How to Start a Home Daycare Business

According to a recent report from Care.com, 65% of parents surveyed have had to wait to get their child into daycare. Moreover, 81% had put themselves on multiple waitlists, and 43% have waited more than 4 months for a spot to open.

If you love caring for children and have sufficient space and resources in your home, now is a great time to open a daycare center.

An at-home daycare would be ideal for all the following people:

• Childcare providers who want a more stable income
• Stay-at-home moms
• Empty-nesters
• Early childhood education graduates
• Former teachers
• Entrepreneurs who love kids

There are many reasons why you might want to open your own daycare. For instance, you get to be your own boss. You won’t have to commute to work or part-time gigs. Plus, if you have young kids of your own, you won’t need to send them to daycare.

While you don’t need a degree or any special training to start a daycare at home, there are certain requirements that both you and your home will need to meet. Because this type of business isn’t regulated on a national level, you’ll need to consult your state, county, and city requirements for home daycares.

In Florida, for instance, there are different requirements at the state and county level. While there’s no state-required license to operate a home daycare, you do need to annually register with the Department of Children and Families. 1 Certain counties (e.g., Broward, Duval, and Hillsboro) also require a home daycare license, meaning that you have to go through two vetting processes before you can open a daycare.

Every place is different, so be sure to check your state’s specific requirements in the National Database of Child Care Licensing Regulations. You can also find a brief summary of state requirements on Daycare.com.

Requirements for you

As the business owner, you’ll need to prove that you’re qualified to run a home daycare. While requirements vary from one jurisdiction to the next, eligibility factors generally fall into the following categories:

• Age: Minimum age requirements vary but are often 18 or 21 years old.
• Education level: There may be no formal education requirements, or you may need a high school diploma or GED.
• Childcare training: You may need to complete a course in childcare or early development.
• Background checks: Many jurisdictions require clear results on background screening checks, such as checks in criminal record, FBI, and sex offender databases.
• Health checks: Depending on where you live, you may need to undergo a medical check and/or provide negative test results for certain viruses or infectious diseases.
• Certifications: You’ll need to provide proof of any required safety certifications, such as CPR and first aid certifications.

Requirements for your home

In addition to meeting legal requirements yourself, your home also needs to be suitable for childcare. Your living space may to need to tick the following boxes before you can get approved for a home daycare license:

• Building requirements: You’ll need to abide by local building requirements and fire safety codes.
• Size of your home: Some governments stipulate that your home must be large enough to provide each child with a certain amount of space.
• Safety equipment: Your home will need to have proper safety equipment and features, such as smoke detectors, carbon monoxide detectors, fire extinguishers, and first aid kits.
• Cleanliness: Your home will need to meet cleanliness standards to protect the health of the children in your care.
• Childproofing: You need to perform adequate childproofing to ensure that children will not be able to access potentially harmful substances, dangerous items, or hazardous objects.
• Environmental control equipment: You may need to show you have adequate temperature control, ventilation, and waste management systems.
• Outdoor space: You may be required to provide an outdoor space for children to access that’s safe and free from hazards.

An inspector may need to visit your home and approve the space you plan to use for your home daycare. Additionally, you may need to undergo periodic home inspections to stay in business.

Other possible requirements

On top of building requirements and personal requirements, you may need to jump through a few additional hoops before you get legal approval to open a home daycare:

• Business plan: You may need to submit a detailed business plan along with your application to open a home daycare.
• Orientations: You may need to attend an orientation in person before you can get a home daycare license.
• Insurance: Some jurisdictions require home daycares to have health, property, and/or general liability insurance before they open for business.
• Employer Identification Number: You’ll need an Employer Identification Number (EIN) to report your business income to the IRS when it’s time to file your taxes.

Starting a private daycare business can be both lucrative and rewarding. However, this isn’t the kind of work you can jump right into. Here’s what you need to open a daycare in your home.

1. Create a childcare business plan

A detailed business plan is a critical first step to starting any business. It will guide all the decisions you make from this point forward. It will also ensure you’re prepared to answer all the important questions your state, county, and clients ask you.

This plan should cover all the aspects of how you intend to launch, fund, and run your business. Make sure it includes all the following information:

• Market analysis: Research the competition currently in your area. Identify gaps in the market. Look into how they’re running their businesses and marketing their services. Also find out how many of them have waitlists.
• Name: Give your daycare a unique, memorable, and positive name. Before settling on a name, make sure it’s not already being used.
• Goals and guiding philosophy: Describe your daycare, its role within the community, and the principles that guide it.
• Type of daycare: While basic daycare services are often for toddlers and very young children who haven’t started school yet, you can also choose to offer specialized before-school or after-school care, summer care, or preschool services.
• Age range: Typical age ranges fall into the categories of infant (0 to 18 months), toddler (18 months to 3 years), young children (3 years to 5 years), and school-age children (5 years and up).
• Number of children: Most states have limits on the number of children you can enroll in your home daycare and/or a minimum provider-to-child ratio.
• Operating hours: Your daycare hours should align with the type of daycare you run as well as parents’ schedules and needs.
• Program and curriculum: Describe what the typical program or day will look like at your daycare. Mention if it includes mealtimes, naps, education, transportation, and so on.
• Management and staff: Even if you’re a sole proprietor, you’ll need at least one person who can substitute for you in case of illness, injury, or time off. You may also need to hire additional staff, depending on the number of children you plan to take on.
• Health and safety plan: Create a detailed plan for how you’ll keep the children in your care safe when they’re at your home, eating your food, riding in your vehicle, out on excursions, and more.
• Marketing plan: Devise a strategy for getting the word out about your business. It will likely include a mix of in-person and online marketing strategies.

2. Come up with a financial plan

Before you start getting prepared to open up for business, you’ll need to confront the financial aspects of running a home daycare. Thankfully, overhead costs shouldn’t be too high since the daycare will be in your home. Nevertheless, keeping a well-controlled budget will ensure your business remains profitable.

Startup costs

Startup expenses include costs associated with the logistical elements of the business, like registration and license application fees, liability insurance premiums, background screening fees, and costs related to inspections.

You should also factor in setup costs. For instance, if you need to renovate your home in order to create a suitable space or meet safety standards, you’ll need funds for that. You’ll also need to buy furniture, supplies, protective equipment, toys, and more for the daycare room.

Monthly budget

Calculate the costs associated with running the daycare. Keep this budget updated in accordance with any changes in your business.

Below are typical costs to consider:

• Rent or mortgage
• Electricity and utilities
• Safety and health items like first aid kits and cleaning supplies
• Toys, mats, bedding, food, and other items for the kids
• Business software
• Payment processing software
• Marketing and sales
• Staffing
• Bookkeeping and accounting
• Taxes

Maintaining a budget is a crucial part of keeping your daycare profitable. It’s also important to keep track of these expenses as you can write off many of them when filing your taxes.

Setting and managing your rates

According to TrustedCare, in-home daycares typically charge somewhere in the range of $125–$225 per week or $540–$1,000 per month for each child enrolled.

Several factors can affect the prices of home daycare services:

• Age group
• Number of children per family
• Part-time vs. full-time care
• Location
• Licenses, certifications, and specialties

When setting your rates, start by researching what others in your area are charging for comparable services. It’s also important to factor in your expenses so you know how much you’ll be taking home in profits at the end of the month.

3. Prepare a daycare room in your home

Once you’ve got all the planning out of the way, it’s time to set up your daycare room. This prep work consists of four stages.

Designating a space

Choose a space that’s large enough for the amount of children in your care. If you live in a small home or apartment, you could put your daycare setup in the living room.

If you’re in a home and you have a sizable yard, consider designating an outdoor play area as well. It will likely need to be fenced. Bear in mind that if you have a pool, hot tub, shed, or hazardous equipment or materials back there, you’ll need to close off access to those areas.

Adding kid-friendly furniture

This includes items like play mats, cubbies and other storage spaces, kid-sized tables and chairs, high chairs, cots, and cribs.

You’ll also need to add furniture to other parts of your house to make it more kid-friendly. For instance, the bathroom might need a stepstool, a changing table, a locking garbage can, cabinet locks, and a safety release for the door lock.

Making your home safe for kids

Each state has its own list of safety requirements. In some states, you’ll need to maintain the health and safety checklist on your own. In other states, your home will be regularly inspected.

Either way, it’s important to create a safe environment for every child who enters your home. You’ll need a smoke detector, a carbon monoxide detector, safety gates, and plug socket covers. It’s also a good idea to secure furniture so it can’t easily fall.

Buying additional supplies

Depending on the type of daycare you run, you might need a mix of childcare, entertainment, and educational supplies.

Here are a few examples of items that may come in handy:

• Toys
• Paper and drawing materials
• Books
• Art supplies
• Food and beverages
• Food preparation and serving supplies
• First aid kits
• Cleaning supplies
• Toilet paper and baby wipes
• Diapers

You might already have some of these things in your home. If not, buy what you need ahead of time. Add anything that needs to be restocked regularly to your monthly budget.

4. Apply for a home daycare license

Even if you don’t strictly need a home daycare license where you live, it’s a good idea to get one anyway. Getting licensed demonstrates that you’re in full compliance with all relevant health and safety guidelines, and it can be a good way to get more clients.

Most license applications will ask you for the following items:

• Personal information about you
• Name of your substitute or assistant and their personal details
• Your Social Security number
• Information about your daycare operations
• Your address history
• Information about the people who live with you
• Personal and professional references
• Your education level
• Details about relevant training you’ve completed
• Background and criminal history records
• Medical history

While most applications ask for more or less the same information, each state has a different application process. Some allow you to submit your application online, whereas others require you to print and mail your application.

You may need to pay an application fee at the same time that you apply. In other cases, you’ll have to submit an “intent to apply” first, and only once the agency confirms that you’re qualified will you receive the application materials.

Typically, the whole application and vetting process takes about 3 months.

5. Prepare necessary documents

Getting everything in writing is absolutely essential for any business. For a home daycare in particular, it’ll help protect you, your parent clients, and the children in your care.

There are two basic types of documentation you should prepare before you officially open for business.

Registration forms

Before you can enroll any child in your licensed at-home daycare, it’s best to get certain documentation from the parents. At minimum, you’ll want to create an enrollment form, a parent contract, an emergency contact form, and a child immunization form.

Before creating these documents, decide whether you want to maintain your records in print or digital format. Once you’ve done that, set up a secure storage system where you can file documents once parents have submitted them.

Parent handbook

It’s also a good idea to create a parent handbook. This will first and foremost provide parents with clarity and transparency about the way you operate your daycare. It will also lay out important guidelines that you and everyone else working at the daycare can follow.

The handbook should include information related to the following topics:

• Your daycare’s goals and guiding philosophy
• Services included
• Monthly costs and fees
• Late payment procedure
• Hours of operation
• Scheduled vacations or other time off
• Drop-off and pick-up times
• Sick child policies
• Disciplinary procedures
• Health and safety checklist
• Emergency procedures and evacuation plan
• Enrollment cancellation procedure

The more information you include in the handbook, the less hassle it will be to manage any disputes or conflicts that may arise.

Once you’ve completed the process of starting a licensed home daycare and done all the hard work of getting prepared to accept new enrollees, you’ll need to start looking for parents who want your childcare services.

Below are several marketing strategies you can use to get new clients:

• Create an eye-catching logo and branding for your daycare.
• Add signage outside your home.
• Create business cards to share with new parents.
• Print flyers and share them at local businesses, churches, schools, farmers’ markets, PTO meetings, and other events and places parents often visit.
• Build a website.
• Optimize your daycare’s website so it shows up in Google searches for “in-home childcare near me.”
• Create social media accounts on LinkedIn, Facebook, and Instagram.
• Join Facebook groups for local parents and other childcare providers.
• List your business on Yelp.

When you start getting enrollments, work on building a positive relationship with both the kids and their parents.

The parents may turn out to be a great source for new business if they’re happy with your daycare. You can ask for testimonials or start a referral program to incentivize them to spread the word.

Your reputation is arguably the most pivotal factor that will influence the success of a childcare business. Thankfully, this makes things pretty simple. Happy kids and happy parents are the secret to a thriving home daycare business.