How to Start a Daycare: Step-by-Step Guide (2026)

Starting a daycare is one of the most rewarding small businesses you can build, but it requires careful planning across licensing, finances, staffing, and operations. The childcare industry generates over $60 billion annually in the U.S., and demand continues to outstrip supply. In 2026, there are approximately 3 million fewer childcare slots than there are children who need them.

Whether you are opening a small home daycare or building a full childcare center, this step-by-step guide covers everything from initial research to opening day and beyond.

Step 1: Research Your Market and Decide on Your Type

Before investing time or money, understand the childcare landscape in your area.

Assess Local Demand

• Check waitlists: Call 5-10 existing childcare providers in your area. If they have waitlists of 20+ families, demand is strong.
• Review demographics: Look at Census data for your zip code. Areas with growing populations of families with children under 5 are ideal.
• Survey parents: Post in local parent groups (Facebook, Nextdoor) to gauge interest and understand what families want.
• Check competitor capacity: Use your state's childcare provider search tool to see how many licensed slots exist in your area.

Choose Your Model

Home daycare (Family Child Care)

• Operate from your own home
• Serve 6-12 children depending on your state
• Lower startup costs and overhead
• More intimate, home-like environment
• Ideal for starting small and testing demand

Center-based daycare

• Operate from a commercial or dedicated space
• Serve 20-200+ children across multiple classrooms
• Higher startup costs but greater revenue potential
• More structured environment with specialized rooms
• Required for serving large communities

Hybrid/expansion model

• Start as a home daycare to build experience and reputation
• Transition to a center-based model once you have proven demand and saved capital
• Many successful center owners started exactly this way

Step 2: Create a Business Plan

A solid business plan is essential for securing funding, guiding decisions, and staying on track. Your plan should cover:

Executive Summary

One page describing your daycare concept, target market, and financial projections.

Market Analysis

• Local demographics and demand data
• Competitor analysis (pricing, capacity, quality, waitlists)
• Your target families (income level, location, age of children)

Services and Curriculum

• Age groups you will serve (infants, toddlers, preschool, school-age)
• Hours of operation
• Curriculum philosophy (play-based, Montessori, Reggio Emilia, academic)
• Additional services (before/after school, summer camp, enrichment programs)

Financial Projections

| Monthly Net Income | $5,800 |

These numbers are illustrative. Your actual projections will depend on your location, capacity, and pricing. For a detailed template, read our daycare business plan guide.

Funding Strategy

• Personal savings
• Small Business Administration (SBA) loans
• Childcare-specific grants (state and federal)
• Bank loans secured by equipment or property
• Community Development Financial Institutions (CDFIs)

Step 3: Get Licensed

Licensing is non-negotiable. Every state requires childcare providers to meet specific health, safety, and staffing standards.

What Licensing Requires

Requirements vary by state, but generally include:

• Background checks for all staff (criminal, child abuse registry, sex offender registry)
• Health and safety inspection of your facility
• Fire safety inspection and approved fire evacuation plan
• Staff qualifications (minimum education, CPR/First Aid certification, ongoing training hours)
• Staff-to-child ratios meeting or exceeding state minimums
• Physical space requirements (square footage per child, outdoor play space, bathroom access)
• Emergency preparedness plans
• Health policies (immunization records, illness exclusion policies, medication administration)

The Licensing Process

1. Contact your state's licensing agency. Find your state agency at childcare.gov.
2. Complete a pre-licensing orientation. Most states require an orientation class or meeting before you can apply.
3. Submit your application and fees. Application fees range from $25 to $500 depending on your state and facility size.
4. Pass inspections. Your facility must pass health, safety, and fire inspections.
5. Receive your license. Processing times range from 30 days to 6 months.
6. Maintain compliance. Licenses require annual renewal and your facility will receive periodic unannounced inspections.

For state-specific licensing details, see our childcare licensing guide.

Getting Insured

You need several types of insurance:

• General liability insurance: $1,000 - $3,000/year. Covers accidents and injuries on your property.
• Professional liability insurance: $500 - $1,500/year. Covers claims related to your professional services.
• Workers' compensation: Required in most states once you have employees. Rates vary by state.
• Commercial property insurance: Covers your building, equipment, and supplies.
• Commercial auto insurance: Required if you transport children.

Step 4: Find and Prepare Your Space

For Home Daycare

• Designate specific rooms for childcare use
• Childproof thoroughly (outlet covers, cabinet locks, gate stairs, secure heavy furniture)
• Create separate areas for play, rest, and meals
• Ensure outdoor play space is fenced and free of hazards
• Install smoke detectors, fire extinguishers, and carbon monoxide detectors in required locations
• Store cleaning supplies, medications, and sharp objects out of children's reach

For Center-Based Daycare

Finding the right space:

• Minimum 35 square feet per child indoors (most states require 35-50 sq ft)
• Minimum 75 square feet per child for outdoor play
• Separate rooms for each age group
• Kitchen or food preparation area
• Adult restrooms separate from children's bathrooms
• Administrative office
• Secure entry and exit points

Renovation and setup costs:

Step 5: Hire and Train Staff

Your staff are your most important asset. Families choose (and stay with) childcare programs because of the people caring for their children.

Staffing Requirements

Hiring Best Practices

• Run thorough background checks on every candidate before they start
• Check references, especially from previous childcare employers
• Conduct working interviews where candidates interact with children while you observe
• Offer competitive wages in your local market. Low pay leads to high turnover, which hurts children and families
• Create a training plan covering your curriculum, policies, emergency procedures, and communication expectations

Required Training

Most states mandate:

• CPR and First Aid certification (renewed every 2 years)
• 15-30 hours of annual professional development
• Training on child abuse recognition and mandatory reporting
• Health and safety topics (food safety, medication administration, emergency evacuation)

Step 6: Set Up Operations

This is where many new daycare owners get overwhelmed. Setting up efficient systems from day one saves enormous time and headaches later.

Enrollment

• Create enrollment forms that collect all required information (emergency contacts, medical history, authorized pickup, dietary restrictions, custody agreements)
• Establish a clear enrollment process with defined steps
• Set up a waitlist system for when you reach capacity
• Define your enrollment policies (deposits, cancellation, withdrawal notice period)

Billing and Payments

• Set tuition rates based on your financial projections
• Choose a payment collection method (software, ACH, checks)
• Establish late payment policies
• Track subsidized families separately if accepting government assistance
• Issue receipts and year-end tax statements

Communication

• Decide how you will communicate with parents (app, email, paper)
• Set expectations for daily reports, photos, and updates
• Create a parent handbook covering all policies
• Plan for parent-teacher conferences and open houses

Attendance and Safety

• Implement a sign-in/sign-out system that tracks who is in your building at all times
• Create emergency evacuation plans and practice them monthly
• Maintain accurate attendance records (required for licensing and subsidy billing)
• Set up an authorized pickup verification process

Modern childcare management software handles all of this in one platform. Rather than juggling spreadsheets for billing, paper forms for enrollment, and group texts for communication, tools like Bloomily unify everything. Enrollment, attendance tracking, billing, daily reports, and parent messaging all work together. Starting with the right software from day one means you never have to migrate away from a patchwork of manual systems later.

Step 7: Market Your Daycare

You cannot serve families if they do not know you exist. Start marketing 2-3 months before you plan to open.

Essential Marketing Channels

1. Google Business Profile: Create and optimize your listing. This is how most local parents will find you when searching "daycare near me."
2. Website: Even a simple one-page site with your location, hours, pricing, and enrollment information is better than nothing. Include photos of your space.
3. Social media: Facebook and Instagram are where parents spend time. Post photos (with permission), share tips, and engage with your community.
4. Local parent groups: Join Facebook groups, Nextdoor, and community forums. Be helpful first, promotional second.
5. Referrals: Offer a referral bonus ($100-$200 tuition credit) to families who refer new enrollments.
6. Childcare resource and referral (CCR&R): Register with your local CCR&R agency so searching families can find you.
7. Open houses: Host monthly or quarterly events where prospective families can tour your facility and meet staff.

What Parents Look For

When evaluating your daycare, parents prioritize:

1. Safety and cleanliness of the facility
2. Staff warmth and qualifications
3. Communication quality (responsiveness, daily updates)
4. Curriculum and philosophy
5. Convenience (location, hours)
6. Price relative to perceived quality
7. Reviews and reputation

Step 8: Open and Grow

Soft Opening Strategy

Do not fill to capacity on day one. A phased approach works better:

• Week 1-2: Open at 25-50% capacity. This gives staff time to learn routines and work out kinks.
• Week 3-4: Add families gradually. Aim for 50-75% capacity.
• Month 2-3: Approach full capacity as systems are running smoothly.

Building Retention

Keeping families enrolled is more cost-effective than constantly recruiting new ones. Focus on:

• Consistent, high-quality care from day one
• Strong communication with daily reports and responsive messaging
• Community building through events, newsletters, and family engagement
• Listening to feedback and addressing concerns quickly
• Celebrating milestones for children and families

Planning for Growth

Once your first location is stable and profitable, consider:

• Adding age groups (if you started with only one)
• Extending hours (early morning, evening, weekends)
• Adding summer camp programming
• Opening a second location
• Offering enrichment programs (language, music, STEM)

Costs to Start a Daycare: Full Breakdown

Home Daycare Startup Costs

Center-Based Daycare Startup Costs

Common Mistakes to Avoid

1. Underpricing Tuition

Many new owners set rates too low to attract families. This creates a cycle of razor-thin margins, staff underpayment, and eventual burnout. Price based on your costs plus a reasonable margin, not based on the cheapest competitor.

2. Skipping the Business Plan

Opening without financial projections leads to cash flow surprises. Know your break-even enrollment number before you sign a lease.

3. Underestimating Staffing Costs

Staff salaries represent 60-70% of your expenses. Budget for competitive wages, substitutes, and turnover. Underpaying staff leads to high turnover, which damages your reputation and the children's experience.

4. Ignoring Marketing Until Opening Day

Start building awareness 2-3 months before you open. Collect interest forms, build a waitlist, and engage with local parent communities early.

5. Not Setting Up Systems from the Start

Using paper forms, spreadsheets, and text messages works for the first month. By month three, it becomes unmanageable. Invest in proper childcare management software from day one.

6. Trying to Do Everything Yourself

Hire help when you need it. A director who is also the cook, janitor, accountant, and marketing department will burn out quickly. Delegate or outsource tasks that take you away from caring for children and running the business.

How Software Like Bloomily Helps From Day One

Running a daycare involves juggling enrollment forms, attendance records, billing, parent communication, daily reports, staff scheduling, and compliance documentation. Trying to manage all of this with paper and spreadsheets is the number one operational mistake new daycare owners make.

Bloomily is built specifically for childcare centers and gives you everything in one platform:

• Online enrollment with digital forms and automatic waitlist management
• Automated billing with online payment collection and subsidy tracking
• Digital attendance with parent sign-in/out and ratio monitoring
• Daily reports with photos that parents can view in real time
• Parent messaging for announcements, direct messages, and newsletters
• Staff management for scheduling, assignments, and compliance tracking

Starting with the right tools means you spend less time on administration and more time building the program families love. Visit bloomily.app to learn more about how Bloomily supports new and growing childcare programs.

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