like your approximate location, opening and closing hours, and anything else that makes your business special. For best results, you may want to place your ads on smaller local papers rather than a big display ad. Of course, it pays huge dividends if you place an ad in the childcare section. It’s important that you inquire on the details allowed, but don’t forget to include the brand name and contact information.

Online daycare advertising sites

Online advertising sites make it easy for parents to search for services in a specific area. They give information on who you are and the services you offer.  Most advertising sites charge a fee to post. If you choose to use one of these sites, always emphasize on any information that makes your business stand out from the competition. And include photographs to showcase your home daycare to prospective clients.

Craigslist, Kijiji

This type of site is commonly referred to as the “hunter’s dream” – you’ll find everything you want here. Even better, you can list your childcare websites. There is a separate section for baby-sitters and daycare providers.

Put a sign on your yard

This will help potential clients know who you are and what you have to offer. All the parents living close to you will be aware of your daycare and will probably mention the same to other parents. These signs can be customized to suit your needs. Be sure to include your business name and contact information.

The above advertising methods will give you an opportunity to toot your own horn. As you embark on the journey, highlight everything that makes your business different from the competition. For best results, do some research to understand the services your competitors are offering. Be creative with your marketing strategies, and you’ll have a full house in no time.