How to Start a Daycare
How to Start a Daycare
How to open a daycare
Starting a daycare is a rewarding way to combine your love for children with entrepreneurship. Success depends on careful planning, meeting legal requirements, and creating a nurturing environment. This step-by-step guide covers how to start a daycare, whether you're opening a large child care center or an in-home daycare.
1. Early childhood education (ECE)
Most states do not require a college degree to open a daycare, but some education or training in early childhood development is highly recommended. Some licensing agencies require providers to complete courses in child development or obtain a Child Development Associate (CDA) credential before opening their doors.
Some states require a high school diploma or GED as a minimum. If you plan to run a larger center or hire staff, employees might need an associate's or bachelor's degree in early childhood education. You also may need ongoing professional development to keep your license current.
Funding & grants
Even if you're starting small, opening a daycare comes with upfront costs. Fortunately, grants are available to help with these expenses. The U.S. Office of Child Care has supported a large majority of licensed child care programs nationwide, so it's worth exploring these funding opportunities for your business.
Connect with your state's Child Care and Development Fund (CCDF) Administrators, who are dedicated to helping new providers. They can point you toward resources and potential grants and guide you through the application process.
2. How to get a daycare license
Every state has its own licensing process for daycare providers, so it's essential to research your local regulations. You'll likely need to attend an orientation, complete background checks, and pass facility inspections to ensure your space is safe and suitable for children. Meeting these requirements is the first crucial step.
Licensing also determines how many children you're able to care for and what age groups you're allowed to serve. Home daycares typically have lower capacity limits, while larger centers can accommodate more children. Always check your state's childcare licensing website for the most up-to-date information.
Health & safety standards
Health and safety are top priorities in childcare. Most states require providers and staff to complete CPR and First Aid training, as well as courses on safe sleep and emergency preparedness. Regular inspections ensure your daycare maintains proper sanitation, fire safety, and childproofing standards.
You'll also need to keep detailed records of any accidents, illnesses, or incidents that occur. Promptly reporting serious events to your licensing agency helps maintain transparency and builds trust with families.
Insurance & permits
Securing liability insurance is a smart way to protect your business from accidents or injuries that may occur. You'll also need to obtain the appropriate business permits, which may include local zoning approvals and certificates of occupancy.
This documentation shows that your daycare meets community standards and legal requirements. Staying organized with your paperwork will make annual renewals and inspections much smoother.
3. Researching other daycares
Take several days to research other daycare centers and in-home daycare businesses in your area. Pay attention to their pricing, daily schedules, and policies for emergencies, extreme weather, or late pick-ups. Notice where they advertise and what strategies they use to attract families.
If you're comfortable, consider reaching out to local daycare owners for advice or insights. Many early childhood educators are friendly and open to networking, especially if you're not in direct competition. These conversations can offer valuable tips and help you better understand local licensing requirements.
Setting pricing
After you've gotten familiar with the rates of comparable centers, you can set your own rates. Child care costs $400 to $1,500+ per month on average, although it's highly dependent on your location and the age of the child. The younger the child, the more daycares normally charge.
In-home daycare costs slightly less, between $540 to $1,000+ per month. Family daycares can get away with charging less because their overhead costs are lower, and some parents prefer them because they have fewer kids than large centers.
4. Choosing a name
Your daycare's name should reflect your mission and appeal to families in your community. Choose something simple, memorable, and easy to pronounce. Names like "Little Scholars" or "Bright Beginnings" convey a sense of care and learning while also being inviting to parents and children.
Before finalizing your name, check that it isn't already in use or trademarked. It's also wise to secure a matching website domain and social media handles. This makes it easier for families to find and remember your daycare online.
Example names
Our Daycare Name Ideas guide includes over 100 unique childcare center names and tons of helpful tips to help you choose your own unique name! Make sure your name conveys warmth, positivity, and the age range or approach you want to focus on. Some creative ideas include:
Little Sprouts Academy
Happy Hatchlings Childcare
Bright Minds Academy
Early Steps Preschool
Sunshine Kids Clubhouse
Little Sunbeams Homecare
Happy Horizons Daycare
5. Setting up the business
A solid business plan will guide your daycare's growth and operations. Start by defining your mission, outlining your philosophy on childcare, and setting clear goals. Include a detailed budget that covers rent, supplies, salaries, and licensing fees, as well as a description of the services you'll offer.
Think about your hours of operation, the age groups you'll serve, and any special programs or extras, such as meals or tutoring. A thorough business plan not only helps you stay organized but also impresses potential investors or partners.
Facility setup
Creating a safe, welcoming environment is the key to a successful daycare. Designate separate areas for play, meals, naps, and learning to keep children engaged and comfortable. Make sure your facility meets all safety standards, with secure storage for hazardous items and childproofed spaces.
Stock your daycare with age-appropriate toys, books, and educational materials. Regularly clean and sanitize all areas to maintain a healthy environment. A well-organized, cheerful space helps children feel at home and reassures parents about their choice.
Create a contract
Once you've settled on the specifics, create a contract that clearly spells out what you offer, what you expect from families, and what's not included. To help you get started, consider these important questions:
What age range of children will you accept?
What are your pick-up times, and what happens if parents are late?
Which services do you provide, and what must parents supply? For example, you might provide formula, but parents bring diapers.
What is your policy for sick children?
How many days will you take off, and will those be unpaid or paid?
What is your process for handling late payments?
Marketing
To attract families, develop a strong online presence with a professional website and active social media profiles. The more visible and engaged you are, the easier it will be to build trust and fill your enrollment spots. Follow these tips to promote your business:
Share photos of your facility, testimonials from happy parents, and information about your programs.
Join TrustedCare to gain access to more potential clients and connect with them.
Word-of-mouth referrals are powerful, so encourage satisfied clients to spread the word.
Get involved in your community by attending events, partnering with local schools, or joining parenting groups.
Starting an at-home daycare
If you don't have the revenue to rent or buy a daycare property, you can start out by using your home instead. This approach also works for people who still have children at home. For a more in-depth look, check out our guide on how to start a daycare at home.
Home preparation
Before opening an at-home daycare, make sure your home complies with local zoning laws and HOA rules. Prepare your space by childproofing rooms, installing safety gates, and securing hazardous materials. Designate specific areas for play, meals, and naps to create a structured, nurturing environment.
It's important to balance your personal and professional life when working from home. Set clear boundaries for your family and establish routines that help you transition between daycare hours and private time. This ensures both your business and home life run smoothly.
Tax credits
If you're starting an in-home daycare, you may qualify for a tax deduction on areas of your home used for business purposes–even if those spaces serve as your family room after hours. This straightforward benefit can help you reduce expenses and make your daycare more financially manageable.
Licensing differences
Licensing for in-home daycares is often simpler than for larger centers but still requires careful attention. Most states limit your care to 4 to 12 children. You'll still need to pass inspections and complete the required training, but the process may involve fewer forms and lower fees.
If you rent your home or live in a managed community, you may need written approval from your landlord or HOA. Always check your state's specific requirements for home-based childcare to avoid surprises during the application process.
FAQs about how to open a childcare center
What is daycare?
Daycare, also known as child care, refers to the supervision and care of infants and young children during the daytime while parents or guardians are at work or school. Daycare centers provide a safe, nurturing environment where children play, learn, and socialize under the supervision of trained caregivers.
Daycares can be center-based facilities with multiple classrooms or in-home programs with fewer children. They focus on providing care, supervision, and social development rather than formal academic instruction, often following a play-based schedule that supports early childhood growth and readiness for school.
What certifications do I need to open a daycare?
To open a daycare, you must meet your state's licensing requirements, which generally include passing a criminal background check, completing CPR and First Aid training, and attending a state orientation. Many states also require the following:
High school diploma or GED (some require college education)
Background checks
Ongoing health and safety training
Emergency planning
Adherence to sanitation and building safety standards
While not always mandatory, earning a Child Development Associate (CDA) credential or Certified Childcare Professional (CCP) designation can strengthen your qualifications. Home-based daycares must follow specific state licensing rules, including limits on the number of children. Always check your state's child care licensing agency for exact requirements.
Are daycares profitable?
Daycares can be profitable, with industry profit margins averaging around 15% in the U.S., which is higher than many other sectors. Profitability depends on factors like location, enrollment, and cost management. Controlling expenses is crucial, especially staffing, which is often 40 to 50 percent of operating costs.
Daycare startup costs range from $11,000 to $30,000, but the sector is growing, with the U.S. market expected to expand at a 6.5% annual rate through 2033. However, challenges like high staff turnover and rising operating costs can impact profits, so careful financial planning is essential.
Can an HOA regulate a daycare?
Yes, HOAs can regulate or restrict daycares based on their own rules and state laws, but their authority may be limited by state protections for home-based childcare businesses. Always review your HOA's governing documents and consult with an attorney or your state's licensing agency before starting a daycare in an HOA community.
What insurance is needed to open a child daycare school?
Most states at least require liability insurance to obtain a daycare license. Check specific local regulations to ensure compliance, but you normally need the following coverage:
General liability insurance: Protects against claims of bodily injury or property damage occurring on your premises, including accidents involving children or visitors
Professional liability insurance: Covers claims related to errors, omissions, or negligence in the care provided by your staff
Commercial property insurance: Protects your building, equipment, and supplies from damage due to fire, vandalism, or natural disasters
Workers' compensation insurance: Required if you have employees, it covers medical expenses and lost wages from work-related injuries or illnesses
Commercial auto liability insurance: Needed if you transport children, covering accidents involving business vehicles
Abuse and molestation coverage: Provides protection against allegations of abuse or misconduct by staff
Using our proprietary cost database, in-depth research, and collaboration with industry experts, we deliver accurate, up-to-date pricing and insights you can trust, every time.