The Ultimate Guide for How to Open a Daycare Center

If you want to know how to open a daycare center, look no further.

Daycare centers are unique businesses that revolve around taking care of children for parents while they’re away for work, vacation, and more. In daycare, children will be provided with activities to keep them busy while they’re away from their parents. The demand for daycare centers is also expected to increase as modern parents continue to be career-driven.

Many people wonder how to start a daycare center because it’s something that can be highly profitable. Fortunately, starting a daycare business doesn’t require much besides patience and attention to detail.

Keep on reading to learn how to open a daycare center!

Decide How You’ll Fund the Daycare

Before you can understand how to start a daycare center, you’ll need to figure out how to fund it. Funding a business of any kind will require a lot of money, so you can’t go in without any and expect to quickly start a daycare.

When it comes to starting a daycare business, it’s best to use cash because you won’t have to worry about interest. However, most people don’t start businesses with money out of their pockets. If you don’t have the money on-hand, you’ll need to opt for loans.

Personal Loan

A personal loan is convenient as it doesn’t require much to get besides a good credit score and proof of income. With this, you can borrow several thousand to help you fund purchases for the business. The only downside is that it won’t be enough by itself to pay for everything.

You can expect to borrow anywhere between $1,000 to $100,000 depending on your credit score and how good your income is. However, the likelihood that you can borrow $100k is low unless you already earn a lot of money.

Most personal loans come with payment periods between 1 to 7 years, giving you plenty of time to pay them off with the money you’ve earned from the daycare.

Credit Cards

A credit card is the easiest borrowing option to acquire because they’re regularly offered to individuals from the moment they turn 18. Credit cards are often required to start building credit, so most people get them at some point.

You can get a credit card by applying online at one of the many credit institutions. Some of the most common are the likes of American Express, Discover, and Capital One. Each lender offers unique credit cards that have varying lines of credit and interest rates.

Similar to a personal loan, a credit card is best used for minor purchases. Unless you have several cards with high credit limits, you won’t be able to do something like purchase a building for the business.

Business Loan

If you’re looking for a way to fund the business without having to rely on another source of money, a business loan would be the best thing to get. With this, you could borrow several hundred thousand dollars to completely fund the business.

What makes a business loan stand out from something like a personal loan is the fact that you can borrow much more and repay over a longer time. For example, if you get a loan from the SBA (Small Business Administration), you could have 25 years to pay the loan off.

Getting a business loan would give you enough to purchase property for the daycare, hire employees, and purchase equipment. The only downside to getting one is that you’ll be in a lot of debt that will take time to pay off. This may cause you to spend a lot on interest when that money could be used elsewhere.

Acquire a Business License and EIN

The most important step after figuring out how to fund the daycare is to acquire a business license. A business license is legally required by all businesses because it’s used to help the government identify who’s legitimate. If you don’t have one, you may have to pay fines and your daycare could be shut down.

You’ll need a business license for each city that you’re operating out of. Providing that you only have one daycare, you’ll need just one license. You can apply for one of these at your city’s business license department. From there, you’ll have to fill out several forms indicating what your business does.

Aside from the business license, you must acquire an EIN (Employer Identification Number). You can think of this as a Social Security number for businesses. It essentially lets the government keep track of the business. Things like taxes and payroll will be tied to your EIN.

Choose a Location

When people think about the requirements to open a daycare, they often forget that choosing a location is a crucial part of the process. If your daycare center isn’t in a good location, you won’t get any clients.

What makes a daycare center different from something like a retail store is that it generally has two times in which people are visiting: the morning and the afternoon. Your daycare can’t be too far from a residential area because most parents will be dropping their kids off before work.

If a parent has to drive 60 minutes to get to a daycare center, they’re more than likely to look elsewhere for a closer one. They’ll also be looking to rush home after work, so the long distance may not be an option for them.

Choosing a location for a daycare center is as simple as finding an empty building near a residential area. It’s best to find a building next to other stores because people will see it as they visit them. This also makes it convenient for parents that are looking to make quick purchases when picking their child up.

You’ll need to find a building that has enough space to contain all the children. Most daycares have separate areas for playing, taking naps, etc. If you can’t find a large building, you won’t be able to take care of as many children at once.

Start looking around in various neighborhoods to figure out where you want to open the daycare. You can find an empty building for rent or sale in-person or via the web. When searching online, type something like, “commercial building for rent near me.”

Hire Employees

After funding the daycare and setting up a property, you’ll need to start hiring employees. You can’t start operating the daycare without employees unless you plan on running a one-man show, which will be tiresome. Not only that, but you’ll hardly earn an income because you won’t be able to take on many children.

To hire employees, you can post job listings on sites like Indeed. You can also spread posters around the city so that people become aware of your daycare.

When people start applying, you must sit them down and start interviewing them. When someone applies, you’ll be provided with things like their name, address, and previous work history.

If you meet someone that you’re interested in hiring, you must have them fill out a W-4 form. In this form, they’ll provide important information in regard to their marital status and Social Security number. They can also choose how much money they want to set aside for taxes if they’re worried about not having enough at the end of the year.

Whenever an employee changes their marital status, you’ll need to have them fill out another W-4. Some couples are eligible for tax breaks, so it’s important to have this information at all times.

Employees must also fill out I-9 forms, which are designed to verify their eligibility to work in the United States. Any time you hire a new employee, you’ll need to provide your local new hire bureau with their I-9 form.

Create a Website

Now that you have some employees and a building to operate out of, you should create a website to give parents a place to go to when they want to learn about your daycare.

Creating a website is something that most modern businesses focus on because it gives them a platform to connect with their audience. When it comes to a daycare center, you want parents to feel comfortable with you so that they’re more likely to send their child to you.

Parents need to build trust with a daycare center and one of the ways they do that is by looking into them. If you don’t have a website, you’ll look mysterious and no one will consider working with you.

On your website, you’ll want to include contact information so that parents can get ahold of you. The site should also include a plethora of pictures and photos so that parents can see what the daycare center looks like. If you haven’t had any parents come in yet, try getting the children of a friend to come in a pose for pictures.

This will give you something to use so that you look more credible. It will also make parents feel more comfortable seeing children in the daycare having a good time.

If you’re looking to attract regular traffic to your website, you can include a blog that revolves around children. Writing about things like childcare, parenting tips, etc. will make parents tune in often. If they like something, they can share it on their social media pages.

Advertise to Parents

To truly get your daycare center off the ground, you must invest in advertising. However, you need to be smart about it because you won’t get parents to come in by simply setting up posters and billboards. Instead, you must take to the internet and use local SEO to attract parents in your area.

Local SEO is a digital marketing strategy that involves setting up websites and advertisements that target people in a specific area. For example, if you live in San Diego, you can set up virtual ads that only those in San Diego can see.

This will help you get a lot of attention because people in your area will actively be seeing your advertisements. This is often done with something like Google Ads, which chooses websites to show your ad based on their viewership.

If you’d like to take things further, you can get into social media advertising. In 2019, over 3.5 billion people were using social media sites like Facebook, Twitter, and Instagram. This gives you a lot of room to choose who you want to advertise to.

Social media platforms give advertisers several options when it comes to choosing who should see the ad. You can choose the age range, location, and gender of the audience that you want to see your ad.

Invest in a Cleaning Service

Although you can get away with cleaning the daycare center by yourself in the beginning, you’ll eventually need to invest in a school cleaning service.

These services provide businesses like schools and daycares with thorough cleanings that get rid of all the germs left by children coming in and out of the building. Using special equipment and cleaning chemicals, you can count on having a clean daycare center and prevent children from getting sick.

Although a cleaning service isn’t one of the requirements to open a daycare, it’ll ensure that you build a good reputation. After you start taking in a lot of children, you’ll want to invest one as soon as possible.

Now You Know How to Open a Daycare Center

Knowing how to open a daycare isn’t difficult and it can be a profitable venture providing that you play your cards right. Similar to starting another type of business, you’ll need to go through all of the steps to find success. We encourage you to open a daycare center with the provided information!

Check out our other articles if you’re interested in learning more about business!