Opening a daycare business is where passion meets purpose, blending entrepreneurial drive with a genuine commitment to shaping young minds.
As demand for high-quality childcare surges nationwide, this opportunity lets you build a thriving business while making a lasting difference in children’s lives.
But launching a daycare isn’t just about colorful classrooms and play areas; it’s about meticulous planning, strict compliance, and a dedication to safety. From licensing hurdles to staff-to-child ratios, every requirement—especially child care certification—is designed to protect and nurture the little ones in your care.
The path to becoming a licensed provider involves orientation sessions, detailed applications, and careful facility inspections.
Think of this guide as your roadmap. We’ll walk you through every essential step to start your daycare business — from creating a strong daycare business plan to obtaining certifications, hiring qualified staff, and setting up a safe and welcoming environment for children.
Steps to Starting a Daycare Business
With more parents than ever seeking quality childcare, the demand for professional daycare services continues to grow. The US childcare market grew from USD 107.01 billion in 2023 to USD 112.19 billion in 2024 and is projected to maintain a steady growth rate of 4.99% CAGR, reaching an estimated USD 150.54 billion by 2030. Whether you're an experienced educator or someone passionate about child development, continue reading to explore all the essential steps involved in starting a daycare business.
Step 1: Research and Plan Your Daycare Business
Before opening a daycare, you need to research your local area. Find out if there are enough families who need childcare and what other daycares are offering. Places with lots of working parents usually have high demand.
Once you understand the market, create a detailed business plan. This should include:
- Your daycare’s mission and philosophy
- The ages of children you’ll care for
- How many staff you’ll need
- Your budget
- Researching state-specific provider requirements
Also, don’t forget to check your state’s rules for running a daycare so you stay compliant from the start.
Step 2: Decide Between a Home Daycare and a Center-Based Program
Before you start, decide what kind of daycare you want to run. Will it be a center-based program (in a separate building) or a home-based daycare program?
Both types have pros and cons, but all must follow strict rules to keep kids safe and happy. The steps to open each one are similar, but local laws may change what you need to do.
Family child care homes typically care for fewer children and offer a more personalized environment compared to center-based programs.
No matter which you pick, a strong daycare business plan is key to making your daycare successful.
Step 3: Build Your Daycare Business Plan and Budget
A good daycare business plan is like a roadmap for your startup. It should include:
- Your mission (what makes your daycare special)
- Who your customers are (families in your area)
- How much money you’ll need to start and run the daycare
- A business bank account to keep personal and business finances separate
- Your staffing plan, rules, and safety steps
- How you’ll market your daycare to parents
It should also cover licensing rules, staff training, and how you’ll keep improving. A clear plan helps you stay organized, get loans if needed, and build a daycare parents trust. If you need a head start, looking at a business plan template can be a useful way to structure your ideas.
Step 4: Secure Capital and Funding for Your Daycare
You’ll need enough money to start and run your daycare. There are a few ways to get this funding: you can use your own savings, get a loan from a bank, or apply for special funding (called grants) that’s meant for childcare businesses.
You’ll need to get two important things:
- An EIN (like a Social Security number for your business) for taxes
- A separate bank account just for your daycare
These will help you keep your personal money and business money separate, handle all your daycare’s finances, and follow tax rules properly.
The government can help too. The Small Business Administration (SBA) gives loans to help pay for things like equipment and renovations. You can also look into grants like the Child Care and Development Fund (CCDF), especially if you plan to serve low-income families. Your state might have other programs to help as well.
Finally, make a clear financial plan that shows how your daycare will make money and cover expenses. This helps convince banks or investors to support your business when you need it.
Step 5: Choose the Right Location and Facility Setup
Picking the right location for your daycare business is very important. The place must be:
- Safe and easy for families to access
- Approved for daycare use under local zoning laws
- Spacious enough to meet your state’s safety and space rules
Your daycare will need separate areas for sleeping, eating, and playing — each with its own safety standards. States also have rules about how much space each child needs.
For example, California requires at least 35 square feet per child indoors and at least 75 square feet per child outdoors.
Your building must also pass safety inspections for cleanliness, fire safety, and emergency readiness. These rules are set by groups like the Consumer Product Safety Commission (CPSC) and the Occupational Safety and Health Administration (OSHA).
Step 6: Meet Building and Zoning Requirements
Daycare centers must comply with local building codes, zoning regulations, and health and safety standards.
For example, a daycare center may need to be located in a residential area or a commercial space, depending on local laws. Additionally, centers must meet specific guidelines for indoor and outdoor space, lighting, ventilation, and safety features.
Ensuring that your facility meets all the necessary standards helps you obtain the required licenses while reassuring parents about the safety and suitability of your daycare environment.
Step 7: Become a Licensed Daycare Provider
In the US, you need a daycare license to open a center. This license shows that your daycare meets important health and safety rules. Licensing rules are different in each state but usually include:
- Child-to-staff ratios
- Safety rules for the facility
- Educational program requirements
You can find your state’s specific rules in the National Database of Child Care Licensing Regulations.
Federal law also requires states to set rules for group sizes and staff-to-child ratios based on age. These rules ensure that every child receives proper attention and care.
The childcare licensing process usually includes:
- Filling out an application
- Background checks for owners and staff
- An inspection by the state’s Department of Health and Human Services (DHHS) or a similar agency
Other details to keep in mind:
- Daycare centers are often checked every year
- Licensing fees can range from $100 to $1,000 depending on the state
- Running a daycare without a license can lead to fines or legal issues
Step 8: Hire Qualified and Certified Staff
Hiring the right staff is key to making your daycare safe and caring. When you hire staff, you must follow your state’s rules and check each person’s qualifications carefully.
In the US, daycare staff must meet meet certain requirements such as:
- A background in early childhood education
- First-aid and CPR training
- Passing background checks
Most states, including New York and California, require 12–24 hours of early childhood education credits or a Child Development Associate (CDA) certification. Other qualifications may include food handler certification or additional safety training.
Background checks are required under the Child Care and Development Block Grant (CCDBG) Act to ensure only safe, qualified adults work with children.
.webp)
Step 9: Establish Health and Safety Protocols
Daycare centers must follow strict health and safety rules to keep children and staff safe. Many states require:
- Health checks and up-to-date vaccines
- Daily cleaning and sanitizing
- Written policies for handling sick children
For example, in Washington, kids must have all required vaccines before joining, following CDC rules to prevent outbreaks.
Centers must also have emergency preparedness plans that include:
- Fire, earthquake, or natural disaster drills
- Easily accessible first-aid kits
- Staff training for emergency response
The Centers for Disease Control and Prevention (CDC) and FEMA provide detailed guidance on these protocols.
Step 10: Design an Age-Appropriate Curriculum and Daily Schedule
Creating a fun and age-appropriate schedule that helps kids learn, be creative, and grow socially is key in daycare. In some states, you must get your learning plan approved as part of your licensing process.
Programs like Creative Curriculum and Montessori offer flexible, structured learning that fits state rules.
For example, Florida’s Department of Children and Families (DCF) says daycares must plan a daily schedule that includes:
- Structured learning time
- Free play
- Rest and outdoor activities
Many states also encourage regular parent communication and inclusive curriculum to support cultural diversity.
Step 11: Create Clear Policies and Procedures
Having clear rules about enrollment, discipline, and safety helps a daycare run smoothly. Parents should get a handbook that explains:
- Operating hours
- Discipline policies
- Health and safety rules
To get proper guidance, contact local licensing offices or Child Care Regulation agencies.
The American Academy of Pediatrics (AAP) recommends using positive reinforcement instead of punishment — many states, such as California and Illinois, have laws banning physical punishment or harsh behavior control.
Daycares must also have clear steps for managing illness, accidents, and emergencies. Strong communication with parents builds trust and keeps them informed about their child’s day.
Step 12: Get Insurance and Liability Coverage
In the US, most states require daycare centers to:
- Follow licensing and safety standards
- Carry general liability insurance to protect against accidents or injuries
If your daycare hires staff, you’ll also need workers’ compensation insurance to cover medical bills and lost wages if an employee is injured at work.
Some daycare centers also offer extra child accident coverage, which, while not required, can make parents feel more secure.
Financial help, such as federal grants and funding programs, can help cover these costs.
Step 13: Market Your Daycare Business
Marketing your daycare is key to attracting families and building your reputation. Start by:
- Creating a website with details about your programs and staff
- Setting up a Google My Business profile
- Encouraging parent reviews on Care.com and other local platforms
- Hosting open-house events so families can meet the staff and explore the facility
In states like North Carolina, licensed daycare centers can join programs like NC Pre-K, which help increase visibility and enrollment.
How To Start a Daycare at Home
If you want to open a daycare in your home, the rules are similar, but there are a few extra things to consider:
- Zoning: You might need special permission to operate from home, especially in residential areas. Check local zoning and HOA rules.
- Insurance: Like larger centers, home-based daycares need liability insurance and business registration.
- Licensing: Some states don’t require licenses for very small home daycares, but health and safety compliance still applies.
- Safety: Maintain childproof areas and clear emergency exits.
A home daycare is often a great way to start small and gradually expand once you gain experience.
What Certifications Do You Need to Open a Daycare?
In most states, daycare providers and staff must complete certified training and background checks before opening.
Common certifications include:
- Child Care Provider Certification: May include courses in child development or early childhood education.
- CDA (Child Development Associate): A widely recognized qualification for early educators.
- CPR and First Aid Certification: Required in all states and must be renewed every few years.
- Food Safety Certification: Needed if you plan to serve meals.
- Medication Administration Certification: Required in some states for handling medications safely.
- Health and Safety Certification: Verifies compliance with local fire, sanitation, and evacuation standards.
Always confirm with your local licensing authority which certifications apply in your region.
Expanding and Growing Your Daycare Business
Once your daycare is up and running, you can focus on growth. Successful daycare owners often:
- Regularly evaluate their programs
- Stay updated with new trends in childcare and early education
- Offer extended hours, summer camps, or special-needs programs
- Build strong relationships with parents and staff
By continuing to innovate and maintaining high standards, your daycare can earn an excellent reputation and attract more families.
Build and Manage Your Daycare Center Efficiently with illumine
Managing a daycare business requires more than just a love for children; it demands efficient organization, effective communication, and a focus on safety and learning.
illumine, a comprehensive daycare management software helps you to optimize operations while increasing parent engagement. With features like digital attendance tracking, lesson planning, real-time parent communication, and automated billing, illumine simplifies the day-to-day tasks of running a daycare.
By using illumine, you can maintain compliance, increase transparency with families, and focus on delivering quality care that meets both state standards and parents’ expectations.
.webp)