Are you thinking about opening a daycare and providing child care services in your community?
We’ve already published a detailed guide on How to Start a Daycare in 2021, with information on creating your business plan, choosing a great location and marketing your child care services.
Today, we’re focusing on some of the pitfalls that you should avoid when opening a daycare business. To help you stay on the straight and narrow, we’ve identified 12 of the most common planning mistakes we see from new child care operators. For each one, we’ll share why it’s a mistake, what can happen in a worst-case scenario and what you can do to avoid the pitfall to make sure your new daycare will be a success.
12 Common Pitfalls to Avoid When Opening a Daycare
Starting Without a Background in Early Childhood Education
Why It’s a Mistake: Without early childhood education training, you may lack essential knowledge that you’ll need to design effective programming, deliver quality care and ensure child safety.
Worst Case Scenario: An ECE course will teach you specific, proven strategies for building trust with kids, creating a safe environment and dealing with problem behaviors. Without these techniques, your responses to a challenging situation could compromise a child’s safety or even cause harm.
What to Do Instead: Attending an ECE diploma program or obtaining a bachelor’s degree will teach you how to guide each child’s growth and progression using the principles of child psychology and human development. Most importantly, you’ll develop the skills needed to interact with kids in a nurturing way that supports their health development.
Starting Without Child Care Experience
Why It’s a Mistake: Opening a daycare is more than a business opportunity — it’s a duty to parents and their children that requires you to genuinely enjoy the work of child care. Getting started with no child care experience is like trying to fly a plane when you have no piloting experience. It’s a very bad idea!
Worst Case Scenario: Imagine opening your daycare for the first time at 7 a.m. on a Monday morning. You’re excited to get your business off the ground and collect your first tuition payments from satisfied parents. Then the kids show up, and you realize you’ve never done this before. You spend 11 hours fixing meals, changing diapers, wiping noses and drying tears. By the end of the day, you’re exhausted – but this is your life now, and you’ll be opening the next morning to do it all over again.
What to Do Instead: Before you take the leap to open your own daycare, get enough child care experience to make sure you really love the work. Start with a babysitting gig, become a live-in nanny or find work at a child care center in your community. Don’t open your own daycare unless you really know that you’ll love working with kids every day.
Starting Without a Business Plan
Why It’s a Mistake: A business plan describes the most important goals for your business, including how much money you’d like to make and the milestones you’ll need to reach on your way to success. Opening a daycare with no business plan means you have no definition of success and no goals for your business. If you do have a goal in mind for your business, you definitely don’t have a realistic plan for achieving it. Failing to plan is planning to fail.
Worst Case Scenario: Creating a business plan isn’t just about producing the document, it’s about doing your due diligence to account for every variable and every source of risk when opening your daycare. Without that due diligence, you can easily overlook important details that will affect the profitability and viability of your daycare.
What to Do Instead: Check out our article on How to Write a Business Plan for Your Daycare Center and follow the steps to create a solid business plan before you start investing your hard-earned money.
Forgetting to Apply for Grants
Why It’s a Mistake: Grants are essentially free money that your daycare program can use to pay its operating costs, upgrade your facilities or provide specialized programming for kids. If you forget to apply for grants, you’ll lose out on countless opportunities to grab that free money and invest it into your business.
Worst Case Scenario: Forgetting to apply for grants isn’t the end of the world, but it does represent a massive missed opportunity for your daycare business.
What to Do Instead: Visit our resource article on Loans and Grants for Child Care Centers, and search through websites like Grant Watch to discover grants that might be good for your daycare business.
Choosing the Wrong Location
Why It’s a Mistake: Parents are most likely to choose a child care center that’s convenient for them – either close to their workplace or home, or close to their child’s school. Opening your daycare in an inconvenient location can significantly affect your ability to attract customers. Parents also value child safety when choosing a daycare, so it’s important to choose a location that’s both safe and quiet for your business.
Worst Case Scenario: Opening a daycare in a location with low demand for your services will make it hard for you to generate business. As a result, you’ll fail to earn a profit and could go bankrupt.
What to Do Instead: Think carefully about where you choose to open your daycare. Choose a location near schools and jobs. Before settling on a location, speak with local community leaders to find out whether child care services are needed in the area. If you choose an area with high demand, you should have no trouble attracting parents to your center.
Operating Without a License
Why It’s a Mistake: Child care in the United States is regulated at the state level, and most child care centers must have a license to operate legally. The child care licensing process also helps you understand and comply with state child care laws. If you open a daycare without a child care license, you’re almost certainly breaking the law.
Worst Case Scenario: If your unlicensed daycare operation is reported to the authorities, you could face heavy fines, penalties and even jail time.
What to Do Instead: Visit the National Database of Child Care Licensing Regulations to learn more about the child care laws in your state. You’ll need to connect with your local child care regulatory agency to start the licensing process.
Hiring Unqualified Staff
Why It’s a Mistake: When you’re hiring a child care provider for your daycare, you want someone reliable, with a nurturing personality, and a strong background in early education and child care. Hiring child care staff without the proper education and experience to provide amazing child care is a big mistake.
Worst Case Scenario: Kids depend on their child care provider’s education and training to keep them safe and happy, and help them learn and grow. Unqualified staff members may not have the strategies and tools to provide great care and build relationships with kids and their parents. As a result, parents may choose to bring their kids to another center with better staff.
What to Do Instead: Follow our child care hiring guide and do your due diligence in the hiring process to attract the right staff with a positive attitude and strong experience in child care and early education.
Neglecting to Market Your Daycare
Why It’s a Mistake: Marketing is how you generate awareness about your daycare that ultimately leads to enrollments, revenue growth and profits. You can’t run a successful daycare without marketing!
Worst Case Scenario: If you fail to market your child care business, local parents simply won’t know that your business exists. You’ll struggle to attract new enrollments and your business might never grow or become profitable.
What to Do Instead: We’ve created detailed resources with plenty of tips and advice on how to market your daycare business using both traditional and digital marketing techniques. Check out our guide and see which child care marketing techniques will work best for your business.
Setting Tuition Prices Too Low
Why It’s a Mistake: Lots of new daycare operators make the mistake of setting their tuition prices too low. While it might feel good to give someone a great deal, charging below the market rate hurts your bottom line and can limit your ability to make a profit.
Worst Case Scenario: In the most extreme cases, it’s possible to set your tuition prices so low that you’re actually losing money on child care – or earning an hourly rate that’s below minimum wage. This is setting your business up for failure. It’s unsustainable and you’ll eventually run out of cash and go out of business.
What to Do Instead: Check out our guide on how much to charge for child care, find out what other daycares are charging in your area and figure out how much it costs your business to care for each child. Your tuition fees should cover all of your business expenses and allow you to make a profit.
Relying on Cash Tuition Payments
Why It’s a Mistake: Opening a daycare without the ability to accept debit and credit payments is usually a mistake. This is often accompanied by another common mistake – enrolling kids without a formal tuition agreement. These practices make the payment process more inconvenient and make it less likely that you’ll get paid on time.
Worst Case Scenario: Cash payments also require manual recordkeeping. You’ll probably create paper invoices and manually track payments to keep your books in order. If you lose track of how much money you’re making, or who still needs to pay, you might end up losing out on money that you’ve rightfully earned. You’ll also have a big mess on your hands when it’s time to file your taxes.
What to Do Instead: Use daycare billing software to automate the payment process, making it easy and convenient for parents to pay their child care invoices online via debit or credit.
Passing Over Policies and Procedures
Why It’s a Mistake: Your policies and procedures provide a framework for how your business operates – everything from dealing with challenging behaviors to charging for your services. Opening your daycare without a handbook of policies and procedures leaves everyone wondering what to do or what to expect in every situation.
Worst Case Scenario: Policies and procedures are most important in high-pressure scenarios where acting quickly can make a big difference. The few minutes, or even seconds, you spend deciding what to do could severely impact the outcome of an emergency and leave you facing serious consequences for failure to act.
What to Do Instead: Establish and document clear policies and procedures that describe how your daycare will operate, including how staff will respond to incidents, deal with challenging behaviors, discipline kids and manage the billing process. Train your staff members to follow policies at all times, and share your policies with parents so they know what to expect.
Depending on Paper Forms and Contracts
Why It’s a Mistake: Daycare centers in the United States usually have legal recordkeeping obligations for child and family information. It’s also important to keep hold of contracts and payment history for each of your customers. Depending on paper forms means you’ll need to physically store all of these important records and make sure they don’t get lost or damaged. In 2021, it’s much easier to store your child care documents in digital format.
Worst Case Scenario: You store your paper child care forms, contracts and payment records in a filing cabinet. One day, there’s a fire/flood/break-in at your daycare and your records are lost/damaged. You’re now most likely in violation of child care recordkeeping laws, and you may have lost vital financial records that you’ll need to prepare your taxes. This is big trouble!
What to Do Instead: Use child care management software to create and store digital child care forms and agreements. With digital storage, you’ll have easy access to your files when and where you need them – with no risk of your important records getting lost or damaged.
Avoid Common Pitfalls by Opening Your Daycare with Procare Solutions
At Procare, our years of experience and expert community give us the wisdom to know what your center might need. Our software helps you avoid common pitfalls so you can feel confident when opening your daycare center to the community.
Procare creates trustworthy, modern and easy-to-use solutions for child care billing, staff management, recordkeeping and parent engagement. We help alleviate the worries of running a daycare and make life easier for child care providers, administrators and parents.
From the first day you open your doors, through the entire life of your business, Procare will be the all-in-one solution for everything you need to successfully run your center.