How to Start a Daycare Business With No Money

A daycare business, also known as a child care or preschool business, involves providing a supervised environment and care for young children during the day while their parents or guardians are at work or otherwise occupied. The primary focus of a daycare business is to ensure the safety, well-being, and development of children in their care.

Daycare businesses cater to infants, toddlers, and young children, typically ranging in age from a few weeks to around five years.

The services provided by a daycare business can vary but generally include early childhood education, socialization, and physical development. These activities might include playtime, structured learning, arts and crafts, outdoor play, and possibly even basic meals.

Over and beyond, daycare businesses play a significant role in supporting working parents by providing a secure and nurturing environment for their children. They also contribute to children’s early education and development, preparing them for school and social interactions.

Steps on How to Start a Daycare Business

Conduct Market Research

Conducting thorough market research is essential for starting and running a successful daycare business. Identify the specific demographic you intend to serve. Consider factors like age range, income level, location, working status of parents, and any special needs or preferences.

Research local demographic data to understand the population in your target area. Look for information on the number of families with young children, average household income, employment rates, and educational levels.

Identify existing daycare providers in your area. Visit their websites, if available, or physically visit their facilities to gather information about their services, pricing, curriculum, facilities, and reputation. This will help you understand the competitive landscape.

Once you have gathered both primary and secondary data, analyze and interpret the findings. Look for patterns, trends, and key insights that can guide your decision-making. Identify the unique selling points for your daycare business and develop strategies to address the needs and preferences of your target market.

Finally, you should utilize the information gathered during market research to develop a comprehensive business plan for your daycare. Include details such as your target market, competitive analysis, pricing strategy, marketing plan, and financial projections.

a. Who is the Target Market for Daycare Business?

Working parents who need a safe and reliable place to leave their children while they are at work.
Families, where both parents are working
Single parents who are employed or pursuing education
Parents seeking socialization
Parents of children with special needs
Parents who require short-term or temporary childcare due to specific events, appointments, or commitments

b. Is Daycare Business a Profitable Business?

Yes, a daycare business can be profitable, but its success depends on several factors. Please note that while a daycare business has the potential to be profitable, it’s important to approach it with careful planning, realistic financial projections, and a strong understanding of the industry and local market conditions.

Conduct thorough research, develop a solid business plan, and regularly monitor your financial performance to ensure that your daycare business remains profitable over the long term.

c. Are There Existing Niches in the Industry?

Yes, there are niche ideas when it comes to the daycare business and some of them are:

Daycare for children under 4 years old
Daycare adults
Daycare for children with special needs
Daycare for families with a particular cultural or religious background.

d. Who are the Major Competitors?

Children’s Discovery Center of San Francisco
Primrose Schools
KinderCare Education
The Goddard School
Learning Care Group
Bright Horizons Family Solutions
La Petite Academy
YMCA of the USA
Kindermusik
The Children’s House
Montessori Schools of America
The Academy of Early Learning
WeeCare
AuPairCare
Care.com
Sittercity
UrbanSitter
Rover
Nannies4Hire
CareLinx

e. Are There County or State Regulations or Zoning Laws for Daycare Businesses?

Yes, daycare businesses in the United States are subject to county, state, and sometimes even local regulations and zoning laws. These regulations are in place to ensure the safety, well-being, and proper development of children in daycare settings. The specific regulations and requirements can vary depending on the state and locality.

Most states have licensing requirements for daycare providers. These regulations typically cover areas such as staff-to-child ratios, health and safety standards, staff qualifications, training, background checks, and more. Licensing requirements aim to create a safe and suitable environment for children.

Some zoning laws may have specific regulations regarding the operation of daycare businesses. These regulations might include factors like proximity to schools, parks, residential areas, and other considerations related to the well-being of children and the impact on the surrounding community.

States and localities often have regulations concerning the physical layout and safety of daycare facilities. This can include requirements for indoor and outdoor play spaces, emergency exits, fire safety measures, childproofing, and more.

Daycare facilities are usually required to meet certain health and sanitation standards to ensure the well-being of the children in their care. This includes guidelines for cleanliness, food handling, hygiene practices, and preventing the spread of illnesses.

Many states require daycare staff to undergo background checks to ensure that they do not pose a risk to children. Staff members may also need to meet specific educational or training requirements.

Regulations often specify the maximum number of children that can be cared for by each staff member. Daycare centers may be required to maintain certain records related to each child’s attendance, medical records, emergency contact information, and parental consent forms.

g. Is There a Franchise for Daycare Business?

Yes, there are franchise opportunities for daycare business, and here are some of them:

KinderCare Learning Centers
Bright Horizons
The Goddard School
Primrose Schools
Tutor Time
Discovery Point
Childtime
Celebree School
The Learning Experience
Adventure Kids Playcare.

h. What Do You Need to Start a Daycare Business?

Business Plan
Location
Licensing and Permits
Staff and Training
Facilities and Equipment
Safety Measures
Curriculum and Activities
Business Insurance
Marketing Plan
Financial Resources.

Choose a Memorable Business Name

When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable. Some of the catchy business name ideas suitable for a daycare business are;

Creative Daycare Business Name ideas

Star Kids® Daycare Center, Inc.
Theresa® Daycare Center, Inc.
La Pas® Daycare Center, LLC
Judith Jorge™ Daycare Center, LLC
Palm Center® Daycare Center, Inc.
Wildwood Meadows® Daycare Center, Inc.
King’s Kids® Daycare Center, Inc.
Esther Manson® Daycare Center, Inc.
Mother Nurture™ Daycare Center, Inc.
Whispering Woods™ Daycare Center s, LLC
Sunflower Valley® Daycare Center, Inc.
Grace Abode© Daycare Center, LLC
Lilian Bach® Daycare Center, Inc.
Natasha Williams® Daycare Center, Inc.
Dame Garfield® Daycare Center, Inc.
Lakeside Haven® Daycare Center, LLC
Wanderlust Woods™ Daycare Center, Inc.
Evergreen Dells® Daycare Center, Inc.
Glitters Kids® Daycare Center, LLC
Chloe Palmer® Daycare Center, Inc.

Register Your Business

a. What Type of Business Structure is Best for Daycare Business?

The best type of business structure for a daycare business depends on several factors, including the size of the business, the number of owners, and the level of personal liability exposure the owners are willing to accept.

However, we usually recommend a limited liability company (LLC) for a daycare business. An LLC is a popular choice for startup businesses because it offers personal liability protection for the owners while allowing them to be taxed as a pass-through entity.

This means that the profits and losses of the business are passed through to the owners’ personal tax returns, avoiding double taxation.

b. Steps to Form an LLC

Choose a Name for Your LLC.
File Articles of Organization.
Choose a registered agent.
Decide on member vs. manager management.
Create an LLC operating agreement.
Comply with other tax and regulatory requirements.
File annual reports.

c. What Type of License is Needed to Open a Daycare Business?

Child Care Center License
Family Child Care License
In-Home Child Care License
Group Child Care License
Residential Child Care License
State-specific Child Care License
Business License
Health and Safety License
Food Service License (if providing meals)
Zoning Permit.

d. What Type of Certification is Needed to Open a Daycare Business?

Here are some certifications that you or your trainers may consider:

Early Childhood Education Certification
CPR and First Aid Certification
Child Development Associate (CDA) Credential
Child Care Professional Certification
Pediatric First Aid Certification
Infant and Toddler Care Certification
Montessori Certification
Special Needs Child Care Certification
Food Handling and Safety Certification
Child Care Management Certification.

e. What Documents Are Needed to Open a Daycare Business?

Business plan
Business License
Employer Identification Number (EIN)
State-specific licenses and permits
Building permit
Fire safety license and permit
Health and Sanitation Permits
Health and Safety License
Family Child Care License
In-Home Child Care License
Food Service License (if providing meals)
Zonal permit
Insurance policies

f. Do You Need a Trademark, Copyright, or Patent?

A daycare business may need a trademark and/or copyright, but typically not a patent. A daycare business may want to trademark its name or logo to prevent others from using the same or similar names or logos. A daycare business may want to copyright original materials such as training manuals, brochures, newsletters, or other written or artistic works it creates, to prevent others from using or reproducing them without permission.

Cost Analysis and Budgeting

a. How Much Does It Cost to Start a Daycare Business?

When it comes to starting a daycare business, the startup costs vary, and it could range from as low as $100.000 to over $1 million.

b. What are the Cost Involved in Starting a Daycare Business?

Business Registration Fees – $750.
Legal expenses for obtaining licenses and permits – $7,800.
Marketing, Branding, and Promotions – $2,000.
Business Consultant Fee – $3,500.
Insurance – $8,800.
Rent/Lease – $150,000
Other start-up expenses include commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($1,800).
Operational Cost (salaries of employees, payments of bills et al) – $80,000
Store Equipment (cash register, security, ventilation, signage) – $6,350
Equipment, Furniture, and Supplies – $50,000
Website: $1,200
Opening party: $5,000
Miscellaneous: $5,000

c. What Factors Determine the Cost of Opening a Daycare Business?

The size and type of the daycare business
The choice of location
The required licenses and permits
The cost of hiring and paying a business consultant and attorney
The cost of branding, promotion, and marketing of the daycare business
The cost of furnishing and equipping the daycare business
The cost of the insurance policy covers
The cost of registering the business
Cost of recruiting and training your staff
The cost of the purchase and customizing of uniforms
The cost for the grand opening of the daycare business.

d. Do You Need to Build a Facility? If YES, How Much Will It Cost?

Yes, you will need to build or lease a facility for your daycare business. The cost of building a facility will depend on several factors, such as the size of the facility, location, and the types of amenities and services you plan to offer. If you plan to build a new facility, the cost will likely be higher than if you lease or renovate an existing facility.

e. What are the Ongoing Expenses of a Daycare Business?

Payroll and employee benefits such as health insurance, retirement plans, and workers’ compensation insurance.
Facility maintenance such as landscaping, cleaning, and repairs.
Utilities such as electricity, gas, water, and sewer.
Property taxes
Insurance such as liability insurance, property insurance, and workers’ compensation insurance.
Ongoing expenses for supplies such as food, cleaning supplies, diapers, and other materials needed for the operation of the daycare
Marketing and advertising such as brochures, website development, and social media advertising.
Professional fees such as accounting, legal, and consulting services.

f. What is the Average Salary of your Staff?

Head of Daycare (President) – $85,000 Per Annum
Day Care Administrator – $60,034 Per Annum
Account Officer – $47,000 Per Annum
Early Childhood Educators – $45,300 Per Annum
Front Desk Officer – $40,000 Per Annum
Cleaners and Nannies – $38,000 Per Annum
Security Guard – $32,000 Per Annum.

g. How Do You Get Funding to Start a Daycare Business?

Raising money from personal savings and sale of personal stocks and properties
Raising money from investors and business partners
Sell shares to interested investors
Applying for a loan from your bank/banks
Source for soft loans from your family members and friends.

Write a Business Plan

a. Executive Summary

Glitters Kids® Daycare Center, LLC is an innovative and nurturing childcare facility poised to serve the families of Williamstown, New Jersey, and its surrounding communities. Our center is dedicated to providing a safe, enriching, and stimulating environment for young children, fostering their growth, development, and readiness for school.

What sets Glitters Kids® apart is our commitment to providing a holistic and well-rounded experience. Our innovative approach integrates technology, arts, and nature into our curriculum, fostering well-rounded development. Our secure facility, highly trained staff, and engaging activities ensure that children thrive in a caring and safe environment.

Conveniently located in the heart of Williamstown, our center benefits from easy accessibility for local families. Our state-of-the-art facility has age-appropriate playrooms, outdoor spaces, and stimulating learning environments designed to inspire young minds.

We believe in building strong connections with our community. Glitters Kids® actively collaborates with local schools, businesses, and families to create a nurturing support network that enriches the lives of children both inside and outside our center.

b. Services and Programs

We offer a range of comprehensive programs tailored to the needs of children aged 6 weeks to 5 years. Our curriculum emphasizes early education, creative expression, social interaction, and physical activity. Our experienced educators are dedicated to nurturing each child’s unique abilities and talents.

c. Mission Statement

At Glitters Kids® Daycare Center, LLC, our mission is to empower the next generation by offering exceptional childcare services that prioritize safety, learning, and emotional well-being. Our vision is to become the trusted cornerstone of early childhood education in Williamstown, fostering lifelong curiosity and a love for learning in every child.

Vision Statement

To be a beacon of inspiration in early childhood education, where every child’s potential is nurtured, their curiosity ignited, and their future illuminated. We envision a world where children develop a lifelong passion for learning, a deep sense of empathy, and the confidence to shine brightly in all their endeavors.

d. Goals and Objectives

The goals and objectives of a daycare business are to provide a supervised environment and care for young children during the day while their parents or guardians are at work or otherwise occupied.

e. Organizational Structure

Head of Day Care (President)
Day Care Administrator
Account Officer
Early Childhood Educators
Front Desk Officer
Cleaners and Nannies
Security Guards.

Marketing Plan

a. SWOT Analysis

Strength:

Integration of technology, arts, and nature in the curriculum.
Highly trained and dedicated staff with expertise in early childhood education.
State-of-the-art, safe, and child-friendly environment for learning and play.
Collaborative partnerships with local schools and businesses.
Central location in Williamstown, easily accessible for families.
A range of age-appropriate programs promoting holistic development.

Weakness:

New daycare centers may need time to establish strong brand recognition.
Acquiring the first wave of enrollees might require focused marketing efforts.
Financial limitations during the early stages may impact expansion plans.

Opportunities:

Rising demand for quality childcare services in the local area.
Opportunities for events and workshops to engage parents and families.
Possibility to expand services or open additional locations as the center gains traction.
Introduction of specialized programs or services to cater to varying needs.

Threat:

The presence of established daycare centers in the vicinity may pose competition.
Changes in licensing or regulations may impact operations.
Economic downturns could influence families’ ability to afford childcare services.
Outbreaks or health-related concerns could impact enrollment and operations.

b. How Do Daycare Businesses Make Money?

Daycare services
Early education services
Meal services
Transportation services
Play activities
Government grants.

c. Payment Options

Credit or Debit Card
Cash
Electronic Payment Systems such as PayPal or Venmo
Checks
Bank Transfers.

d. Sales & Advertising Strategies

Identify target customers: Determine the demographics and psychographics of the ideal customer for the daycare center, such as parents with young children who live or work nearby.

Develop a brand and messaging: Create a brand that stands out and resonates with the target customers.

Leverage digital marketing: Develop a strong online presence by creating a website, social media accounts, and Google My Business listing. Use search engine optimization (SEO), pay-per-click (PPC) advertising, and social media advertising to increase visibility and attract new customers.

Utilize traditional marketing channels: Use traditional marketing channels such as flyers, brochures, direct mail, and print ads to reach local customers.

Build relationships with local organizations and schools: Network with local schools, pediatricians, and other relevant organizations to build relationships and generate referrals.

Offer promotions and loyalty programs: Offer promotions, discounts, and loyalty programs to incentivize repeat business and referrals.

Focus on customer service: Provide excellent customer service and maintain open communication with parents to build trust and loyalty.

Financial Projection

a. How Much Should You Charge for Your Product/Service?

National Average: The national average cost for full-time center-based daycare was around $9,000 to $10,000 per year per child. This could vary significantly depending on factors like location and the age of the child.

Infant Care: Infant care tends to be the most expensive due to the higher caregiver-to-child ratio required for younger children. On average, infant care can range from $12,000 to $20,000 per year.

Toddler and Preschool Care: As children get older, the costs might decrease slightly. Toddler and preschool care can range from $8,000 to $15,000 per year.

Home-Based Daycare: Home-based daycares, often run by individuals in their homes, can sometimes be more affordable. Costs can range from $4,000 to $10,000 per year.

b. How Much Profit Do Daycare Business Owners Make a Year?

Daycare facility owners make an average of $37,000 per year. While some daycare facility operators record profits of more than $60,000 per year, others report profits of well over $80,000 per year.

c. What Factors Determine the Amount of Profit to Be Made?

The capacity of the daycare business
The service and product offerings of the daycare business
The location of the daycare business
The management style of the daycare business
The business approach of the daycare business
The advertising and marketing strategies adopted by the daycare business.
The number of years the daycare business is in business

d. What is the Profit Margin of a Daycare Business?

On average, the profit margin for daycare business products ranges from 10% to 30%, depending on the location, and service offerings.

e. What is the Sales Forecast?

Below is the sales forecast for a daycare business. It is based on the location of the business and other factors as it relates to such startups in the United States.

First Fiscal Year (FY1): $250,000
Second Fiscal Year (FY2): $300,000
Third Fiscal Year (FY3): $380,000

Set Up your Shop/Office

a. How Do You Choose a Perfect Location for a Daycare Business?

The demography of the location especially as it relates to young parents and children between the age of 0 to 4 years old
The demand for daycare services in the location
The purchasing power of residents of the location
Accessibility of the location
The number of daycare centers in the location
The local laws and regulations in the community/state
Traffic, parking, and security et al

b. What State and City is Best to Open a Daycare Business?

Dallas, Texas
Plano, Texas
Madison, Wisconsin
Irvine, California
Newton, Massachusetts
Overland Park, Kansas
Cary, North Carolina
Franklin, Tennessee
Bellevue, Washington
Ann Arbor, Michigan.

c. What Equipment is Needed to Operate a Daycare Business?

Cribs or Beds
Playpens or Play Yards
High Chairs, and Changing Tables
Child-sized furniture (Chairs, Tables, etc.)
Toys and Educational Materials
Art Supplies
Diapers and Wipes
First Aid Supplies
Safety Gates
Nap Mats
Storage Units
Outdoor Play Equipment
Cleaning Supplies
Kitchen Appliances (Refrigerator, Microwave, etc.)
Baby Monitors
Sensory Equipment
Learning Centers (Bookshelves, Reading Nooks, etc.)
Restroom Facilities (Child-Sized Toilets, Sinks, etc.)
Computers or Tablets (for Administrative Use).

Hire Employees

If you are looking to start a daycare business, then you should make plans to hire employees because a daycare business cannot be run by an individual. It requires a team to effectively run a daycare business because the babies and kids under your care will need attention.

Launch the Business Proper

Organizing an opening party for a new daycare business can be a good way to introduce your business to the community and create awareness about your services. If you want to organize a proper launch for your daycare business, then you must make sure to invite potential clients (families), key stakeholders, and other members of the community who may be interested in your services.

a. What Makes a Daycare Business Successful?

Being consistently reliable
Excellent customer service
Excellent facilities, services, programs, and events
Emphasis on cleanliness and safety
Efficient operations
Compliance with regulations
Hiring skilled and knowledgeable employees and providing ongoing training that will ensure you deliver high-quality services.

b. What Happens During a Typical Day at a Daycare Business?

A typical day at a daycare business involves a structured schedule of activities and routines for the children. Here is a general outline of what you might expect to see at a daycare business:

Arrival and Greeting: As parents drop off their children, daycare staff will greet them, and take care of any necessary paperwork or check-ins.

Breakfast and Morning Activities: Depending on the age of the children, breakfast may be served and followed by a range of activities, such as story time, arts and crafts, and free play.

Outdoor Play and Physical Activity: Most daycare facilities incorporate outdoor playtime and physical activities such as games, obstacle courses, and yoga, to promote gross motor development and stimulate the children.

Snack and Rest Time: Children usually have a mid-morning snack and rest time or quiet activities such as reading or puzzle-solving, to recharge before lunch.

Lunch and Afternoon Activities: A balanced and healthy lunch is typically provided, followed by activities that range from structured learning (e.g., math, science, and language activities) to creative activities (e.g., painting, music, and drama).

Nap and Quiet Time: Depending on the age of the children, they may take a nap or have quiet time for relaxation and recharge.

Snack and Afternoon Free Play: After waking up from their nap, children usually have a snack and enjoy more free play activities indoors or outdoors.

Clean-up, Departure, and Parent Communication: As the day winds down, children participate in clean-up activities, such as putting away toys and materials. Parents receive updates on their child’s day, including what they ate, activities they participated in, and any notable events. Parents then pick up their children, say goodbye to the staff, and leave the daycare.

c. What Skills and Experience Do You Need to Build a Daycare Business?

Early Childhood Education Knowledge
Childcare Experience
Management Skills
Communication Skills
Patience and Empathy
Organizational Skills
Business Management Experience
Marketing Skills
Safety and First Aid Training
Problem-Solving Skills
Creativity
Team Leadership Skills
Financial Management Skills
Regulatory Compliance Understanding
Customer Service Skills.