Owning a Child Care Business: What to Expect

  • Budget
  • Business
  • Employees
  • Software

Owning a child care business is a great way to find professional fulfillment, earn a living and make a difference in your community. To get started, you’ll want to get a clear understanding of what’s required to operate a child care business. As a child care owner and operator, you’ll be responsible for attracting new customers, providing routine care and early childhood education, staying in compliance with child care laws and managing your daycare in a sustainable way.

Owning your own child care business is a big commitment, so it’s important to know what to expect before you get started. To help you on your way, we’ve put together a list of the most common questions we hear from future daycare owners. We’ve provided answers to these questions, along with our best tips and advice to help you prepare for owning and operating your own child care business.

Keep reading to find out exactly what you should expect when owning a daycare business.

Owning a Child Care: What to Expect

Do I Need a License to Own a Child Care?

Yes.

Child care businesses in the United States are regulated at the state level, so you’ll need to apply for a child care license through the proper regulatory agency in your state. Most states offer several different types of child care licenses with more stringent requirements for center-based facilities and simpler requirements for home-based daycare businesses.

To obtain your child care license, you’ll need to get the site of your business approved by municipal zoning officers and health and safety officials. In most cases, a state employee will be assigned to help you understand and achieve compliance with child care laws in your state.

Do I Need Special Education or Training to Own a Child Care?

Yes.

Depending on where you live, local child care licensing laws may require child care providers, directors or administrators to meet specific requirements for training, education and certifications. You can contact your local child care licensing agency or read up on child care licensing laws to learn more about specific educational requirements for your state.

Many states require daycare owners/directors to possess qualifications like:

  • A degree or diploma in Early Childhood Education (ECE).
  • A Child Development Associate (CDA) credential from the Council for Professional Recognition.
  • Experience working in an early child care setting.
  • Completion of required First Aid, CPR, and blood-borne pathogen training.

You’ll need to contact your local child care licensing authority or read up on state child care laws to learn more about the requirements for owning a child care business where you live.

How Do I Start a Child Care Business in My Community?

Your path to owning a daycare business in your community depends on three simple factors: the type of daycare you want to operate (home-based or center-based), how many kids you plan to care for and the child care licensing laws in your state.

As a first step, you’ll want to check with your local child care licensing authority to determine whether your daycare business will require a license. In many states, a license is not required to start a home-based daycare business with low capacity – usually just two or three kids. However, home-based and center-based care programs with a capacity of three or more usually require a license.

Do I Need a Child Care Business Plan?

A daycare business plan is a document that describes in detail how you will launch and operate your child care business. Creating a business plan can help you:

  • Clarify and document a mission statement for your business, your core business values and your child care philosophy.
  • Set goals for your business, including things like enrollments, attendance and revenue.
  • Start planning for legal compliance requirements, including staff-to-child ratios, insurance and child safety.
  • Figure out the cost of getting your business started.

If you’re planning to access government grants or loans to fund your business, a business plan will help you convince potential investors to offer their support.

How Much Does it Cost to Start a Child Care Business?

No two child care businesses will be exactly the same, but estimated start-up costs can range from $5,000 to $50,000 and beyond.

The critical factors in determining your start-up costs are usually location and capacity. If you start a center-based program, you’ll need to either purchase property or obtain a commercial lease – but if your business is home-based, you’ll save money since you’re already paying for a place to live. Capacity is another factor: if you want to serve more kids, you’ll need more rooms, more staff and more equipment – and that means more costs.

In summary, we can say that home-based daycares cost the least to get started (especially if you already own some child care equipment and materials), while high-capacity, center-based programs are the most expensive to open.

How Do I Market My Child Care Business?

As a daycare business owner, you’ll want to market your child care services to parents who live, work or send kids to school in your local area.

Traditional marketing methods like word-of-mouth and referral programs are a great way to generate buzz and attract new customers. You can connect with leaders at community institutions (schools, libraries, community centers, etc.) and ask them to refer parents who need child care services. Posting flyers in your community is also a great way to raise awareness about your business.

If you’re a little more tech savvy, you can try marketing your business through digital channels. Most parents now start the search for child care services online, so it’s worthwhile to create a simple website and register your daycare on Google My Business to make your child care business more visible in local search.

How Do I Staff My Child Care Business?

Staffing your business with qualified child care providers is necessary to stay compliant with staff-to-child ratios as you get more kids into your center.

You can discover new candidates by posting job openings on online job boards, working with a recruitment agency, or forming a partnership with the ECE program at your local college or university. Child care providers in the United States earn an average of around $22,500 per year. To keep your people happy and reduce staff turnover, you’ll need to provide positive working conditions, competitive pay, and opportunities for education or advancement within your business.

How Much Do Child Care Owners Make?

It depends!

As a child care owner, you’ll earn money based on how much profit your business makes every year, calculated as Profit = Revenue – Expenses. Your revenues will mostly come from child care tuition (paid monthly or weekly), while your expenses will include everything from commercial rent and insurance (fixed costs) to child care materials, meals and snacks, and staffing (variable costs).

As an owner, you’re in charge of making the decisions that will determine how much money you earn each year. To earn more money each year, you’ll need to grow your revenue (by enrolling more kids at your center) while controlling your expenses (avoiding waste while maintaining a high standard of quality and care).

If you’re wondering how much you should be charging for tuition, check out our resource on Child Care Costs by State.

What Makes a Child Care Business Successful?

As a child care business owner, you can create your own definition of success that aligns with your values as a provider.

Your definition of success can include things like providing a high level of care, maximizing your impact in the community by growing your enrollment, creating jobs for child care providers in your community, or simply earning enough money to live comfortably and do the job you love.

Is Owning a Child Care Fun and Rewarding?

Yes!

If you’re already passionate about child care, owning a daycare gives you the ability to perform the job you love, in the way you want, every day. When you’re making the rules, you can ensure that your kids get the very best meals, the very best programming or curriculum, and the highest standard of care you can provide.

You’ll enjoy genuine fun and laughter each day, from the moment you open your doors in the morning until your last child goes home at the end of the day. You’ll also experience the rich emotional rewards that come with watching your kids learn, develop and eventually age out of your program, prepared to succeed in Kindergarten and beyond.

Make Owning a Child Care Easy with Procare Solutions

Procare provides trustworthy, modern and easy-to-use software that helps you manage every part of your business. With Procare, you’ll spend less time on paperwork and admin tasks, and more time on the important stuff: providing amazing care and learning for your little ones.

Procare helps alleviate the worries of owning a child care business by giving providers the expert tools and live support they need to do their best work. Our child care software helps you automate tuition payments, keep track of staffing and attendance, and nurture parent engagement with regular updates and communication.

Ready to see how Procare makes it easier to own and operate your own child care business?

Request a Demo

About The Author

Francie Dudrey

Francie Dudrey is Director of Content, Events and Brand at Procare Solutions, where she leverages Procare’s brand leadership to support our customers through meaningful content and compelling events. She also has two small children and deeply appreciates the value of high-quality child care.

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