Congratulations on making the decision to become a child care business owner!

To help you bring your decision to life, I’ve prepared a checklist for starting a home daycare, as well as a few tips to help you get started the right way.

Step #1: Understand your customers and craft a business plan

The most important thing you can do when starting a home daycare is understand your potential customers.

Do you plan to open your home daycare in your neighborhood or relocate? If so, check if there is a need for a home daycare. Are local parents on the lookout for more affordable child care options?

Most of the time, the answer is a resolute “yes” but double-check.

Maybe available daycares aren’t fulfilling the needs the parents have. That’s a good thing to keep track of, as it can help you differentiate your daycare from the get-go.

After you have done the market research, start working on the business plan. You can consult my extensive guide on writing daycare center business plans as a model to make sure you’ve got everything covered.

Step #2: Requirements and financial planning

As I’ve written in Hopping In’s guide to starting a daycare center, you should familiarize yourself with law requirements for opening a home based daycare.

These regulations can vary from state to state, and don’t forget to check the local and federal requirements, as well. You should comply with the local, federal and the state laws. The U.S. Small Business Administration can help you find all the necessary requirements.

A good rule of thumb when planning your costs for starting a home daycare is to always plan for more.

For example, if your prediction is that you are going to need 5 cots, count with at least 8. Your costs may seem bigger but you’ll be happy to have some leeway in the budget when you open your daycare.

Your costs will depend on the number of children you are going to take care of. Things you should calculate into the costs are:

– supplies (keep in mind that this is not just a starting cost)

– insurance fees

– alterations to your house

– extra staff (be mindful of staff-to-child ratio required by law)

– food for the children

Once you’ve got all of these down on paper, you can see how much you should charge parents and whether it’ll be profitable.

At this point, it’s also good to see how much other child care businesses are charging.

Step #3: Legal structure

If you’ve deduced that starting a home daycare is a viable option, it’s time to start thinking about the legal structure.

Look into getting a Limited Liability Company that way, your business will be a separate entity. If you are going to have staff, getting this is likely the better option. Consult a business attorney.

This step of starting a home daycare is also when you should start thinking about a name. Find something friendly and easily memorizable with a colorful logo that draws in your customers and their kiddos.

Step #4: Funding

Starting a home daycare can be pretty costly, even if you’ve got initial capital.

The good thing is that there are different options for getting external funding.

Governments (federal, state and local) often have grants and affordable loans you can use to start your home daycare. SBA will come in handy again.

Step #5: Orientation, training and application

Some states require you to go through certain orientations to file the application for starting a home daycare. Even if it’s not required in your state, it’s good to get if possible as you will make sure that you have all the information necessary to start your daycare.

After going through orientation, you will be able to submit an application for starting a home daycare.

woman playing with a child

Your state’s licensing requirements will tell you exactly what information you need to provide, and where you need to file it. You’re may also to need to provide character references that prove you are the right person to open a daycare.

As for training, there is quite a few things you are going to have to know before passing the inspection.

It’s best to consult the licensing requirements, but generally these include CPR, child health and development, and disaster preparedness.

Step #6: Insurance

With daycare insurance, it’s best to get as wide coverage as possible.

You will need general liability insurance, but consult your insurance agents (for daycare insurance, and for your homeowners insurance) on how these two overlap.

You can also consult our expert’s tips on selecting the right insurance company for your child care business.

Step #7: Inspection

The lucky number 7 is passing the daycare inspection.

If you’ve followed local, state and federal requirements, as well as received necessary training and purchased insurance, you’ll be good to go.

After that, it’s only a matter of making sure your daycare runs smoothly.

Get to work

Think about marketing even before you officially open the doors and look into ways that can help you generate the extra revenue necessary to keep growing.

For example, Hopping In is incredibly effective at filling empty spots at your daycare by allowing the parents to book extra care when they need it, and drop the spots they don’t need so others can re-book them.

If you are starting your daycare aware of a need present on the market that no other center satisfies, like flexible hours, highlight your specialty with Hopping In.

And if you need advice on running your daycare, improving communication with parents and getting more time for improvement, browse the Hopping In blog.

We’re here to help every daycare owner do what they do best: lead a successful child care business.

Author: Hopping In Blog

Sholom Strick is an expert on the business of running daycare centers and founder of Hopping In, a tool that helps childcare centers and family daycare providers fill unused spots.

To contact him or for media inquiries email s.strick@daycareteam.com

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