The article was originally published on February 15, 2014, and updated on July 4, 2026.
Want to start a daycare business? Learn how to choose the right child care model, meet licensing requirements, estimate startup costs, create parent policies, set tuition rates, market to families, and adapt to post-COVID expectations around health, safety, and communication.
Starting a daycare business can be a rewarding small business opportunity for entrepreneurs who enjoy working with children, supporting families, and creating a safe, structured environment where children can learn and grow. Parents need dependable child care so they can work, run businesses, attend school, or manage family responsibilities. But today’s parents are not simply looking for someone to “watch” their children. They want a provider they can trust with their child’s safety, health, development, routines, and early learning.
A daycare business can take several forms. You may start small with a licensed family child care home, operate a group child care home, or open a larger child care center in a commercial, church, school, or community facility. The best model depends on your budget, location, state licensing rules, available space, experience, and long-term business goals.
Child care is also a highly regulated business. Before you enroll your first child, you need to understand licensing rules, local zoning, background checks, staff-to-child ratios, insurance, safety standards, parent policies, and emergency procedures. Since COVID-19, parents have also become more attentive to illness policies, cleaning routines, communication, ventilation, staff backup plans, and how a daycare handles closures or health concerns.
A successful daycare business is built on more than a love for children. It requires planning, compliance, financial discipline, parent trust, staff management, and consistent marketing.
This guide explains how to start a daycare business, what requirements to expect, how much it may cost, how to set up your space, and how to attract families.
Key Takeaways
- A daycare business can be started as a family child care home, group child care home, preschool program, before- and after-school care program, or full child care center.
- Licensing rules vary by state, so your first step should be to contact your state child care licensing agency.
- Parents choose daycare providers based on trust, safety, cleanliness, convenience, communication, licensing status, curriculum, and reputation.
- Post-COVID, successful daycare businesses need clear illness policies, strong cleaning routines, emergency communication systems, and backup staffing plans.
- Startup costs depend heavily on whether you operate from home or lease a separate facility.
- Written parent contracts, tuition policies, health rules, and operating procedures are essential.
- Marketing should focus on local visibility, referrals, parent trust, online reviews, and clear communication.
Articles in the Starting a Daycare Business Series:
- How to Start Your Own Daycare Business
- What Do You Need to Open a Daycare Business?
- Why You Cannot Get a Daycare License
- Starting a Day Care Business on a Shoestring Budget
- Operating a Daycare Center
- Caring for the Children
- Income Potential of a Daycare Business
- Managing Your Daycare Business
- Complementary Businesses for Additional Income
- Marketing Your Day Care or Childcare Business
- Licensing Requirements of Starting a Daycare: Alabama to Louisiana
- Licensing Requirements of Starting a Daycare: Maine to Wyoming
Table of Contents
Is a Daycare Business Right for You?
A daycare business can be personally fulfilling, but it is not a casual or low-responsibility business. Parents are trusting you with their children, and regulators will expect you to meet specific health, safety, training, supervision, and recordkeeping standards.
You must be patient, organized, reliable, and comfortable following rules. You also need to communicate clearly with parents, manage children’s behavior, maintain a safe environment, handle emergencies, and keep accurate records.
A daycare business may be right for you if you:
- Enjoy working with infants, toddlers, preschoolers, or school-age children
- Have patience and emotional maturity
- Can create daily routines and follow safety rules consistently
- Are willing to complete licensing, training, background checks, and inspections
- Can manage parents, staff, paperwork, and finances
- Have a suitable space or can secure one
- Are prepared for long hours and high responsibility
- Can handle illness policies, emergency plans, and parent concerns professionally
A daycare business may not be the right fit if you are looking for an easy home business, dislike paperwork, do not want regulatory oversight, or are uncomfortable handling emergencies, parent complaints, staff issues, and strict safety requirements. Before choosing this business, it is helpful to honestly evaluate your skills, temperament, and limitations. PowerHomeBiz’s guide on understanding the strengths and weaknesses of your business can help you think through where you are prepared and where you may need support.
Types of Daycare Businesses You Can Start
Before writing your business plan, decide what type of daycare business you want to operate. The structure you choose affects your licensing requirements, startup costs, facility needs, staffing, capacity, and income potential.
| Type of Daycare Business | Best For | Typical Location | Advantages | Challenges |
|---|---|---|---|---|
| Family Child Care Home | Entrepreneurs starting small from home | Your residence | Lower startup cost, home-based, smaller group | Capacity limits, home inspections, zoning rules |
| Group Child Care Home | Providers who want to care for more children than a small home daycare allows | Residence or approved property | More earning potential than a small home daycare | More rules, possible assistant/staff requirements |
| Child Care Center | Entrepreneurs who want a larger, scalable business | Commercial building, church, school, or leased facility | Higher capacity and revenue potential | Higher startup costs, payroll, rent, inspections |
| Preschool Program | Providers focused on early learning and school readiness | Home, center, church, or school | Strong appeal to parents preparing children for kindergarten | Curriculum planning and teacher qualifications may be required |
| Before- and After-School Care | Providers near schools or family neighborhoods | Home, school, community center, or center | Serves working parents with school-age children | Transportation and split scheduling can be challenging |
| Drop-In or Backup Care | Areas with parents who need occasional or flexible care | Licensed center or approved space | Can fill a flexible niche | Staffing and licensing can be complex |
Many entrepreneurs start with a family child care home and later expand into a larger center. This approach can reduce risk because you can learn the business, understand parent needs, build a reputation, and develop your systems before taking on larger expenses. If you want to focus specifically on a home-based model, read PowerHomeBiz’s guide on starting a family child care business.
Why There Is Demand for Daycare Services
Reliable child care remains important for families because many households depend on two incomes, single parents need care to work, and many parents need support outside traditional school hours. Daycare also supports early childhood routines, social development, and school readiness.
However, demand does not automatically guarantee success. Parents may need care but still be price-sensitive. Some communities may have long waitlists for infant care, while others may already have several established providers. Your opportunity depends on your location, tuition, quality, reputation, hours, licensing status, and the specific needs of families in your area.
ChildCare.gov explains that child care licensing is handled by state and territory governments and sets minimum health and safety requirements programs must meet to operate legally. This is important because many parents specifically look for licensed or regulated care when comparing providers.
You may find a strong local opportunity if your community needs:
- Infant care
- Extended-hours care
- Before- and after-school care
- Affordable home-based child care
- Preschool-style learning
- Care near commuter routes
- Bilingual or culturally responsive care
- Small-group care
- Summer or school-break care
- Care for parents with nontraditional work schedules
The key is to avoid opening a generic daycare. Instead, identify the specific child care gap in your local market and build your program around that need.
Daycare Business Requirements
Every state has its own child care licensing rules, but most daycares must meet similar operating requirements. ChildCare.gov’s page on child care licensing is a good starting point because it directs families and providers to state-specific licensing information.
| Requirement Area | What It Usually Covers |
| Licensing or registration | Approval from your state or local child care licensing agency |
| Background checks | Criminal history and child abuse registry checks for owners, employees, and sometimes household members |
| Health and safety rules | Cleanliness, supervision, illness policies, emergency plans, medication handling, safe sleep, injury prevention |
| Staff-to-child ratios | Maximum number of children per caregiver, often based on age group |
| Training requirements | CPR, first aid, safe sleep, child development, mandated reporting, health and safety training |
| Facility requirements | Indoor space, outdoor play area, bathrooms, exits, fire safety, sleeping areas, food preparation |
| Zoning approval | Local permission to operate a child care business in your home or chosen facility |
| Insurance | General liability, property insurance, professional liability, workers’ compensation if you have employees |
| Parent policies | Enrollment contracts, payment terms, pick-up rules, illness policies, discipline policy |
| Recordkeeping | Attendance, emergency contacts, immunization records, staff files, incident reports |
Because licensing rules vary so much, you should also check the National Database of Child Care Licensing Regulations and your own state licensing office. PowerHomeBiz’s daycare licensing requirements by state can also help you locate the right state-level information.
Step-by-Step Checklist to Start a Daycare Business
Use this checklist as a planning guide. Your exact steps may differ depending on your state, city, facility type, and child care model. For the business planning stage, the U.S. Small Business Administration offers useful guidance on how to write a business plan, and PowerHomeBiz also has a practical guide on how to write a business plan.
| Step | Action Item | Done |
| 1 | Decide whether to start a family child care home, group child care home, preschool program, or child care center | ☐ |
| 2 | Research local demand and competition | ☐ |
| 3 | Identify your target market, such as infants, toddlers, preschoolers, school-age children, or shift-working parents | ☐ |
| 4 | Contact your state child care licensing agency | ☐ |
| 5 | Review local zoning rules for your home or proposed location | ☐ |
| 6 | Create a daycare business plan | ☐ |
| 7 | Estimate startup costs and monthly operating expenses | ☐ |
| 8 | Choose a business name and legal structure | ☐ |
| 9 | Register your business if required | ☐ |
| 10 | Apply for an EIN from the IRS if needed | ☐ |
| 11 | Complete required background checks | ☐ |
| 12 | Complete CPR, first aid, safe sleep, and other required training | ☐ |
| 13 | Prepare your home or facility for inspection | ☐ |
| 14 | Buy appropriate business insurance | ☐ |
| 15 | Purchase furniture, supplies, toys, safety equipment, and learning materials | ☐ |
| 16 | Create parent contracts and a parent handbook | ☐ |
| 17 | Set tuition rates and payment policies | ☐ |
| 18 | Hire and train staff, if needed | ☐ |
| 19 | Build a website and claim your Google Business Profile | ☐ |
| 20 | Market locally before opening | ☐ |
| 21 | Complete inspections and licensing approvals | ☐ |
| 22 | Enroll your first families | ☐ |
| 23 | Open and monitor operations closely during the first 90 days | ☐ |
If you plan to hire employees, open a business bank account, or file business taxes separately, you may need an Employer Identification Number. The IRS allows businesses to apply for an EIN online.
Daycare Startup Costs
Startup costs vary widely depending on whether you start from home or open a full child care center. A home-based daycare may require licensing fees, training, insurance, toys, child-sized furniture, safety equipment, and minor home modifications. A commercial daycare center may require a lease, renovations, playground improvements, fire safety upgrades, staff hiring, technology, signage, and several months of operating capital.
PowerHomeBiz’s guide to the cost of starting a business can help you think through the startup expenses that apply to most small businesses, including insurance, supplies, marketing, professional fees, and operating reserves.
Typical Daycare Startup Cost Categories
| Cost Category | Home-Based Daycare | Child Care Center |
| Licensing and application fees | Low to moderate | Moderate |
| Training and certifications | Low to moderate | Moderate |
| Background checks | Low | Moderate, depending on staff size |
| Insurance | Moderate | Higher |
| Furniture and child-sized equipment | Moderate | High |
| Toys, books, and curriculum materials | Moderate | Moderate to high |
| Safety equipment | Moderate | High |
| Renovations or repairs | Low to high | Often high |
| Outdoor play area | Low to moderate | Moderate to high |
| Food service setup | Low to moderate | Moderate to high |
| Website and marketing | Low to moderate | Moderate |
| Rent or lease deposit | Usually none if home-based | High |
| Initial payroll reserve | Usually low if owner-operated | High |
| Operating reserve | Important | Essential |
Sample Startup Budget Worksheet
| Item | Estimated Cost |
| Licensing and permits | $_____ |
| Business registration | $_____ |
| CPR/first aid/training | $_____ |
| Background checks | $_____ |
| Insurance | $_____ |
| Furniture and cribs/cots | $_____ |
| Toys, books, and learning materials | $_____ |
| Safety gates, locks, outlet covers, and first aid kits | $_____ |
| Cleaning and sanitation supplies | $_____ |
| Food preparation supplies | $_____ |
| Outdoor play equipment | $_____ |
| Website and local marketing | $_____ |
| Rent deposit or facility costs | $_____ |
| Renovations or repairs | $_____ |
| Initial payroll reserve | $_____ |
| Emergency fund | $_____ |
| Total Estimated Startup Cost | $_____ |
Do not underestimate working capital. Enrollment may build slowly, and you may need to cover rent, utilities, staff wages, insurance, food, supplies, and marketing before revenue becomes stable.
Licensing, Zoning, and Legal Requirements
Licensing is one of the most important parts of starting a daycare business. Requirements differ by state and sometimes by county or city. Some states use terms such as licensed, registered, certified, or approved, especially for family child care homes.
Your licensing agency may review:
- Your application
- Your facility or home layout
- Indoor and outdoor space
- Fire safety
- Emergency exits
- Bathrooms and handwashing areas
- Sleeping arrangements
- Food preparation areas
- Staff qualifications
- Staff-to-child ratios
- Background checks
- Training certificates
- Written policies
- Health and safety procedures
- Immunization and child records
- Emergency preparedness plans
Do not assume that you can legally care for several unrelated children from your home without licensing. Many states allow only a small number of unrelated children before licensing or registration is required. Local zoning rules may also restrict whether you can operate a daycare in a residential area, especially if parent drop-off traffic, signage, parking, or outdoor play creates neighborhood concerns.
Before signing a lease or spending money on renovations, contact:
- Your state child care licensing agency
- Your city or county zoning office
- Your fire marshal or local fire inspection office
- Your health department, if food service rules apply
- Your insurance agent
- Your landlord, homeowners association, or mortgage provider, if applicable
If your application is denied or delayed, review the common reasons in PowerHomeBiz’s guide on why you cannot get a daycare license. Problems such as incomplete paperwork, failed inspections, zoning conflicts, missing training, or unsafe premises can often be corrected before reapplying.
Starting a Daycare Business After COVID: What Has Changed
COVID-19 changed how many parents evaluate daycare providers. While emergency pandemic rules have eased in many places, the experience left lasting expectations around health, cleanliness, illness policies, communication, staffing, and business continuity.
For new daycare owners, health and safety practices are not just licensing requirements. They are also part of your reputation and marketing. Parents want to know that your daycare has a plan for sickness, cleaning, ventilation, parent notifications, temporary closures, and staff absences.
The CDC’s early care and education guidance emphasizes everyday infection prevention strategies such as staying home when sick, handwashing, cleaning and disinfecting, improving ventilation, and following health and safety practices in child care settings. The CDC’s page on preventing infectious diseases in early care and education programs is a useful resource for providers building health and safety policies.
How COVID Changed Daycare Operations
| Area | Before COVID | After COVID |
| Illness policies | Many providers had basic sick-child rules | Parents now expect clearer exclusion, return-to-care, fever, symptom, and notification policies |
| Cleaning and sanitation | Cleaning was expected but not always emphasized | Frequent cleaning, handwashing routines, and visible hygiene practices are now trust signals |
| Parent communication | Updates were often informal | Parents expect faster alerts about illness, closures, staffing changes, and policy updates |
| Drop-off and pick-up | Parents often entered classrooms freely | Some providers use more controlled drop-off and pick-up to reduce disruption and illness exposure |
| Staffing | Staffing was already a challenge | Backup coverage and substitute plans became more important |
| Enrollment stability | Many centers relied on steady full-time enrollment | Providers now need stronger financial reserves and clearer closure/payment policies |
| Emergency planning | Plans often focused on fire or weather | Daycares now need plans for illness outbreaks, temporary closures, staffing gaps, and supply disruptions |
Health and Safety Practices Parents Now Expect
Parents may not expect strict pandemic-era procedures, but they do expect a daycare to have practical health and safety systems. Your parent handbook should clearly explain:
- When sick children and staff should stay home
- Fever, vomiting, diarrhea, rash, and respiratory symptom policies
- When a child may return after illness
- How parents will be notified of contagious illnesses
- Daily handwashing routines
- Cleaning and disinfecting procedures
- Diapering and toileting sanitation
- Food handling practices
- Safe sleep practices for infants
- Ventilation or fresh-air practices where possible
- Emergency closure procedures
- Tuition policies during closures or extended absences
The CDC’s guidance on protecting against infections in early care and education programs can help you develop policies around illness, hygiene, cleaning, ventilation, and everyday prevention.
Why Communication Matters More Than Ever
One of the biggest post-COVID changes is the importance of communication. Parents want to know what is happening, why a policy exists, and how it affects their child. A daycare that communicates clearly can reduce frustration, prevent misunderstandings, and build loyalty.
Strong communication systems may include:
- A parent handbook with updated illness and closure policies
- Text, email, or app-based alerts for urgent updates
- Daily reports for infants and toddlers
- Written incident and illness notices
- A process for reporting exposure to contagious illness
- Advance notice of policy changes
- Backup contact information if apps or phones fail
This is also a business advantage. Parents are more likely to trust a provider who explains policies calmly and consistently before problems happen.
Staffing and Backup Coverage Are Now Critical
The pandemic exposed how vulnerable daycare businesses can be when staff members are sick, unavailable, or burned out. Even after the emergency phase, staffing remains one of the biggest challenges for child care providers.
Before opening, create a staffing plan that includes:
- Substitute caregivers
- Floaters or part-time backup staff
- A sick-leave policy for employees
- Cross-training for daily routines
- A plan for maintaining staff-to-child ratios
- A closure plan if staffing falls below licensing requirements
- Competitive wages where possible
- A positive work environment to reduce turnover
The Bureau of Labor Statistics’ profile of childcare workers can help you understand wage trends, job duties, and employment outlook for child care staff. Since payroll is often one of the largest expenses in a daycare business, use local wage research when creating your financial projections.
Build Financial Resilience Into the Business
COVID also showed that daycare businesses need stronger financial planning. Temporary closures, enrollment drops, staff shortages, illness outbreaks, and supply cost increases can hurt cash flow quickly.
A stronger post-COVID daycare business should have:
- A written tuition policy for closures and absences
- An emergency reserve fund
- A waitlist strategy
- Multiple marketing channels
- Clear enrollment contracts
- Flexible but sustainable scheduling policies
- Backup suppliers for food, cleaning products, and essentials
- Accurate bookkeeping and monthly cash flow reviews
Do not rely only on full enrollment to survive. Build your pricing so the business can handle normal absences, seasonal enrollment changes, and unexpected expenses.
Post-COVID Daycare Startup Checklist
| Task | Why It Matters |
| Update your illness policy | Parents need to know when children must stay home and return |
| Create a cleaning schedule | Helps staff stay consistent and reassures parents |
| Add closure terms to your parent contract | Prevents disputes about tuition during emergencies |
| Plan for substitute care | Helps maintain required ratios |
| Create a parent alert system | Improves communication during illness or closures |
| Review ventilation and fresh-air options | Supports a healthier indoor environment |
| Keep extra essential supplies | Reduces disruption from supply shortages |
| Train staff on infection prevention | Makes health practices consistent |
| Create an emergency fund | Protects cash flow during disruptions |
| Review state and local health guidance | Child care rules can vary by location |
How to Use Health and Safety in Your Marketing
Do not market your daycare with fear-based messaging. Instead, present your health and safety systems as part of your professionalism.
For example, your website can say:
“We maintain clear illness policies, regular cleaning routines, parent communication procedures, and emergency plans to help provide a safe, stable environment for children and families.”
Parents want reassurance. Show them that your daycare is organized, prepared, and serious about children’s well-being.
Choosing a Location
Your location can determine whether your daycare business succeeds. Parents usually want care that is safe, convenient, clean, and close to home, work, school, or commuting routes.
Good Daycare Location Factors
| Factor | Why It Matters |
| Safe neighborhood | Parents must feel comfortable at drop-off and pick-up |
| Easy access | Busy parents value convenience |
| Parking or drop-off space | Reduces frustration and improves safety |
| Outdoor play area | Often required or expected |
| Enough indoor space | Licensing rules may require minimum square footage per child |
| Bathrooms and handwashing areas | Important for licensing, hygiene, and sanitation |
| Fire exits and emergency access | Required for safety approval |
| Nearby schools or family neighborhoods | Helps with enrollment |
| Zoning approval | Prevents costly legal problems |
| Room for growth | Allows you to expand enrollment or programs |
A vacant house, church facility, school wing, community center, or small commercial building may work, but only if the property meets licensing, zoning, fire, health, and safety requirements. Never assume that a space is acceptable because it looks perfect. Always verify compliance before signing a lease or spending money on renovations.
Setting Up Your Daycare Space
Your daycare environment should be safe, organized, age-appropriate, and easy to supervise. Parents notice how a space feels when they visit. A clean, warm, well-arranged daycare can help build trust immediately.
Consider setting up areas for:
- Arrival and sign-in
- Cubbies or personal storage
- Infant care, if applicable
- Nap or rest time
- Reading and quiet play
- Blocks and building toys
- Art and sensory activities
- Pretend play
- Meals and snacks
- Diapering and toileting
- Handwashing
- Outdoor play
- Staff supplies and records
- Cleaning supplies stored away from children
- Emergency supplies
For infants and toddlers, safe sleep rules, diapering procedures, sanitation, bottle storage, and constant supervision are especially important. For preschoolers, parents may also look for school-readiness activities, social-emotional learning, language development, music, movement, art, and outdoor play.
Equipment and Supplies Checklist
The supplies you need will depend on the ages you serve and your licensing requirements.
Basic Daycare Equipment Checklist
| Category | Items |
| Safety | First aid kits, smoke detectors, carbon monoxide detectors, fire extinguishers, outlet covers, cabinet locks, baby gates, emergency contact binder |
| Furniture | Child-sized tables and chairs, storage shelves, cubbies, high chairs, changing table, rocking chair, office desk |
| Sleep and Rest | Cribs, cots, mats, sheets, labeled bedding storage |
| Learning Materials | Books, puzzles, blocks, art supplies, music materials, manipulatives, dramatic play items |
| Outdoor Play | Balls, ride-on toys, climbing equipment, sandbox materials, shade, fencing if required |
| Sanitation | Gloves, disinfectant, paper towels, hand soap, diaper disposal system, laundry supplies |
| Meals and Snacks | Plates, cups, utensils, food storage containers, refrigerator thermometer |
| Administration | Attendance sheets, enrollment forms, incident reports, parent contracts, payment records |
| Emergency Preparedness | Flashlights, batteries, emergency water, evacuation plan, parent contact list, weather radio |
| Post-COVID Essentials | Extra hand soap, tissues, child-safe cleaning supplies, illness notice templates, backup masks if required by local policy, parent alert system |
Buy durable, easy-to-clean, age-appropriate equipment. Avoid secondhand cribs, car seats, or safety equipment unless you can verify they meet current safety standards and have not been recalled. Before purchasing used equipment, check the U.S. Consumer Product Safety Commission’s recall database.
Staffing and Training
If you operate a small family child care home, you may begin as the only provider. If you open a larger daycare center, staffing becomes one of your biggest responsibilities and expenses.
Your state may regulate:
- Minimum age of caregivers
- Education or experience requirements
- Staff-to-child ratios
- Group size
- CPR and first aid training
- Safe sleep training
- Mandated reporter training
- Background checks
- Ongoing annual training hours
- Director qualifications
- Substitute caregiver requirements
Many states require child care providers to complete CPR and first aid training before working with children. The American Heart Association provides information on CPR and basic life support training, though you should verify which courses your state licensing agency accepts.
Staffing Planning Table
| Role | When You May Need It | Responsibilities |
| Owner/Director | From the beginning | Licensing, parent communication, business management, staff supervision |
| Lead Teacher | Center or preschool program | Classroom management, curriculum, child supervision |
| Assistant Teacher | Larger groups or ratio requirements | Support lead teacher, supervise children, help with routines |
| Substitute Caregiver | To cover illness, appointments, emergencies | Maintain ratios when regular staff are absent |
| Cook or Food Prep Worker | Larger programs serving meals | Meal preparation, food safety, cleanup |
| Administrative Assistant | Growing centers | Enrollment, billing, parent communication, records |
Good staff are central to your daycare’s reputation. Parents notice whether caregivers are warm, calm, attentive, and consistent. Staff turnover can hurt trust, disrupt routines, and make licensing compliance harder. Build staff retention into your business model from the beginning.
Pricing and Income Potential
The income potential of a daycare business depends on capacity, tuition rates, enrollment stability, staff costs, rent, insurance, food, supplies, and your ability to maintain licensing compliance.
A simple formula is:
Monthly Revenue = Number of Enrolled Children × Monthly Tuition per Child
Then subtract:
- Rent or mortgage allocation
- Staff wages and payroll taxes
- Insurance
- Food and snacks
- Supplies
- Utilities
- Cleaning
- Maintenance
- Marketing
- Licensing and training
- Accounting and administrative costs
- Emergency reserve
Sample Revenue Planning Table
| Scenario | Children Enrolled | Monthly Tuition per Child | Estimated Monthly Revenue |
| Small home daycare | 6 | $900 | $5,400 |
| Larger home/group care | 12 | $900 | $10,800 |
| Small center | 30 | $1,000 | $30,000 |
| Larger center | 60 | $1,000 | $60,000 |
These numbers are examples only. Your actual tuition will depend on your local market, age groups served, hours, program quality, staff ratios, and whether you accept subsidies or participate in government programs. Infant care often costs more because younger children typically require lower staff-to-child ratios. School-age care may cost less but can require transportation coordination or split schedules.
Do not price only by looking at competitors. Price based on your real cost of care, desired profit, licensing limits, staffing needs, and the value you provide.
Parent Contracts and Policies
A daycare business needs clear written policies. Parent misunderstandings can quickly create stress, late payments, disputes, or safety issues. A parent handbook and signed contract help protect both your business and the families you serve.
Policies to Include
| Policy Area | What to Cover |
| Enrollment | Required forms, emergency contacts, immunization records |
| Tuition and fees | Payment due dates, late fees, deposits, vacation policy |
| Hours | Opening time, closing time, late pick-up fees |
| Illness | When children must stay home, return-to-care rules |
| Medication | Whether you administer medicine and what documentation is required |
| Pick-up authorization | Who may pick up a child and ID requirements |
| Discipline | Positive guidance methods and prohibited discipline |
| Meals and snacks | What you provide and allergy procedures |
| Nap/rest time | Schedule, bedding, safe sleep rules |
| Holidays and closures | Paid holidays, weather closures, emergency closures |
| Emergency closures | What happens during illness outbreaks, severe weather, power outages, or staffing shortages |
| Termination | How either party may end care |
| Communication | Daily updates, incident reports, parent meetings |
Have an attorney review your contract, especially if you are accepting deposits, charging late fees, hiring staff, or operating from a leased facility. Written policies are also part of running a more professional operation; PowerHomeBiz’s article on protecting your business with written policies can help you think through why policies matter.
How to Market a Daycare Business
Parents do not choose child care casually. They want confidence that their child will be safe, cared for, and treated well. Your marketing should focus on trust, not hype.
If you already have a separate daycare marketing article, use it as the supporting page for this section. PowerHomeBiz’s guide to marketing your day care or childcare business can be linked here as the deeper resource. You can also support this section with broader small business marketing advice from PowerHomeBiz’s article on how to market your small business.
Daycare Marketing Ideas
| Marketing Strategy | Why It Works |
| Google Business Profile | Helps local parents find you in search and maps |
| Local SEO website | Gives parents details about your program, hours, tuition, and enrollment process |
| Parent referrals | Parents trust other parents |
| Open house events | Allows families to see the space and meet you |
| Reviews and testimonials | Builds credibility |
| Partnerships | Pediatricians, schools, churches, real estate agents, employers, and community groups may refer families |
| Social media | Helps show your environment, activities, and personality |
| Flyers and local bulletin boards | Useful in neighborhoods, libraries, community centers, and family businesses |
| Email list | Helps follow up with interested parents |
| Community events | Builds local awareness before you need enrollment |
What Parents Want to See on Your Website
- Licensing status
- Ages served
- Hours of operation
- Location and service area
- Program philosophy
- Staff qualifications
- Safety and security practices
- Illness and cleaning policies
- Daily schedule
- Meals and snacks
- Photos of the space, if appropriate
- Enrollment process
- Contact form
- Parent testimonials
- Frequently asked questions
- Clear call to action: schedule a tour, join the waitlist, or request tuition information
Your marketing should answer the questions parents are already asking: Is this daycare safe? Is it licensed? Will my child be cared for? Will communication be clear? What happens if my child is sick? What are the hours? What does it cost? Can I trust this provider?
Common Mistakes to Avoid
Starting a daycare business requires more than enthusiasm. Many new providers struggle because they underestimate regulation, costs, staffing, parent communication, and illness policies.
Avoid These Daycare Startup Mistakes
| Mistake | Why It Hurts |
| Starting before understanding licensing rules | Can lead to fines, shutdowns, or denied applications |
| Choosing a location before checking zoning | You may lease a space you cannot legally use |
| Underpricing tuition | Leads to cash flow problems and burnout |
| Failing to create written parent policies | Causes disputes over payments, illness, pick-up, and closures |
| Not buying enough insurance | Exposes your personal and business assets |
| Hiring too quickly without proper checks | Creates safety and compliance risks |
| Ignoring staff-to-child ratios | Can violate licensing rules and endanger children |
| Spending too much on decor before essentials | Cash should first go to safety, licensing, and operations |
| Not building an emergency fund | Enrollment gaps and repairs can create financial strain |
| Marketing too late | You need parent inquiries before opening, not after |
| Having weak illness policies | Creates parent conflict and health risks |
| Not planning for staff absences | Can force closures or licensing violations |
Should You Start Small or Open a Full Daycare Center?
For many entrepreneurs, starting small is safer. A home-based family child care business can help you learn the industry, build enrollment, develop parent policies, and understand your local market before expanding.
However, if you have capital, management experience, a strong location, and clear demand for more child care slots, a center may offer greater growth potential.
Start Small If:
- You have limited startup capital
- You want to work from home
- You prefer a smaller group of children
- You want to test the business first
- You do not want to manage a large staff immediately
- You want lower overhead while building experience
Consider a Center If:
- Your area has strong unmet demand
- You can secure a compliant facility
- You have enough startup capital or financing
- You are comfortable hiring and managing employees
- You want a scalable business
- You understand licensing, inspections, payroll, and compliance requirements
Frequently Asked Questions About Starting a Daycare Business
Do I need a license to start a daycare business?
In most cases, yes. The rules depend on your state, the number of children you care for, their ages, and whether the children are related to you. Some states allow a small number of unrelated children before licensing is required, while others require registration or licensing sooner. Check with your state child care licensing agency before accepting children.
Can I start a daycare business from home?
Yes, many providers start with a family child care home. However, you may still need licensing or registration, background checks, training, inspections, zoning approval, insurance, and home safety upgrades. You should also check your lease, homeowners association rules, and local zoning restrictions.
How much does it cost to start a daycare business?
Startup costs vary widely. A small home-based daycare may require licensing fees, training, insurance, toys, furniture, safety equipment, and supplies. A child care center may require a lease, renovations, playground equipment, staff payroll, fire safety upgrades, and months of operating capital. Create a detailed budget before committing to a location.
Is a daycare business profitable?
A daycare business can be profitable, but profit depends on enrollment, tuition, staff costs, rent, insurance, food, supplies, and licensing limits. Many providers struggle when they underprice tuition or fail to account for staffing ratios and operating expenses. Profitability improves when you control costs, maintain enrollment, and offer a program parents value.
What is the difference between daycare and preschool?
Daycare usually refers to child care that supports working parents and may serve infants, toddlers, preschoolers, or school-age children. Preschool usually focuses more specifically on early learning and school readiness for children before kindergarten. Some daycare centers include preschool programming.
What insurance do I need for a daycare business?
You may need general liability insurance, professional liability coverage, property insurance, abuse and molestation coverage, commercial auto insurance if transporting children, and workers’ compensation if you have employees. Speak with an insurance agent who understands child care businesses.
How many children can I care for in my home?
This depends on your state licensing rules, the ages of the children, the number of caregivers, and your available space. Infants usually require lower staff-to-child ratios than older children. Contact your state licensing agency to confirm your limit.
What training do daycare providers need?
Common requirements include CPR, first aid, safe sleep training, child development, health and safety training, emergency preparedness, and mandated reporter training. Directors and lead teachers may need additional education or experience depending on the state and program type.
How did COVID change daycare businesses?
COVID changed parent expectations around illness policies, sanitation, communication, staffing, and emergency planning. Even though many emergency rules have ended, parents still want daycare providers to have clear health policies, cleaning routines, parent alerts, backup staffing plans, and procedures for closures or contagious illness.
How do I get parents to enroll in my daycare?
Start with local trust-building. Create a simple website, claim your Google Business Profile, ask for referrals, network with family-focused organizations, host an open house, and make it easy for parents to schedule a tour. Parents want to see safety, warmth, professionalism, and clear communication.
What should be included in a daycare parent handbook?
A parent handbook should include tuition policies, hours, late pick-up rules, illness policies, medication procedures, discipline policy, meals and snacks, nap time, emergency procedures, closure dates, pick-up authorization, and termination terms.
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Can you please send the link of set up process, applicable law, and regulatory for day care in Mary Land, Virginia, or around Washington DC.
Thanks for visiting! We have the links to the regulatory agencies and processes responsible for overseeing the daycare businesses on a state by state basis. Visit http://www.brigittesglobalstore.com/daycare-state-licensing to see the links for Maryland, Virginia and Washington DC. Good luck!
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