How to Start a Daycare | A Step-by-Step Guide to Everything You Need to Know

You might have worked as a nanny, a teacher, or a parent who sees the gap in the child care industry that needs to be filled. However, it’s essential to know that knowledge in childcare is not the only skill you need to start and run a daycare or a childcare center.

To effectively start one, you must develop a coherent business plan of what you want. Also, look for various ways to help you actualize and streamline the plans of your objectives. The business’s success will highly depend on the management system you adopt. As a small business owner, the startup process of your business will matter a lot depending on the company’s performance in the long run. Keep reading to know how to start a daycare.

How to Start a Daycare Center: A Step-by-Step Guide

Come Up With A Daycare Business Plan

As a daycare business owner, you must research thoroughly to help you create a business plan. Create a unique name for your child care centers at this stage. You will also need to develop a mission statement, a business structure, organizational plans, budgets, and staffing, to mention a few. 

You will also need to state your source of funds for the business clearly. For instance, are you the one who will fund the company entirely? Will you get loans or business credit cards? What kind of business bank account will you need? Are you planning to get partners and investors to come on board? All these need to be clearly stated in your business plan. 

Kids smilling

Consider the Licensing of the Business

There will be a set of rules and guidelines set up by the local authorities where you intend to set up your own daycare center. Daycare licensing requirements are implemented to regulate small business owners and their businesses. 

It’s crucial to comply with all the rules to avoid putting yourself, your business, and the business's image in jeopardy.

 To start, check out the licenses meant for daycare and child care providers. Please read and understand them well to ensure you work within the stated procedures and provide your clients with the best services.

Find a Suitable Location for the Business

kids sleeping at daycare

A location is one of the most critical aspects of the entire business. Depending on your target clientele preferences, you may choose to set up the company right at home or in a commercial area. Start by identifying a suitable location that is strategic and safe for everyone involved, mainly the children. 

The location should be noise-free to offer your little clients a safe and quiet place during their daily naps. In the business aspect, you may consider an area previously used as a daycare center where more parents are familiar with.

Don’t forget the local government’s zoning laws and child care licensing departments’ guidelines.

Purchase Insurance for Your Daycare Centre

The insurance policies you get will depend on the size and type of child care center you will be running. You might require various procedures, such as business insurance, worker’s compensation, property, and liability insurance. 

Note that daycare in a commercial area will have different instance requirements than a daycare set up at home. Consult with the Licensing provider from the local government for guidelines of everything you will need to ensure the business.

Come Up With the Procedures and Policies of Your Daycare Business

You may already know a lot about childcare and even have taken a course in early childhood and development education. It’s crucial but not enough to survive in the childcare industry. Developing your procedures and business policies and even creating a handbook for the staff and families will require you to do extensive research.  

Yellow orange daycare

Benchmarking with existing businesses in the child care business, reading books, and researching online will significantly help with the process. You may also want to develop a plan to manage any crisis that may arise, health and safety issues, and all the nutritional protocols to be followed by your employees.

All the above should be done under the local government guidelines on small businesses.

Preparing the Facility and Hiring Staff

You will need to equip the facility with child-safe furniture and other supplies to start. You will also need safety equipment like fire extinguishers, first aid kits filled with tools to help with first aid for child-related accidents such as food poisoning. 

You will also need qualified childcare providers to help you run the business. For instance, you will hire staff in different departments like managers, caregivers, and even nurses to help cater to sick children. When hiring your workers, ensure you conduct a thorough background check on each of them and their references for the safety of the children you will take care of.

Daycare teacher with kids

Purchase Child-care Software

The best investment to have when owning a daycare is the childcare software and other daycare technology. They will come in handy when streamlining all the administrative tasks.

Some of these systems help child care providers to keep in touch with parents and families by giving real-time updates through their phones and computers. They will also come with a billing system, automated check-in/check-out system, making it easier for you and the parents. 

Marketing Your Business 

You will need a powerful marketing strategy and an online presence for your small business to attract families. You should also ensure your daycare business is listed in the local child care directories to reach more people. Participating in preschool and daycare enrollment fairs is also a great marketing idea. 

You may also create flyers and pass them to parenting groups, local coffee shops (see 'How to Open a Coffee Shop'), and other local businesses that allow advertising on their premises. You may also consider opening your business website and social media pages and running campaigns to help you reach out to more families with small children. 

Why Start a Daycare?

There are several reasons people may decide to start and run a successful child care business. A good deal of people may be driven by money, but others are doing it for genuine reasons, as detailed below:

Early Childhood Education and Child Care Passion

Dealing with small children requires a person to have a passion and love for them. You will work with children from different backgrounds who come in with variations in behavior, characters, and temperaments, so you must have patience, be kind-hearted, and be passionate about child care. Such people start daycare centers to help parents take care of their kids while also molding the kids into respectable future adults.

To Have Variety and Be Their Bosses

Many people do it to escape their monotonous life of employment. For instance, a teacher who has been employed for a very long time or a nanny who has worked in a family and the children are all grown, and they would love to have something different. Opening daycare centers help them take charge of their lives and careers by becoming self-employed and doing what they love.

Advantages to Starting a Daycare

Various benefits come with starting up your child care center outlined below:

Personal Childcare

As a parent, starting your daycare, especially in your own home, gives you a chance to take care of your children. A home daycare gives the parents a chance to save hundreds of dollars spent monthly paying caregivers to take care of their children. You will also experience their growth and milestones and even have the much-required parent-child bonding moments.

Emotional Satisfaction

Taking care of children is one of the most rewarding jobs globally. Working with children will also help you learn patience and improve your communication skills. Also, the gratitude and the happy little faces will give you an emotional satisfaction you will not get working in an office setting.

Extra personal and business expenses

Stay-at-home parents can take this business as a chance to make more money. You can talk to your friends, parents at the grocery store and the gym (see also how to start a gym) and market your daycare services and the fee you charge. The extra cash will be a great addition to the regular household income.

Can You Start a Daycare from Home?

Yes. However, this will mostly depend on the city’s zoning laws and daycare regulations. You will be required to apply for relevant licenses and permits, helping you run the business smoothly. Some federal governments offer grants to any home-based daycare center

Remember that you are not free from tax deductions because the business is run an in-home daycare. Always be alert during the tax season and file your income tax returns to avoid running into trouble with the authorities.

Home daycare

How Much Does It Cost to Start a Daycare?

Opening a daycare business will require a reasonable amount of starting business expenses. Start-up costs involved, such as the operational funds to ensure the child care center is safe, educational, and funds for the children you are looking after. 

However, the costs will vastly differ depending on whether the child care center is an in-home daycare or daycare center. In estimate, you will require roughly $600 to $1000 to run a small daycare business. Startup costs for a medium to a large own daycare business will cost you $600 to $50000. On a related note, if you want to start a small business with minimal startup fees, a courier service or small-scale delivery business might be your best bet.

Business Expenses

Examples of expenses you are likely to incur in your daycare center include the training and license costs. You are likely to pay up to $50 annually for the licenses on average.

You will need your staff to be well conversant with CPR and Early Childhood Development Education (ECDE) for training. The cost of training will differ depending on the college and your current location. 

Safety and equipment, furniture, building cost and overheads, advertisements, and marketing costs are among a few expenses one should consider when starting a daycare.

Proven Business Formation Services

If you think you need help to set up a Daycare, you can trust these proven formations services and registered agents services to answer all your questions and help with starting up or running your new business. Here are our recommendations:


The Nolo website has so many products, services and information that it can be quite a lot to digest if you're only looking for a specific daycare service like LLC formation. Good thing they have an advanced “search” feature and easy-to-access sections to make things easier to find. One single drawback is that Nolo doesn't list a phone number on the website, so there's no way to call them when you need to talk to support.

Rocket Lawyer

There’s a lot to love about Rocket Lawyer. Their Form Builder is simple to use and comes with clever steps to ensure that what you’re doing is valid and legal when setting up a daycare. Their team is always happy to assist you with your business formation needs, making Rocket Lawyer a fun, customer-friendly, and professional environment. Rocket Lawyer will likely be able to handle any issue that might come up.


Compared to other services, ZenBusiness gives you more value for your money during the business registration process. In such a short amount of time, ZenBusiness is operating like a brand that has decades of experience. They make the entire process straightforward and are not looking to charge you additional services. Also, their ZenBusiness Pay-It-Forward program for women and minority-owned businesses, including daycare facilities, is fantastic.


This company have been responsible for the business formation of over a quarter of a million businesses since their inception. IncFile service and professionalism are some of the best in business. The fact that you get a registered agent for a full year at no cost is a huge plus, but being able to form an LLC at no cost (other than your state’s fees) is nothing short of incredible. The free services are included in their starting Silver Package. 

Opening a Daycare Ins and Outs Final Thoughts

Starting a daycare is a process that needs care and business planning that is completely accurate. Regardless of the fact that it might seem easy, it is not. We hope that our guide has been helpful to you as you decide to start your daycare business. Good luck with your new venture!

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