at home daycare business plan

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Home Daycare Business Plan

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Do you love children? Do you want to do something that really matters? Maybe home daycare for you. Check out this home daycare business plan and see if it’s financially viable. If you want to run a home daycare , start there.

Working from home can be awesome. Being able to stay home with your own children is a blessing too. Being your own boss and setting your own hours and pay are great too. If you love that idea and you are a kind and patient person with lots of empathy for others, home daycare might be a great plan for your life.

For more about how to start a home daycare click here.

For a downloadable printable home daycare business plan worksheet , click here.

Home daycare is going to be growing by leaps and bounds after the year we’ve gone through so far. There is going to be a huge need for daycare since many small businesses folded this year. Home daycare is a special type of business that has fairly low overhead and is customizable to put your own personal spin on what you do.

I don’t agree with most people’s ideas of how to teach kids. I have my own brand of teaching. I march to the beat of my own drum. I’m very passionate about why I choose to teach my kids the way I do and I want to be able to chart my own waters. This isn’t possible with working for someone else.

Giving my kids the very best of me is the number one reason why I love working for myself. I get to study, learn, and do my very best for my families.

Home daycare is fun! There is a lot of hard work, little respect, and lots of messes. But it’s also different every day. You never get bored because you don’t know what you’re going to get. You get to set the tone of your environment. It’s a great place to be.

The first step in starting a home daycare is to find out about how to get licensed of what the rules are for your area. Click on the highlighted text to see more about whether a license is required. Once you determine that, it’s time to do some other research to find out if home daycare is a viable income for your family.

A big part of the cost of providing care will have to do with the regulations you have to follow. Some licenses cost. Some are free. Some states require a substantial expense in getting your home up to code. Some have very few requirements.

Some things you may have to change is fencing, hiring staff, meeting fire regulations, getting medical exams, and acquiring more education, training, or certificates.

Also, consider local zoning laws. Do you rent? Is your landlord okay with a home daycare in their property? Do you own? Is there a homeowner’s association? Do they allow businesses in the neighborhood? It’s important to consider your neighbors for sure.

Daycare business plan

Now that you know if you can open, you need to consider what you can make. Look at existing facilities, homes, and centers in your area. What do they charge? What do they offer? What do you want to offer? Do you plan to have a specialization that you can charge more for?

How many children will you be allowed to keep and of what ages? In Oklahoma, we can keep 7 kids over the age of 2. We can keep 6 kids if 3 are under 2. We can keep 5 if they are all under 2. So, a big determination in how many kids you can keep is what age of children need care in your area and what ages you will enjoy caring for. I LOVE babies, but I don’t love keeping them 10 hours a day. I like to run and play and do activities. I don’t want to hold an infant all day. So, I don’t keep them. For 20 years, I kept all ages from birth to 12, but over the years, I scaled back.

As I got older, it was more difficult to do everything for everyone, so I changed some of my home daycare rules to suit me better at the age I am now. Believe me, home daycare is far easier when you are 24 than when you are 49. I promise!

Now think of your location. Is it a good area that people will be happy to take their kids to? Or will you have a more difficult time getting clients in that area because of some stigma? In my town, there is an east and west side. For some reason, people think the west side is bad. There are good and bad areas on both sides, but home daycares on the west side always struggle. It’s a stigma, not a real problem. But it does affect business.

When doing your research, find out if there are some gaps in care that many people need. Here there is ALWAYS a big need for very young infant care. None of our centers in town take kids under 10 months. And there are always lots of babies being born. If you wanted to open an infant only facility, it would do well.

You could also specialize in early morning or late-night care. What about weekends? Lots of people here work shift work and they need good care at night. Find out who provides what and what people need. You can look on Facebook and find out what people are asking for. You can ask in a community group or a mom group. You can ask the principle and the electuary school what they have heard.

Is afterschool care with transport from the school a huge need? That could be your niche. Think about providing care during all the school breaks but most of the year only doing it for an hour or two after school? There’s always a great need for that. If you like older kids and like helping them with homework, you could be a godsend to many families.

In our state, we have resource and referral agencies that can provide this information to you all in one place. You can ask if you have anything like that when you contact your licensing agency for regulations in the beginning.

Now to make a specific business plan.

Home daycare salary

How many children will you care for? What will be the minimum and maximum age you’ll take? Will you charge a different price for different ages? What time will you be open? Will you provide all meals for children? Will you provide diapers and wipes? Will you need to hire staff to help you? What about an accountant or bookkeeper? Housekeeper? Lawn service? Think about all the expenses you may have because you’ll be busy working with kids so many hours a day.

Next, you need a name and a philosophy. Potential parents will want to know your ideals and what you stand for. What are your beliefs about providing care? Will you be play-based? Montessori? Nature-based? Have a strict school readiness goal?

You’ll also need policies and a contract . This is a super important step in your business plan. You may be tempted to skip it, but don’t. You will regret it.

Next, you’ll need a budget . You can use this printable business plan to record all the information you’ve collected and figure out what your budget might be. You’ll have to consider start-up expenses and must-have items to work. And you’ll also have to consider the price of every day supplies such as food, replacement toys, repairs, paper products, and so on.

There are other expenses or charges you may not think about such as are listed below.

Charges for families:

• Registration fees
• Waitlist fees
• Supply fees
• Curriculum fees

Expenses for you:

• Construction costs
• Software costs
• Training costs
• Bank charges

Then you’ll have to figure out the income you’ll be making. What will you charge per child and how many children? Figure up your potential earnings and add it to the printable business plan to come up with your home daycare salary.

Check out what home daycare essentials you really need here.  

Home daycare insurance

Don’t forget about home daycare insurance. Obviously, you’ll have to have homeowner’s insurance and auto insurance for your vehicles, but did you know that neither of those covers your business?

Many insurance companies won’t offer it, so you’ll have to look around. If you can’t find any, ask around to other home daycare providers and see if any of them have a suggestion.

Lastly, before you can open, you’ll have to find a way to market your home daycare. Check out these advertising ideas to get you started.

Home daycare website

Don’t forget if you want to make a daycare website to advertise and share information with your clients about what’s going on at daycare, you’ll need to figure in the cost of that as well. You can get wonderful website design help and custom made forms from daycare time solutions here. 

Get your home daycare business plan worksheet here.

Get your home daycare menu planning guide here.

Get your home daycare licensing checklist here.

For a planner made JUST for home daycare providers , this jewel will help you get all of your business organized-AND, it’s gorgeous! There are tons of great provider helps on this site. I wish resources like these ladies have were available when I started. There was no help for home daycare providers back then. But don’t forget to always take care of yourself so you can take care of others!

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How to Start a Day Care: A Step-by-Step Guide

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If you’re a teacher, former teacher, or simply have years of experience caring for children — and an entrepreneurial streak — you might have considered starting your own day care center, either from home or in a dedicated facility. And at an expected job growth of 7% over the next decade, working in child care is a stable career choice. So, if you’re seriously wondering how to start a day care center, you’ve come to the right place.

As is the case starting a business in any industry, however, your passion for your craft alone — or, in this case, your students — isn’t quite enough to ensure that your day care business is copacetic, either financially or legally. You’ll need to do a good amount of due diligence when looking into how to start a day care business, paying special attention to licensing requirements, and ensuring that your facility and program aligns with your state’s health and safety codes.

If you’re a pro at educating, training, supporting and generally corralling large groups of small children, you should be pretty unperturbed by the work it takes to start a day care business. Here’s what you need to know.

How to start a day care business

Although every path toward starting a business looks different for every business owner, there are a few steps that every aspiring day care owner needs to think about when it comes to how to best start a day care.

1. Decide what kind of day care business you want to start

Before you can even get to writing a business plan for your day care business, you need to decide what kind you want to open. Look into whether you want to start a day care business at home, or whether you want a more commercial facility — there might be different permits required in your municipality depending on which you choose. You also need to decide what age groups you want to focus on.

Next up, you'll have to decide on a business entity, which will have huge effects on the way you're taxed and how you operate your day care business. Will you have partners or open your business on your own? Additionally, you'll want to consider whether you want a business entity that offers you some protection. Making your day care center a limited liability company might be a good move, since the business will take on liability should anything go wrong.

You might also decide to buy into a day care franchise opportunity. This option will significantly streamline the steps you need to take in opening your day care.

Once you narrow down these details about your business, you can move on to the next step in starting a day care business: writing a business plan.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

2. Write a day care business plan

This is a step you have to take when starting any business and it can be quite a bit of work, especially for anyone looking to get moving quickly on their business. When you start writing a business plan, start with an outline of all the things you want to include.

Your plan should include a summary, an overview of the company, a market analysis that includes an assessment of the need for a business like yours, a marketing and sales plan, and a financial plan along with financial projections. Don't worry, though, you can always add to it as your business grows.

One thing you should include, though, is market research. The last thing you want to do is go through all of these "how to start a day care business" steps, only to find that there isn't a market for one or that there are already too many day cares in that area to make it a viable business.

Your business plan should also include a budget. The costs associated with opening and running your day care center can never be accurately totaled, but nailing down a budget will give you some parameters to work within (and some peace of mind).

In your budget plan, don’t forget to factor in:

Your startup costs, including day care equipment, food, toys and educational tools, wages, insurance and licensing.

How much tuition you’ll charge.

Your predicted revenue over the next two to three years.

When you’ll break even.

Also know that day care centers can claim certain tax deductions, which can ease your annual financial burden.

You'll also want to include a marketing plan. If you’re seriously researching how to start a day care business, it’s likely that you’ve already been caring for children in your area for some time and have built up a network of local parents. That’s one valuable method of attracting customers (aka word of mouth) covered. Still, implementing even a basic marketing plan can help define and legitimize your business — and if you need to implement a waitlist as a result, that’s great too!

Your marketing efforts can be relatively simple and low-cost. You can start by creating a Facebook page for your day care center and building a business website, making sure to include your contact information and a little bit about your business. If possible, plan to include pictures of your facilities and testimonials from happy customers.

If you’re a fan of social media, it also can’t hurt to create an Instagram, LinkedIn and/or Twitter account to keep both current and prospective customers updated on your business. Just be sure that once you do, you receive permission from parents or guardians before posting pictures of their children, of course.

Analog marketing techniques would work well here, too. If possible, consider distributing flyers or brochures to nearby libraries, schools, places of worship or any other local gathering spots.

3. Obtain the necessary certification and licenses

You may not need a master’s degree in education to become a day care teacher, but each state does require some combination of licensing and certification when it comes to how to start a day care. Visit your state’s Division of Child Care Services (or its equivalent) to find out the training, experience and credentials you need to legally operate a day care facility.

In New York State, for instance, the head of the day care facility must have one of the following:

An associate degree in early childhood education or an equivalent.

A CDA credential (child development associate) and at least two years of experience caring for children.

A high school diploma and at least three years’ experience caring for children.

You'll probably find that there are some other requirements that usually come up when you're looking up how to start a day care business at home or in another facility. Your state may require that you and any staff you hire are CPR-certified, for one. Another point of safety to remember is that you should be trained in at least basic first aid for children. You and your staff might also need to be fingerprinted and undergo background checks before being cleared for work.

Even if your state doesn’t require that you obtain a license, you should consider doing so, as your licensing course will go over all the boxes you need to check to operate your day care in your state — including health and safety regulations, proper food preparation and the required child-to-adult ratio.

4. Find a (safe) day care facility

In certain states, in order to obtain the proper licenses or registration to start your day care business, you’ll first need to show that your day care facility meets your state’s health and safety requirements.

So whether you choose to open your day care facility in your own home, or buy or lease a new property, you’ll need to make sure your facility meets zoning, fire, and health and safety laws. When it comes to how to start a day care at home, you may need to make alterations to your house to comply with day care requirements in your state, so be sure to factor them into your budget.

5. Get insured

Another requirement for obtaining your license? Getting insured. In certain states, you’ll need to be licensed by the Department of Health and Human Services to run your day care center, but to do so, you’ll first need liability insurance.

The exception is home-based day care centers, which don’t need insurance to be licensed by the DHHS. Still, those opening day care centers at home should seriously consider obtaining small business insurance. You always run the risk of a lawsuit when you’re running your own business, but that risk increases when caring for other people’s children — so protect yourself whenever possible.

There are several types of insurance that cover day care businesses — general liability insurance, workers’ compensation, property insurance, abuse and molestation insurance and others — so contact an insurance broker to help you decide which coverage is best for your business.

6. Get a business checking account and credit card

Get a business credit card and a business checking account early on to help you keep your business expenses separate from your personal expenses when first starting a day care.

It’s crucial to separate your personal and business expenses for many reasons, not the least of which is to reduce your (or your accountant’s) burden come tax season. It’s simply the most professional way to conduct your business, too. Set yourself up for success now by signing up for a business credit card and opening a business bank account, and be diligent about using both solely for your day care’s finances.

Having a business credit card can help you increase your business credit score, too. By paying the card off on time — or early if you can — you can boost your score, which will help you late on when you need a loan or other financing for your day care business.

7. Get financing

Most entrepreneurs bootstrap their businesses at the beginning, as it’s difficult for brand-new businesses with limited credit history to secure a business loan, either from a bank or from an alternative lender.

Your financing options aren’t limited to your own purse strings (or your friends’ and family’s). Here are a few other ways to get funding and loans for a child care business:

SBA microloan

Although most SBA loans are available only to businesses with a few years of experience under their belts, SBA microloans are actually designed to help startups get off the ground. They’re especially accessible to women, veterans, minorities and business owners in low-income areas. And unlike most other SBA loan programs, SBA microloans are disbursed by nonprofit lenders, rather than banks.

As the name suggests, SBA microloans tend to be on the smaller side, with amounts capped at $50,000, but they may be as low as $500. (For more context, the average microloan amount was $14,000 in 2017.) And because microloans are designed for new businesses, business owners with average or even challenged credit may still be accepted, as long as other aspects of their SBA loan applications are in good shape.

SBA community advantage

These loans from the SBA have all of the advantages that come with SBA microloans but the community advantage loans are specifically for businesses that are serving traditionally underserved communities. These loans are generally for a higher dollar amount than the microloans and can go a bit further for your business.

Government grants

You might be able to obtain financial assistance to start and run your day care through state or federal funding programs for early childhood education providers. For instance, you can contact your state’s Child Care and Development Fund Plan to look into startup funds, or your state’s school meal contacts to seek funding for your day care center’s meals.

Take a look at the Administration for Children and Families Office of Child Care’s list for a more comprehensive overview of federal and state financing programs for child care centers .

Business credit card

It’s important to use a business credit card to keep your day care’s expenses separate from your own. Of course, using a credit card is also the most convenient way to pay for your daily expenses. And since credit limits for business credit cards tend to exceed those of consumer cards, you can spend more liberally without worrying about maxing out your card.

Another bonus? Using your business card responsibly (by which we mostly mean paying off your balance in full and on time, every month) can help you build business credit. And with a healthy business credit score, you’re in a better position to secure business loans with great terms down the line.

If you opt for a card with a long 0% intro APR period, you can essentially use that introductory grace period as an interest-free loan. Look into the American Express Blue Business Plus card, which, at 12 months, carries one of the longest interest-free introductory periods in a business credit card right now.

After your 12 interest-free months are up, though, a variable APR kicks in at a rate depending on your creditworthiness and the market. Check the issuer's terms and conditions for the latest APR information.

8. Hire staff

You may be planning on running your day care facility solo, but depending on your state and the number of children you’re looking after, that might not be an option — every state sets a required ratio of staff to children to ensure that every child receives adequate care. They also dictate the maximum number of children permitted in a group.

Adult-to-child ratios and class sizes depend on the age of the children, but they might also depend on the size of the day care facility, or face further restrictions based on municipality. For a day care center in New York state, for example, the state requires one adult for six children under school age. However, in New York City, there must be two teachers or one teacher and one assistant to every six children aged 2 to 3, with a maximum of 12 students allowed in a single group. Your own children may or may not be included in that count, too.

So, while hiring really depends upon your state’s requirements, it makes sense to leave room for hiring staff in your business budget. That way, you’ll be prepared for growth, without worrying about your operation shutting down because you’re not properly prepared for it. (Just keep in mind that any staff you hire needs to be appropriately licensed or trained for it, and potentially undergo a background check.)

Start Your Dream Business

9. Write your day care contract and policies

To further legally protect your business, it’s crucial that you draw up a contract, write out your day care policies, and require that potential clients (or, more likely, the parents of potential clients) review and sign both documents before accepting their patronage.

If you're just starting to read up on how to start a day care business, you might not be clear on the distinction between these two documents. To clarify, your contract is the document stating that you’ll provide child care, be compensated for providing care according to the payment terms you specify, and have the right to terminate providing care.

Your policies, on the other hand, provide parents with important logistical information regarding how you’ll run your day care center. There, you can outline protocol regarding vacation, illness, inclement weather, drop-off and pickup times, curriculum, field trips, and anything else you believe is important for your clients to understand and agree to about your day care center.

On a similar note...

The Daycare Business Plan Blueprint (Examples + Template)

April 14, 2022

Adam Hoeksema

Starting a daycare business can be a daunting task. There are so many things to think about and plan for. You need to find the perfect location, get the right licenses and permits, hire qualified staff, and, most importantly, create a daycare business plan. 

Creating a daycare business plan is one of the most important steps in starting your business. A well-thought-out business plan will help you get funding, attract investors, and operate your business effectively. 

The bad news is that there is a lot of advice out there on writing a business plan. With so much information and tons of daycare business plan examples to choose from, it can be overwhelming to know where to start. 

The good news is, we've got you covered. In this article, we'll give you a comprehensive guide on how to write a daycare business plan. We will also provide some examples and a free daycare business plan template to get you started. 

But First...Is a Daycare a Good Business to Start? 

Before we talk about how to create a daycare business plan, let's first answer the question: is starting a daycare a good business to get into? 

The answer is a resounding yes! The daycare industry is growing rapidly. It is one of the few businesses that are not only recession-proof but also thrives in uncertain economic times. 

According to the National Association of Child Care Resource & Referral Agencies (NACCRRA), the demand for child care services has increased by 26% over the last decade. This demand is only expected to grow in the coming years. 

When it comes to profitability, the daycare industry is very attractive. According to IBISWorld , the average profit margin for a daycare business is around 15%. That's higher than the average for most other industries! 

If you're thinking about starting a daycare business, know that you are getting into a very profitable and in-demand industry. Now let's talk about how to write a daycare business plan that will help you start and grow your business successfully.

How to Create a Daycare Business Plan 

A daycare business plan is as simple as a word document with the following sections:

• Business Description
• Market Analysis

Business Model

• Location and Facility
• Marketing Plan
• Financial Plan

Executive Summary

This article will provide context of what to include in each section of your daycare business plan. As you work on writing your business plan, you will want to grab our daycare financial projection template as well in order to complete the financial plan section.

Your daycare business plan should be an elevator pitch in itself. It should be attractive to potential partners and investors. Basically, it should give them a clear idea of your business, where it is located, what services you offer, who your target market is, and how you plan to make money. 

Creating a daycare business plan doesn't have to be complicated. In fact, the cheapest and easiest approach is to simply start with a blank word document and work through each of the above sections, it can be pretty easy. Here is a step-by-step guide on how to create a daycare business plan: 

Create a Compelling Business Description

Your daycare business's unique selling point (USP) should be the first thing you include in your business plan. What is it that makes your daycare center different from all the others? 

This description should be the foundation of your marketing efforts as well.

There are a few questions you should answer in your company description. They include:

What's your Curriculum Based On?

Potential investors, partners, and even customers will be interested in knowing what your curriculum is based on. This will help them understand the environment children will be in a while under your care. 

When describing your curriculum, make sure to include:

• What age ranges do you cater for?
• The type of care you offer (full-time, part-time, drop-in) 
• Your educational philosophy 
• The activities and programs you offer 

For example, if your daycare is unique by offering a Montessori curriculum, you will want to highlight that.  In fact, you can learn more about how to start a Montessori program here . 

How Big is Your Facility? 

The size of your facility will say a lot about the type of operation you're running. Are you a small, home-based daycare or a large center with multiple classrooms? 

This section of your business plan may include: 

• A floor plan of your facility 
• The capacity of your facility 
• The number of employees you have 
• Type of equipment and furniture you have 

Who Is Your Target Market? 

You can't market to everyone, so you must identify your target market. This will help you focus your marketing efforts and ensure that you're reaching the right people. 

Below is a daycare business plan example that shows how your business description should be:

“ABC Daycare is a small, home-based daycare located in San Francisco, CA. We cater to children aged 0-12 years old and offer full-time, part-time, and drop-in care. 

Our curriculum is based on the Reggio Emilia approach, emphasizing hands-on learning and collaboration. Activities and programs include arts and crafts, music, and outdoor play. 

Our facility can accommodate up to 12 children at a time. We have a staff of four employees who are all CPR and First Aid certified. 

Our target market is working parents in the city who need quality child care but can't afford the rates of larger daycare centers.  We've created an affordable subscription-based pricing model for our target market to fulfill the demand. We generate revenue through monthly subscriptions and have low operating costs due to our small size. 

Our suppliers are local businesses that provide us with food, toys, and other supplies.” 

Do a Thorough Market Analysis

After writing a compelling description of your business, you need to do a thorough marketing analysis. This analysis will help you determine your target market, what type of advertising and promotion will work best, and how to price your services. 

You should also research the competition and see what they are doing right and wrong. This information will be invaluable as you create your daycare business plan.

Keep these things in mind when doing a market analysis:

The Size of Your Market

This is determined by the number of potential customers in your area who need or want your services. 

For example, if you live in a small town with only a few thousand people, there may not be enough demand to support a large daycare facility. 

On the other hand, if you live in a city with hundreds of thousands of people, there may be room for multiple daycare facilities. 

Your target market is the segment of the population that is most likely to use your services. This includes factors like age, income, education, and location. 

After you've identified your target market, you need to show how you plan on fulfilling the demand. This is where your business model comes in. 

Your business model is a detailed description of how your daycare will operate daily. It should include: 

• How do you plan on acquiring customers? 
• What are your pricing strategies? 
• How will you generate revenue? 
• What are your operating costs? 
• Who are your suppliers? 

Your business model should be detailed and easy to understand. It should also be realistic and achievable. 

Here is a daycare business plan example of a business model for a small daycare center: 

“The daycare will be open Monday through Friday from six in the morning to six at night. We will offer care for children ages six weeks to twelve years old. 

Our rates will be $50 per week for one child and $40 per week for each additional child from the same family. We will offer a discount of $20 per week for families who enroll their children for an entire year. 

We will generate revenue by charging weekly rates for our services. Our operating costs will include rent, utilities, supplies, and salaries for our employees. Also, we will acquire customers through online advertising and word-of-mouth.” 

As you can see, a business model is a detailed description of how your business will operate. It's essential to have one in place before promoting and selling your services. 

One thing you should not forget to include in your daycare business plan is the location of your business and your rental agreement. If you are renting a space, including the terms of your agreement and how long you have the space. If you are purchasing a property, include information on the property, such as square footage and any special features that will help your business stand out. 

This daycare business plan example shows you how to include this vital information: 

“The daycare will be located at 123 Main Street in a commercial space currently leased by the owner. The lease agreement is for three years with an option to renew for an additional three years. The monthly rent is $2000, and the security deposit is $3000. 

The daycare will have exclusive use of the main floor, including a large open play area, a small kitchen, two bathrooms, and four classrooms. The daycare will also have access to the outdoor playground.

80% of our space will be used for childcare, with the other 20% used for our administrative offices and staff lounge. 

We have chosen this location because it is close to several residential neighborhoods and has easy access to public transportation. The space is also large enough to accommodate our future growth.” 

There are many daycare business plan templates you can use to help you get started. This is a basic outline of what should be included.

Daycare Marketing Plan

Most daycare business plan templates will include a section for your marketing plan. Most people overlook the marketing aspect of their business, but it is one of the most important pieces of your puzzle. 

In your business plan, you need to outline your target market, your marketing strategies, and how you plan on executing those strategies. 

You also need to set aside a budget for your marketing efforts. Many people make the mistake of thinking that they don't need to spend money on marketing, but that couldn't be further from the truth. 

The following daycare business plan example shows you how you should describe your marketing efforts:

"Our target market is working for families with children between six weeks and five years old. We will reach our target market through online and offline marketing efforts. 

Some of the offline marketing strategies we will use include print advertising, flyers, and word-of-mouth referrals. We will use a mix of SEO, content marketing, and social media for online marketing. 

We have set aside a budget of $500 per month for our marketing efforts."

As you can see from the example above, your marketing plan should be clear, concise, and to the point. Don't forget to include a budget!

Daycare Financial Plan

Your business plan should include a financial plan section. This is where you'll lay out how much money you need to start or grow your business. Be specific and include dollar amounts. If you're seeking a loan, including information on how much you're requesting and how you'll use the funds.

You should also include a detailed budget in your business plan. Your budget should include all of your projected income and expenses for at least the first year of operation. Creating a budget will help you get a clear picture of what it will cost to start and operate your business.

This section should include projected costs for:

• Rent or mortgage payments
• Advertising and marketing
• Operating expenses such as utilities, supplies, and more. 

Startup costs are another vital item to include in your business plan. This is the money you need to purchase equipment, furniture, or any other items to get your business up and running.

If you plan to secure a loan, your lender will want to see a detailed business plan with information on how you plan to use the loan funds. Ensure you include this information in your business plan to increase your chances of securing funding.

If you're seeking funding from investors, you'll need to include information on how they will be compensated. This is typically done through equity, a percentage ownership stake in your business. 

For example, if you seek $100,000 in funding and offer a 20% equity stake, the investor will own 20% of your business. 

Make sure you use a daycare business plan template that includes a section on funding to ensure you include all the necessary information. If you’re planning to get a loan or seek investment, you’re going to need full financial projections. Our daycare financial model will provide up to 5 years of projected income statements, cash flow and balance sheet forecasts.

Next I want to answer some key financial questions for you as you consider how to forecast your daycare financials. I am going to hit on:

• Daycare Startup Costs
• Daycare Revenue 
• Daycare Facility Operating Expenses
• Daycare Profitability

Let’s dive into some key questions. 

How much does it cost to start a daycare? 

It costs between $10,000 and $50,000 to start an in-home daycare business according to Bizfluent . 

It costs between $59,000 and $3 million dollars to start a daycare facility according to Bizfluent . 

So obviously this is a huge range in startup costs.  The main thing that will determine your startup costs is your daycare facility.  Depending on how large your daycare is, whether you are buying, building, or leasing the space, and how much renovation needs to be done, your startup costs can vary drastically.  

Some tips to help you estimate a cost of a daycare facility:

• A daycare facility should have 35 square feet of open floor space indoors per child. 
• So if you wanted a facility that could care for 100 children you would need 3,500 square feet of indoor space for children, plus additional space for offices, kitchen, bathrooms, etc.  Let’s assume that you would need at least 5,000 square feet of space for a daycare facility that served 100 children.  
• A daycare center would cost at least $295 per square foot to construct in the U.S. based on data from Levelset . 
• Constructing a new 5,000 square foot daycare center would likely cost at least $1,475,000 based on $295 per square foot.  
• Now you might not be constructing new, rather you might rent an existing facility which could require renovations.  You will need to get a specific quote for the specific renovations that you need for your space. 

How much revenue can a daycare business make?

A daycare facility can generate $17,680 in revenue per year per child according to Zippia .  

A daycare business with 100 children can generate over $1.75 million per year in annual revenue based on our average revenue per child of $17,680. 

How much does daycare cost?

The average cost of daycare is $17,680 per year, per child in the U.S. according to Zippia . 

This means that the average monthly cost of daycare in the U.S. is roughly $1,475.

What is the typical child to staff ratio for a daycare? 

The typical child to staff ratios for a daycare are:

• 1 adult staff for every 4 infants (age 0 to 12 months)
• 1 adult staff for every 6 toddlers (age 1 to 3 years)
• 1 adult staff for every 10 pre schoolers (age 3 to 5 years)
• 1 adult staff for every 12 school aged children (5+ years old)

Source - Childcare.gov

These ratios will help you estimate how many staff members you will need.  Our financial projection template makes this easy.  Just enter in your ratios and the number of children you expect to have in each age group and the model will automatically calculate the number of staff required to maintain your ratios.  See the input daycare staffing table below:

What are the typical operating costs for a daycare? 

Your largest operating expense for a daycare facility is likely to be your rent. 

It should cost between $20 and $30 per square foot to rent a daycare center space based on available spaces on Loopnet . 

Other operating costs for a daycare center include:

You can see how you can enter in your operating costs into our financial model below:

How much profit can a daycare make? 

The average daycare profit margin is 6.5% according to Daycare Business Boss . 

Once you complete your projections you will want to take a look at our At a Glance tab to make sure that your projected profit margins aren’t way out of line with the industry norms.  You can find projected profit margins for your daycare below:

This is an important aspect that you may not find in most daycare business plan templates, but it's still essential. An appendix includes any additional information to help you understand your business plan. This might include things like your:

• Business licenses 
• Insurance policy 
• Lease agreement 
• Sample contracts 
• Staff bios 

This section adds credibility to your daycare business plan and shows that you've done your homework. Including all of the necessary details in your appendix will give investors peace of mind and show that you're serious about starting a daycare center.

An executive summary is a brief overview of your business plan and is often considered the most important section. It should be two pages long, with a clear description of your business, your goals, and why you will achieve them.

There are several key elements to include in your executive summary:

• Business Name: This is the name you have chosen for your business.
• Location: Include the city, state, and country where your business will be located.
• Business description: Describe what type of business you will be operating.
• Target market : This is the group of people you will be targeting as customers.
• Competition: Who are your competitors, and how will you compete with them?
• Product or service : What product or service will you be offering?
• Sales and marketing: How will you generate sales?
• Financials: Include a five-year income statement, balance sheet, and cash flow statement.
• Management team: Introduce your management team and their experience.
• Exit strategy : This is the plan for how you will eventually sell or otherwise exit the business in case you decide to retire or move on to other projects.

The executive summary is the most crucial section of your business plan because it gives investors and lenders a quick overview of your company and its prospects. Be sure to include all of the key elements listed above, and keep it under two pages in length.

What Are The Benefits of Creating a Daycare Business Plan?

Research shows that a business plan helps business owners make better decisions, turn abstract goals into tangible objectives, and track progress over time. But what does this mean for those who want to open a daycare? 

Creating a business plan forces you to think through every step of starting your company. It's a valuable exercise that can save you time and money in the long run. Even if you don't end up following your business plan to a tee, the process of writing it will help you better understand your business and what needs to be done to make it successful. 

There are many benefits to creating a daycare business plan, including: 

Gives You a Roadmap to Follow

As with any journey, it's always helpful to have a map. A business plan is that map for your daycare business. It will give you a clear idea of where you want to go and how you can get there. 

Helps You Secure Funding

A business plan is essential if you're looking for investors or loans. It will show potential lenders and investors that you've put thought into your business and have a solid strategy for making it successful. 

Ensures Your Daycare Business is Feasible

When you're starting a business, it's easy to get caught up in the excitement and overlook potential problems. A business plan forces you to take a step back and assess whether your business is truly viable. It also helps you identify any areas where additional research is needed. 

Final Thoughts

A daycare business plan is a valuable tool to help you make your business successful. 

It is worth noting that your business plan is not a one-time exercise but should be updated regularly as your business grows and changes. This document is meant to be a living document that evolves as your business does. 

If you're unsure where to start, there are plenty of resources available to help you, including daycare business plan examples online, books, and daycare business plan templates. 

You can also use our daycare projection template to get your financial plan ironed out and ready for your business plan.

The most important thing is just to get started. The sooner you create your business plan, the better prepared you will be for success.

You can get the Daycare Facility financial projection template here!

The template is simple to use and will save you loads of time while still producing professional looking daycare projections. ProjectionHub has helped more than 50,000 businesses create financial projections so you can be confident that you can do it too.

The daycare business projection template includes:

5 Year Daycare Facility Pro Forma Financial Statements

CPA Developed & Completely Customizable

Free Support & Projections Review

Compatible with Google Sheets

Free expert review of your completed projections

The template is easy to use and you do not need to be an excel wizard to fill it out. Editable cells are highlighted in blue, a video guide is included, and our team is available to answer any questions you have.

You can see the complete walkthrough and demonstration of the daycare business forecast template here:

Get the template today for just $79

If you have any questions before purchasing, please feel free to begin a live chat or email us at [email protected]

100% money back guarantee in accordance with our terms and conditions

‍ Photo by Pixabay

About the Author

Adam is the Co-founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors, lenders and internal business planning. Since 2012, over 40,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections.

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How to Start a Daycare at Home in 14 Steps (In-Depth Guide)

Updated:   March 22, 2024

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As more parents enter the workforce, it’s no surprise that the U.S. daycare market reached a whopping $60.4 billion in 2022. The industry is continuing to grow, with an estimated CAGR of 4.18% from 2023 to 2030.

For aspiring entrepreneurs, few businesses offer the low startup costs and convenient work-life balance of home daycares. By converting a spare room or basement into a kid-friendly space, you can capitalize on this demand and start a rewarding small business caring for local families.

This guide will walk you through how to start a daycare at home. Topics include market research, competitive analysis, registering an EIN, forming a legal business entity, obtaining business insurance, and more.

1. Conduct Daycare at Home Market Research

Market research is essential to employment in early childhood education. It offers insight into your target market, potential business expenses, trends in health and human services, and more.

Some details you’ll learn through market research as you obtain your family child care license include:

• The target demographic for home daycares is children under age 6.
• With over 70% of children under 6 potentially needing care while parents work, there is a huge demand to be met.
• The rise of dual-income households over the last few decades underlies this increasing market need.
• Home daycares have lower costs than traditional center daycares, making them an appealing option for cost-conscious parents. T
• With more affordable rates, home daycares can attract clients even in economic downturns as parents seek budget childcare options.
• Competition from existing home daycares varies greatly by region but tends to be minimal.
• Most competitors are other small home operations with a capacity for under a dozen children.
• Larger daycare franchises can provide stiffer competition in some areas but may have higher tuition rates that deter some parents.
• Market research should examine local competitors’ enrollment levels, tuition rates, services, and offerings to strategize competitive differentiation.
• Many home daycares break even within their first year of opening.
• Ongoing expenses tend to be quite low, focused mainly on food, supplies, and modest marketing spending to maintain full enrollment.
• Many home childcare business workers choose to work from home to continue caring for their own children.

Use this market research as you open your own child care business to formulate a thorough business plan.

2. Analyze the Competition

When starting a home daycare business, conducting a thorough competitive analysis is key to strategizing your positioning and rates. Assess other early childhood professionals within a 5-10 mile radius to analyze in-person offerings local families may consider.

For brick-and-mortar daycares, research center sizes, staff-to-child ratios, tuition rates, curriculums, and program offerings. Visit their sites to get a feel for environments and caregiver engagement. Look at their online presence including websites, social media, and directory listings.

Analyze competitors’ enrollment levels, whether they have waitlists, parent reviews, and word-of-mouth referrals. Higher enrollments and waitlists indicate satisfied families and a strong community reputation. You can leverage such insights to emulate popular curriculums or program offerings in your own business.

Research nanny and babysitter options to examine competition from independent childcare workers as well. Compare their hourly rates, services provided, credentials, and liability coverage against your home daycare offerings.

3. Costs to Start a Daycare at Home Business

As a business owner, you’ll encounter a variety of expenses through your child care center. From your business loan interest to meeting licensing requirements, and beyond. Here are some of the startup and ongoing expenses daycare centers encounter:

Startup Costs

Starting a home daycare requires various upfront investments to handle licensing, materials, renovations, insurance, marketing, and initial operating costs before opening for business. Total startup costs often fall between $10,000-$25,000, including:

• Acquiring state licensing and permits can cost $150-$500 depending on your region.
• Some states may require extra director credentials (CPR/First Aid training, etc.) adding $100-$300 to costs.
• Zoning permits range from $25-$150+.
• Fingerprinting and background checks add $50-100 per caregiver.
• In total budget is $500-$1200 for administrative licensing.
• Business insurance (general liability & accident) ranges from $300-$1000 annually.
• Separate child care licensing insurance can cost $300-$600 depending on policy liability caps.
• Budget at least $1000 for any renovations like child gates, safety rails, or converting a spare room into a dedicated classroom space.
• $2000-$5000 ensures high-quality materials and developmental appropriateness across all age groups under care.
• Budget $1500-$3000 for robust multi-channel outreach to local parent networks and directories.

The first 1-3 months could see lower enrollments as your center ramps up. Have at least 3 months of working capital for rent/mortgage, food, caregiver salaries (if applicable), supplies, and other operating expenses before profitability.

Ongoing Costs

Once open for business, monthly costs often include:

• Rent/Mortgage: $0 (existing residence) to $2000
• Food Supplies: $250-$600
• Learning Materials/Toys: $100-$300
• Insurance: $100-$250
• Marketing: $100-$500
• Accounting Software: $50-$150

Variable costs tied to enrollment levels include caregiver payroll, associates’ credentials/training, and activity/event programming. Reinvesting profits into quality improvements demonstrates a commitment to families while fueling referrals.

4. Form a Legal Business Entity

When starting a home daycare business , the legal structure you operate under impacts taxes, liability coverage, and ease of expansion over time. Weighing the pros and cons of each framework ensures you make the best decision when establishing your company.

Sole Proprietorship

Operating as a sole proprietor means no formal business registration is required beyond standard licensing. This simplifies logistics and paperwork for fledgling owners. It offers no personal asset protection if sued – creditors can seize personal bank accounts, properties, etc to settle company debts.

Partnership

Enlisting a co-owner shares startup costs and management duties. However, partners are subject to unlimited personal liability same as sole proprietors. Income pass-through hits all partners harder at tax time as well compared to limited entities. Disagreements between partners also introduce legal complexities.

Limited Liability Company (LLC)

Registering as an LLC offers liability protection missing from proprietorships or partnerships. Only business assets are impacted by debts, lawsuits, or claims – personal assets remain shielded even if the company folds. This coverage incentivizes small business growth through hiring once capacity expands.

Corporation

Incorporating brings the strongest business liability protections but also the highest maintenance costs. Double taxation applies on both corporate and personal returns too – expect an extra tax burden of $1,000+ from income passing through. Corporations have strict record keeping, public bylaws, and annual shareholders meetings.

5. Register Your Business For Taxes

To operate legally and open business bank accounts, home daycares need both a federal Employer Identification Number (EIN) and state sales tax registration. The EIN essentially functions as the business’s Social Security Number for tax purposes.

Apply for an EIN online . Registering for an EIN is free and simple through the IRS website. The online application takes less than 15 minutes to ask for basic entity information, owner names, and mailing addresses. No filing requirements or extensive paperwork is involved like incorporating.

Most states also require sales tax registration for childcare services. The application process varies slightly but resembles the Streamlined Sales Tax System. This unified form allows businesses in member states to register once rather than needing individual state forms.

Costs are generally low – $10 or less. Non-streamlined states may charge $50-$150. Once approved, you can collect and remit sales tax on tuition revenue to state departments of revenue. Ensure tax-exemption rules are followed though.

Check state government websites for specifics on sales tax waivers along with business license/zoning obligations, employment policies, and daycare regulations. Statutes differ across state lines regarding safety standards, caregiver duties, record keeping, and more.

6. Setup Your Accounting

Robust recordkeeping is crucial for home daycares to track revenues, expenses, and payroll and prove regulatory compliance. There are many ways to use accounting to benefit child care businesses, including:

Accounting Software

Using accounting software simplifies these tracking efforts greatly compared to manual ledgers. QuickBooks handles customer billing, invoices, expense coding, and cash flow reports and can deliver key data to your accountant come tax season.

Hire an Accountant

Having an accountant advise your home daycare locks in expert guidance on revenue/expense classification, deductions, and financial strategy from the start. They establish foolproof processes for bookkeeping, payroll processing, bank reconciliation, and fiscal year-end preparation.

Open a Business Bank Account

Separating business and personal finances prevents confusion. Open a dedicated business checking account for transparent tracking of daycare revenues, caregiver payroll draws, vendor payments, and eligible purchases. Reconcile statements monthly before reporting details to your accountant.

Apply for a Business Credit Card

Applying for a small business credit card also builds helpful lines of credit for larger purchases or operating shortfalls from enrollment ebbs/flows. Put all daycare-related expenditures on the card, pay the balance monthly, and request gradual limit increases over time

7. Obtain Licenses and Permits

Being approved for state childcare licensing is the foremost permit needed before opening doors to little ones. Find federal license information through the U.S. Small Business Administration . The SBA also offers a local search tool for state and city requirements.

In California, daycares under the care of 14 children require a family childcare home license. This involves extensive background checks, yearly tuberculosis testing, and 15 hours of initial health/safety curriculum completion for all adult members residing within the home.

Extensive childproofing precautions must also be completed covering anything posing fall, drowning, burn, or poisoning dangers across indoor/outdoor spaces. Monthly site visits verify standards compliance.

Florida mandates licensed homes carry special commercial liability insurance covering up to $100,000 per occurrence. Caregiver certifications in first aid, infant/child CPR, and development training clock at least 40 hours. Yearly safety inspections also apply with records submitted monthly.

In Texas, the Department of Family and Protective Services likewise facilitates background screenings, monitoring, and training requirements for legal home registration. Any adults present with known criminal convictions or child abuse history are immediately disqualified from eligibility.

Home insurance carriers also often prohibit operating businesses within residential policies. Purchasing a Child Care Insurance Policy extends commercial general liability and abuse/molestation coverage vital given elevated interaction risks with multiple children simultaneously.

8. Get Business Insurance

Carrying adequate business insurance shields home daycares from financial ruin should injuries, accidents, or emergencies strike while children are in care. Out-of-pocket costs for medical bills, legal fees, and damages payouts easily reach six figures without protection.

Some potential risks include:

• If a house fire required emergency room transport for smoke inhalation treatment across eight kids, damages would run $150,000 without coverage.
• A visitor slips on a wet floor, sustaining back injuries requiring surgery and extended physical therapy.
• Accidentally serving meals causing allergic reactions summon ambulance callouts hitting $2000+.

Having general liability coverage defrays these wildcards. Additional abuse and molestation policies further shield claims tied to hire misconduct. Top carriers like State Farm offer specialized plans accommodating home daycares for $400-$1200 yearly. Expect options covering:

• $500,000 per occurrence
• $50,000+ property damage
• $250,000 molestation sublimit
• $2000 medical payments
• $1000 ambulance expense

Obtain quotes through independent brokers having existing relationships with family care carriers. Insure on facilitates expedited digital applications answering just basic questions without obligation. Expect requests like:

• Entity type + Ownership
• Location/building details
• Historical liability claims
• Current provider coverage status
• Desired quote customizations

Applying through multiple reputable agencies ensures the most competitive premiums for equal coverage suited for home daycare risks. Never operate uninsured – an accident lawsuit and settlement can bankrupt entire savings rapidly.

9. Create an Office Space

Having a dedicated office/classroom area for administrative needs lends daycares valuable versatility accommodating parent meetings, one-on-one consultations, or extracurricular planning sessions. This space supplements regular activity rooms keeping toys and children contained without distraction.

Home Office

Converting a spare bedroom or basement into a functional office typically costs $2,000+ factoring desk, file cabinet, and chair purchases alongside any renovations, painting, or lighting improvements. While convenient, mingling clients and kids risks overstimulation, privacy concerns, and injury incidents.

Coworking Space

Nearby WeWork locations offer professional environments for client meetings starting at $300 monthly. Custom WeWork office sizes suit small consultations, training sessions, or parent open houses conveniently. Military family events also benefit from roomier third-party venues over at-capacity houses.

Retail Space

Leasing retail spaces like storefronts proves overkill for most single-site providers outside hybrid daycare franchises with built-out amenity spaces. Property owners seldom rent units under 5 years either, a longer commitment than prudent for newly established businesses. Expect rental rates of $20 per square foot.

10. Source Your Equipment

Outfitting home daycares requires extensive toys, furniture, feeding supplies, safety gear, and specialty infant items to care for multiple age groups. Stocking up across these categories can be done by buying new, used, renting, or leasing options.

Major retailers like Walmart, Target, and Amazon supply toys supporting cognitive, motor, and social skill development across all toddler stages. Purchase age-specific furniture like cribs, playpens, mats/gyms along with cabinets/cubbies for personalized storage. Feeding essentials include plates, cups, utensils, and bibs.

Buying Used

Secondhand batches of playsets, activity mats, costumes, books/puzzles, and outdoor equipment findable on Facebook Marketplace , Craigslist , or Offer Up often hold up through multiple daycare enrollments if inspected closely for safety. Create saved searches on these platforms for bulk deals.

Children’s consignment platforms like Kid to Kid lease infant/toddler inventory like bouncers, play mats, and high chairs for flexible 3-6 month terms. This suits changing enrollment needs as age distributions shift each year. Rental fees range from $25-$60 per item but save eating huge upfront spend.

11. Establish Your Brand Assets

Cultivating a distinctive brand identity helps home daycares stand out from competitors and attract enrollments through consistent visual recognition. Parents gravitate towards providers reflecting professionalism across touchpoints, from logos to web layouts showcasing nurturing environments.

Getting a Business Phone Number

Acquiring a unique business line using RingCentral lends legitimacy over listing personal cell numbers across outreach materials. Expect just $20 monthly for a dedicated mobile line, local caller ID, and basic answering features like voicemail transcriptions. Upgrade to toll-free lines once establishing steady demand.

Creating a Logo and Brand Assets

A thoughtful Looka logo visually encapsulates program values and personalities home providers radiate. Whether utilizing abstract shapes or kid-friendly illustrations, ensure palettes and fonts synchronize across business card templates, letterheads, website motifs, and signage backdrops.

Business Cards and Signage from Vistaprint

Business cards supply quick references for parents unable to snap photos of facility contact info during tours. Exchange at community tabling events or initial consultations so families have 24/7 access. Yard signage, window clings, and indoor displays ordered through Vistaprint make standalone homes identifiable as licensed daycares, not personal residences.

Purchasing a Domain Name

Secure matching domains from Namecheap for $15 annually. Opt for .com over .biz or .info which read unestablished. Make usernames/emails easy to recall to create memorable brand awareness and make it easy for clients to find you.

Building a Website

Employ DIY platforms like Wix for one-time $100s investments crafting pages showcasing caregiver bios, activity philosophies, menus, and enrollment information across responsive desktop/mobile layouts. Add photo galleries and parent review social proof later. Alternatively, hire web developers on Fiverr .

12. Join Associations and Groups

Joining local and national associations facilitates invaluable collaboration with fellow childcare professionals. Access member-exclusive training programs, checklist resources, and referral networks to accelerate getting up and running.

Local Associations

In Texas, the National Association for Family Child Care chapter lists accredited home providers meeting strict quality benchmarks. The Texas Professional Home Childcare Association connects over 500 area members for continuing education, substitute caregiver pools, and mentorship channels.

Local Meetups

Platforms like Meetup organize regional workshops and social mixers to unite area childcare pros. Poll fellow business owners on enrollment promotion tactics, favorite curriculums, and vendor recommendations within intimate meetup settings.

Facebook Groups

For round-the-clock advice from national peers, Daycare Owners and Home & Daycare Crafts And Helpful Ideas share endless program inspiration. Discuss everything from affordable outdoor playset brands to managing COVID-19 exposures and symptomatic students.

13. How to Market a Daycare at Home Business

Implementing marketing initiatives fuels steady enrollments and waitlists through consistent community outreach. Without promotion, openings risk going unfilled as local families remain unaware of new neighborhood offerings.

Personal Networking

Leveraging personal networks presents the most valuable starting point before investing in formal platforms. Reach out to parent groups, neighborhood listservs, and community centers to circulate flyers or offer open house events showcasing your facilities in person.

Digital Marketing

• Launch Google/Facebook ads geo-targeting nearby parental demographics with $15-50 daily budgets
• Create Instagram and TikTok accounts showcasing activities, meals, and campus facilities. Use relevant #hashtags to expand visibility.
• Claim online directory listings on Care.com for increased discoverability.
• Distribute monthly e-newsletters to enrolled families highlighting curriculum topics, staff spotlights, and seasonal reminders.
• Blog about parenthood challenges, kid development milestones, and balancing work-life routines to attract local readers.

Traditional Marketing

• Design eye-catching yard signs and distribute door hangers throughout surrounding neighborhoods.
• Sponsor booths at school fairs, fundraisers, and community events to meet area families.
• Place ads in neighborhood newspapers/magazines and pitch relevant lifestyle section stories.
• Partner with complementary businesses like pediatricians, tutors, or photographers for cross-promotions.
• Purchase promotional giveaway items like t-shirts, magnets, and stickers to boost brand familiarity.

Balancing digital and real-world marketing exposes home daycares to the widest possible audience of potential applicants. Measure response rates across initiatives to double down on the most effective channels based on actual enrollment conversions.

14. Focus on the Customer

Delivering exceptional caregiver support and family engagement accelerates enrollment growth for home daycares through word-of-mouth referrals. Prioritizing child development and nurturing environments over profits earns community trust and loyalty.

Take extra time getting to know student’ personalities, interests, and needs to personalize curriculums nurturing their unique gifts. Schedule regular show-and-tell sessions for children to share projects displaying their creativity growth over months in care.

Make parents feel heard regarding new policy changes, activity feedback, or child milestone concerns. Hold quarterly focus groups to collect suggestions, address worries, and highlight recent improvements implemented through their insights.

Share daily recaps through app platforms like Brightwheel detailing meal menus, lessons covered, and individual child progress across motor skills, vocabulary gains, and social realm. Attach photos capturing precious laughter and play moments families miss while working.

Exceeding expectations across communication channels and genuinely bonding with little ones manifests satisfied customers evangelizing your home daycare within neighborhood circles. This grassroots endorsement propels sustainable word-of-mouth referrals.

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How to Write a Business Plan for a Daycare: Complete Guide

• January 30, 2023

👇 Check all our resources on daycares 👇

Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) for your daycare, you will need to prepare a solid business plan.

In this article we go through, step-by-step, all the different sections you need in your daycare business plan. Use this template to create a complete, clear and solid business plan that get you funded.

1. Executive Summary

The executive summary of a business plan gives a sneak peek of the information about your business plan to lenders and/or investors.

If the information you provide here is not concise, informative, and scannable, potential lenders and investors will lose interest.

Though the executive summary is the first and the most important section, it should normally be the last section you write because it’s the summary of the different sections included in your business plan.

Why do you need a business plan for your daycare?

The purpose of a business plan is to secure funding through one of the following channels:

• Obtain bank financing or secure a loan from other lenders (such as a SBA loan )
• Obtain private investments from investment funds, angel investors, etc.
• Obtain a public or private grant

How to write an executive summary for your daycare?

The executive summary of your daycare business plan should include the following important information:

Business Overview

Introduce your company (its name, its mission) and the history behind it: why did you decide to create a daycare in your area today? Why you? 

Also, that’s where you should expand on the business: where will the daycare facility be located? How old are the children you target? How many children will you be able to take care of? What are the amenities (classrooms, playground, cafeteria, etc.)? 

Market Overview

Provide here a deep market analysis that backs your decision to open a daycare business in your area today. Why would your business succeed given current market conditions? 

For example, the market analysis should include information like: what are your competitors in the area? What are their characteristics, strengths and weaknesses ? Who are your target audience (parents and children)? Is that in line with the demographics in your area?

Management & People

Who is the management team? What is your/their experience in the daycare industry?

Financial plan

What is your expected revenue and profitability for the next 5 years? When do you expect to break-even? Simply include here a chart of your key financials (e.g. Revenue, Gross Profit, Net profit )

Funding Ask

What loan/investment/grant are you seeking? How much do you need? How do you intend to spend the money?

Daycare Financial Model

Download an expert-built 5-year Excel financial model for your business plan

2. Daycare Business Overview

The business overview section of the daycare business plan summarizes the basics of your facility, including the background information, business model, services, target audience, and legal structure. 

a) History of the Project

When you launch a daycare business, you want it to grow and even become the best in the region if possible. One small element that can catalyze your company’s growth is its history. You don’t have to exaggerate the information here, but try to include useful details that will make your daycare business stand out. 

For a business as sensitive as daycare, trust overrides anything else. So, make sure to include in your business plan your experience and passion for children to demonstrate to investors you are qualified and the right person to successfully run a new daycare facility.

Also, flesh out the history behind the project: why are you starting a daycare now? For example, you may have noticed a lack of child care services for toddlers and infants in the city.

b) Business Model

Next up is the business model. This is the revenue-generating plan that identifies how your business operates. A daycare business model should be succinct and address specific things about the business. 

For instance, is it a commercial daycare facility or a family daycare? Is it an independent facility or a partnership? And should you opt for a daycare franchise? 

Keep in mind that daycare facilities vary by the target age group. So, you can opt for a childcare center, a family daycare, a kindergarten/pre-school, or a nursery school.

c) Daycare Services

It takes a lot to raise a child. So, be clear on the services you want to offer in your newly founded daycare facility. The quality of services will make your business more attractive. But an even bigger factor will be the type of services you provide at the facility.

Indeed, a lot happens inside a daycare facility, from hands-on learning (classrooms, private tuition) to field trips, games and community events. 

d) Pricing Strategy

Age is a key factor when setting the prices of your daycare services. On average, parents across the US pay about $9,400 per year on child care per child. Of course, the actual figure will vary based on a number of factors, but this is a great starting point when getting into the industry. 

An accurate pricing strategy can help you outshine your biggest competitors. However, don’t forget that setting cheaper prices isn’t necessarily the best strategy, just in the same way overpriced services may turn off potential clients. 

e) Target Audience

Daycare centers are so named because they are about a child’s well-being. However, the final decision rests with the parents, who must buy into your idea and long-term vision for the facility. 

For this type of business, you have a definite target market . And all you have to do is ensure your facility is closer to a busy neighborhood with many children. Find out if the families truly need child care services, why they need these services and the children’s average age. 

Finally, make sure your services are aligned with your target audience. For example, you wouldn’t necessarily succeed with a daycare operating 9am – 4pm in an area where parents typically work long hours in the city and need time to commute back to their neighborhood to pick up their kids.

Same goes for pricing: if you offer high-quality expensive daycare services, make sure your daycare is either located close to offices or in an area where affluent parents work or live.

f) Legal Structure

Finally, your business overview section should specify what type of business structure you opt for. Is this a corporation or a partnership (LLC)? Who are the investors? How much equity percentage do they own? Is there a Board of Directors? If so, whom? Do they have experience in the industry?

3. Daycare Market Overview

In the market overview section of your business plan, you must cover 2 important areas:

• Market trends : how big is the daycare industry in your area? How fast is the market growing? What are the trends fuelling this growth (or decline)?
• Competition analysis : how many competitors are there? How do they compare vs. your business? How can you differentiate yourself from them?

a) Daycare Market Trends

How big is the daycare industry in the us.

It’s always helpful to base your business decisions on the latest trends in the US market. For instance, the US daycare market had a value of approximately $54.3 billion in 2019 . And it is projected to grow at an annual rate of 3.9% from 2020 through 2027. 

According to reports, the high number of parents occupying full-time and part-time jobs is a major driving force behind the increasing demand for daycare services. No matter how you look at it, these statistics make the daycare business even more lucrative, provided you get all the basics right through your business plan. 

How big is the daycare industry in your region?

After the US, assess the size of the daycare market in your city or area. Focus on the zone where you plan to offer daycare services.

Naturally, you might not be able to get the data for your specific city or region. Instead, you can estimate the size of your market, for more information on how to do it, read our article on how to estimate TAM, SAM and SOM for your startup . To give you an example, let’s assume you plan to operate in an area where there are already 10 competitors:

As we know the US daycare industry is worth $54 billion today, and there are about 230,000 child care centers , therefore the average annual turnover per child care center is around $235,000.

Now, we can safely assume that the daycare industry is worth $23 million in your area (10 centers).

How fast is the daycare industry growing in your region?

Growth is an important metric for assessing the status of the daycare industry in your region. 

Here if you don’t find information online or via your research, you can calculate growth using the total number of competitors in your area. 

For example, assuming there were 8 daycare competitors in the region in 2018, and 10 in 2022, the annual growth rate is 6% per year.

b) Daycare Competitor Analysis

At the very least, your competitor analysis should answer all the questions below:

• How many daycare businesses are the area where you plan to open yours?
• What type of daycare businesses are there: home-based vs. center-based home care, early care vs. early education & daycare, etc.
• What age range do they specialise in?
• What services do your competitors offer?
• What amenities do your competitors have (playground, classrooms, etc.)
• What’s their average price (daily rate / monthly rate)?
• What is the child / staff ratio of your competitors?

4. Sales & Marketing Strategy

For some existing daycare facilities, marketing isn’t the most important aspect of running the business. But you’ll probably have to implement a few marketing strategies at the beginning to attract the first families , especially if you’re starting a new daycare facility.

a) Daycare Market Channels

A daycare business doesn’t have diverse marketing channels like retail stores or other businesses. So, this may limit your options when it comes to new marketing channels. 

Apart from word of mouth, other marketing channels include;

• Social media
• Online listing (Google business, Facebook business page)
• Word-of-mouth

b) What are Your Unique Selling Points (USPs)? 

Daycare facilities offer pretty much the same services, and it’s not easy to stand out from the competition. However, a few factors can be useful when evaluating your opportunities in a competitive market, including:

• Target age group : You may cover a unique age group as opposed to your competitors
• Opening hours : you may offer longer opening hours to accommodate for different parents’ jobs and availabilities
• Price : Your services may be cheaper than your competitors
• Quality & amenities : Quality services and extra amenities (outdoor playground, etc.) will make your daycare facility more attractive vs. competitors
• Services : Your services may go beyond the standard hands-on learning and kid games 

5. Management & People

The 5th section of your daycare business plan should be about people. It should include 2 main elements:

• The management team and their experience / track record
• The organizational structure: what are the different teams and who reports to whom?

a) Management

Here you should list all the management roles in your company.

Of course, the amount of details you need to include here varies depending on the size of your company. For example, a small daycare business run by 1 or 2 persons doesn’t need the same level of detail vs. a large center with 50 children or more.

If you plan on running your business independently, you may write a short paragraph explaining who are the co-founders and/or senior managers (if there are any in addition to yourself). It’s important to highlight their experience in the industry and previous relevant professional experiences.

b) Organizational structure

No matter how many leadership roles there are, you should now explain how you intend to run the company from a management standpoint.

What are the different teams (management, childcare staff, cooking staff, human resources, finance, etc.)?

Note that you should include these details even if you haven’t hired anyone yet. It will show lenders and investors that you have a solid hiring and management plan to run the business successfully.

A great addition here is to add an organizational chart that list all the roles, from Directors to managers, key supervisory roles and employees. Make sure to highlight with reporting lines who manages/supervises whom.

6. Financial Plan

The financial plan is perhaps, with the executive summary, the most important section of any business plan.

Indeed, a solid financial plan tells lenders that your business is viable and can repay the loan you need from them. If you’re looking to raise equity from private investors, a solid financial plan will prove them your daycare is an attractive investment.

There should be 3 sections to your financial plan section:

• Your historical financials (only if you already operate the business and have financial accounts to show)
• The startup costs of your project (if you plan to start a new daycare facility, or add capacity to an existing daycare center, renovate your facilities, etc.)
• The 5-year financial projections

a) Historical Financials (optional)

In the scenario where you already have some historical financials (a few quarters or a few years), include them. A summary of your financial statements in the form of charts e.g. revenue, gross profit and net profit is enough, save the rest for the appendix.

If you don’t have any, don’t worry, most new businesses don’t have any historical financials and that’s ok. If so, jump to Startup Costs instead.

b) Startup Costs

Before we expand on 5-year financial projections in the following section, it’s always best practice to start with listing the startup costs of your project.

For a daycare, startup costs are all the expenses you incur before you open the space to your customers. These expenses typically include: renovation costs, equipment and furniture, etc.

The startup costs for opening a child care center depend on various factors such as the location and size of your daycare facilities, the capacity (the number of children you plan to have), the quality of the amenities, etc. 

We’ve identified that it costs anywhere between $130,000 to $490,000 to start a daycare business with 50 children . See below the cost estimates.

Note that these costs are for illustrative purposes and depend on several factors which might not fully apply to you. Let’s first start below with startup costs. 

c) Financial Projections

In addition to startup costs, you will now need to build a solid daycare financial model over 5 years.

Your financial projections should be built using a spreadsheet (e.g. Excel or Google Sheets) and presented in the form of tables and charts in your business plan.

As usual, keep it concise here and save details (for example detailed financial statements, financial metrics, key assumptions used for the projections) for the appendix instead.

Your financial projections should answer at least the following questions:

• How much revenue do you expect to generate over the next 5 years?
• When do you expect to break even?
• How much cash will you burn until you get there?
• What’s the impact of a change in pricing (say 10%) on your margins?
• What is your average customer acquisition cost?

You should include here your 3 financial statements (income statement, balance sheet and cash flow statement). This means you must forecast:

• The number of children over time ;
• Your expected revenue ;
• Operating costs to run the business ;
• Any other cash flow items (e.g. capex, debt repayment, etc.).

When projecting your revenue, make sure to sensitize pricing and the number of members as a small change in these assumptions will have a big impact on your revenues.

When it comes to the costs, consider both startup and operating costs. For more information, read our complete guide here .

7. Funding Ask

This is the last section of the business plan of your daycare center. Now that we have explained what type of daycare services your company would offer, at what price, your marketing strategy , management and people, this section must now answer the following questions:

• How much funding do you need?
• What financial instrument(s) do you need: is this equity or debt, or even a free-money public grant?
• How long will this funding last?
• Where else does the money come from? If you apply for a SBA loan for example, where does the other part of the investment come from (your own capital, private investors?)

Use of Funds

Any business plan should include a clear use of funds section. This is where you explain how the money will be spent.

Will you spend most of the loan / investment to buy the real estate and do the renovations? Or will it cover the cost of the salaries of your childcare staff and other employees the first few months?

Those are very important questions you should be able to answer in the blink of an eye. Don’t worry, this should come straight from your financial projections. If you’ve built solid projections like in our daycare financial model template , you won’t have any issues answering these questions.

For the use of funds, we recommend using a pie chart like the one we have in our financial model template where we outline the main expenses categories as shown below.

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10 Steps to Starting a Home Daycare Business

Author: Kara Wilson

February 22, 2021 Leave a Comment

Starting a home daycare business can be an excellent opportunity if you love kids and the prospect of being your own boss. Because you would be working from home, the startup costs can be low compared to many other businesses. Additionally, the rewards, both emotionally and financially, are potentially high. 

There are many considerations when starting a home daycare business, and the requirements for such will vary from state to state. For a start, you will need to have some knowledge, or be willing to study, early childhood education so as to provide a suitable learning environment. You will also need to handle the business side of things, from licensing, regulations, and taxes. 

If you feel like you have what it takes, whether you have your own children at home or not, let’s dive into the 10 steps involved in starting a home daycare business.

Step 1: Create a Business Plan

Before you even get started, it’s imperative to start thinking of it as a business, and the best way to do that is to create a business plan. Here is how to write one, plus a bonus  free template . 

Step 2: Structure Your Business

There are many different ways to legally structure your business, so talk to a legal or financial professional to help you determine which structure is best for your situation. You may wish to open your business as a sole proprietorship, LLC, S Corp, or Corporation. To discover the pros and cons of each structure, read  What Business Structure is Right For Your Business?  

Step 3: Secure the Funding

There are many small costs in setting up a home daycare that adds up considerably. For example, you’ll need educational supplies, toys, cleaning supplies, first-aid and CPR training, insurance, legal forms, a website, and registration. If you don’t have savings, check your local and state websites to see if there are any available grants or subsidies. The US Department of Health and Human Services is a good resource for where to get grants.

Step 4: Design Your Brand

To help your home daycare stand out, choose a great name and image for your business. You’ll need to consider brand colors, create a logo, and open social media accounts. You might find this article,  11 Branding Tips for Your Home-Based Business  useful for getting started. 

If you’re starting your home daycare business on a budget, check out Canva . It’s a free online design tool that can help you create a logo, brochures, social media images, and more! Best of all, it’s easy to use and will make you look like a pro! Just know that you won’t be able to trademark your image if you use a Canva template, as you don’t own the rights.

Step 5: Create a Budget

Now we’re getting into the nitty-gritty of running a business. Create a thorough budget of all your running expenses, and work out how many children and how much you will need to charge to cover the costs and provide a profit. The number of children you can take on will depend on staff-to-child ratios based on ages and criteria established by your state government. Read more on what these are on  OPM.gov .

Step 6: Get an Insurance Plan

Accidents can and will happen, particularly in a daycare setting. You need to ensure that you’re business is covered for things like slips, falls, and any other unforeseen events. You’ll want to shop around and compare different business insurance plans (don’t forget to add this to your business budget). 

Step 7: License Your Home Daycare

It’s in your and the prospective families’ best interest to license your business. Parents want assurance that they’re leaving their children in the best hands, in a place that meets all the standards for health and safety. In many locations, you will be expected to contact the department of child welfare or a similar agency to request an information pack.

Some jurisdictions may also include inspections as part of the application process. Also, check whether you need a separate business license by contacting your local department of licenses and inspections. Head to  Daycare ’s website for your state’s licensing laws. 

Step 8: Decide on a Learning Approach

Learn about various childcare approaches and philosophies, and determine which one is right for your daycare setting. Some of the more common ones include  Montessori ,  Reggio-Emilia , and  Waldorf.   Geteduca  has a library of early learning curriculum goals, government, and state early learning guidelines, frameworks, and quality standards. 

Step 9: Safety-Proof Your Home

Minimize accidents and be prepared for them by completing a first-aid course (such as the  Red Cross  training), having a fire emergency action plan in place, covering all electrical outlets, and securing furniture to the walls. The safety of the children should be your top priority. 

Step 10: Get Paid

The last part of the equation is getting all of your financial ducks in a row. Work out how you will collect tuition, and open a business bank account. Find an accounting system that works for you and makes it easy to track payments and expenses, and send invoices. As a business owner, you’re responsible for paying quarterly self-employment taxes, be sure you understand all of your financial responsibilities.

Next Steps in Running Your Daycare Business

Now that you know the steps to start a home daycare business, you might be wondering what happens next.

As your business grows, you may consider hiring someone to help with some of your duties. You’re not just a group babysitter, so you will need to plan activities each day. Allocate time weekly to create lesson plans to engage and nurture the children in your care.

Parents will expect daily communication from you about their child, so you could either write reports or use an app that updates them in real-time and includes photos.

You’ll be required to replenish classroom supplies and furniture, so to reduce costs, keep an eye out online for second-hand furniture or free loose parts for play. 

To get the word out there, you will need a good marketing strategy. You might like to distribute brochures locally, use social media, join local parenting Facebook Groups , list on a directory like  Yelp , or advertise through Google. 

Once you’ve become an established home daycare business, you might like to take it to the next level. By becoming accredited, parents will know that you’re following all of the necessary guidelines, and you may also be eligible for funding opportunities. Many states offer a Quality Rating and Improvement System (QRIS). Accreditation proves to parents that you’re among the best in your community, which of course, you want to be! 

Free Business Plan Template

Would you like to start a home-based business, but you're not sure where to start?

Grab our FREE Simplified Business Plan Template , which will walk you through the questions and steps you need to take to get your business off the ground!

About the Author

Kara Wilson

Kara Wilson has been an enthusiastic freelance writer for over 8 years. She is also a web content editor, infant sleep educator, and mama to two young children. When she isn't building forts with her kids, or hiding in her office to write, she loves to cook, read, and fantasize about traveling. If you're looking for a professional writer for your parenting website or blog, you can contact her at [email protected] .

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Daycare Business Plan Template

Written by Dave Lavinsky

Over the past 20+ years, we have helped over 5,000 entrepreneurs create business plans to start and grow their businesses. On this page, we will first give you some background information with regards to the importance of business planning for your daycare. We will then go through a good daycare business plan template step-by-step to help you outline and create your plan today.

Download our Ultimate Daycare Business Plan Template here >

What Is a Daycare Business Plan?

A daycare business plan provides a snapshot of your daycare business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan

If you’re looking to start a daycare business or grow your existing one, you need a solid business plan. This plan will help you raise funding, if needed, and plan out the growth of your daycare in order to improve your chances of success. It is a living document that should be updated annually as your company grows and changes.

Source of Funding for a Daycare Business

With regards to funding, the main sources of funding for a daycare business are bank loans and angel investors. With regards to bank loans, a lender will want to review your daycare business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

The second most common form of funding for a daycare is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding or, like a bank, they will give you a loan. Venture capitalists will not fund a daycare business.

Finish Your Business Plan Today!

A good daycare business plan should include the following 10 key elements:

Executive Summary

Your executive summary provides an introduction to your daycare business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of child care business you are operating and the status; for example, are you a startup, do you have a daycare that you would like to grow, or are you operating a chain of child care centers.

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the daycare industry. Discuss the type of daycare you are operating. Include detailed information about your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing strategy. Identify the key members of your team. And offer an overview of your financial plan.

Company Analysis

In your company analysis, you will describe the type of daycare company you are operating, including a business description.

For example, you need to decide which type of child care business you plan to operate:

• Home-Based Daycare: this type of daycare business operates out of your home and typically has one or two caregivers on staff.
• Daycare Center: this kind of child care center operates out of a commercial building. It typically has multiple teachers and personnel and can provide care to many kids.
• Preschool Daycare: a daycare business that primarily serves preschoolers
• School-Age Daycare: a daycare business that primarily serves school-age kids.

In addition to explaining the type of child care you operate, the Company Analysis section needs to provide background on the business.

Include answers to questions such as:

• When and why did you start your daycare business?
• What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new program offerings, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the child care industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the daycare industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards daycare that includes transportation, it would be helpful to ensure your plan calls for such a service.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your daycare business plan:

• How big is the daycare business (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the local or national market?
• What trends are affecting the daycare industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your daycare. You can extrapolate such as figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section must detail the community you serve and/or expect to serve.

The following are examples of customer segments: soccer moms, young families, baby boomers caring for grandchildren, etc.

Try to break out your target audience in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the families you seek to serve. Because most daycares primarily serve customers in the same local area, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target families. The more you can understand and define these needs, the better you will do in attracting and retaining your families.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your daycare business faces and then focus on the latter.

Direct competitors are other daycare providers in your local area.

Indirect competitors are other options that parents have that aren’t direct competitors. This includes keeping children at home and/or after-school programs among others.

With regards to direct competitors, you want to detail the other daycare or child care centers with which you compete. Most likely, your direct competitors will be daycare businesses located very close to your location.

For each such competitor, provide an overview of their services and document their strengths and weaknesses. Unless you once worked at your competitors’ daycare businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of parents do they offer services to?
• What daycare services do they offer?
• What times are they open?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the parents’ perspective.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide superior daycare services?
• Will you provide daycare services that your competitors don’t offer?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a child care business plan, you should include the following:

Product : in the product section, you should reiterate the type of daycare that you documented in your Company Analysis. Then, describe the specific services you will be offering. For example, will you over technology or exercise classes to the children?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the child care services you offer and their prices.

Place : Place refers to the location of your daycare. Document your location and mention how the location will impact your success. For example, is your daycare located next to a heavily populated office building, or gym, etc.? Discuss how your location might provide a steady stream of potential customers.

Promotions : the final part of your daycare marketing plan is the promotions section. Here you will document how you will drive families to your location(s). The following are some promotional methods you might consider:

• Social media marketing
• Reaching out to local bloggers (particularly “mommy” bloggers) and websites
• Local radio advertising
• Banner ads at local venues

Operations Plan

While the earlier sections of your daycare business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term procedures include all of the tasks involved in running your daycare such as discussions with prospective new customers, procuring supplies, keeping the center clean, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 100th child, or when you hope to reach $X in sales. It could also be when you expect to hire your 4th employee or launch a new location.  

Management Team

To demonstrate your daycare’s ability to succeed, a strong management team is essential. Highlight your key players’ and teachers’ backgrounds, emphasizing those skills, and experiences that prove their ability to grow your child care business.

Ideally, you and/or your team members have direct experience in the daycare or child care business. If so, highlight this experience and expertise. But also highlight any experience or certification that you think will help your daycare business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your daycare business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in daycare centers and/or successfully running a retail or small company.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In creating your income statement, you need to devise assumptions. For example, will you serve 10 children per day or 50? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your company. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets : While these financial statements include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your daycare center, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your company, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a company approached you with a massive $100,000 daycare contract, that would cost you $50,000 to fulfill. Well, in most cases, you would have to pay that $50,000 now for employee salaries, etc. But let’s say the company didn’t pay you for 180 days. During that 180 day period, you could run out of money.

In developing your financial projections be sure to include several of the key costs needed in starting or growing a daycare center:

• Daycare center build-out including design fees, construction, etc.
• Cost of fixtures like tables, chairs, couches, etc.
• Cost of equipment used like computers and televisions
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your daycare center design blueprint or location lease.  

Putting together a good business plan for your daycare is an exciting process to help you develop and grow your child care business into the future. If you follow the template above including all the key sections, by the time you are done, you will truly be an expert. You will really understand the daycare industry, your competition, and your target parents. You will have developed a comprehensive business plan and will really understand what it takes to launch your daycare business, obtain the financing you need, and expand your business.

Daycare Business Plan FAQs

What is the easiest way to complete my daycare business plan.

Growthink's Ultimate Daycare Business Plan Template allows you to quickly and easily complete your Daycare Business Plan.

Where Can I Download an Example Daycare Business Plan PDF?

You can download our daycare business plan sample PDF  here . This is a business plan example you can use in PDF format.

Don’t you wish there was a faster, easier way to finish your Daycare business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how a Growthink business planning advisor can create your business plan for you.

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How to create a daycare business plan

• Nirit Braun
• Sep 11, 2023

When you're getting ready to launch your daycare business, one of the first things you'll want to do is create a solid business plan. Think of it as your roadmap for success. This document spells out your goals, strategies and financial projections within the childcare industry.

It serves as your trusty guidebook, helping you navigate the path to success and providing solutions for any challenges that come your way. Keep reading to learn more about the specific elements of a strong daycare business plan, and use the template at the end to get started.

Ready to launch your daycare business? Create a business website today with Wix.

Top benefits of creating a daycare business plan

Starting a daycare business demands careful planning, and a well-structured business plan offers numerous benefits that can significantly contribute to its success:

Helps raise money for your business : Experts estimate that for a home-based daycare serving four to six children, startup costs can exceed $36,000 . A comprehensive business plan is essential when seeking investors or financial support. It showcases your clear vision, market research and growth strategies, demonstrating your commitment and knowledge about the daycare industry. Potential investors are more likely to provide funding when they see a thoughtfully crafted plan that outlines potential returns on their investment.

Helps allocate resources : Writing a business plan forces you to conduct thorough research on what resources, supplies and staff are needed to launch and run your daycare center successfully. From facilities and equipment to educational materials and safety protocols, this detailed analysis ensures that you're fully aware of the startup and operational costs, preventing any unexpected surprises down the road.

Provides operational clarity : A well-constructed business plan outlines your daycare center's daily operations, including schedules, curriculum and staffing requirements. This clarity not only helps you understand the practical aspects of starting a business but also provides a structured approach to managing day-to-day activities effectively.

Highlights market insights : Through the process of writing your business plan, you delve into market research, identifying your target demographic, understanding their needs and analyzing your competitors. According to Zippia, 58% of working parents depend on childcare centers, which means you have a very large market to work with. This information is invaluable in tailoring your services to stand out in a crowded niche, creating a unique selling proposition that attracts parents and caregivers.

Helps with risk management : Starting a daycare business involves addressing potential challenges and risks. A business plan encourages you to identify these risks upfront and develop contingency plans to mitigate them. This proactive approach increases your preparedness and helps you navigate unexpected obstacles with more confidence.

Creates a profitability timeline : Financial projections included in your business plan offer insights into the revenue and expenses expected in the early stages of your daycare business. This information is crucial for determining when your business will become profitable and ensuring that you have a sustainable financial strategy.

Learn more: How to start a service business

How to create a successful daycare business plan in 6 steps

Now we’ll walk through the six essential steps for crafting a daycare business plan tailored to your company's unique needs.

Executive summary

Business and domain names

Market analysis and research

Operations plan, marketing and advertising plan, financial plan.

Thinking of developing another type of business? Check out more service business examples .

01. Executive summary

The executive summary is a concise overview of your entire daycare business plan. It provides a snapshot of your business concept, key strategies, goals and financial projections. While it appears at the beginning of your plan, it's often written last, after you've fully developed the other sections. A well-written executive summary should capture the reader's attention and convey the essence of your daycare business in a compelling and clear manner.

To write a clear executive summary for a daycare business, incorporate the following details:

Overview : Introduce your daycare business and highlight its unique features. Mention the age groups you'll serve, the educational approach you'll adopt and any specific services or benefits that set your daycare apart.

Demand : Describe the demand for daycare services in your target area. Mention any growth trends in working parents, shifting demographics or changes in government policies that could impact your business.

Operations : Briefly outline your strategies for attracting and retaining customers, managing operations efficiently and achieving growth. Touch on your marketing, staffing, curriculum and safety plans.

Staff : Highlight key members of your management team and their relevant experience in the daycare or education sector.

Financials : Provide a high-level overview of your projected revenue, expenses and profitability. Mention the timeframe you expect to break even and showcase your potential for generating returns for investors. You can also mention the amount of initial investment you're seeking and how you plan to use the funds.

Example executive summary for a daycare business

“ABC Sunshine Daycare is a premium childcare center dedicated to providing a nurturing and educational environment for children aged six months to five years. Our play-based curriculum, experienced educators and commitment to child safety make us the ideal partner for parents seeking top-tier care. With a projected 15% annual growth in working parents in our area, we are poised to tap into a significant market opportunity.

Our key strategies include partnering with local businesses to offer exclusive discounts to their employees, implementing a comprehensive child development curriculum and maintaining a low student-to-teacher ratio for personalized attention. We anticipate achieving profitability within the first 18 months, with a projected revenue of $350,000 by the end of Year 2.

We seek $150,000 in funding to secure a prime location, equip our state-of-the-art facility and launch targeted marketing campaigns. Our leadership team comprises experienced educators and childcare professionals, ensuring the highest quality of care for our young learners.”

02. Business and domain names

Knowing how to name a business is crucial for a daycare center and a key step before you register your business . It will be the foundation of your brand identity, influencing how parents perceive your services and creating trust. When choosing a name, consider its relevance to child care, its uniqueness and its ease of pronunciation and memorability.

Using a business name generator like one from Wix can spark creativity and offer unique suggestions that align with your daycare's values and mission. Once you've settled on a name, securing a matching domain name is essential for establishing an online presence. A domain name that reflects your business name makes it easier for potential clients to find you online.

You’ll want to first conduct a domain name search to ensure that the name you want isn't already in use.

Some best practices for choosing a domain name are to keep it short and memorable, which means avoiding complex spellings or special characters. Be sure to make it relevant to your specific services and values. The recommendation is to choose a domain extension (.com, .net, .org) that's familiar and commonly used.

03. Market analysis and research

Strong market analysis is vital for understanding the competitive landscape for this type of business and identifying opportunities where you can thrive. Research the demographics and psychographics of your target audience, their needs, preferences and pain points. Analyze your competitors—both other daycare centers and alternative childcare options—to identify gaps in the market that your business can address.

Incorporate this analysis into your business plan to develop a more robust marketing strategy . Highlight how your daycare's unique value proposition will resonate with parents and differentiate you from the competition. Include plans for pricing, branding, promotions and customer retention strategies to attract and retain families.

04. Operations plan

Your operations plan outlines the practical aspects of running your daycare business. This includes details such as:

Location: Explain the rationale behind your chosen location, considering factors like accessibility, safety and proximity to potential clients.

Premises: Describe the layout and design of your facility, including play areas, classrooms, restrooms and any outdoor spaces.

Equipment: List the equipment and supplies required for daily operations, from educational materials to furniture and safety equipment.

Staffing: Outline your staffing needs, including teachers, assistants and administrative personnel. Detail their qualifications, roles and responsibilities.

Healthy and safety: Highlight your health and safety protocols, emergency procedures and compliance with relevant regulations.

By including these details in your operations plan, you demonstrate a clear understanding of how your daycare business will function and meet the needs of both children and parents.

05. Marketing and advertising plan

To get started with marketing, you’ll need to develop a suite of brand assets, starting with a company logo. You can use a free logo maker to get a professional design in minutes.

Learn more: How to make a website

Your marketing and advertising plan outlines the strategies and campaigns you'll employ to promote your daycare business. Consider a mix of both traditional and digital marketing methods, such as social media. Utilize online platforms like Facebook, Instagram and Pinterest to share engaging content, showcase your facility and connect with parents. You can also use your social media accounts to collaborate with local businesses, pediatricians and schools to build a referral network and increase visibility.

Use your business website for targeted online ads to reach parents in your area who are actively searching for childcare options. Additionally, you could publish a blog on your website that offers parenting tips, educational insights and other valuable content that positions your daycare as an authority in child development.

You can also organize open houses, workshops, or parent-child events to give families a firsthand experience of your daycare's offerings.

06. Financial plan

The financial plan is a critical component of your daycare business plan, outlining your initial funding requirements, revenue projections and profitability timeline. Specify the sources of funding you're seeking—whether through personal investment, loans or investors—and detail how the funds will be allocated.

Provide a breakdown of your startup costs, including cost to start an LLC if relevant, expenses for facility setup, equipment purchase, staffing, marketing and any administrative costs. Present projected revenue based on enrollment estimates, pricing strategies and the competitive landscape.

Create a cash flow forecast that outlines your expected inflows and outflows over a specific timeframe. This projection will help you identify potential financial challenges and plan for adequate cash reserves.

Include a profitability analysis that showcases when you anticipate reaching break-even and becoming profitable. This information is crucial for both potential investors and your own financial planning.

By including a well-structured financial plan, you demonstrate your business' financial viability and your understanding of the financial aspects of running a daycare center.

Template for a daycare business plan

Note that this template is meant to serve as a starting point for your daycare business and you should customize it to reflect your specific business concept and goals.

A brief introduction to the daycare business concept

Market opportunity and growth potential

Key strategies for curriculum, staffing and marketing

Financial projections: revenue, profitability, funding needs

Company and domain name

Name: [Your Daycare Name]

Domain: www.[YourDaycareName].com

Demographics and psychographics of target audience

Competitive landscape analysis

How your daycare addresses market needs

Location details

Facility layout, safety features, outdoor spaces, etc.

Equipment, inventory and setup

Staff roles, qualifications and responsibilities

Health and safety protocols and compliance

Social media strategy

Local partnerships, collaborations with local businesses

Open houses and events

Online advertising plan and ad types

SEO and content marketing strategy

Initial investment requirement

Startup costs including facility setup, equipment, staffing and marketing

Projected revenue based on enrollment estimates and pricing

Cash flow forecast over the first year

Profitability and break-even point analysis

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Complete guide to starting and growing a home-based childcare center

• Posted by Michael Keshen
• March 11, 2021
• in Posted in Leadership & administration

A home-based childcare center can be a great business opportunity for aspiring entrepreneurs who love children. When operating out of your home, the startup costs and risks are low when compared to other businesses, while the opportunity for monetary and emotional rewards are high.

There are many things to consider when deciding to open a in home child care center. First and foremost, you will need to have a thorough understanding of early childhood education. You will have children in your care that are in the stage of life where they are doing the most important cognitive development, and so it is your responsibility to provide them with a suitable environment to meet their needs.

Additionally, even though it is in your home, a home daycare is still a business and needs to be thought of as such. From budgeting and taxes to licensing and regulations, you will need to handle the business side of child care as well.

Table of contents

• Business Plan
• Business/Legal Structure
• Name & Branding
• Learning Philosophy
• Billing & Payments
• Activity Planning
• Parent Communication

Accreditation

• Online Listings
• Referral Program
• Social Media
• Search Engine Optimization

Before you start

Opening an at home daycare center does not mean simply stating that your home is now a daycare.

From legal requirements to supplies, there are many items you will first need to sort out for your daycare center business to have everything it needs to get started working with children and to provide care for a rewarding career.

Business plan for your at home daycare

The very first step towards opening your home daycare is thinking like a business, and a proven way to do so is by creating a business plan. There are many different ways to create a business plan and you can find many templates online to help get you started.

Writing a business plan is a helpful exercise that forces you to plan ahead and anticipate many of the challenges that can often lead to failure when they are overlooked, such as:

• Is there enough demand for home-based child care providers in your area (e.g. are there more families with young children in your area than existing daycares can accommodate)?
• How much will it cost to operate your business?
• How much will you need to charge per child, and do you have enough space?
• How will you promote your business to get young children enrolled?

In general, the more thorough your business plan is, the better prepared you’ll be to open your daycare business. Things will naturally change as you go, but your business plan will give you a solid foundation to build off of.

Business/legal structure

There are many different ways to structure your business from a legal standpoint. There may be different options based on your area, so check your government websites for information they provide on business structures.

For example, you may wish to open as a sole proprietorship, partnership, or incorporation. Each option has different pros and cons for liability, taxes, profits and several other factors.

Additionally, rather than opening as a brand new business, you may wish to become part of a home-based childcare center agency. This would mean more help starting up and getting children enrolled, but less profit overall because the agency will take a commission of sales.

There are many costs involved with starting an in home daycare. Toys, mats, first aid kits, cleaning supplies, binders, markers, paper, food, software, insurance, registering your business, advertising…all the little things begin to add up.

Hopefully you already have enough funding saved up, but chances are you will need to do some outside fundraising.

Aspiring entrepreneurs usually start off asking friends and family to invest in their business. This can be just a simple loan, or you may offer a percentage of your business in exchange for their funding (especially if they are providing a large amount).

You can also check with your bank to see if you can be approved for a business loan. These will often have notable interest rates, however, so make sure that you will be able to repay these loans in a timely manner without it impacting your business too much.

As a child care provider and small business, you may be eligible for local grants or subsidies. Check your local, state/provincial or federal websites to see what is available of new child care businesses. You may be able to get a substantial portion of your funding just by applying to these programs, which can also help you lower your enrollment costs to help benefit parents as well.

Name and branding

A great name can really help your home daycare stand out, which is why it’s important to put effort in the beginning towards creating a great name and brand for your business.

Try to think of a name that is clever and easy to remember, while at the same time tells people what your business is. This is much easier said than done, and coming up with the perfect name can take days or weeks.

Use a notepad or the notes app on your phone to jot down an idea whenever you have one so you don’t forget it. Once you have a lot of names, start picking your favorites. Then share these in conversation to see what others think of your name options.

If you’re feeling completely stuck, give our  preschool name generator  a try!

Once you have your name, create a logo and choose some brand colors. It may seem like you don’t need this yet, but pretty soon you will be printing things with your logo, sharing it on social media, creating signs, and many other things involving a logo. By doing this work upfront, you will have done the hard work first, and your materials will be consistent because you won’t be changing things as you go.

If you need a bit of help,  Coolors  can help you choose a color scheme, and there are many online logo designers like  Hatchful  that can help you choose a font and image for your logo.

Getting started

Once you’ve finished creating your business plan and decided that opening a home-based childcare center is right for you, it’s time to get to work!

Before you open your doors, there are plenty of logistics to think through and set up. This opening a home daycare checklist will help set you on the right track.

One of the most important things to do as you get started is to figure out how much it will actually cost to run your business. By creating a thorough budget, you will be able to prioritize what are the essential items your in home daycare you will need and which ones are nice-to-haves. This will also help you figure out how many children you will need to enroll and how much their tuition should be.

It can be challenging when creating a budget to be sure that you have thought of every possible thing. If you need a little help, give our  free child care center budget template  a try.

As careful as you may be, accidents can happen — especially in child care. If they do, you will definitely want to have a good insurance plan to ensure that you are covered. Depending on what plan you choose, in home daycare insurance can cover essential things like:

• Business income
• Equipment breakdown

When creating your budget, insurance may seem like an extra expense to cut down on, but it will be well worth the cost when compared to the alternative of going out of business.

Depending on your location, it may be an option to run your home-based childcare center with or without a license. Even still, it is in your best interest to license your home daycare and understand licensing requirements.

Just think of it from the parent’s point of view: Your child is the most precious thing in the world. Would you really be comfortable sending them to a random person’s house, or would you rather send them to a properly licensed child care center?

By licensing your in home daycare, parents will know that your program meets all of the standards established by your government. Doing so will also likely make you eligible for different funding and professional development opportunities, which can have a significant impact on the success of your business.

Learning philosophy

A home-based childcare center is not group babysitting. Ages zero through five are the most important years for a child’s cognitive development and a majority of what – and how – they learn will be with you.

There are several  learning philosophies  to choose from, with the most common being:

• Reggio Emilia

Additionally, there are typically state of provincial educational frameworks that your government recommends (and in some cases requires), or assessment frameworks you can purchase like the Ounce Scale or Work Sampling System from Pearson.

To start, check with your government websites to see what they recommend or require. If you are becoming licensed, you may have already found the assessment and curriculum you will be following.

When you’re responsible for a group of children, safety needs to be one of your top priorities.

The first step is to safety-proof your home. Minimize the chances for injuries by removing furniture with sharp corners, covering electrical outlets, securing bookshelves to the wall, and so on.

Next, be prepared for any medical emergencies by getting CPR training if you do not have any already.

It is also a good idea to run regular fire drills and have an action-plan ready should an emergency occur.

Billing and payments

It goes without saying that you will need to collect money in order to sustain your business. When starting your home daycare, you will need to figure out how you will bill customers and collect payments.

Sending invoices and tracking payments can be a lot to keep track of while you have all of the other things to manage when running your business, so choose a system that will help make this easier. For example, using HiMama allows you to create and send invoices to parents, track payments, and even collect payments electronically from their credit card or bank account.

For more help getting started, see your  complete guide to billing and payments for child care centers .

Although staffing requirements are much lower than a child care center not run out of a home, you will likely not be able to do everything on your own. Your licensing or government frameworks may require a certain teacher-to-child ratio. Plus, with all of the other administrative duties, meal prep and cleaning, it can be a lot to manage as one person.

Working at an in home daycare can mean wearing many different hats in terms of responsibilities. Figure out what you enjoy most about being a child care provider and focus on those duties, then get help for the other things that need attention.

When looking for employees, focus on candidates who are clearly passionate about child care. It can be demanding and low-paying work, so those who love what they do will be your greatest assets.

Activity planning

Each and every day, you will need to plan out what the children will do to fill up their day. Do some research on different activities to try at your home-based childcare center, and keep track of the ones that the kids most enjoy and benefit from.

This is also how you will promote their development through whichever learning philosophy you are following. Chances are that the framework or approach you are using have well-documented activities that they recommend.

Parent communication

Now more than ever, parents expect regular communication with their child care provider. They will want to know what their kids have been up to all day, which is why most childcare centers will provide daily sheets.

It can be difficult to fill out paper daily sheets in the moment, and so educators may have to fill them in later relying on their memory, leading to inaccurate reports. For that reason, you may want to consider digital activity tracking and reporting, so you can easily make observations as they happen and share them in real-time (and with a photo for good measure).

You will also want to be able to easily and effectively communicate with parents to send reminders, notes for the next day, or emergencies. A child care app can make this a lot simpler and faster, which will make a difference after you get up and running.

The most expensive part of getting your home-based childcare center up and running will likely be all of the supplies you will need, which will generally be either for the classroom or operational supplies. Classroom supplies are things like furniture, books and toys, while operational supplies include cleaning sprays, toilet paper, food, and so on.

To help cut costs, you may be able to find second-hand items like furniture and books, but just make sure they are in good condition and you have properly cleaned them before bringing the kiddos in! You can also implement a policy where parents provide some basic supplies for their children. For example, their child’s favorite toy, some basic stationery or their own diapers and wipes for infants.

To get children enrolled at your home daycare, you will need to first put the word out. Marketing can be a challenge for any business that’s starting out, but there are some tried and true strategies that often work for daycare providers. An informational brochure or postcard can be a great way to communicate all that your home-based childcare center has to offer. You can create quick and simple designs using a platform like Canva.

When parents are deciding between the many different providers in your area, having something in front of them to refer back to will allow you to be present during those conversations without actually being there. You can even make a day of it by walking around the neighborhood to drop them off in your neighbors’ mailboxes!

If you want to take your marketing to the next level, you can also advertise online on Google and Facebook. We’ll get into that in more detail in the next section, but you may also want to consider hiring a marketing consultant to help do these things for you while you focus on other tasks.

Growing yo u r child care provider business

Once you’ve conquered the biggest challenge of getting up and running, at some point you may wish to take your business to the next level. After all, kids grow up fast, meaning that you’ll need to find new customers sooner than later.

Below are some of the many things you can do to further legitimize your home daycare and attract new customers.

Earning accreditation means that your business meets a high level of standards for different aspects of child care such as education and safety. Being accredited provides you with an easy way to communicate with parents that your business is among the best in your community.

There are several ways to become accredited. For example, many U.S. states offer a Quality Rating and Improvement System (QRIS), which have their own set of criteria to recognize different levels of excellence. There are also professional membership organizations like  NAEYC , which have their own requirements and are widely recognized as authorities in the early education space.

By becoming accredited, parents will know that you are following all of the important guidelines that keep their children safe and are providing developmentally appropriate programming. Accredited child care businesses can also be eligible for funding opportunities not available otherwise.

Online listings

Try doing a Google search for “home daycares in [your city]” and see what websites come up. If there are local websites that list other daycares in your area, try contacting them to see if they will list your business as well. It can be helpful to also provide a description of your business that they can include on their website.

If you see directory websites like Yelp, you can create a free listing for your business. Make sure you are thorough and provide as much information as possible, so your business will look good when compared to the competition. Directory websites will typically have a “freemium” model, where it is free to get started and you can pay to have additional features, which you may want to consider if you begin to see good results from your listing.

Although many home-based childcare centers get enough enrollment through word of mouth, it can never hurt to create a website for your business. If a parent is considering your center, having a website helps legitimize your business and gives them a place to learn more about your services. Plus, you will begin appearing in search results, exposing your business to new potential customers.

Luckily, creating a website is now easier than it has ever been. See our post on how to create a home-based childcare center website to learn how!

Referral program

No matter how much advertising you do, nothing beats a recommendation from a trusted friend or family member for convincing a potential customer to choose your business.

Although you can’t make someone recommend you if they don’t actually want to, a referral program will incentivize them to spread the word about how great you are. Even something as simple as a $25 Starbucks gift card can give parents that extra push to tell a few more friends or post a link to your website on Facebook. Just one additional customer earned through a referral could make the entire program worth it.

Social media

Social media is a great way to connect with your existing and potential customers online. Create a Facebook or Instagram page for your business and begin sharing content. These can be updates from your center, sharing links to relevant articles you’ve found online, commenting on others’ posts, sharing videos, and so on.

Just make sure that whatever you do is appropriate and enforces the idea that you are a great child care provider. This is not the time to share your opinion on the latest political scandal. Think more along the lines of an article with tips on how to make bedtime easier.

If your budget allows, you can also create paid social media. Even spending as little as $30 could be enough to reach thousands of parents in your area.

Search engine optimization

When searching for daycares in your area, you want your business to appear in those results. A website is essential to be listed (as outlined above), but there are more ways to be found in search results.

To be listed in Google Maps results, you can create a free Google My Business listing. This allows you to share a description, your hours, location, photos, contact information, and other important things about your business. You will also be able to collect reviews from your customers, which can make a big difference when potential customers are browsing your listing.

Running a home-based childcare center can be an incredibly rewarding experience and provides a valuable service to your community. In this guide, we’ve broken down the major steps involved with getting up and running, but there are always more tips to be shared. Let others know in the comments what has helped you run your child care center!

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Related posts

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Run your home daycare like a superstar!

If you’re thinking of adding an app to your childcare center, we’d love to talk!

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Michael Keshen

Michael writes for HiMama's early childhood education blog and ECE Weekly newsletter. When not developing content for early childhood professionals, he can usually be found out and about with his wife and daughter exploring all that Toronto has to offer, or playing music with his karaoke band.

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10 comments

Hello there 🙂 I work as a Child Care Consultant with family child care providers. I want to caution you against using the term “Home Daycare Center”. It can be very confusing, especially to those just starting out. There are family child care programs and child care centers. They are generally licensed very differently. (Can vary state to state) Also, in order to professionalize the profession, we in the field of early education are moving to using the term child care instead of day care. Great article, I just wanted to point out a few things that may get confusing for folks. Thanks!

I have questions I just started my daycare business

My wife is a stay at home mom and she sometimes watches the neighbor kids when their parents have a special work meeting at work. I like your infographic about starting a daycare. It is interesting that 77% of small businesses use personal funds to finance the business. I imagine that there are many different daycare services that you can offer to be competitive with other daycare centers.

Hi I am a mom of three kids especially the young one is just 10 months and I wanted to stay home for them but also start a good earning business and love kids. So planning to do daycare or caring for kids and would love to start individually on at small scale. How to go about it in a simple and basic way, can you give me guidance on this matter?

I have worked in 2 daycares in the city I live in I have a little one of my own now and I have always wanted to be a stay at home mom but I have a lot of worries about opening my own day home. I personally feel like the demand is high in my city as when I was pregnant in 2019 there was a 2 year waiting list at almost all of the daycares. I have alot of support from my SO to stay home but getting everything started it the biggest thing. im looking for some guidance on if its a good idea and if so how do i properly go about it where im actually making money and not braking even.

Great information! Thank you for sharing.

My name is Nicole Perera. I am a nurse that has been thinking about starting a daycare fro my 3 year old son.

The question is do I need to be a teacher even though I am a nurse.I would be in my home with hopefully 5 -4 children kn Kingston ont

Hello My name is Nicole Perera. I am a nurse that has been thinking about starting a daycare fro my 3 year old son. The question is do I need to be a teacher even though I am a nurse.I would be in my home with hopefully 5 -4 children kn Kingston ont Thank you

This article is really mean something to me, you wrote such efficiently about how can someone grow their home daycare center. I personally would love to infact i am planning to start it. Thank you so much for sharing this information with us!

I’m glad you said that emotional and physical awards could help boost the morale of children. My friend told me a couple of nights ago that she was planning to enroll my godson in early childhood education as he was engaging with academics. She asked if I had thoughts on the best enrollment guide. I like this enlightening education guide article for the best knowledge-gathering experience. I’ll tell her it will be much better if she consults a trusted childcare center as they can help figure out the best for my godson.

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Daycare Business Plan Template

Written by Dave Lavinsky

Business Plan Outline

• Daycare Business Plan Home
• 1. Executive Summary
• 2. Company Overview
• 3. Industry Analysis
• 4. Customer Analysis
• 5. Competitive Analysis
• 6. Marketing Plan
• 7. Operations Plan
• 8. Management Team
• 9. Financial Plan

Daycare Business Plan

You’ve come to the right place to easily complete your daycare business plan.

We have helped over 100,000 entrepreneurs and business owners create business plans and many have used them to start or grow their daycares.

How To Write a Daycare Business Plan & Example

Below are links to each section of your daycare business plan template:

• Executive Summary – This is a brief overview of your daycare business plan. The executive summary should be no more than 2 pages long, with brief summaries of other sections of the plan.
• Company Overview – This is where you provide a business description, including your company history, business structure, and any pertinent information about the daycare center.
• Industry Analysis – The industry analysis describes the daycare industry, including market size and trends.
• Customer Analysis – This section of your daycare business plan describes your target market and potential customers. You will detail the demographics, needs, and wants of your target audience and how you plan to meet those needs.
• Competitive Analysis – The competition in your local area will be described here, along with how your daycare business will compete in the market.
• Marketing Plan – Your marketing plan will describe your daycare’s marketing strategy, including your advertising and promotion plans.
• Operations Plan – This section of your business plan describes how your daycare will be operated on a day-to-day basis. It may also include your long-term plans for expansion and the milestones you want to achieve to get there.
• Management Team – The management team section of your business plan should describe the experience and qualifications of your management team including the director, teachers, and support staff.
• Financial Plan – The financial plan section of your daycare business plan should include your financial statements, such as your income statement, balance sheet, and cash flow statement.

Next Section: Executive Summary >

Daycare Business Plan FAQs

What is a daycare business plan.

A daycare business plan is a plan to start and/or grow your daycare business. Among other things, a good daycare business plan will outline your business concept, identify your target customers, present research about the child care industry, detail your marketing plan, and provide your financial plan.

You can  easily complete your daycare business plan using our Daycare Business Plan Template here .

What Are the Main Types of Daycare Businesses?

There are different types of daycare businesses that parents can choose from for their child's needs. A traditional daycare center is most sought after by working parents since it provides child care during regular work hours. There are also in-home daycare centers that are licensed to provide child care in a home setting with fewer children. Other child care centers provide hourly care services by trusted babysitters or nannies and are operating on an as-needed basis.

What Are the Main Sources of Revenues and Expenses for a Daycare Business?

The primary source of revenue for a daycare business is its child care services.

Some key expenses for a daycare business is rent, salaries for staff, utilities and snacks expenses for the children.

How Do You Get Funding for Your Day Care Business Plan?

A daycare or child care center is typically funded through small business loans, personal savings, credit card financing and/or angel investors. This is true for a business plan for daycare or a childcare business plan.

What are the Steps To Start a Daycare Business?

Starting a daycare can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Day Care Business Plan - The first step in starting a business is to create a detailed child care business plan that outlines all aspects of the venture. This should include market research on the childcare industry and potential target market size, information on the services you will offer, marketing strategy, pricing strategies and detailed financial projections.

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your daycare business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your daycare business is in compliance with local laws.

3. Register Your Daycare Business - Once you have chosen a legal structure, the next step is to register your daycare business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 

4. Identify Financing Options - It’s likely that you’ll need some capital to start your daycare business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 

7. Acquire Necessary Daycare Equipment & Supplies - In order to start your chlidcare business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your childcare   business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising to reach your target audience.

Learn more about how to start a successful daycare business:

• How to Start a Daycare Business

Where Can I Get a Daycare Business Plan Example PDF?

You can download our daycare business plan PDF template here. This is a business plan template you can use in PDF format.

How to Write a Business Plan for Daycare and Preschool

• brightwheel
• Running a business

Writing a daycare or preschool business plan is a big task, but due diligence and hard work will help you understand what you’ll need to launch and run a daycare or preschool successfully.

What do daycare investors want?

Your local government will have rules and regulations you’ll need to follow as a small business owner and childcare provider. Start by reviewing the childcare licensing guidelines for your state and city. Once you’re clear on licensing guidelines, you’re ready to start writing your childcare business plan.

The purpose of a business plan is to help secure funding. You’ll likely need financing to launch your preschool or daycare, especially if you want to avoid the monthly repayment of a loan. 

Investors provide businesses with money in exchange for partial ownership. As a result, they expect a larger return on their initial investment. Because many investors work in business, they prefer to invest in an established company.

Most investors look for:

Industry background and experience

Financial performance and promise.

Investors want to make money. Therefore, they are more inclined to work with experienced entrepreneurs and business owners to guarantee a return on their investment. 

This might sound discouraging for those with little experience or without a business management background, but the opportunity doesn’t end there. You could consider bringing on a partner with a business background. Additionally, many investors act as a source of business advice. 

You need to demonstrate that your business will make money. Investors will likely want to see signs of business growth before they give you money. 

Additionally, investors will want to know about your financial stability. Questions an investor might ask are:

• What do you plan to do with the money?
• Has your business been up or down in recent years?
• Is your company losing money? Are there signs of growth for the future?
• How do you plan to repay your investment?

Of course, every investor is different, so they’ll consider various factors. While experience and financial promise are at the top of the list for most investors, they might also look for uniqueness, business readiness, an effective business model, and more.

Writing a daycare business plan

We’ve discussed licensing and investors. Now, you’re ready to begin the framework of your business plan for daycares and preschools. Here’s what you’ll need to get started:

Business description

Needs assessment, insurance policies, operating policies and procedures, marketing strategy.

Start with the basics: what does your daycare do? Detailing the service you’re offering will help you create a clear business plan. Next, you might want to write some goals or even a mission statement outlining your purpose and motivation.

Start by looking at general daycare or preschool industry trends, then narrow your scope to the preschools or daycares in your local area. Next, you’ll need to figure out who your target customers are and confirm that there is a need for a business like yours in your community. 

Are there a lot of young families in your neighborhood? Are you located somewhere convenient for commuting parents? Does your business offer a specific service that your competitors don’t, like early check-in or extended hours? 

Also, check out the competition. Research the existing daycare or preschool options in your community. Look at current preschool or daycare business plan samples. What makes your daycare or preschool unique? 

Developing detailed budgets will help you run your small business. You’ll need to compare your current cash flow and expenditures to determine whether you’ll make a profit.

Build a budget for unexpected costs. For example, how many children do you need to serve to be able to pay your bills and stay afloat? Child Care Aware of America offers some terrific budgeting resources for this process.

Depending on the type and size of your preschool, you’ll need insurance policies of several different types, including liability, property, workers’ compensation, and business insurance. Check the licensing requirements for guidance in building this part of your preschool business plan.

Create a comprehensive handbook for families and staff that includes you center's policies and procedures. For instance, you'll need to develop an emergency plan , daycare sick policy , and other safety protocols according to your local childcare licensing requirements. 

Your staff handbook will be a helpful resource your employees can reference and include all your employment policies including work and pay schedules, benefits, and information about professional growth and development. You can also include information on your center's philosophy and curriculum, classroom procedures, and expectations for working with children and families.

Your marketing strategy is the key to attracting customers. Decide what type of advertising you will use in front of potential customers. For example, list your school in local directories and participate in parenting and kid-friendly community events. Run a social media campaign focusing on your target population.

Another big part of childcare business marketing is differentiating yourself from other preschools. These days adopting daycare software is a surefire way to attract families with young children. A tool like brightwheel's center management feature will streamline your center's admission process, record keeping, and reporting, saving you up to 20 hours per month. 

You can also use brightwheel for recording and tracking daily events and activities, and sending real-time updates to families throughout the day. It also offers secure, digital check-in/check-out and a paperless billing system. This is a great way to keep your families looped in on daily activities and handle all of your administrative tasks in one place.

Your business is ready!

Writing a business plan can be stressful, but it doesn’t have to be. Once you secure the proper licensing, use the information in this article to guide you through creating a solid daycare business plan that drives investors and financing to your business.

These are just the basics to get you started. For further information, the U.S. Small Business Administration’s website has detailed instructions on creating each necessary part of a successful business plan. 

Childcare and Preschool Supply List

A list of everything you need to start an early education program.

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The ultimate guide to starting a daycare business.

Why Start a Daycare?

Advantages to starting a daycare, can you start a daycare from home, how much does it cost to start a daycare, 15 steps to starting a daycare center, resources for daycare owners, bottom line.

Since most parents work outside the home, most preschool aged children receive some form of child care. While many are cared for by nannies, babysitters or other family members, nearly one-quarter (23.4%) of children under age five attend an organized daycare center. 

This presents a world of opportunity for those looking to take the next step and start a child care business of their own. Starting a daycare center can be both personally fulfilling and financially rewarding.

Do you want to open your own daycare center in the U.S.? Follow along with this guide as we reveal the step-by-step process for opening a successful child care business. 

Opening a daycare can be intimidating, but it can also be incredibly rewarding. While there is no blueprint for success, many child care business owners find joy in the journey. So whether it’s your passion for kids or desire to serve parents in your community, there are many valid reasons to open a daycare. 

What’s important is that you also need to consider your own unique reasons for wanting to open a daycare, as these reasons will then motivate you to follow through on your dream. Even though you will face obstacles along the way, the payoff of opening a daycare is certainly worth the struggles.

Starting your own daycare business can be advantageous on multiple levels. For one, you’ll have the personal satisfaction of starting your own care center from scratch. Then, there’s the joy of spending time with children and learning life-changing lessons along the way.

If you’re still on the fence about starting your own daycare, consider these likely advantages:

• Emotionally rewarding: Working with kids teaches you to be patient and enjoy the simple things in life. You’ll also have the flexibility of having your own business versus being confined to a traditional day job.
• Financial freedom: By opening a daycare, you’re in control of your income rather than reliant on a typical paycheck. You can maximize your earning potential and make investments back into your own business.
• Personal child care: If you have your own child, you can care for them while you’re running your daycare. This will save you money and give your offspring opportunities to make friends with other kids. 
• Continued education: Opening a daycare can open the door to new opportunities in the field of child care. You may be presented with another job position or choose to pursue additional education of your own accord. 
• Extra money: Rather than stay home and care for your own children for free (assuming the original plan was to be a stay-at-home parent), why not make some extra money by caring for other children at the same time? 
• Tax deductions: As a business owner, you can write of certain expenses as business expenses, saving you money on your taxes. These expenses can include a portion of your housing payment (if you have an in-home daycare), your cell phone bill, your vehicle, child care supplies and more. See Tax Deductions . 

These are just a few of the many advantages of starting your own daycare center. Now let’s address some common questions you may have about being a daycare business owner. 

Yes, starting a care center from your home is an option and may even be the more affordable option. This is because there are different options at the local, state and federal level that provide grants and funding to in-home daycare centers.

If you already have the space to run a child care business out of your home, it’s worth looking into Small Business Administration (SBA) loans to help you fund your endeavor. Remember, at the end of the day, you may be eligible for tax cuts and other benefits.

According to small business website bizfluent.com , the average startup cost for a daycare center is $10,000 to $50,000. This can vary widely depending on whether you’re opening a home-based daycare or leasing a separate facility for your care center. 

If you don’t have $10,000+ in your bank account, don’t worry. There are many grants and loans available to child care businesses. In fact, some local businesses will offer financial incentives to support budding child care centers. Consider reaching out to your community for support.

Now, let’s get to the good stuff: how to start your own daycare business from start to finish!

Starting a small business in general is always a journey. While we’ve outlined a few steps to getting your business up and running, know that there is no one “right” way to achieve success. You’ll learn many lessons along the way and are likely to pave your own path.

That said, here are 15 steps to starting your daycare center, even if you have zero experience.

1. Learn About Daycare Licensing Requirements

You might have started off as a babysitter or a nanny, but in order to start a full-on daycare business, you need to meet the proper licensing requirements in order to be legal . That way, your daycare will be legitimate and you won’t run into any legal trouble accepting children into your care. 

A good first step is to contact your state’s Department of Children and Family Services (DCFS) to learn about their specific regulations for child care providers. Another option is your local area’s child care licensing agency. You can usually find this information online. 

To obtain a license to start a daycare center, you’ll also need a current CPR certification, a clean driving record and additional documents that prove your commitment to providing quality child care. Don’t be afraid to ask your local agency questions to ensure you’re satisfying all requirements.

2. Consider Taking Early Childhood Education Classes

While you don’t need to have professional child care experience to start a daycare business, having some understanding of early childhood development is strongly encouraged. You’ll be caring for young lives, so you need to know how to provide the right kind of support and care.

Getting a degree is early childhood education is a good place to start. You can typically find classes in-person at your local community college or online. Through this degree, you’ll gain a greater understanding of how children think and behave, and what they need in order to be properly cared for. 

Beyond that, you’ll have the skills to set your business apart from your competition. You’ll be better prepared to offer the services parents are looking for and keep them coming back time and time again.

3. Create a Daycare Business Plan

In starting any type of small business, it helps to have a business plan. Having a business plan helps you set tangible goals for your business, organize your business structure, outline your services and so much more.

In your daycare business plan, you’ll define your daycare’s mission statement, operations and procedures, staffing and budget. This business plan works to keep you on track and striving toward success. 

Consider how you want your business to be organized for you plan. Will you be solo or hire staff? How will you secure funding? Will you offer services beyond child care (like tutoring)? For help in creating your business plan, check out this detailed guide from the U.S. Small Business Association .

4. Find a Location for Your Daycare

If you plan on running your daycare out of your home, this step should be pretty straightforward. If not, you’ll need to find a location for your child care facility.

Many recreational centers, churches, local businesses and even schools have space available to host a daycare, typically for a monthly fee. Search online, in your local newspaper and within your network to find options in your area. 

Once you’ve found a good fit, you need to check your city’s zoning laws and licensing guidelines to make sure your chosen location is compliant. That way you can avoid some legal headaches down the road. 

Ideally, you’ll need to find a location that’s centrally located, easily accessible and child-friendly. Consider what children and their parents will be looking for in a child care center. You might not find the perfect option, but you can make it work with a little TLC.

5. Get Insurance

Most daycare centers need several types of insurance in order to keep children (and their businesses) protected. These policies typically include liability coverage, property, workers’ compensation and business insurance.

Not sure what type of insurance you need? You can always check with your local child care provider licensing office for guidance.

6. Seek Out Grants and Funding

As we covered already, there are certainly costs associated with starting a daycare. If you don’t have the money you need to cover your initial startup costs, you’ll need to get creative when it comes to acquiring funding.

There are many grants available to help you cover your startup costs. You might also consider taking out an SBA loan or doing community fundraising. Know that the goal is to use these funds as an investment that will yield profitable returns in your business.

Costs Associated with Starting a Daycare

There are several things you’ll need to buy or lease in order to get your business up and running for day one. These expenses include but are not limited to:

• Renting a daycare space
• Indoor and outdoor play equipment
• Art supplies
• Cleaning supplies
• Child care supplies (like diapers and wipes)
• Business laptop
• Licensing fees
• Food (for snacks/meals)
• Bottles, cups, plates, utensils, etc.
• Car or reliable transportation (optional)

You might think of some additional items you’d like to have at your daycare. Over time, you can use the revenue coming in to help cover these expenses and invest in better equipment/supplies. It’s OK to keep things simple and then scale your way up. 

7. Prepare Your Daycare Center

Once you have a location secured and the proper materials and equipment in place, it’s time to prepare your daycare center.

First, clean your facility and sanitize with an effective disinfectant. Then, take the needed steps to childproof your daycare according to the ages of the children you will be caring for. Follow this childproofing checklist for help.

Finally, set up play equipment and lay out toys. You might decide to use storage boxes to keep everything organized. You can always rearrange your layout according to your needs.

Is your daycare ready for service? Give it another once-over and you’re ready to open your doors for day one of business!

8. Draft up a Contract

As a small business owner, having a contract is always a good idea. The parents that come to your facility are essentially your clients, and you want to have a solid contract in place to protect yourself from any legal issues.

We recommend seeking out a trusted contract lawyer to draft up a contract according to your needs and unique business requirements. Your contract will then be used to outline your expectations for your clients and their children.

Here are some important questions to consider when creating your contract:

• How do you expect to be paid?
• How will you handle late payments?
• What time should parents pick up their children?
• Are there consequences for late pick up?
• What services will you provide?
• What is your policy when it comes to sick children?
• Do you offer refunds? If so, under what conditions?
• What happens if a child is injured at your facility?

Whether you seek help from an attorney or write the contract yourself, you should have a contract in place before accepting business. Once signed, you can then send professional daycare invoices to get paid by your clients. 

9. Establish Policies and Procedures

Establish policies and procedures for the families that attend your daycare and your staff. These procedures may include an emergency plan, safety procedures, privacy protocols and rules for your facility.

Having these procedures in place will help you keep the children safe and protect yourself from liability (in some instances). In establishing your policies, be sure to review your local child care licensing requirements to ensure compliance. 

10. Research Possible Tax Credits

If you’re opening an in-home daycare, you may be eligible for certain tax reductions based on the fact that you’re using your residence for business purposes. This means you can essentially write off a portion of your housing cost. This can be the case even if your daycare space serves as a family room after hours. 

11. Hire Staff as Needed

When you’re first getting started, you may just be a company of one, as you might want to save the cost of hiring unnecessary help. But over time, you may need to hire help to take care of the kids during the day.

This is especially true if you find yourself running up against the required ratio of staff to children, as outlined in your local daycare licensing requirements. Be sure to review these to make sure you have enough staff for the number of children you plan on caring for.

Also, make sure all child care staff undergo criminal background checks and provide references to ensure the safety of the children. Make your hiring decisions carefully to keep your facility safe and maintain a stellar reputation.

12. Market Your Daycare

You have your daycare set up and open for business, now how do you get families in the door? As with any small business, you’ll need to market yourself to attract potential clients.

There are many ways to market your daycare. One method is to create flyers and post them around your local community—at businesses, schools and coffee shops. You can also run paid ads on Google or Facebook to draw in families from your local area.

To establish your daycare as a professional business, consider building a website that provides more information about your services. A basic website can cost anywhere from $10 for a WordPress template and set up, to $2,000 or more for a custom design.

With a website, you can then use search engine optimization (SEO) to attract organic traffic from Google. That way, when families search for a daycare near them, your business is likely to show up in the search results.

13. Promote Your Daycare on Social Media

Another effective marketing tool for daycare centers is social media. Platforms like Facebook, Instagram and LinkedIn can be used to promote your business and draw in potential clients.

Create a business Facebook page to post more information about your daycare, collect client testimonials and keep families up-to-date with events at your daycare. You can also post on Instagram and LinkedIn, with targeted hashtags, to attract families in your area.

As your business grows, you might decide to invest in paid marketing services. A digital marketing agency or consultant can help you increase your business’s presence online, outrank your local competitors and attract new clients. 

14. Provide Top-Quality Care

The success of your daycare depends on you providing top-quality care to your families. If the kids at your facility are properly cared for, and, even better, enjoy coming to your daycare, you’re likely to attract more referral business.

Positive reviews can work wonders to attract new clients. Ask families to review your business on Facebook, Google, Yelp and other review sites to improve your daycare’s reputation in your community.

Always look for ways to improve your daycare. Ask families for feedback, invest in additional education and hire fantastic staff to make your daycare the obvious choice for families in your area. 

15. Manage Your Business Finances

Many small businesses fail due to poor money management. If you want your business to succeed, you’ll need at least a basic understanding of business accounting and how to manage your expenses.

Staying on top of your business finances is more than just tracking revenue in and expenses out. You’ll need to plan for taxes—typically around 30% of your revenue, after expenses—and make informed decisions when it comes to how you’re going to allocate your funds.

Professional daycare accounting software can help you send invoices, track revenue, manage expenses and more. It can even send reminders to parents for late payment and accept credit card payments with ease.

The more you know, the easier it will be to make smart financial decisions. Stay on top of your business finances so your business is not only surviving but thriving . 

Congratulations on taking the first step to starting your own daycare business—reading this guide! By now you have a general blueprint for how to start your own business and get up and running. 

Need more help getting started? Check out these reliable resources for aspiring daycare business owners:

• Child Care Aware of America: licensing guidelines for child care and daycare providers
• United States Department of Health and Human Services: childproofing checklist
• Early Childhood Training and Technical Assistance System (ECTTAS): child care resource guide
• Office of Child Care: list of state licensing agencies
• Child Care Resources Inc.: early educator training

Starting a daycare business can be challenging but also incredibly rewarding. The process is made easier by having a general roadmap for how to get started. Hopefully, this guide has provided some guidance on how to get started, plus inspiration for you to finally launch a business of your own.

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Everything You Need To Know

Home Daycare Business Plan

Sure, starting a home daycare seems simple enough – it’s just babysitting, right wrong.

Running an in-home daycare is running a business and you need to treat it as such. As a sole proprietorship business, you are liable for the well-being of every single person that sets foot on your property.

As with any new business, you need to have a detailed outline on how it’s going to run. This is known as a business plan. You’ll use it to figure out how you’re going to run your business and more importantly, make money. 

If you haven’t had a chance to check out the  Getting Started Page , go do that now.  You will need to start gathering information about specific licensing requirements for opening a family child care business in your area. Plus, you will want to get started on some of the paperwork for your business license, police records, and first aid. 

GRAB A COFFEE

Because we are going to cover a ton of information, jump to a section, business summary.

Who Are You? | What do you plan on doing? | What is going to make you stand out?

FINANCIAL PLAN

Rates | Start-Up Costs | Record Keeping | Payment Policies | Taxes

OPERATIONS PLAN

Designate Your Home Daycare Area | Develop a Parent Handbook | Schedules | Quality Control Checks | Interviewing Parents

MARKETING PLAN

Your own website | Flyers with tear off tabs | Word of mouth | Social Media | Newspaper Ads | Online Daycare Advertising Sites | Craigslist, Kijiji | Put a sign on your yard 

Let’s get started!

Home daycare business summary.

Start by briefly summarizing the following: who you are, what are you planning to do? What will set you apart from other child care businesses? You will use this summary over and over again during the planning process.

So NO CHEATING! Don’t skip this step.   

Who are you?

Simply state who you are and why you are qualified to open a home daycare. Don’t worry if you think you aren’t qualified. You don’t need a background in early childhood education to run an in home child care business. Chances are you are more qualified than you think, so take a deep breath and just go for it. The following are a few examples:

I am Liz, a stay at home mom of 2.

I am Sally, a preschool teacher taking a break from teaching to stay at home with my kids.

What do you plan on doing?

List the types of services you plan on providing. Think about who your ideal client would be and what services they would need. 

Ask yourself the following questions to identify your ideal client :

What ages of children do you most want to have in your home daycare?

Would you rather have sets of siblings?

Do you only want to take on full time children or do you prefer only part time children?

Take some time to really brainstorm your perfect home daycare situation and then write a summary.

For example:

My ideal clients would be a non-shift worker whose contracted hours are 8-5.  The children would be between ages 1-4.  

My ideal clients are teachers, who do not need care in the summer. The children would be between the ages of 1-4. 

Also think about the services you don’t want to offer. If drop- in care doesn’t work for your family, don’t offer it. You will have moments when you are tempted to change your services for parents, but adjusting services based on individual cases will only hurt your business. Make sure you are very clear on what you want to offer and what you don’t.  

Here are some examples:   

• Provide child care services for children between the ages of 1-5
• Provide Fulltime, part-time, drop in services
• Provide Before and after school child care 
• Provide 24 hour care for shift workers

What is going to make you stand out?

Try to find something that will set your home daycare apart from other comparable businesses in your area. Now don’t go all politician here and make some wild and crazy promises that you won’t be able to keep. It can be as simple as a weekly craft or newsletter. Specializations could include: 

• Do you speak another language?
• Do you have a special talent?  (Music, Art)
• Will you provide transportation?
• Will you cater to shift-workers who work odd hours?
• Will provide tons of outdoor time?
• Will you be an allergy friendly house?
• Will you serve only organic food?

We will go over more market research in the following section, but start asking around in local Facebook groups and social media groups for ideas. What are local parents looking for in home daycares?  You might be surprised by their answers. It can be as simple as wanting a home daycare to be open until 6 pm. Or something different like a home daycare that provides pet sitting. 

Now, put it all together in a brief summary. It doesn’t have to be perfect. At this point you can cut out what you don’t want to include or add anything extra you think will make your business stand out.  

Here are a few examples 

I am Liz, a stay at home mom of 2.  Liz’s home daycare is located in the Willowbrook area and provides care for children 1-6 years old.  We spend our days, exploring local parks and making crafts.   

I plan on opening a home daycare in the Berryhill area, with transportation services to Berryhill elementary and Markhill elementary.

Home Daycare Financial Plan 

In this section, we’re going to work out how much money you need to charge your clients in order to turn a profit. Let’s face it, having positive cash flow is kind of the point and if this venture isn’t going to provide you with the extra cash flow you want, what’s the point? And although there aren’t a ton of start-up costs for opening a home daycare, there are operating costs that can cut into your profits. Here we will create a budget for expenses, and touch on tax planning.    

Sure, we would all love to charge the highest rate possible. Who doesn’t want to make a fortune at their home business? but that’s not always feasible. In order to attract clients, you will have to charge rates that are competitive with other child care services in your area. Remember, that being a child care provider is a lot of work. You will be working long hours, with few breaks So, don’t undercharge yourself, either.

So how do you determine what to charge?

Start by conducting some market research about your competitors. 

You don’t need to break out the excel sheet but you should gather details about your other child care providers in your area. Start by calling different home daycares and child care centers to find out their rates and what they offer. After a few, you will start to see a general average rate for your area. 

Then ask yourself, does any daycare stand out more than the others? If so, what makes them unique? Are they charging a premium?  

Now, go back and revisit your business summary. Did you identify something that will make your home daycare stand out?  Did any of the home daycares you called offer something comparable? What were they charging? You may need to expand your research beyond your local area to find a comparable home daycare.  

Types of rates

Your rates should reflect how you plan on running your home daycare. If you haven’t thought about this yet, it’s a good time to start. Ask yourself if you would prefer to have your number of kids on a monthly basis or have a few full-time and a few part-time kids.  

Monthly Rate

Charging a monthly rate is fairly straightforward. This is a set rate for the whole month regardless of how many days are in the month. This rate should be a set amount and not fluctuate.  

Part-time rate 

You can do a few things with part-time rates. Charging a set rate for a certain number of days per week is one option. Another option is charging for a certain number of days per month.

2 days a week is x amount

3 days a week is x amount

Or 10 days per month is x amount

You’re only allowed to have so many kids in your care, so if you plan on taking on part-time kids make sure that it works in a way for you to be able to fill the other days. 

Sally comes three times a week only on Monday/Wednesday/Friday. You can then offer care to another child on only Tuesday/Thursdays. Although this system is more difficult to make work it is possible.   

Margo comes 10 days out of the month. Her parents let you know a month in advance what those 10 days are. With plenty of notice, you can fill those extra spots.   

Frankly if you want to have a steady income, only take on full-time kids. Or only take on 1-2 part-time kids in addition to 1-2 full-time kids.  

If you plan on having a drop-in service, make this your highest per-day rate. Drop-in’s can be a lot of work.  Often these kids are not used to daycares. 

Don’t expect to be at full capacity right away. Budget for 75% to 85%. 

Figure out your break-even point. Is there a minimum amount that you “need” to make it worthwhile for you to run a home daycare. For some, this will be $2,000 or other it will be $500.  

Say you need to make $2000 per month and through your research, the average price for childcare in your area is $750.  

You would need to take on at least 3 full-time kids to make your $2000. 

Desired income + monthly expenses / Your rate = How many kids you need to take on.   

***Important this calculation does not take in consideration that you still need to pay taxes on this and in Canada, you need to pay into the Canadian Pension Plan twice.  (See more on  Using Your Home for Daycare ) If this is a concern for you, adjust these amounts accordingly.  

Now if you are just running a home daycare to make some extra cash, this might not be such a concern to you, but remember your time is still valuable.     

Remember, if you are able to add more value to your services you should be charging more. Also, keep in mind, you should increase your rates every year to keep up with increases in the cost of living.    

Start-Up Costs

Although there are not a ton of start-up costs to running a home daycare, there are a few that will have to come out of your pocket before you can take on your first client. Here is a list of possible startup costs for opening your home daycare:  

• Business license
• Licencing fees (If required)
• First Aid Courses
• Police Checks
• Additional Home Insurance
• Additional Auto Insurance
• Operational Supplies  (Check out The Ultimate List of Home Daycare Supplies)
• Marketing/Advertising costs

Record Keeping  

Record keeping is so important when running a small business. Don’t fall behind on this.  Set aside time each day to record your attendance and some time at the end of the month to update your expenses and income reports. Get a binder or file folder to hold all your important documents.

You should record your attendance daily.  Keep a record of who attended each day, when they were dropped off and picked up. Depending on the type of services you offer the number of hours you work could vary daily or stay the same. Regardless you will need to know this for tax purposes.  

Record every time someone pays you. Use an Excel sheet, an online accounting program or a notebook.  

Let’s face it no one becomes a millionaire running a home daycare. You want to save as much as possible of what you do make.  And one way of doing that is paying less in taxes. Make sure you save your receipts and record all your expenses. The more you can deduct the less tax you will have to pay at the end of the year.    

Here is a list of typical operational expenses for home daycares:

• Supplies for activities
• Curriculum materials 
• Fees (e.g. licensing)
• Maintenance
• Office supplies
• Professional services (e.g.lawyer or accounting)
• Accounting Software
• Supplies (cleaning, kitchen and teaching)
• Telephone and Internet
• Utilities        

Payment Policies

How are you going to make sure you get paid .

You can require payment either monthly, bimonthly or weekly .  Also include how far in advance you want to receive payment. The first of each month is commonly used. However, you can choose to require payment two weeks in advance of services. You can match your payment schedule with the parents’ salary payment and get paid the same day they do.  

Decide how you are going to handle drop-in payments?  Will you require payment in advance? 

Are you planning on charging late fees?  If so, when do you plan on requiring payment.

For example:  

Payment for late fees are required within 24 hours from the occurrence or subject to termination of care

Payment for late fees will be added to next months payment.  

Inform parents what forms of payment you accept, most common are cash and Email Money Transfer (EMT).

You should state that fees are nonrefundable and services are subject to termination if not paid on time.

Develop a system for yourself to ensure you’re on top of getting paid and nothing gets missed. You don’t want to be working for free.  

For example you can make a policy that part-time parents need to have their required hours submitted by the 1st of every month. You can send a reminder email the week before to ensure you have enough time to fill any empty spaces.

You can you also use an application like Waveapp to create recurring invoices, send payment reminders and generate payment statements.  This program is free. 

What if a parent doesn’t pay?  

You need to decide before opening what your policies will be on non-payment. Unexpected bills and extenuating circumstances do come up for parents. However you have to remember you’re running a business here and you deserve to be paid. Simply put: don’t provide services without for free.   

The last thing you want is a big tax bill at the end of the year. Decide on how you plan on address paying your taxes. The easiest way is to put a little away each month in a savings account. You can always set up an automatic transfer, so you don’t forget.

Get a file folder to keep all your receipts in one place.   

Decide whether you are going to do your own taxes or have an accountant file your taxes for you.  If you go the accountant route, look for an accountant who is knowledgeable about home daycares. 

*Keep in mind the legal structure of most home daycares is that of the sole proprietorship. On the tax front, the business’s income and expenses are included in the tax return of the owner. Since the business is not legally separate from its owner, it is not required to file separate tax returns.

  Home Daycare Operations Plan

Your operation plan defines the nitty gritty details how exactly you are going to run your business.  While there are regulations that home daycare have to follow, you have a lot of freedom in how you run your home daycare. You get to choose your hours, days off, policies and even which children you take in.  

Designate your home daycare area

If you have not by now, figure out all the areas of your house you will be using for your home daycare. You should include a dedicated area play area, sleeping area, eating area and bathroom. Calculate the square footage and keep it handy for your taxes.  

Now start addressing your supplies needs for each area.  

You might already have everything you need but check out  The Ultimate List of Home Daycare Supplies . This post goes into detail on everything you possibly can think of to run a home daycare.

Develop a Parent Handbook – Policies and Procedures

If you want your home daycare to run smoothly from day one, you need to figure out your policies and procedures. While this sounds like a daunting task, it will be incredibly helpful when it comes to communicating your expectations with parents.       

A Parent Handbook is an easy way to share your policies and procedures. It’s an informational guide for parents outlining everything you expect from them. What they should expect from you, payment information, behavior policies and emergency information. A handbook sets you up for success by getting everyone on the same page, but it’s up to the parents to read it.

Hours of Operation

What hours do you want to work? 

What days do you want to be open?

Keep in mind the average person works 9-5 Monday through Friday and must commute to and from work. Yet there still is a market for part-time, overnight or even care on weekends.

It’s tempting to change your hours in order to sign a new client. But over time your work- life balance will suffer and you will end up burning yourself out.

Contracted Hours / Days

  You should insist on each child having contracted hours. Contracted hours are the time/days the parents will be dropping off and picking up their child. For example: If you have a part time child that comes on 3 days a week on Monday, Wednesday and Friday 9am to 5pm, you can schedule other part time children around those days to fill your Tuesday and Thursday time slots. If the clients need to change their contracted three days to a different three days, in your contract, specify that you can refuse such changes due to a conflict and have the right to end the contract.  

Contracted hours allow you to schedule activities. You will know approximately when each child will be coming, and you can plan around drop offs and pickups.

While late drop off and picks happen, you want to make sure that the parents know you are serious about open communication. Be sure to ask them, if they are going to late that they call or text you to let you know. You will soon find out that maintaining a schedule and following a routine is important.

Holidays   

What holidays do you want to observe?

It’s widespread practice for clients to pay regular fee for civic holidays. For example, your monthly rate is $800, so you would not give a discount because you’re closed for a holiday.

You can choose to either charge parents for your vacation days or not. But, you must make this completely clear to clients before they sign your contract.  

Be sure to state that if the parent decides to take a holiday or day off and pull their child out of your care for that day, they still pay your full monthly fee. They will not receive a refund or credit.  This is important because often you put out your own money for food beforehand. You don’t want to be losing money because a parent took a Friday off. Your time is valuable and there is a cost to holding a spot for them.        

Some providers also include a few paid personal days in their contract. This is 2-3 days that they would elect to take of during the year the parents would pay for. For example, you want to take next Friday off for a funeral. You would inform your parents that you will be taking a personal day. This would be one of your paid days off. This saves you the hassle of issuing refunds or credits for having to take a day off.

Pickup and Drop off Policies

Nothing is worse that a parent drop off a child early and you’re still in your bathrobe. Or you need to drop your kid off dance class and a parent hasn’t pick up their kid yet.

Most parents are good about picking up their children on time. Unless an emergency arises, you shouldn’t have a problem. But it’s always a good idea to have something written in your handbook about early/late drop offs. This is primarily so that you are not being taken advantage of. The chances that you are going to have to charge a late fee is slim, but it is a good idea to put a monetary value on being late such a $5 fee for every ½ hour the child is in your care past their contracted hours. Most large daycare centers have similar policies and strictly enforce them.  

Once a child is in your care, you are responsible for who you release that child to. You need to have it written in your handbook and contract, who is allowed/ not allowed to pick up a child. It is best to get this in writing, so in the case of a mix up you can prove you have done your due diligence. Specify that you will be asking for photo ID before releasing a child to anyone you have not met in person. 

Restraining Orders   

In the event of a court ordered restraining one parent from a child, you need to have a legal copy of the restraining order and a written note from the custodial parent. Without these items on file you can’t prevent the non-custodial parent from picking up the child. You don’t want to be in the middle of a messy divorce. 

Provider’s Sick Day Policy 

If you need to close on a given day because of illness, you need to decide if you will provide a refund for the day.  Most home daycares do not charge customers for their own sick days. Or have a number of sick days outlined in their contract.  

Illness Policy

You wouldn’t invite someone over to your house that had been up vomiting all night, so don’t do it with your home daycare. Parents will test you on your illness policy, but you need to stand firm. You may have to remind parents that bringing a sick child into a dayhome spreads the illness to not only the other children in your care, but also yourself, potentially rendering you unable to care for their child.  

Specify the symptoms you consider a child to be too sick to attend. Make a list of symptoms, then specify when a child is safe to return. Generally, a child should be well enough to take part in normal everyday activities.

What are you going to do when sickness develops during the day?

Outline what you expect parents to do. For example, will you call them and expect them to come pick up their child immediately? 

Ask parents to let you know as soon as possible if their child won’t be attending due to illness or for any other reason. This will allow activities to carry on as scheduled and help you know how many children you need to prepare meals for.

Medicine Policy and Procedure

Get parents to provide written consent before you administer any type of medicine. Parents should label all medicine with the child’s name, dose and dosage times before you administer anything. You should specify that you won’t administer any medicine not complying with the policy. 

Example of medicine policy:

Prior to administering any type of medicine to your child(ren), I require written consent by a parent. All medicine must be properly stored in a container labeled with the child’s name, dosage and times to be administered.  Medicine supplied in unmarked, unlabeled containers and/or without written consent will not be administered.   

Medical Emergencies

Minor bumps and scratches are inevitable. You should specify how will you handle minor injuries. Will you administer first aid, then let the parent know at the end of the day what happened? Or will you call the parents right away?

What are you going to do in case of an emergency injury or illness? Specify who is responsible for the cost of any emergency medical treatment/ transportation. 

Emergency Plan and Evacuation Plan

Provide parents with your emergency plan.  Where you are going to be and how to contact you.  What evacuation sites you are going to be at incase of fire, earthquake, flooding etc.

Behavior policy

  Give a brief summary of how you are going to handle children’s behavior. For example, do you plan on using the “time-out” method?  If a behavioral issue continues without resolve, how do you plan on handling such situations? Think about at what point would you want to end a contract over a behavioral issue.  It’s unfair to the other children in your home daycare if you spend your whole time dealing with one child.

Clothing Policy

Clothing can become a big issue if you don’t specify what you expect. Make sure parents know that you want children to be dress in comfy clothing that can get dirty. You don’t want to be responsible for any stained or ruined clothing. Older children should be able to operate their clothing themselves, without your help. Insist on at least one spare change of clothes regardless of the child’s age. You want to keep children happy and comfortable. Younger children should have at least two changes of clothing (including socks).  

Kindly remind parents that if outdoor apparel is not supplied, then everyone has to stay inside.   Often this can happen in winter time because of a lack of snow pants, hats or mitts. You can suggest that parents leave an extra set at your house to prevent this from happening.  

Meals and Snacks

Provide parents with a schedule of meals and snacks. Inform them if they drop off after a scheduled meal time, you expect the child to have eaten. You don’t have time to supply meals on demand.

Are you going to allow a child to bring food from home? Often parents will sneak snacks into a kid’s backpack,  in case their kid gets hungry. But this can cause conflict between kids and issues for you if another child that has allergies.  For special occasions like birthdays, you can decide on a case to case basis if you are going to allow special treats from home.   

What are your procedures for storing breast milk? Put in place a procedure for yourself, so that you never run out of breast milk or formula.  An example of this would be that you require to have at least half a can of formula on hand at all times. Are you going to be responsible for sanitizing the bottles? or do you expect parents to supply sanitized bottles every day. 

Food Allergies

You need to decide if you will allow children with food allergies to attend your home daycare.  

Can you guarantee your home daycare is safe from allergies? 

Are you comfortable administering an EpiPen? 

Decide which food allergies you will allow.  An allergy to mangos is a lot easier to deal with than a peanut allergy.  Also specify any allergies where parents need to supply the food. Such as in the case of a gluten allergy, you can ask the parents to supply bread, dry pasta or crackers.  Specially foods can be expensive, and you don’t want to blow your whole food budget on one child. 

Potty Training Policies

At one point in your home daycare career, you are going to have to assist with potty training. The key word here is “assist” with potty training.  Communicate with parents that it’s not your job to potty train their child. If they have a method that has been working for them, then you’ll try to continue with that method.  However, their child must wear clothing at all times and you’re unable to follow a strict timed potty schedule. (ex. taking a child to the potty every ½ hour). Children need to be able to pull down and up their pants themselves. Suggest “User friendly” clothing, such as shorts and pants with elastic waist.  Kindly mention if you run out of dry clothing, that you will be calling and expecting them to drop off more. 

Termination Policy

Decide on how much notice you need from a parent before they can terminate their contract. Two weeks’ notice is common, but some home daycares require a month notice.

Outline reasons to parents why you would to end a contract.

Here are some suggestions,

• Failure to provide payment for services
• Routinely late picking up their child
• Failure to complete the required forms
• Lack of parental cooperation
• Failure of child to adjust to the home daycare after a reasonable amount of time
• Physical or verbal abuse of any person or property
• Lack of compliance with handbook policies and procedures
• Serious illness of a child

Other policies and procedures you may want to consider including:

Indoor activities  

What activities are you planning to engage in, circle time, reading, singing.  Give parents a brief summary of daily activities you plan on doing.  

Outdoor activities

How much outdoor time are you planning on having?  Include what your weather limits are. How hot or cold do you consider to be unsafe to play outside?

Napping / Quiet time procedures

Give parents a brief outline of how you are going to handle napping/quiet time.  Do you require all kids to nap? If not, what do you expect from children during quiet time.  Remember this is probably the only time you will get a break during the day. 

Are parents responsible for bringing their own Pack and Play or are you providing beds?

Immunizations Policy

Consider if you need all children to be immunized/or not to attend your home daycare. This is a personal preference. 

Transportation  

Many home daycares provide before and after care for school aged children.  This sometimes includes transportation to and from school in their own vehicles.  Also, some home daycares offer field trips to local attractions such as a library, park or zoo. If this is something you want to provide consider the following:

Do you have a vehicle that could adequately fit all the children?

Do parents need to provide car seats?

What schools are you willing to provide transportation to?

Who is going to pay for admission to attractions?

House rules

Providing a set of house rules is a wonderful way to express your expectations of a child’s behavior.  For example: you expect no jumping/climbing on couches.  

Toys from home

Are you going to allow toys from home? Often these items cause fights among the other children.  An exception to this should be a comfort toy/blanket for napping. 

Two-week trial period

You can choose to implement a two-week trial period for both parties. This allows adequate time for a child to adjust to your home daycare.  At the end of the two weeks, either party can terminate the contract for whatever reason they see fit. Trial periods allows you to see how a child fits into your home daycare dynamic. 

While you can run a home daycare without a schedule, you will save yourself a ton of grief if you have at least a guideline of activities.  You can also include this in your parent handbook to give parents an idea of your daily activities.   

Kids thrive on routines and while you don’t have to have a strict routine, a schedule can help children navigate their day and ease the transition from one activity to the next.  For example, they will get to know that after lunch they go for nap.

Start by setting a time for breakfast, lunch, and snack time s.  Then think about naptime and activities. 

Quality control checks (Cleaning)

Kids are sticky, messy and germy but in a good way. Don’t forget, this is not only your place of work, but also your home and the last thing you want is to be sick all the time. If you take a sick day, you most likely are not getting paid so you should be motivated not to take too many. While you don’t have too much control over what kind of germs enter your home, you can control the spread of it.  

Put in place a cleaning routine. Just like any public washroom, keep a cleaning checklist.  There will be things that you have to do everyday. And other things you will only have to do once a week. Make your checklist as detailed or not as you feel like. 

Items to include:

Bathroom,  Floors,  Bedding &  Toys

Interviewing Parents

The interview process can be a bit scary when you first start out.  But remember you’re also interviewing them too.  

Never commit to taking on a child full time until you have met them.      

For any new prospective client, suggest a “meet and greet.” What is a meet and greet?

A meet and greet is an opportunity for prospective parents to come into your home and check out the space.  It gives parents time to ask you any questions and voice any concerns they may have. A meet and greet also gives you a chance to observe a child’s behaviour and ask them any questions you may have. Such as is your child a bitter? Has the child ever been in a home daycare before.  If so, why did you leave the last home daycare.   

Don’t be afraid to say “no” to a parent if you don’t think their child would be a good fit. You’re better off to be honest and up front. One child can completely change the dynamic of your home daycare and cause you and the other children in your care undue stress.  If you are unsure, then suggest a two week trial period before committing to a contract. Revisit the section of your business summary where you outlined who your ideal client would be. Be picky.  

Now, it’s time to get your first client.  

Home Daycare Marketing Plan

When starting a home daycare business, you don’t just sit there waiting for families to knock on your door. You need to get your name out there.   

If you’re just getting started, marketing your services may not be your strongest skill. Thankfully, there are many ways you can easily advertise your home daycare business.

Here are some ideas for home daycare advertising to give potential customers a better sense of your services.

Your own website

This is perhaps the most inexpensive way of reaching out to parents. A website should introduce your daycare by highlighting the basic information like name, size, location, and the age range you accept. Secondly, you should come up with a business name and logo that stands out from other family daycare services. Obviously, the website should sum up the services you offer.  And you can even outline your policies and procedures. Also list some features like meal/snack options, size of your space, outdoor play setup, fencing, and more. Besides that, you should include short endorsements from past customers so that parents can know their children will be under constant supervision.   

Flyers with tear-off tabs

This is the easiest home daycare marketing strategy. You should make colorful flyers (red, yellow or blue) that show the contact number, email, and services offered. Needless to say, they should be child-friendly – include some pictures of smiling happy children or clip art. It’s worth mentioning that you should not list the price on the flyers. This is because you want the parents to choose a family daycare based on the services, not price.  Flyers work best when they are posted in locations most likely to reach your target market. Where do parents frequent that they may see your ad? The best place to distribute them is in community centers, coffee shops, and libraries.

Word of mouth

Tell everyone about your new venture. You can notify your neighbors, family, co-workers, and friends. And if you already have clients, ask them to recommend a friend.

Social media

The strategy you use on your social media marketing should reach families looking for daycare centers. You should make Facebook page for special announcements, reminders and examples of fun activities. Most parents will appreciate a platform where they can see and share photos of their kids activities. But keep in mind not all parents what to have their kids faces on social media.  Make sure you have a photo release form signed before posting any child’s face.

Other social media platforms you can use include Instagram, YouTube, and Pinterest.

Newspaper Ads

You should include information like your approximate location, opening and closing hours, and anything else that makes your business special. For best results, you may want to place your ads on smaller local papers rather than a big display ad. Of course, it pays huge dividends if you place an ad in the childcare section. It’s important that you inquire on the details allowed, but don’t forget to include the brand name and contact information.

Online daycare advertising sites

Online advertising sites make it easy for parents to search for services in a specific area. They give information on who you are and the services you offer.  Most advertising sites charge a fee to post. If you choose to use one of these sites, always emphasize on any information that makes your business stand out from the competition. And include photographs to showcase your home daycare to prospective clients.

Craigslist, Kijiji

This type of site is commonly referred to as the “hunter’s dream” – you’ll find everything you want here. Even better, you can list your childcare websites. There is a separate section for baby-sitters and daycare providers.

Put a sign on your yard

This will help potential clients know who you are and what you have to offer. All the parents living close to you will be aware of your daycare and will probably mention the same to other parents. These signs can be customized to suit your needs. Be sure to include your business name and contact information.

The above advertising methods will give you an opportunity to toot your own horn. As you embark on the journey, highlight everything that makes your business different from the competition. For best results, do some research to understand the services your competitors are offering. Be creative with your marketing strategies, and you’ll have a full house in no time.

Home Daycare Business Plan [Template + Example in 2024]

Home daycare businesses need a business plan whether they are just starting out or already in operation. Home daycare business plans are essential, especially if you need funding or business partners to grow your business. Ultimately, starting and running a home daycare business takes a lot of resources. Business plans can help you attract partners and secure funding by giving you a credible image.

Therefore, a solid business plan is equivalent to a good start. The plan will assist you in setting goals, knowing how to start, and knowing what measures to take. Creating a business plan with so many sections and terms seems daunting. Our template and example will make it easy for you.

Throughout this article, you'll learn what to include in your business plan for a home daycare. Here are some examples we made to help you understand. With this guide, you'll understand what to write and how to create a business plan for your home daycare business to help it start, run, and maintain.

Without further ado, let's get into it!

How to Write a Home Daycare Business Plan?

Every Home Daycare business plan must have the following sections:

• Executive Summary
• Business Overview
• Products and Services
• Market Analysis
• Marketing Strategy
• Financial Planning
• Operations Plan
• Management Team

Now, let's discuss each section in detail together with examples.

1. Executive Summary

It's always an excellent idea to start with an executive summary when preparing a business plan. This section explains what your business offers in general terms.

The executive summary should include a description of the problem you are trying to solve and your plan for resolving it.

Writing your summary last is advisable once the other sections are finished and settled since it's an overview of the entire plan.

More and more families are now dependent on two incomes, increasing the need for childcare. In addition, the growing demand for safe, educational environments indicates that more kids need them.

The success of Safe Haven Home Daycare depends on providing childcare services to any home within the scope of the business. Our goal is to provide a safe, informative, and enjoyable experience for kids while assisting parents in feeling confident about the care their children receive.

Safe Haven Home Daycare provides the most needed childcare services to any home within a 30-mile radius around Central Islip. The service is available to clients full- and part-time, depending on the necessary working hours.

2. Business Overview

Your business plan contains a Business Overview, which provides general information about your company. Thus, it should include essential information such as your business structure, mission, and values.

You must demonstrate your competitive edge in a Business Overview to attract business investors, funding, and grants. A business plan answers why yours will be better than other businesses and how it will stand out.

In the beginning, the company will be solely owned by its founders, who have the fundamental proprietorship rights for the business.

Depending on the interests of the company and the best way to serve them, the owner may decide that reregistering as a corporation or a limited liability company is best.

3. Products and Services

As its name suggests, your business plan's Products and Services section describes what you offer. If a business's Products and Services Section is detailed, it will be an excellent addition to any business proposal or investment invite.

The process by which your product will be manufactured, sold, or delivered must be explained in detail. Additionally, you can show clients how your services will be delivered. Therefore, you must evaluate your product's position on the market, cost, and suppliers.

The childcare market on Long Island, New York, is one of the most competitive in the country. As a result, the city has more than 300 unique facilities. In general, facilities can be divided into two categories.

Corporate franchise centers often manage the larger franchise centers. This facility offers both regional and national services.

According to current data, 28% of the childcare market is controlled by the top four centers in the United States.

Many colleges and universities operate on a smaller scale and are locally owned and operated. For this reason, Safe Haven Home Daycare services cater to childcare services at home rather than in an institution.

4. Market Analysis

An analysis of the market is another essential component of a business plan. In this section, you will explain how your marketing strategy will be implemented. Using this section to describe your competitors, target market, and marketing strategy is a good idea.

For this reason, this section should contain the following information:

• Competitive Analysis: To determine who your competitors will be
• Customer Analysis: To determine your target audience
• Industry Analysis: To show how the industry is currently doing

There are more than 300 childcare centers in the neighborhood. According to market share, KinderCare has the most. However, they can't cater to families whose kids need home daycare.

They can compete well because of their excellent reputations in the consumer sector. With Safe Haven Home Daycare, clients can enjoy a one-to-one interaction, focusing on their child rather than in school.

In addition, the business keeps childcare rates between five and ten percent lower than the average for major commercial chains.

Children from needy families can get childcare at Safe Haven Home Daycare within a 30-mile radius of Central Islip. Our program accepts part-time and full-time kids.

The facility's efforts to get licenses and certifications give it an edge in the childcare industry. People are subjected to a thorough background check before they're hired.

5. Marketing Strategy

Using the marketing strategy, you can explain to your readers how you plan to market your products. This way, you can explain how to gain and retain customers. You will find information in this section about reaching your target market, motivating them, and making them want to buy your products.

The key differentiator will be customer service benchmarking. Customer-centricity will be infused into the entire organization. Additional funds will be invested in training and attracting the best employees at Safe Haven Home Daycare.

The staff is the one who interacts with the children and their parents. Therefore, their chances of becoming devoted clients and enthusiastic advocates of the facility are excellent in this situation.

Several social media platforms will be used in the campaign, including LinkedIn and Facebook. Professionals will respond to public inquiries about child care. As a result, we demonstrate our competence to the public. Additionally, we will allow customers to leave reviews and communicate with us.

6. Financial Planning

Another part of your business plan you should include is the Financial Planning section. In this part, you will describe your business goals and the process.

Therefore, all possible expenses should be included in a defined timeline. This section aims to demonstrate how you would handle your finances to ensure growth and avoid problems.

Families where both parents work or are required to work are ordinary for children. Therefore, as parents work, they can leave their child at home with someone who can cater to childcare services, teach, and interact for fast learning.

If they cannot be with their children in an emergency, parents must have someone trustworthy they can leave them with.

Our service values the "safe mentality." Our clients appreciate that we have subject matter experts on hand to address their questions. We will not make a special effort to provide advice since we expect people to seek our advice if they need it.

We intend to invest $30,000 in the launch of our business. Our startup costs will also be covered by each owner's contribution of $15,000.

7. Operations Plan

Your business plan's Operations Plan details the entire operation of your business. As such, it should outline the steps your entire staff will follow to ensure you achieve your goals. It is essential to put information about each department employee's daily, weekly, and monthly responsibilities.

Providing quality care to children will generate enormous financial benefits for Safe Haven Home Daycare.

Since Safe Haven Home Daycare will be based on clients' homes, word-of-mouth marketing will make it profitable within the first year. Every six months, the company expects its client base to double in the first 16 months.

Most of the funds will be dedicated to the childcare service providers of the business. This way, they can undergo special training and gain licenses to conduct home daycare services.

Since the client's home will be the place of operations, they can add travel expenses to the bill. It's a safe space for kids, and parents will rest assured of the kids' safety with the licensed providers.

8. Management Team

You should also include a section devoted to your management team in your business plan. The purpose of this section is to summarize the entire staff you currently have and any future staff you plan to hire.

Workers are one of the most vital parts of a business, so anyone reading your plan should know who works there and how they contribute to the company's success.

You should highlight your team's skills, abilities, and experiences to boost your company's credibility.

In addition, you need to demonstrate how you will distribute responsibilities and tasks to ensure each person has an opportunity to grow while maintaining the business's steady development.

Safe Haven Home Daycare will be supervised by seasoned childcare professionals Myrcella Smith and Stephanie Rivers.

Myrcella has eight years of experience in sales, marketing, and management from The Children's House Daycare. During Myrcella's tenure at the company, the company's annual revenue increased from $75,000 to nearly $3.9 million.

Myrcella's partner Stephanie Rivers has a finance and administration degree. Before joining Safe Haven Home Daycare, Natasha worked for The Joyous Place, one of the country's largest childcare providers.

She increased operational profits at The Joyous Place by 112% during her tenure as Chief Financial Officer, which is uncommon for a company in this field.

Home Daycare Business Plan PDF

Do you want to download a Home Daycare business plan example in PDF?

Here is the download link.

Let us know if you have any questions!

Home Daycare Business Plan FAQs

Below are some of the frequently asked questions you may have about Home Daycare Business Plans:

What Is a Home Daycare Business Plan?

Home Daycare business plans showcase the entire structure, function, goals, and any other information relating to a particular business.

Home Daycare business plans present the business's problems, solutions, and functions. In addition, your business plan can provide detailed information about your company, attract investors, and secure funding.

The business plan shows the company's structure and operations. The report also describes the operation's finances, marketing, and management.

The cost of operating a business, market research, mission statements, and succession plans can all affect the launch of a business. Therefore, these things should be clearly stated in a business plan.

Why Is a Home Daycare Business Plan Important?

Home daycare businesses must have a business plan. It outlines a company's goals and structure as a business plan. Moreover, once you have an outline for your project, you can adjust it as needed.

A home daycare business plan would be helpful if you want to hire and train staff, seek investors, or adjust your pricing strategy. Even if your business has yet to launch, you should create one.

Is Owning a Home Daycare Profitable?

The need for home daycare businesses is always present. In this regard, owning a home daycare business is a business that has a vast potential for success and growth.

The key to being profitable is to plan, execute, and maintain your business efficiently. As a result, it's crucial to have an effective business plan to set you up for success.

Our business plan template can help you create a plan that suits your home daycare business. You'll enjoy a profitable home daycare business if you create an effective plan and execute it well.

Home daycare business plans are essential for anyone planning to open one. With such a plan, you can identify your strengths, analyze your competitors, identify your target audience, attract potential customers, and set a goal for success. Moreover, if you need funding, a solid business plan can help you secure grants or investors.

The Home Daycare Business Plan template includes all the necessary information and elements. Using the examples we provided, you can develop your business plan.

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Home-Based Daycare Business Plan

Complete done-for-you business plan for in-home family daycare.

It’s important to have a business plan, even when you run your daycare out of your home. Business plans help you focus your business so you make the most money and save the greatest amount in taxes. A plan is especially important if you are going to pursue a grant or low-interest funding from a bank or the Small Business Administration.

So I’ve provided you with a sample business plan for daycare business to get you started fast, writing your business plan. You can simply insert your daycare business name into the document and presto, you’re well on your way to a business plan! Use this business plan as is, or you can modify it to fit your unique situation.

24 Pages. Available as a downloadable E-Book.

This Business plan includes all the major sections required in Business Plans including:

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• Executive Summary
• Confidentiality Agreement
• Company Information
• Services Provided
• Market Analysis / Competitive Analysis
• Sales Forecasts
• Personnel / Staffing Plan
• Financial Projections
• Profit / Loss Statement
• Projected Cash Flow
• Projected Balance Sheet

Don't bother with copy and paste.

Get this complete sample business plan as a free text document.

Day Care Business Plan

Start your own day care business plan

Safe Kids Child Care

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">, opportunity.

There are an increasing amount of families who have become dependent on two incomes, which has created the necessity of the child care industry. Increasing need means that there are more children that are in need of a safe enriching place to go. 

Safe Kids Child Care will succeed by offering its clients’ children a safe and secure care environment, and close personal attention. The goals of the center are dual-sided: to help parents feel good about the care of their children, and to make it a safe, educational, and fun experience for the child. 

Safe Kids Child Care has a focus on meeting the local need for child care services within the 10-mile radius of Lynn. Children are taken in flexibly on either a full-time or part-time basis.

Competition

There are over 300 child care providers in the local area. The larger commercial chain child care centers, such as KinderCare, have a majority of the market share. These larger chains compete well because of a good reputation among the consumer market. Safe Kids Child Care offers a lower staff to child ratio, which is appealing to most parents. Additionally, the company maintains child care fee levels that are 5-10% below the average of that of the large commercial chain child care fees.

 Safe Kids Child Care offers a lower staff to child ratio, which is appealing to most parents. Additionally, the company maintains child care fee levels that are 5-10% below the average of that of the large commercial chain child care fees.

Expectations

Safe Kids is an exciting opportunity that provides safe and secure child care to the Lynn, MA neighborhood. Safe Kids will reach sustainable profitability over the next three years. Through a combination of well-priced services, outstanding customer service, and a well seasoned management team, Safe Kids will quickly gain market share and a reputation as a premier child care provider.

Financial Highlights by Year

Financing needed.

We plan on having $40,000 to start our business. Each owner will contribute $20,000 to our opening costs. 

Problem & Solution

Problem worth solving.

The child care market is quite competitive in the Boston area. There are over 300 different facilities. There are two general types of facilities. The larger style is commercially run, typically a corporate franchise center. These facilities are both regional and national. Currently, the four largest child care facilities in the USA account for 29% of the market. There are also many different smaller locally run and owned faculties. While the largest facilities can host between 20-100 children, the locally run centers typically have a maximum capacity of 20 children.

Target Market

Market size & segments.

Full-Time Working Couples

The company wants to establish a significantly large full-time regular client base in order to establish a healthy, consistent revenue base to ensure stability of the business. Customer relations are extremely important, as it is imperative to keep the parents pleased in order to keep their children in the daycare center.

Part-Time Workers / Drop-Ins

Part-time workers and drop-ins comprise approximately 20% of revenues. While this market is not the primary focus, sufficient flexibility to handle this secondary market is important to producing supplemental revenues.

Current Alternatives

Our advantages.

Child care competitive edge is the facility’s efforts in obtaining all appropriate licensing and certifications. Additionally, thorough pre-hire background screenings are performed on all individuals before hired for employment.

Keys to Success

Keys to success for the company will include:

• Maintaining a reputable and untarnished reputation in the community. 
• Quality care. 
• Competitive pricing. 
• Flexible hours.

Marketing & Sales

Marketing plan.

The differentiating effort will be benchmarked customer service. A customer-centric philosophy will be infused within the entire organization. Safe Kids will spend extra money to attract and train the best employees. This is especially important because it is the employees that interact with both the children and parents and will have the best chance to impress them enough to turn them into a loyal customer as well as to be vocal in telling their friends about their positive child care experience. 

We will have a Social Media Campaign which uses Facebook and Linked in. We will have experts answer child care questions if the public wants. This gives the public confidence that we know what we doing. We will have customer reviews and allow our customers to talk to us. 

Safe Kids Child Care will make a significant profit through the excellent care of children. Even though Safe Kids charges less, the company will see profit within the first year due to beneficial word-of-mouth advertising. The company expects to double its’ clientele every six months, for the first 18 months.

Locations & Facilities

The facility will originally consist of a 1,300 sq. ft. house in a quiet, residential neighborhood. The yard will be fully fenced in, to ensure no one can either come in or wander away. The yard will be furnished with safe, entertaining toys, as well as a sandbox.

Milestones & Metrics

Key metrics.

Our Key Metrics are: 

• Facebook page views, Twitter re-tweets, and new potential clients calling saying that a current client referred them. 
• The number of children we take care of daily 
• The number of children that are signed up for the monthly care 
• The amount of training our staff has to take care of children and keep incidents down to zero. 

Ownership & Structure

This business will start out as a simple proprietorship, owned by its founders. As the operation grows, the owners will consider re-registering as a limited liability company or as a corporation, whichever will better suit the future business needs.

Management Team

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Personnel Table

Financial plan investor-ready personnel plan .">, key assumptions.

Our key assumptions are: 

• There are children from families where both parents work or need to work. The children need somewhere safe and enriching where they can grow and make friends while their parents get a chance to get back to him.
• Adults sometimes have emergencies and they need to have a place to leave their children when they can’t be with them 
• The community appreciates the it takes a village mentality. They appreciate we have resources and experts that will answer their questions. We assume they will come to us if they need help, we won’t go out of our way to advise. 

Revenue by Month

Expenses by month, net profit (or loss) by year, use of funds.

Our Start-up Expenses are $3000 including: 

Legal $1,000

Brochures $350

Stationery etc. $100

Activity Supplies $250

Food Preparation Supplies $300

First Aid Supplies $200

Cleaning Supplies $150

Nap Time Bedding $250

Sources of Funds

Our two owners will put up 20,000 dollars each, totaling 40,000. 

Projected Profit & Loss

Projected balance sheet, projected cash flow statement.

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How Biden Adopted Trump’s Trade War With China

The president has proposed new barriers to electric vehicles, steel and other goods..

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email [email protected] with any questions.

From “The New York Times,” I’m Sabrina Tavernise, and this is “The Daily.”

[MUSIC PLAYING]

Donald Trump upended decades of American policy when he started a trade war with China. Many thought that President Biden would reverse those policies. Instead, he’s stepping them up. Today, my colleague, Jim Tankersley, explains.

It’s Monday, May 13.

Jim, it’s very nice to have you in the studio.

It’s so great to be here, Sabrina. Thank you so much.

So we are going to talk today about something I find very interesting and I know you’ve been following. We’re in the middle of a presidential campaign. You are an economics reporter looking at these two candidates, and you’ve been trying to understand how Trump and Biden are thinking about our number one economic rival, and that is China.

As we know, Trump has been very loud and very clear about his views on China. What about Biden?

Well, no one is going to accuse President Biden of being as loud as former President Trump. But I think he’s actually been fairly clear in a way that might surprise a lot of people about how he sees economic competition with China.

We’re going after China in the wrong way. China is stealing intellectual property. China is conditioning —

And Biden has, kind of surprisingly, sounded a lot, in his own Joe Biden way, like Trump.

They’re not competing. They’re cheating. They’re cheating. And we’ve seen the damage here in America.

He has been very clear that he thinks China is cheating in trade.

The bottom line is I want fair competition with China, not conflict. And we’re in a stronger position to win the economic competition of the 21st century against China or anyone else because we’re investing in America and American workers again. Finally.

And maybe the most surprising thing from a policy perspective is just how much Biden has built on top of the anti-China moves that Trump made and really is the verge of his own sort of trade war with China.

Interesting. So remind us, Jim, what did Trump do when he actually came into office? We, of course, remember Trump really talking about China and banging that drum hard during the campaign, but remind us what he actually did when he came into office.

Yeah, it’s really instructive to start with the campaign, because Trump is talking about China in some very specific ways.

We have a $500 billion deficit, trade deficit, with China. We’re going to turn it around. And we have the cards. Don’t forget —

They’re ripping us off. They’re stealing our jobs.

They’re using our country as a piggy bank to rebuild China, and many other countries are doing the same thing. So we’re losing our good jobs, so many.

The economic context here is the United States has lost a couple of million jobs in what was called the China shock of the early 2000s. And Trump is tapping into that.

But when the Chinese come in, and they want to make great trade deals — and they make the best trade deals, and not anymore. When I’m there, we turn it around, folks. We turn it around. We have —

And what he’s promising as president is that he’s going to bring those jobs back.

I’ll be the greatest jobs president that God ever created. I’ll take them back from China, from Japan.

And not just any jobs, good-paying manufacturing jobs, all of it — clothes, shoes, steel, all of these jobs that have been lost that American workers, particularly in the industrial Midwest, used to do. Trump’s going to bring them back with policy meant to rebalance the trade relationship with China to get a better deal with China.

So he’s saying China is eating our lunch and has been for decades. That’s the reason why factory workers in rural North Carolina don’t have work. It’s those guys. And I’m going to change that.

Right. And he likes to say it’s because our leaders didn’t cut the right deal with them, so I’m going to make a better deal. And to get a better deal, you need leverage. So a year into his presidency, he starts taking steps to amass leverage with China.

And so what does that look like?

Just an hour ago, surrounded by a hand-picked group of steelworkers, President Trump revealed he was not bluffing.

It starts with tariffs. Tariffs are taxes that the government imposes on imports.

Two key global imports into America now face a major new barrier.

Today, I’m defending America’s national security by placing tariffs on foreign imports of steel and aluminum.

And in this case, it’s imports from a lot of different countries, but particularly China.

Let’s take it straight to the White House. The president of the United States announcing new trade tariffs against China. Let’s listen in.

This has been long in the making. You’ve heard —

So Trump starts, in 2018, this series of tariffs that he’s imposing on all sorts of things — washing machines, solar panels, steel, aluminum. I went to Delaware to a lighting store at that time, I remember, where basically everything they sold came from China and was subject to the Trump tariffs, because that’s where lighting was made now.

Interesting.

Hundreds of billions of dollars of Chinese goods now start falling under these Trump tariffs. The Chinese, of course, don’t take this lying down.

China says it is not afraid of a trade war with the US, and it’s fighting back against President Trump with its own tariffs on US goods.

They do their own retaliatory tariffs. Now American exports to China cost more for Chinese consumers. And boom, all of a sudden, we are in the midst of a full-blown trade war between the United States and Beijing.

Right. And that trade war was kind of a shock because for decades, politicians had avoided that kind of policy. It was the consensus of the political class in the United States that there should not be tariffs like that. It should be free trade. And Trump just came in and blew up the consensus.

Yeah. And Sabrina, I may have mentioned this once or 700 times before on this program, but I talk to a lot of economists in my job.

Yeah, it’s weird. I talk to a lot of economists. And in 2018 when this started, there were very, very, very few economists of any political persuasion who thought that imposing all these tariffs were a good idea. Republican economists in particular, this is antithetical to how they think about the world, which is low taxes, free trade. And even Democratic economists who thought they had some problems with the way free trade had been conducted did not think that Trump’s “I’m going to get a better deal” approach was going to work. And so there was a lot of criticism at the time, and a lot of politicians really didn’t like it, a lot of Democrats, many Republicans. And it all added up to just a real, whoa, I don’t think this is going to work.

So that begs the question, did it?

Well, it depends on what you mean by work. Economically, it does not appear to have achieved what Trump wanted. There’s no evidence yet in the best economic research that’s been done on this that enormous amounts of manufacturing jobs came back to the United States because of Trump’s tariffs. There was research, for example, on the tariffs on washing machines. They appear to have helped a couple thousand jobs, manufacturing jobs be created in the United States, but they also raised the price of washing machines for everybody who bought them by enough that each additional job that was created by those tariffs effectively cost consumers, like, $800,000 per job.

There’s like lots of evidence that the sectors Trump was targeting to try to help here, he didn’t. There just wasn’t a lot of employment rebound to the United States. But politically, it really worked. The tariffs were very popular. They had this effect of showing voters in those hollowed-out manufacturing areas that Trump was on their team and that he was fighting for them. Even if they didn’t see the jobs coming back, they felt like he was standing up for them.

So the research suggests this was a savvy political move by Trump. And in the process, it sort of changes the political economic landscape in both parties in the United States.

Right. So Trump made these policies that seemed, for many, many years in the American political system, fringe, isolationist, economically bad, suddenly quite palatable and even desirable to mainstream policymakers.

Yeah. Suddenly getting tough on China is something everyone wants to do across both parties. And so from a political messaging standpoint, being tough on China is now where the mainstream is. But at the same time, there is still big disagreement over whether Trump is getting tough on China in the right way, whether he’s actually being effective at changing the trade relationship with China.

Remember that Trump was imposing these tariffs as a way to get leverage for a better deal with China. Well, he gets a deal of sorts, actually, with the Chinese government, which includes some things about tariffs, and also China agreeing to buy some products from the United States. Trump spins it as this huge win, but nobody else really, including Republicans, acts like Trump has solved the problem that Trump himself has identified. This deal is not enough to make everybody go, well, everything’s great with China now. We can move on to the next thing.

China remains this huge issue. And the question of what is the most effective way to deal with them is still an animating force in politics.

Got it. So politically, huge win, but policy-wise and economically, and fundamentally, the problem of China still very much unresolved.

Absolutely.

So then Biden comes in. What does Biden do? Does he keep the tariffs on?

Biden comes to office, and there remains this real pressure from economists to roll back what they consider to be the ineffective parts of Trump’s trade policy. That includes many of the tariffs. And it’s especially true at a time when almost immediately after Biden takes office, inflation spikes. And so Americans are paying a lot of money for products, and there’s this pressure on Biden, including from inside his administration, to roll back some of the China tariffs to give Americans some relief on prices.

And Biden considers this, but he doesn’t do it. He doesn’t reverse Trump’s tariff policy. In the end, he’s actually building on it.

We’ll be right back.

So Jim, you said that Biden is actually building on Trump’s anti-China policy. What exactly does that look like?

So Biden builds on the Trump China policy in three key ways, but he does it with a really specific goal that I just want you to keep in mind as we talk about all of this, which is that Biden isn’t just trying to beat China on everything. He’s not trying to cut a better deal. Biden is trying to beat China in a specific race to own the clean-energy future.

Clean energy.

Yeah. So keep that in mind, clean energy. And the animating force behind all of the things Biden does with China is that Biden wants to beat China on what he thinks are the jobs of the future, and that’s green technology.

Got it. OK. So what does he do first?

OK. Thing number one — let’s talk about the tariffs. He does not roll them back. And actually, he builds on them. For years, for the most part, he just lets the tariffs be. His administration reviews them. And it’s only now, this week, when his administration is going to actually act on the tariffs. And what they’re going to do is raise some of them. They’re going to raise them on strategic green tech things, like electric vehicles, in order to make them more expensive.

And I think it’s important to know the backdrop here, which is since Biden has taken office, China has started flooding global markets with really low-cost green technologies. Solar panels, electric vehicles are the two really big ones. And Biden’s aides are terrified that those imports are going to wash over the United States and basically wipe out American automakers, solar panel manufacturers, that essentially, if Americans can just buy super-cheap stuff from China, they’re not going to buy it from American factories. Those factories are going to go out of business.

So Biden’s goal of manufacturing jobs in clean energy, China is really threatening that by dumping all these products on the American market.

Exactly. And so what he wants to do is protect those factories with tariffs. And that means increasing the tariffs that Trump put on electric vehicles in hopes that American consumers will find them too expensive to buy.

But doesn’t that go against Biden’s goal of clean energy and things better for the environment? Lots of mass-market electric vehicles into the United States would seem to advance that goal. And here, he’s saying, no, you can’t come in.

Right, because Biden isn’t just trying to reduce emissions at all costs. He wants to reduce emissions while boosting American manufacturing jobs. He doesn’t want China to get a monopoly in these areas. And he’s also, in particular, worried about the politics of lost American manufacturing jobs. So Biden does not want to just let you buy cheaper Chinese technologies, even if that means reducing emissions.

He wants to boost American manufacturing of those things to compete with China, which brings us to our second thing that Biden has done to build on Trump’s China policy, which is that Biden has started to act like the Chinese government in particular areas by showering American manufacturers with subsidies.

I see. So dumping government money into American businesses.

Yes, tax incentives, direct grants. This is a way that China has, in the past decades, built its manufacturing dominance, is with state support for factories. Biden is trying to do that in particular targeted industries, including electric vehicles, solar power, wind power, semiconductors. Biden has passed a bunch of legislation that showers those sectors with incentives and government support in hopes of growing up much faster American industry.

Got it. So basically, Biden is trying to beat China at its own game.

Yeah, he’s essentially using tariffs to build a fortress around American industry so that he can train the troops to fight the clean energy battle with China.

And the troops being American companies.

Yes. It’s like, we’re going to give them protection — protectionist policy — in order to get up to size, get up to strength as an army in this battle for clean energy dominance against the Chinese.

Got it. So he’s trying to build up the fortress. What’s the third thing Biden does? You mentioned three things.

Biden does not want the United States going it alone against China. He’s trying to build an international coalition, wealthy countries and some other emerging countries that are going to take on China and try to stop the Chinese from using their trade playbook to take over all these new emerging industrial markets.

But, Jim, why? What does the US get from bringing our allies into this trade war? Why does the US want that?

Some of this really is about stopping China from gaining access to new markets. It’s like, if you put the low-cost Chinese exports on a boat, and it’s going around the world, looking for a dock to stop and offload the stuff and sell it, Biden wants barriers up at every possible port. And he wants factories in those places that are competing with the Chinese.

And a crucial fact to know here is that the United States and Europe, they are behind China when it comes to clean-energy technology. The Chinese government has invested a lot more than America and Europe in building up its industrial capacity for clean energy. So America and its allies want to deny China dominance of those markets and to build up their own access to them.

And they’re behind, so they’ve got to get going. It’s like they’re in a race, and they’re trailing.

Yeah, it’s an economic race to own these industries, and it’s that global emissions race. They also want to be bringing down fossil-fuel emissions faster than they currently are, and this is their plan.

So I guess, Jim, the question in my mind is, Trump effectively broke the seal, right? He started all of these tariffs. He started this trade war with China. But he did it in this kind of jackhammer, non-targeted way, and it didn’t really work economically. Now Biden is taking it a step further. But the question is, is his effort here going to work?

The answer to whether it’s going to work really depends on what your goals are. And Biden and Trump have very different goals. If Trump wins the White House back, he has made very clear that his goal is to try to rip the United States trade relationship with China even more than he already has. He just wants less trade with China and more stuff of all types made in the United States that used to be made in China. That’s a very difficult goal, but it’s not Biden’s goal.

Biden’s goal is that he wants America to make more stuff in these targeted industries. And there is real skepticism from free-market economists that his industrial policies will work on that, but there’s a lot of enthusiasm for it from a new strain of Democratic economists, in particular, who believe that the only chance Biden has to make that work is by pulling all of these levers, by doing the big subsidies and by putting up the tariffs, that you have to have both the troops training and the wall around them. And if it’s going to work, he has to build on the Trump policies. And so I guess you’re asking, will it work? It may be dependent upon just how far he’s willing to go on the subsidies and the barriers.

There’s a chance of it.

So, Jim, at the highest level, whatever the economic outcome here, it strikes me that these moves by Biden are pretty remarkably different from the policies of the Democratic Party over the decades, really going in the opposite direction. I’m thinking of Bill Clinton and NAFTA in the 1990s. Free trade was the real central mantra of the Democratic Party, really of both parties.

Yeah, and Biden is a real break from Clinton. And Clinton was the one who actually signed the law that really opened up trade with China, and Biden’s a break from that. He’s a break from even President Obama when he was vice president. Biden is doing something different. He’s breaking from that Democratic tradition, and he’s building on what Trump did, but with some throwback elements to it from the Roosevelt administration and the Eisenhower administration. This is this grand American tradition of industrial policy that gave us the space race and the interstate highway system. It’s the idea of using the power of the federal government to build up specific industrial capacities. It was in vogue for a time. It fell out of fashion and was replaced by this idea that the government should get out of the way, and you let the free market drive innovation. And now that industrial policy idea is back in vogue, and Biden is doing it.

So it isn’t just a shift or an evolution. It’s actually a return to big government spending of the ‘30s and the ‘40s and the ‘50s of American industrialism of that era. So what goes around comes around.

Yeah, and it’s a return to that older economic theory with new elements. And it’s in part because of the almost jealousy that American policymakers have of China and the success that it’s had building up its own industrial base. But it also has this political element to it. It’s, in part, animated by the success that Trump had making China an issue with working-class American voters.

You didn’t have to lose your job to China to feel like China was a stand-in for the forces that have taken away good-paying middle-class jobs from American workers who expected those jobs to be there. And so Trump tapped into that. And Biden is trying to tap into that. And the political incentives are pushing every future American president to do more of that. So I think we are going to see even more of this going forward, and that’s why we’re in such an interesting moment right now.

So we’re going to see more fortresses.

More fortresses, more troops, more money.

Jim, thank you.

You’re welcome.

Here’s what else you should know today. Intense fighting between Hamas fighters and Israeli troops raged in parts of Northern Gaza over the weekend, an area where Israel had declared Hamas defeated earlier in the war, only to see the group reconstitute in the power vacuum that was left behind. The persistent lawlessness raised concerns about the future of Gaza among American officials. Secretary of State Antony Blinken said on “Face the Nation” on Sunday that the return of Hamas to the North left him concerned that Israeli victories there would be, quote, “not sustainable,” and said that Israel had not presented the United States with any plan for when the war ends.

And the United Nations aid agency in Gaza said early on Sunday that about 300,000 people had fled from Rafah over the past week, the city in the enclave’s southernmost tip where more than a million displaced Gazans had sought shelter from Israeli bombardments elsewhere. The UN made the announcement hours after the Israeli government issued new evacuation orders in Rafah, deepening fears that the Israeli military was preparing to invade the city despite international warnings.

Today’s episode was produced by Nina Feldman, Carlos Prieto, Sidney Harper, and Luke Vander Ploeg. It was edited by M.J. Davis Lin, Brendan Klinkenberg, and Lisa Chow. Contains original music by Diane Wong, Marion Lozano, and Dan Powell, and was engineered by Alyssa Moxley. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

That’s it for “The Daily.” I’m Sabrina Tavernise. See you tomorrow.

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Hosted by Sabrina Tavernise

Produced by Nina Feldman ,  Carlos Prieto ,  Sydney Harper and Luke Vander Ploeg

Edited by M.J. Davis Lin ,  Brendan Klinkenberg and Lisa Chow

Original music by Diane Wong ,  Marion Lozano and Dan Powell

Engineered by Alyssa Moxley

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Donald Trump upended decades of American policy when he started a trade war with China. Many thought that President Biden would reverse those policies. Instead, he’s stepping them up.

Jim Tankersley, who covers economic policy at the White House, explains.

On today’s episode

Jim Tankersley , who covers economic policy at the White House for The New York Times.

Background reading

Mr. Biden, competing with Mr. Trump to be tough on China , called for steel tariffs last month.

The Biden administration may raise tariffs on electric vehicles from China to 100 percent .

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