The hardest part of starting a daycare center is knowing where to start. LegalZoom tells you how to turn your wish into a reality.
Ready to start your business? Plans start at $0 + filing fees.
Excellent
by Swara Ahluwalia
Swara has over six years of writing experience in the software, manufacturing, and small business segments. When she ...
Updated on: August 27, 2024 · 12 min read
Despite the rise of remote work, the demand for daycare services is at an all-time high. According to Grand View Research, a leading research publication, the U.S. child care industry stood at $63 billion as of 2023, and the market is expected to grow by another 5.86% through 2030.
For an entrepreneur looking to start a small business in child care, these numbers certainly exhibit opportunities for success and profit. But where does one begin?
Let LegalZoom help. Learn how to start the daycare center of your dreams.
We’d say yes! This year and the coming years are poised to be lucrative times to step into the child care market. Trends driving this surge in demand include:
From a business standpoint, a child care business presents ongoing demand and exciting prospects. Here are some numbers to back that up.
Excited about working with children and running your own business? The pathway to success begins with market research.
The child care business has stiff competition, and to be successful, you need to know what you’re up against and what you need to do.
Here are a few steps that help you dig deep and assess whether a child care center is a viable business idea.
Many people have successful child care centers operating from their homes or basements when state law permits. If you plan to go that route, ensure you have a safe and sufficient place in your house that doesn’t disturb your own children or family members' daily routines.
If you need to look externally, run an online search and contact local recreational clubs, gyms, churches, and other small businesses. Often, they will have an underutilized space they can rent out at an affordable price.
Location parameters to keep in mind while you go space hunting include:
After you have narrowed down location options, check with your local zoning, fire, homeowner association, and health department for compliance requirements.
Having an idea isn’t enough; to operate a successful daycare center you need a well-thought-out business plan that includes everything from competitor analysis to financial statements, marketing strategy, and details about managing conflicts.
Your business plan should detail the following:
The more planning and prep work done upfront, the higher the chances of success. SCORE offers a business plan template that can ensure a strong start off the blocks.
Securing the right licenses, permits, and certifications is one of the most important aspects of starting any business. These licenses and certifications protect your business from unfavorable conditions and often inform your customers about your commitment to safety.
Licenses and permits that you may require are:
Most permits and licensing requirements are regulated by the state government. Also, the licenses and permits required depend on the size of the daycare and whether you are operating from your home or a commercial place. LegalZoom’s Business Licenses service can help identify and meet your licensing requirements.
The financial aspect of your child care center business might not be as fun as selecting a name or designing the space. Still, it’s a catalyst that gets you one step closer to becoming a successful entrepreneur.
Can’t bootstrap your way into business and require external financial assistance? Don't panic, here are a few alternative sources of money that you can look at:
This is the best part! Proper design and layout of your daycare can be instrumental in fostering a nurturing environment where kids can thrive and grow. The challenge you might face is designing an aesthetically pleasing and functional that abides by the required safety regulations. You can hire an interior designer or get ideas from Pinterest to overcome this hurdle.
While designing, factor in the following:
Running a daycare center requires massive investment in supplies and equipment—from tables and chairs, disinfectants, wipes, and books to toys and bibs and various art materials. You can search online marketplaces to find preloved materials at a bargain or explore suppliers like Discount School Supply and Lakeshore Learning.
The need to hire staff depends on your state of residence as well as the age and number of children in your daycare. For example, in New York State, a child care center must have one adult for every six children under the age of six.
Your state’s Office of Child and Family Services or licensing agency can inform you of the required staff-to-children ratio and the necessary qualifications and experience for hired staff.
There are still more things you have to complete after you have identified the number of people you need:
An employment attorney can steer you away from legal issues and ensure you’re following your state’s employment laws and mandates while hiring and managing your staff.
This business handbook is the master blueprint your daycare runs on. If you have any doubts or confusion about how to deal with the families or your staff, the handbook should have the answers.
For families, the handbook should cover crucial logistical information, such as:
For your staff, the employment handbook should include:
You can have the best daycare in the area, but nobody will know about it if you don’t market it. And by marketing, we don’t just mean a few flyers or social media posts; an entire strategy has to be set that addresses the question, “Why should families choose you?”
To start, pick a creative name for your daycare and design a logo. You can collaborate with a graphic designer or utilize online design tools like Canva and Snappa. Getting a trademark can protect your business from potential copycats.
In today’s world, an online presence is a must. Develop a business website and social media presence. You don’t need to be active on all channels—just the ones that resonate with your target audience.
Pro tip: Get a website domain name and social media handle that matches your business name. It will create brand consistency and make it easier for parents to find you.
A free and powerful marketing tool is to set up a Google Business Profile. Collaborate with local businesses, like libraries, gyms, restaurants, and grocery stores, to advertise your business. Also, getting featured in a local newspaper or hosting an open house or free parenting class can also go a long way.
This is premiere night, and you should put on a show to get people through the door. You’ve one shot to make a positive impression, so give this your all.
A popular and effective way of getting people through the door is to host an opening with engaging activities that speak to your target group. Consider offering:
This allows you to showcase your skills while potential clients get first-hand experience of what it would be like for their child. To boost brand recall, make sure every person who attends leaves with a memorable freebie with your daycare’s name and logo, such as tote bags, stationery items, or even a T-shirt.
Pro tip: You can further encourage attendees to submit enrollment forms by offering a special discount, such as waived registration fees or a significant discount.
Starting a business is challenging, but it’s also the most rewarding and fulfilling experience. We understand that the start-up to-do list may seem endless, but remember, you don’t have to do it all on your own.
We can turn your passion for transforming future generations into a thriving business with our Business Formation services. With the right information and resources for every big or small question, our start-up experts will smoothen your entrepreneurship journey.
You might be able to, but it’s best to check with your local licensing authority about the number of kids you can care for and the space requirements for a home-based daycare.
It’s difficult to pinpoint an exact figure because it depends on the number of kids enrolled, operational costs, location, and competition. If you are in an area with multiple other family child care providers, you will have to keep your rates competitive.
Daycare centers typically require property, workers' compensation, professional, and general liability insurance coverage. An insurance broker can help you pick the right policies for your business.
You may also like
7 essential resources for women small business owners
Women own more than 9.1 million American businesses but, in many ways, business can still feel like a man's world.
September 12, 2023 · 2min read
10 tips for creating a small business plan
A business plan is a necessary part of your impetus for success for your small business. Find out how to create a business plan that will help you obtain investors and stay on track as you grow.
November 21, 2023 · 4min read
A beginner's guide to cash-flow management for small businesses
Proper cash-flow management is essential to a small business's success.
August 14, 2023 · 3min read