Start Your Dream Daycare Business: Essential First Steps to Launching Your Daycare

Are you ready to start a daycare business? Congratulations. In this guide, we’ll walk through the most important steps to launch your childcare business the right way. There may be challenges ahead, however careful planning and preparation will set you up for success. This article is a great place to begin.

How Do I Know I’m Ready to Start a Daycare Business?

Great question. As with any new venture, you can never be 100% ready. However, the questions below will help you assess whether now is the right time to launch your childcare business:

• Do you have significant childcare work experience?
• What is your educational background? Do you have formal training or a degree in Early Childhood Education or a similar program?
• What is your motivation? Do you love children enough to ride out the daily demands of childcare work and business ownership?
• Are you in a financially, mentally, and logistically stable place in life? Are you reasonably healthy? A new business venture is exciting — but taxing.
• Is there a real need in your community? Demand for childcare is rising, but is that need already being met by other providers nearby? You’ll want to find out first.

Once you’re certain you want to move forward, here are the essential first steps to take.

Research State and Local License Requirements

To operate a legal childcare business, you’ll need to obtain proper licensing from your local governing authorities. First, check your state’s requirements through online resources like Child Care Aware of America. Next, look up rules in the National Database of Child Care Licensing Regulations.

In addition, contact your local government’s office of children and family services. As a result, you’ll know exactly which inspections, training hours, and ratios apply before you sign a lease or buy supplies.

Construct a Business Plan

If you plan to apply for a small business loan, you’ll need a comprehensive business plan. However, even if you don’t pursue lender funding, a plan is still a must. The U.S. Small Business Administration offers free templates to get you started.

Your business plan creates a complete picture of your daycare. For example, it will help you answer essential questions like:

• Will you run your daycare out of your home?
• Will you lease or buy space?
• Will you purchase an existing daycare?
• Will you work alone or hire employees?
• What will your budget look like?
• How many children do you plan to enroll?
• How will you market your business?
• How will your business meet the needs of families in your community?
• Who is your target market?
• Who are your competitors?
• How will you use loan funds?
• What start-up costs do you anticipate?

If creating a plan sounds intimidating, take heart. The more thought you invest now, the better prepared you’ll be later. For a deeper dive, read our guide to the elements of an effective daycare business plan and our breakdown of choosing the right business structure.

Obtain Insurance

What kind of insurance will you need? It depends on the type of childcare business you plan to operate. General liability, property, professional liability, workers’ compensation, and umbrella policies are common options to weigh.

For more detail, check out this article on preschool insurance options.

Develop Policies and Procedures

Next, work out the fine details of the policies and procedures you want in place before opening your doors. There are many daycare policy templates online to help you. NAEYC is also a strong resource for early childhood program standards.

Carefully document everything — safety, medical, and emergency procedures; health, nutrition, and daily care policies; payment and attendance rules; and any other guidelines your staff and clients will follow. Meanwhile, your state and local licensing requirements will serve as a helpful guide as you build these policies.

Get Your Daycare Facility Ready

Whether you’ll run your daycare out of your home or a separate location, you’ll need to purchase the right equipment and supplies. For example, plan to budget for:

• Safety equipment like first-aid kits and fire extinguishers
• Cleaning supplies
• Classroom furniture
• Baby gear
• Food and feeding supplies
• Toys, arts, and crafts
• Diapers and wipes
• Quality admin tools, like a digital childcare management software program

All supplies should be accounted for in your business budget from day one.

Hire Staff and Choose Curriculum

These steps may not apply to every daycare. However, if you need to hire employees and choose a preschool curriculum, do both with care. First, read our hiring best practices for new childcare businesses.

Next, dig into our guide to choosing a preschool curriculum that fits the needs of your center and the families you serve.

Market Your Daycare Business

Finally, it’s time to spread the word and enroll your first families. How will you market your daycare? As with every business expense, marketing belongs in your budget from the start.

Take advantage of no-cost and low-cost tools, including word-of-mouth, flyers in local businesses, libraries, coffee shops, churches, and grocery stores, plus social media pages and online business listings like Yelp, Angi, and Google Business Profile. In addition, build a simple website to establish your online presence. You don’t have to try every tactic — stick to your budget and use the channels that reach your community best.

Hire a Knowledgeable Accountant to Start a Daycare Business Strong

Your business is your livelihood, so make sure your finances are in good hands from day one. Many new owners quickly feel overwhelmed by the financial side of running a daycare. Payroll, tax prep and compliance, invoicing, and budgeting can add real stress to already demanding work.

As a result, outsourcing accounting to a specialist can be one of the smartest early moves you make. To learn more, read about the benefits of outsourcing your accountant.

The financial experts at Honest Buck Accounting are passionate about helping driven entrepreneurs launch and grow successful childcare businesses. We hope this guide helps you take the first steps with confidence. When you’re ready, schedule a discovery call with our accounting team — we’d love to learn more about your childcare business.