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

Congratulations on making the decision to start your own child care or a daycare business! Whatever your reason, whether you’re an entrepreneur with a vision or a parent who sees a need, or an experienced teacher in the childcare business, opening a daycare or daycare center isn’t easy. If you want to run a successful daycare, you need expert advice, a clear business plan, financing, hiring expert staff.

When operating a daycare, the startup costs for daycare and risks are low when compared to other businesses, while the opportunity for monetary and emotional rewards are high. A daycare plan if properly executed can help you breakeven within three years. Your success in opening a child care center will depend on careful management of the startup process from start to finish. This guide will explain exactly how to start your own daycare, from writing a business plan, marketing, ensuring quality services to the parent and choosing a location, to marketing, hiring, and managing your day-to-day operations. 

1. Create a business plan

The very first step towards opening your home daycare is thinking like a business, and a proven way to do so is by creating a business plan.

You’ll need to do your research, with a focus on understanding the costs involved in successfully launching a profitable daycare business. 

Writing a business plan is a helpful exercise that forces you to plan ahead and anticipate many of the challenges that can often lead to failure when they are overlooked, such as:

Is there enough demand for a daycare in your area (e.g. are there more families with young children in your area than existing daycares can accommodate)?
Are there enough working parents or big offices in your area?
Are you able to get a favourable rental term?
How much will it cost to operate your business?
Validate your idea with your friends and
How much will you need to charge per child, and do you have enough space?
How will you promote your business to get children enrolled?

2. Find a location for your daycare

Are you starting an in-home daycare, looking to rent an existing daycare center, or starting a daycare business from scratch with a brand new facility? In any case, you’ll need to find a home for your child care business. Check your city’s zoning laws and child care licensing guidelines when you’re making this decision to be sure your location is compliant.

When making this decision, consider that home-based child-care businesses generally have fewer expenses and lower overhead, have more flexible hours, and are more convenient for you and, likely, the parents whose needs you will be serving. The legal requirements to operate a home-based child-care business are also generally less strict than those for a center-based child-care business.
On the other hand, a center-based business—while probably more expensive to establish and operate—will provide greater space so you can expand your business and earn greater revenue.

3. Competitor Research

Include a market analysis of day care centres. Make a list of day care industry trends and make an estimate of the industry’s revenue. Include information about your target market’s wants and how their daycare needs are currently being met. Include details on how you want to position your day care centre for success in the face of competition. You will be able to compare services provided by competitors must be considered and compared to the your own services.  For example, what kind of curriculum is being offered?  Is it new and innovative?  If not, how can this be capitalized on?  Other concerns might be special services such as longer hours, pick-up and drop services for kids,special needs children, sick child care, or after school program.  Also, what are the rates for these services?  The bottom line is to provide the parents with the best value!

Ace childcare marketing with these actionable strategies Download the ebook now!

4. Research on legal requirement

Explain the legal framework you’ll use for your company. You could form a sole proprietorship if you plan to be the single owner of the day care business. You will, however, need to form a partnership if you have a partner. You can even set up your company as a different entity from yourself by founding a corporation.

Sample Daycare Business Plan

Cover sheet

  • Business name, address, and phone number
  • Business name, address, and phone number
  • Mission statement

Table of content

The company

  • Business description
  • Business location
  • Market research and feasibility
  • Operating processes and policies
  • Staffing

Financial information

  • Loan application
  • List of capital equipment and supplies
  • Balance sheet
  • Break-even analysis
  • Statement of income
  • 3-year overview (year 1 details by month, year 2 and 3 details by quarter)
  • Projection of monthly cash flow

Supporting document

  • Tax returns for the last three years
  • Personal financial statements
  • Leasing agreement
  • Licenses
  • Résumés of staff

5. Funding and grants

  • Bank

    All commercial banks provide business loans at current interest rates, both short and long term. Banks will demand collateral to protect their loans from total loss if they default. The cashflow is generally good in daycare business as fees are collected in advance. If you can do proper budgeting and work on your business plan you can get interest on lower rates. Banks generally offer lower interest rates to women entrepreneurs. So it will be a good idea to register the company in the name of a woman heading the day-to-day management.

  •  Private sources

    Private sources of funding include your own savings or monies from friends or family, and are one of the most typical ways to get money.

    The benefits of using your own money include no finance charges and a reduced need for extra finances. The downsides are that you lose out on potential interest and you lose the ability to use your savings as a cushion for future emergencies.

    Borrowing from friends and family has the following advantages: they are less likely to make demands on your management style, there is no legal restriction on how much you can borrow, and the conditions of borrowing can be negotiated and are normally more flexible than those offered by banks.

6. Name and Branding

Your daycare’s name will become your brand. You could include your own name. Choosing an educational philosophy may assist you in naming your daycare. There are numerous philosophies to choose from, including Montessori, Waldorf, and Reggio Emilia. If you don’t already have experience with these, do some research online to see what speaks to you.

The right name for a daycare always attracts more customers. A unique name is a fundamental and critical function of any daycare’s brand image and marketing. While your childcare may be extremely professional and important, choosing a unique name can help it stand out. Cool names are easily remembered, whereas names that describe what your company does sound the same as everyone else’s.

If you’re opening a daycare centre, giving it a cute and playful name can be a great way to show that it’s a fun place to be. There are numerous ways to come up with these names, and it’s a good idea to focus on cute words and concepts, such as hugs, kisses, toes, and tots, as well as words like precious, care, love, and so on.

Daycare name ideas


  • Apple Seed Daycare
  • Treehouse Child Care Center
  • Rainbow Playground
  • Dew Drops Education Center
  • Daycare for Little Sunflowers
  • Small Cloud Baby Care
  • Leaf Tender Childcare
  • Sunshine Tots Educational Center
  • Oak Tree Learning Center
  • Tiny Dinos Playground
  • The Maple Leaf School for Children
  • Daycare Center for Little Lions
  • Ladybug Education Center
  • Childcare at Sunrise
  • Tiny Blossoms Child Development Center
  • Acorns in Miniature School
  • Morning Rain Education Center
  • Childcare Center for Little Learners
  • School Alphabets Storytime for Kids Preschool and Daycare
  • Early Childhood Education School
  • Academy for Young Learners
  • Jumbo Jack’s Playground
  • Little Doodlers Academy
  • Tots on Tricycles Preschool and Daycare
  • Jumping Rope Training Facility
  • Chalk In Various Colours Center for Children
  • Tic Tac Toe Preschool and Daycare
  • Hopscotch Toddlers
  • Sand Castle School
  • Jumping Jacks Education Center
  • Bright Eyes Learning Center
  • Lots of Laughter Preschool and Daycare
  • Laughter and Education Childcare Facility
  • Wonder and Awe Childcare
  • Grow and Nurture Daycare Facility
  • Fantastic Beginnings Playhouse

7.Branding Strategies for Childcare

A brand gives a company more than just a product or service. It gives people an idea, philosophy, or way of life to which they can become attached. By building your brand, you become much more than a childcare provider; you will forge a much stronger bond with families who will know to come to you for advice on all things early childhood development.

Whatever distinguishes you from your competitors, such as nighttime hours, and lessons conducted by licensed teachers, should be incorporated into your brand identification.

In your target market, your logo and business name should be well-known. Pay attention to the colour palette of your logo and the phrases you utilise. Everything should be connected to the image you wish to project to the public.

Daycare branding guide

8. Invest in child care software

One of the best ways to start a successful daycare in 2019 is to take advantage of the amazing childcare technology at your disposal. Streamline your administrative tasks and you’ll have more time to focus on providing your families a top-notch daycare experience–which is your whole goal anyway, right?

Illumine makes easy-to-use child care software that will help you manage your daycare and stay in touch with families. Your staff can use illumine for recording and tracking daily events and activities, and parents get real-time updates delivered to their mobile devices throughout the day. Delight parents and bridge the gap between learning that happens in your program and learning at home using our parent-teacher app. Our powerful daycare app also offers secure, digital check-in/check-outlive streaming, and an automated paperless daycare billing system. This is a great way to keep your families looped in on daily activities.

9.Budgeting and Billing

Because each child care centre is different, you’ll need to develop a budget that is tailored to your personal needs. These factors include your physical location or jurisdiction, the desired size of your centre, whether you intend to hire personnel, how you plan to administer your centre, the activities you want to offer, and other factors.

  1.  Licensing fee
    A valid licence is required in many countries for child care providers or centre operators. To stay in compliance with local requirements, many licences must be renewed every year. Child care licensing fees vary depending on the size of your centre and the number of children you care for.

  2. Facility costs
    You’ll need to find a suitable facility in a good area before you can create a child care centre. Before you open, you may need to do some modifications to make sure the facility suits your needs.

  3. Other costs
    Toys, books, games, and other educational items that you’ll need to keep youngsters interested and improve learning outcomes are known as child care supplies. You’ll need to stock up on child care materials for the kids.


  4. Legal costs
    When it comes to incorporating your child care facility or developing contracts for suppliers, employees, or clients, you may need legal support. You might want to work with an accountant who can help you arrange your books, handle your payroll, and provide tax services.

  5. Martech costs
    The software and hardware solutions required to digitise your centre should be included in your marketing and technology budget. Through a digital, paperless interface, Illumine makes it simple to manage enrolment, attendance, billing, and payments. You’ll need a computer for the administrator’s office and at least one tablet for each classroom to properly utilise digital child care solutions.
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10.Childcare Billing

Sending invoices and keeping track of payments can be difficult to handle when you have so many other things to think about while running a business, so pick a system that makes it easier. Illumine, for example, allows you to create and send invoices to parents, track payments, and even collect payments electronically from their credit card or bank account automatically.

11.Choosing a Curriculum

When creating a childcare curriculum from scratch, you’ll need to conduct thorough research to identify activities that suit your needs:

Step 1: Knowing who your target audience is can help you set goals for your daycare programme. The first step is to think about childcare management. Your students’ common interests and hobbies will help you develop activities and lesson plans that will pique their interest and keep them engaged.

Step 2: If this is your first time establishing a daycare centre curriculum, the next step is to become familiar with your state’s early learning standards. At the very least, you should cover all of the proposed annual learning goals and target outcomes in your state’s early learning standards.

Step 3: Your daycare centre’s curriculum should focus on one or more of the four domains of early childhood development.

Step 4: Consider include monthly themes in your daycare curriculum:

A monthly theme helps preschoolers make connections they might not have realised otherwise. Holiday themes, for example, allow kids to learn about traditional holidays, create seasonal projects, and enhance their vocabulary.

Step 5: The final step in creating your daycare curriculum is to write individual lesson plans. Every lesson plan you produce should include the activities that youngsters will engage in as part of their educational journey, a technique for assessing student comprehension and a reporting mechanism on it to help them grow.

Related post : A Secret Tool to Help You Build Preschool Curriculum for Daycare


12.Staff Hiring

You won’t be able to accomplish everything on your own, even if the staffing needs are far lower than a child care centre that isn’t run out of a house. A certain teacher-to-child ratio may be mandated by your licence or regulatory standards. Plus, juggling all of the other administrative responsibilities can be exhausting. That’s why you need patient teachers who put the students’ before themselves.

Download our staff hiring guide


 Current generation parents do a lot of research before making childcare decisions. They want high-quality daycare and are more involved in the early education of their children. Hence it is important to keep your story out there and attract parents to your childcare. A good marketing strategy will make your customers aware of your services, boost sales and build a strong relationship with parents.

  1.Tell your childcare story. What makes your childcare different from everyone else?

Your story should be the cornerstone of your marketing messaging. It should be honest, truthful and come straight from your heart.Parent should be able to feel the same passion as you feel for your childcare when they hear your story.

2.Make your parent tours a memorable one

A parent tour can mean getting a new client or a parent picking another child care over yours. It is imperative that you have a plan for giving a memorable parent tour

3.Create a website

Attractive and professionally built websites help build a strong online presence, communicate quality information to potential customers, and provide legitimacy to your business. Without a website, customers may question your legitimacy.  When someone hears about you, the first thing they do is to check your website. If the website is not well made, you will lose the bulk of your potential customers even if you provide world-class service.

4.Register on Google Business

5.Paid Marketing

PPC (pay-per-click) ads can aid in ranking. You get charged each time someone clicks on your advertisement. According to studies, PPC can raise brand recognition by as much as 80%.PPC advertisements can also be launched on numerous social media platforms. A Facebook retargeting ad, for example, is a form of PPC ad. PPC has the advantage of being measurable in terms of your SEO efforts. You also just pay for clicks, which means you only pay for visitors that are interested in your daycare services

Unlocking Excellence: The Ultimate Childcare and Preschool Supplies Checklist by Illumine


14. Live Streaming / CCTV access

In our last blog, we had highlighted why allowing daycare and childcare parents to give access to school’s cctv is a good idea. Parents are full of anxiety, apprehension, and doubts when they leave their children in a school. The best way to relieve them of their anxiety is to give them live access of the classroom. 

Schools realized the parental concerns and apprehensions. Over time these reduce too once the child gets comfortable. But the research has shown that parents prefer to put their kids in schools which has live streaming access for them. The modern chains realized that and now even smaller ones have started following it. Some of the schools that were the first movers in this were

15. Obtain necessary licenses.

Operating a home daycare with or without a licence may be a possibility. Even so, licencing your home daycare is in your best interests.

Consider it from the perspective of a parent: Your child is the most valuable thing in the world. Would you rather send them to a professionally licenced child care centre or send them to a random person’s house?

Parents will know that your home daycare programme satisfies all of the local authorities’ standards if you obtain a licence. This will most certainly qualify you for various funding and professional development possibilities, which can have a substantial impact on your company’s success.


16. Attendance and timecards

All sign-out and sign-in records are automatically logged and updated in real time by Illumine. As a result, school administrators can view digital attendance reports and their centre’s live-student-teacher ratio at any time. The admin dashboard gives you access to all of the data.

Hourly billing

You can use Illumine to generate your own charge templates. This allows you to charge parents on an hourly basis and keep your centre simple. You may easily charge parents with Illumine’s billing software. Create unique templates for parents that use a different payment system, and bill them accordingly.

Records of late check-ins

You can simply track late check-ins because the check-in and check-out times of both students and employees are automatically logged. The late check-in feature allows you to efficiently monitor student and teacher activity while also assisting you in making appropriate payments to the staff.

illumine childcare software

1 thought on “How to Start a Daycare: A Step-by-Step Guide”

  1. Hey Awesome blog post!
    I would love to put my comment on this blog post!
    The blog post helped me a lot to take right decision for my kid!
    Thanks for sharing Worldwide!

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