Opening a Daycare: Important Things You Need To Know

What You Need to Know Before Opening a Daycare

Parents spend about $42 billion on early child care. You could say that much of this number comes from a combination of societal issues and ambitious parents. For providers, aspiring or otherwise, this knowledge represents a need to be met. With this in mind, what do you need to have ready before opening a daycare?

The first thing you need to have ready is your business plan. The plan dictates your policies across the board and provides a basis for your decision-making. Once the plan is finished, you will need to register your business, select a name, and handle your administrative functions.

The rest of this article will detail some of the information mentioned above. We will also go over some tips you need to know that crop up for first-time child care providers.

Five Important Business Steps You Need To Take When Opening a Daycare

  1. Do some research
  2. Select your business type
  3. Have certifications and licenses (or hire people with those)
  4. Create a business plan, contracts, and policy documents
  5. Purchase insurance 

#1: Do Some Research Before Opening a Daycare

Your first step in starting a daycare comes back to knowledge. You need to know how successful programs start their business. If you have a friend in the industry, you can ask them for some tips. 

It would help if you had the following to start a daycare:

  • Anywhere from $10 thousand to $50 thousand for startup costs (some of which you can address with grants)
  • A building or open slot in a church or recreational center 
  • Toys, food, safety equipment, art supplies, cleaning supplies, an outdoor space, and reliable transportation for a full daycare worth of kids.

#2: Select your Business Type

There are many types of businesses you can start. Typically, they fall into three major categories:

  • Sole proprietorship: The easiest to form, but all of the legal liability falls on you.
  • Partnership: This business type is just as simple to form but may result in disagreements down the road.
  • Limited liability corporation (LLC): This business type is the most complicated to form, but it protects you in the event of a lawsuit. 

The businesses have their pros and cons. By handing this process to companies that specialize in this, you take another problem off your plate. Companies in this industry include LegalZoom or ZenBusiness.

During this process, be sure to get an EIN (Employer Identification Number). You will need this to do your business taxes properly. 

#3: Have Certifications and Licenses (or Hire People With Those)

States require you to be certified if you want to label yourself as a child care facility. While some at-home daycares can get away with not having them, they are severely limited to the number of kids they can have legally. Sometimes, the state won’t even let them near kids without the proper license. 

By being certified, you allow yourself the full potential to access state resources. You can also hire someone who has the necessary certifications, but it’s best if you have them as well (just in case you need to step in).

#4: Create a Business Plan, Contracts, and Policy Documents

Legal documents are the most tedious part of starting any business. However, you will find that legal documents are a necessity. They hold parents, staff, and administrative assistants to a certain standard of expectations. By making them central to your daycare business plan, your requirements are made clear to all. 

Business plans also provide clarity to yourself as well. They include details on what to do with the lateness of payments, expected expenses, and other issues daycare providers commonly have. For simplicity for all, make sure all of your contracts receive a review by legal specialists (like a lawyer). As a daycare owner, you will thank yourself. 

#5: Purchase Insurance 

The last area we are going to mention here is business insurance. Business owners often don’t think hard enough about this one, thinking that some basic insurance policy will help them. Many at-home providers assume that their homeowner’s insurance will cover them, which is a terrible mistake. 

Childcare providers at all levels need insurance that is specialized to include childcare exposures. If you are uncertain about anything, don’t be afraid to quiz your business insurance provider. 

Your legal contracts should also be sure to ensure parents are in charge of sick children. While you can be a gatekeeper, some things are outside of the business insurance scope.

Opening a Daycare: Ways You Can Help Your Business Stand Out

Opening a daycare can be pretty tricky. Limiting your interaction with children in care from a business standpoint can prevent you from truly connecting with them. As a result, we’ve got a few more tips to ensure the childcare part of your business is part of your plan.

Join the Community

Just because you’re competing with local providers doesn’t mean you can’t learn from them. A successful child care facility works with other care business owners. They are willing to collaborate and brainstorm with people in the same community, even if they may be competing. 

You can also join your local community through platforms like Facebook, Twitter, and Instagram.

Include the Parents

Encourage adults to participate in your facility by creating events. Any full-time care facility will want to encourage parents to see their day-to-day operations. Have a once-a-month day devoted to including parents. 

Automate Your Administrative Services

The more time you spend fretting over creating invoices and chasing for payments, the less energy you have towards developing programs for your kids. Consider an online tuition management system like TUIO to help you focus on what’s important. 

Don’t Forget Field Trips.

Not everything has to be contained within the daycare. Don’t forget that there are plenty of local attractions. Make sure to communicate the need to say with the group beforehand. Also, be sure that your group doesn’t have any runners. Watching five kids at once when one runs away is a nightmare scenario.

Final Thoughts

Inevitably, you will run into something that we haven’t mentioned on this list. In that case, the best advice we can give you is this: don’t panic. 

You will never have all the answers to starting any business. The point is that if you’ve done your preparation and know all of your documents, you will be better prepared than most who jump into it.