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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.

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.

business planning sheets and equipment

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.

chart with start, idea, plan, action and an up arrow

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.

notebook and pen ready to make a 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:

Expenses for you:

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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A great resource. Thank you so much for sharing.

Thank you for checking it out!

How to Start a Daycare at Home

Learn how to start an at-home daycare business from this article or use the form below if you are ready to start

Ready? Let’s choose a name!

The workforce has changed a lot since the 1950s — and this means that, more often than not, both parents are kept out of the house and away from their children. In 2010,  less than one third  of toddlers stayed at home with a parent during the day, and that figure has only grown.

According to the most recent research from the  U.S. Bureau of Labor Statistics , 66.4% of mothers with children younger than six years old and 93.4% of fathers with children younger than 18 years old were employed. If that’s the case, who watches the kids?

In a world where parents are working more than ever, starting a daycare business at home isn’t just a rewarding career in early childhood education — it’s also a necessary service. For this reason, childcare centers and other daycare businesses have some of the fastest employment growth out of any industry, per the  U.S. Bureau of Labor Statistics .

It’s also a fairly easy business to start. Though business owners don’t explicitly need a specific level of education to open a daycare, there are certain child care licensing requirements,  fees , and legal odds and ends. Here’s how to start a daycare at home.

Benefits of Starting a Daycare at Home

You’re not just shaping young minds with an at-home daycare center. Overall, it’s a massively large and lucrative market with the flexibility of setting your own work hours. There are 54,000 commercial childcare centers in the United States with a combined annual revenue of $27 billion, but that’s just direct revenue.

Home-based daycares, like most home-based businesses, have  relatively low overhead costs  since they don’t require any extra rent. In fact, there are major tax benefits that allow you to deduct a portion of your existing expenses — like rent, mortgage interest, and utilities — as business expenses. Food costs can also be offset by the Federal Food Program, so you’re really only paying for supplies, insurance, advertising, and additional food and beverage expenses.

How to Start a Daycare at Home Checklist

Business owners who start a daycare at home have to jump through a couple legal hoops before they can get started. Luckily, this is one of those businesses that can be started quickly because you’re not waiting to set up a specific location, nor do you have to wait for permits.

This process can be handled in a matter of weeks, and if you’re moving swiftly, it’s possible to open your at-home daycare in the time it takes to acquire a family child care license.

The process is as as follows:

Checklist for How to Start a Daycare at Home:

1. Create a Business Plan

Even if you’re starting a small business from home, a business plan is a must-have. It’s the one way you can determine what you’ll need, how you’ll operate, and if your business is likely to succeed. It also gives you guidelines on how to handle any potential problems that can occur. Think of it as your one-stop shop for every business question you may have in the future.

To craft a solid business plan for an at home daycare center, it’s important to: 

👶 If you want more in-depth guidance when writing your first business plan, check out  our handy guide .

2. Choose a Business Structure

All types of businesses must be registered with the IRS, but in doing so, business owners have to  choose a business structure , which serves as both a legal structure and tax structure. As a small business, at-home childcare centers are generally registered as:

Since parents are entrusting you with the lives of their children, the  liability protection provided by an LLC  is highly recommended. You don’t want anyone to be able to go after your personal assets in the event of a lawsuit. It’s also a popular option because it avoids the double taxation of a corporation. Corporations are taxed once on their profits and again when the profits go to owners or shareholders. In addition, single-member LLCs are taxed as sole proprietorships, anyway. It’s often considered the best of both worlds.

You can file for an LLC online, but first, you’ll need to get a general business license and the family child care license required in your state. It can take about one to two weeks to process your request if you opt for expedited filing or as little as three to five business days if you opt for rush filing. Processing time is determined by the state, and each  state charges different fees .

👶 Learn more about  which is the best legal structure entity for your new business in this article →

Ready to get started?

Start Your Daycare Business Today

3. Determine Your Business Costs

In order to open a daycare at home, you need to have the cash — but how much does it cost? This can be determined by examining the type of daycare you’re running and your business model. For example, are you hiring any staff? Are you only watching a handful of kids? How much does your equipment cost? To determine your daycare’s costs, calculate:

Make sure to add in a cushion to cover unexpected or emergency expenses. It’s also important to check for any tax breaks or local grants that can save you money both up front and long term.

👶 Learn more about the costs of starting a business in this guide →

How to Fund Startup Costs

Not everyone has the capital to start a small business without financial assistance. The good news is that most small business owners can get started with just $10,000. This is a totally feasible goal for a home-based daycare center, and you can raise money a number of ways, including:

4. Name Your Business

A business is only as good as its name. This is what people remember, and this is how they’ll judge your business. Your daycare’s name should be easy to understand and slick enough that it can be easily recognized across social media profiles, the web, and advertisements.

When  creating your business name , make sure to choose something truly original. If it’s already taken, there can be legal repercussions, and you don’t want someone else to already have registered the web domain. That  will  get confusing. Check with local business registration services and perform an extensive online search to make sure that your name is brand new.

👶 Naming Tips :  How to Come Up with a Catchy Business Name →

5. Register Your Business and Open Financial Accounts

Opening a daycare center at home has a number of legal and licensing requirements to sort out before you can open for business. These include:

👶 Read our article about how to open your new business bank account here →

6. Purchase Equipment for Your Daycare Business

At-home daycare equipment is generally very basic and can typically be purchased through Amazon or a big-box store like Walmart, OfficeMax, and Target. Take inventory of what you already have at home and consider purchasing things like:

👶 How to Buy Assets and Equipment for Your Business →

7. Market Your Daycare Business

You won’t get any students if no one knows that about your daycare business. Marketing is an essential part of running your business, and social media has made it easier than ever. Consider creating a social media strategy across Twitter, Facebook, Instagram, and even YouTube. Running ads on these types of platforms is generally inexpensive  and  effective at targeting local markets. You can even promote yourself in local Facebook groups.

You’ll also want to register your business in online directories like Google, Yelp, LinkedIn, and other local business directories. As you get students, encourage parents to leave reviews. Online word of mouth goes a long way. You may also want to enact a small print campaign by taking out ads in the local papers or community bulletins. 

Finally, it’s important that your website is appealing to parents. If your marketing efforts are successful, that’s where they’ll go to find out more. Consider printing your curriculum and enacting an SEO strategy that helps your business pop up in search engine results for local daycares.

👶 Find free resources on marketing your business here →

Examples of Daycare at Home Businesses

There are a lot of different facets of early childhood education, and not every daycare center is the same. In order to create a business plan, the most important step is determining what type of childcare business you want to run. This covers everything from startup costs to government tax breaks and licenses.

Bottom Line

Figuring out how to start a daycare at home isn’t terribly difficult. This is a business with very clear legal requirements, limited startup costs, and a massive market.

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10 Steps to Starting a Home Daycare Business

February 22, 2021 Leave a Comment

Starting a home daycare business can be an excellent opportunity if you love kids and the idea of being your own boss. Find out how to start!

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.

10 Steps to 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 .

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). 

10 Steps to Starting a Home Daycare Business

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

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

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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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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.

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.

at home daycare business plan

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.)

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.

at home daycare business plan

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

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.

download the pdf

Table of contents


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:

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.

child care budget expenses

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:

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:

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.

managing billing and payments for a home daycare

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).

child report home daycare

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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Michael Keshen

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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.

Learn how HiMama can transform your center

HiMama brings parents, teachers and directors closer together and saves everyone time.

In 15 minutes you could be on your way with HiMama - it doesn't take longer than that!

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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!

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I have questions I just started my daycare business

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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.

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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?

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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.

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Great information! Thank you for sharing.

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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

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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!

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at home daycare business plan

Daycare Business Plan Template

Business Plan Outline

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:

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 Daycare Business Plan?

A daycare business is typically funded through small business loans, personal savings, credit card financing and/or angel investors.

What are the Steps To Start a Daycare Business?

Starting a daycare business 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 Daycare Business Plan - The first step in starting a business is to create a detailed daycare business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.  

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 daycare 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 daycare 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. 

Learn more about how to start a successful daycare business:

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  1. Home Daycare Business Plan - Little Sprouts Learning

    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.

  2. How to Start a Daycare at Home | ZenBusiness Inc.

    In order to create a business plan, the most important step is determining what type of childcare business you want to run. This covers everything from startup costs to government tax breaks and licenses. Childminding: an at-home daycare where children under age 8 spend more than two hours per day.

  3. 10 Steps to Starting a Home Daycare Business - The Work at ...

    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

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

    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...

  5. Complete guide to starting and growing a home-based ... - HiMama

    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.

  6. Daycare Business Plan Template - PlanBuildr Business Plan ...

    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.