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How to Start A Daycare: The Ultimate Guide

Starting your own daycare center can be both exciting and daunting. Many of those who choose to pursue this step in their career do so out of passion for helping children develop and reach their full potential.

While passion and child care experience are musts when opening a daycare, it cannot be overlooked that child care and daycare centers need a solid business plan. Therefore, the opening of your daycare center must be approached with a careful strategy in place to ensure success in the early make or break years. This combination of a clear mission and a carefully constructed business plan will greatly increase the success of your child care business.

At Procare, we want to encourage and enable child care professionals with all of the tools they need to enrich the lives of their students. That is why we have created this outline of important business needs to consider when starting a daycare center. The following information will provide aspiring daycare owners with direction throughout this challenging process.

Daycare Center

The “Why” Behind Opening Your Daycare Center

Starting a business, especially one as demanding as child care, is a huge time and financial commitment. It’s a good idea to examine the reasons driving your decision to open a daycare center, or “your big why.” Make sure you have a clear understanding of the time you will be required to devote before and after opening.

You should also consider your previous child care experience. If you have been in this field for years and know it is what you want, then you can move on to the business planning stage. However, if you have relatively little experience in the field, it might be prudent to gain more experience at an independently owned center or even franchise. Think about why you want to open a daycare and the specific attributes that make you uniquely qualified for this filed.

Assessing Your Market

Once you are committed to opening your own daycare center, you will have to do research to determine how competitive a marketplace your community currently is, and how sustainable an environment it will be for your business in the future.

First, are there already daycare centers open in your community? If so, you will want to look at things like:

  • What kind of center are they?
  • What age groups do they accept?
  • Where are they located?

Another good indicator of the need in your community is whether these child care centers have waiting lists. This information can help you determine if there is enough demand in your community to open you center there.

Another research strategy is to look at the current demographics in your neighborhood. If there are a lot of young families or newlyweds, this indicates that there will continue to be a need for your services in the future.

Differentiating Your Daycare Center

Once you are familiar with the current child care landscape in your community, you have to think about how you will differentiate your program to fill a need not currently being addressed.

Look at the hours of operations for the other centers in your community. Perhaps there is a timeframe early in the morning or late in the evening during which these centers are not open. Filling this need could make your center a valuable resource for parents.

Additionally, if there is an age group that is not being served, such as daycare for infants (newborns to a year) or after school programs, your center could establish a foothold by filling these needs.

Bonus Tip: Talk to parents in your community to find out what they need most from a daycare, and aim to address these needs at your center. 

Business Planning

Business Planning

Once you have done this initial research into whether your daycare business will be viable in your community, you have to begin compiling a comprehensive business plan that maps out your objectives and the strategies by which you will bring them about.                                              

Child Care Center Business Plan Checklist

Here’s a checklist recapping some essential steps of putting together your child care business plan:

  • Competitor matrix
  • Financial Planning: Funding and budgeting
  • Location of your business
  • Staffing needs
  • Licensing requirements
  • Materials, equipment, and program agenda

Bonus Tip: As you go through creating your business plan, it is a good idea to mark down important deadlines and milestones on a calendar. This will ensure you have an accurate timeline for how long planning and preparations will take, and a strong estimate for when your business will be able to open.

Licensing Requirements

Child Care License

There are many legal regulations to consider when opening your center. License requirements are typically determined by states, and therefore will vary based upon where you live. You will have to make sure your business is in compliance with these regulations by acquiring the proper licenses. Child Care Aware offers a licensing resource that directs you to the proper licensing authorities by state.  

It is important to note that child care licenses and business licenses are not the same. You will likely have to acquire separate business licenses and child care licenses to legally operate your business.


Financing Your Daycare Center

Starting a business is financially demanding. For your endeavor to be successful, it is essential that you accurately assess how much it will cost for you to open the center, determine where that money will come from, and then budget and plan to ensure your financial structure will sustain your business as it gets off the ground.

During this process, you should consider initial expenses, and how much it will cost to run your business on an annual and monthly basis. Consider how much you will pay your daycare staff, what your tuition structure will be for parents, how late fees will factor in, and how much property rent / cost is in your community.

Potential Costs of Opening a Daycare Center

A few examples of the costs associated with opening a daycare center are:

  • Property renovations
  • Insurance
  • Materials
  • Staff
  • Marketing


It is important that you don’t begin the business process until you know how it will be paid for. This is money can be accrued from a variety of sources including your personal savings, loans from friends, loans from the bank, government programs, or grants.

Financial Tracking

It is important that you keep track of your expenses and cash flow for multiple reasons. First, it will help you to track and pay back any loans in accordance with the agreement you made with the lending party.  

Second, tracking cash flow ensures that you don’t overspend, or create a payment structure that will jeopardize the financial stability of your business on a month-to-month basis.

To be aware of when money comes into and leaves your center monthly, you should be tracking: the number of tuition payments you get per month, how many times a month your center pays employees, how many enrolled children you are permitted to have, and how many of those slots will be filled.

Bonus Tip: Doing these calculations by hand leaves room for error, so we recommend a child care accounting solution that will track financial information for the center and the families you serve, as well as tracking bookkeeping, tuition payments, and cash flow.

Choosing a Location

Daycare Center

The first thing to determine when choosing a location for your daycare center is if you want to run the center from your own home, or in a commercial space. This will affect your expenses and licensing requirements.

The location of your daycare center will be subject to many licensing regulations, including building safety, zoning, physical space requirements, emergency preparedness, and more. Many of these are to ensure that the environment in which you run you center is healthy and secure. This includes things like proper waste removal and having fire alarms. 

Two important location licensing requirements to keep in mind are zoning and physical space requirements. Zoning refers to a permit from the proper authority that allows you to run a business, or be zoned for business. The physical space regulation refers to the requirement that child care centers must have 25 square feet available per student. Therefore, you have to keep in mind that the size of your space will determine how many students are allowed to enroll.


Daycare Staff

For parents to feel comfortable leaving their children at your center and confident that they will get the developmental stimulation they need, you staff has to be well trained and experienced. Additionally, you must have enough instructors to provide quality group and individual care, as well as meet ratio requirements.

When hiring staff for your center there are three key features to keep in mind:

  • The student-to-teacher ratio
  • Licensing requirements
  • Training

Student-to-Teacher Ratio

The student-to-teacher ratio refers to the number of instructors that must be present based on the number of and age of the students. The National Association for the Education of Young Children provides recommended ratios based on age and group sizes.

Staff Licensing Requirements

Professional certification requirements and licenses vary by state; however, child care providers are often expected to have a high school degree or secondary degree. Common certification requirements are the Child Care Professional certification and the Child Development Associate certification. These require a certain number of hours of experience in different child care fields.

Staff Training

You should also make sure that your staff has training in safety courses such as CPR and first aid, as well as how to asses and document child development to report to parents. Child care instructors can provide important information to parents about where their children are developmentally, and where they may need individualized attention. That is why it is important to have reporting and parent engagement processes defined at your center, to simplify communication between caretakers and parents. 

Bonus Tip: The interview and review process to find the perfect candidates for your center can be time consuming, so you will want to start the hiring process at least two months prior to the opening of your center.

Last Steps

With financing, licensing, location, and staffing researched and prepared, you are almost ready to open your child care center. Final steps will be getting the necessary equipment and supplies, and setting an agenda for your daycare programs. You will need kid sized tables, furniture, and cots, as well as toys, crafts, and games. You will also need cleaning and administrative supplies.

When setting the agenda for your program you will want to establish routine daycare schedules for each age group. These schedules should incorporate activities that promote early child care development in major areas such as cognitive, emotional, and physical development.

As you get to know your students better, you will be able to cater the activities and learning programs to their specific interests.

Final Thoughts

The processes and planning that go into starting a daycare center can be overwhelming. However, with a defined mission and strategic business plan in place, it can be a successful and worthwhile endeavor. Following the guidelines above will give you the structure you need to build a thriving daycare center with an environment that fosters healthy, happy kids.   

Looking for ways to automate and organize administrative and business functions at your daycare center? Learn how Procare can help!

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Who’s in control, you or the center?

With Procare, there's no need to struggle

Are you working hard to run your center or is your center working you hard?

What I mean is that many directors often tell us about the work they pour into their center every day. But, in the chaos of everything going on around you, ideas of growing your business take a back seat when it’s a struggle to just maintain. We all know that a well-run center requires a lot of time and energy to run smoothly and profitably. That’s where you come in…

Before you arrive in the morning, your day is already booked. Immediately you are busy greeting parents, posting checks, juggling staff, and managing accounting. Before you know it, you’ve skipped lunch or perhaps you’re picking up toys and wiping down counters so you can go home. With time so short, you may even find yourself working when you should be playing. If this sounds familiar, it’s time to look into automating your center with a software solution that as unique as you and your center.

The best child care management system provides an all-in-one solution. It allows you to do away with confusing spreadsheets, generic financial software, clipboards and bank deposits.It helps you easily manage child and family data, attendance tracking, parent communications, staff hours, child/teacher ratios and more. And, it’s all-inclusive with check-in solutions and door security. Once you start collecting tuition electronically, you’ll say goodbye to late payments forever—all with just a few clicks!
Andy Spliethof
VP Creative Services
Procare Software

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4 Tips to Grow Your Child Care Enrollment

Preschool Boy in Field of CloverLying in a field of clover on a sunny spring day is the perfect way to spend a carefree afternoon—but if you’re waiting for a lucky four-leaf clover to increase enrollment at your preschool, you may be in for a surprise.

Enrollment gains aren’t based on luck. They require focus on marketing your child care business and effectively communicating with potential families. Lucky for you though, it’s easy to do when using Procare Child Care Management Software and following these 4 tips to grow your enrollment. Continue reading

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Using Immunization Tracking Software at Your Child Care Center

Girl Holding Teddy Bear while Getting a ShotHugging a teddy bear can help kids feel braver when it comes to getting a shot. And while they may have to endure a brief moment of pain in the name of good health, at least they don’t have to deal with the hassle of keeping track of immunization records and paperwork. Truth be told, neither should you.

As a child care professional, chances are you’re familiar with the recommended immunizations for young children and you’re careful to make sure every family brings in the child care immunization records for their children before they can attend. Next on your list is the question of how to efficiently keep track of all the immunization requirements, due dates and child history.

How to Track Child Care Immunizations

To help you simplify the paperwork, here are some essential features to look for in  immunization tracking software to keep your immunization records up-to-date.

Flexible Immunization Schedule

In order to track when the next immunization is due, you’ll need a way to define the schedule of required vaccinations. Since each shot requires a different schedule, you’ll want the child care database you choose to be flexible. For example, one immunization may have multiple doses due at specific ages, another may be due every 12 months, and a third may be due so many months after the last one, rather than at a specific age—such as when children are on a make-up schedule.

See Video: Set Up Immunizations

Allow for Exemptions

Children may be exempt from certain vaccinations for a variety of reasons.

  • If they’ve already had an illness, like chickenpox, the immunization (such as varicella) may no longer be necessary.
  • A child might have an exemption due to family philosophical or religious reasons.
  • Combo-vaccinations are another reason for exemptions. Families might choose (or their pediatrician might recommend) individual shots or a vaccine that combines multiple immunizations into one. Therefore, you’d need a way to exempt children from the “individual” shots or vice-versa.
  • An age exemption is another possibility. For school-age children you may not be required to track immunizations that apply to younger children.

Mark Child as Exempt from an Immunization

One final thought on exemptions: you’ll also want a way to indicate the reason why a child is exempt.

Alerts When Immunizations are Due

It’s good to know when an immunization or other requirement (physical, etc.) is due, but it’s even better to get advanced notice of when it’s coming due. In other words, you’d like the parents to know ahead of time, so they’re able to make sure they have the necessary doctor’s appointments arranged.


Immunization Due Alert

You may also want a way to:

  • Easily see on your director’s screen when immunizations are due or coming due.
  • Let parents see immunizations that will be needed soon, at the time they check their children in.
  • Generate reports and lists showing immunization information.

Immunization History

Beyond knowing what’s coming due, you’ll also want an efficient way to track the history for each child. In other words, what dates did a child receive each vaccination in the sequence? Typically, this information should be available on an immunization history report.


Immunization History Report
Final Thoughts

Making sure the kids attending your child care center are up to date with their immunizations is necessary to ensure the health of every child in your care. However, when the year gets underway and your schedule fills up, it can be easy to lose track of the multitudes of paperwork that go along with immunizations records. To mitigate these challenges and manage health records, child care centers should employ immunization tracking software with a degree of flexibility and customization that allows them to account for each child’s needs.

Learn how Procare can help you better keep track of  family health information at your child care center.

Interested in learning more about managing health information at your child care center? Check out these related articles.

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How to Calculate Full Time Equivalency (FTE) at Your Child Care Center

If you’ve ever played piano or most any musical instrument, you may be familiar with the metronome. It’s used to help you keep in time with the music; that is, to play at a steady tempo and consistent pace.

Likewise, Full-Time Equivalency (FTE) is a way to help your child care business keep each classroom filled in a steady and predictable way.

The beauty of FTE is that it allows you to compare classrooms in a reliable manner, regardless of the types of programs offered. This is possible because FTE uses a single measurement to account for daycare schedule variations, like full-day, part-day, or before and after school.


Daycare Schedule


Here’s how it works. One child with a full-time, 5 day a week schedule would have a FTE of 1.0. Two children each scheduled half days, all week long, would have an FTE of 0.5 each, but combined they would also have an FTE value of 1.0. In other words, together they would be equivalent to one full-time child.

Managing FTE Calculations

If all the children in your care are full-time you may be able to do the calculations by hand or with a simple spreadsheet, but if some children are scheduled on M-W-F or Tue-Thurs, or a few hours here and there, the calculations get complicated quickly. That’s where daycare scheduling and tracking software can help. By scheduling children in a management system, like Procare Software, you’ll be able to easily print reports showing the full-time equivalency for each classroom. This can be especially helpful when projecting enrollment for future weeks, and help with decisions about which programs need a marketing boost.

How to Calculate FTE at Your Child Care Center

FTE calculations are determined one child and day at a time, then added together for the week. Let’s assume you’re open 5 days a week and consider a full-time day to be 8 hours. For a single day, the most a child could contribute toward the weekly total would be 1/5 of a week, even if they were scheduled over 8 hours. Since 1/5 is the same as 20% or 0.20, a child scheduled 8 hours (or more) would have a FTE value of 0.20 for that day. A child scheduled less than 8 hours would contribute less to the total; for example, a 4-hour schedule would have a value of 0.10 for the day.

Example 1: One Full-Day Child, 3 Days/Week

Let’s say McKenzie was scheduled 8 hours on Monday, Wednesday and Friday, her FTE would be 0.20 for each day and 0.60 for the week. That is, she would be equivalent to 60% of a full-time child.

FTE: One Full-Day Child, 3 Days/Week

Example 2: Five Full-Day Children, 3 Days/Week

If 5 children (including McKenzie) had the same M-W-F schedule, their Monday FTE would be 5 children x 0.20 = 1.0 for the day and 3.0 for the week. In this example, none of the 5 children are full-time by themselves, but added together they are the equivalent of 3 full-time children for the week. A quick glance at the report shows we need to do a better job of getting the word out about our Tuesday and Thursday programs.

FTE: Five Full-Day Children, 3 Days/Week

Example 3: Add Five Half-Day Children, 2 Days/Week

If we add some children on Tuesdays and Thursdays at 4 hours per day, each of them would have a FTE value of 0.10 per day (half of the full-time value) and 0.20 for the week. In other words, half-day kids scheduled two days a week are equivalent to 20% of a full-time child. Adding 5 children with half-day schedules on Tuesdays and Thursdays would give us FTE values of 0.5 for each of those days (5 children x 0.10). And, adding that to the 3.0 we already had for M-W-F children gives us a full-time equivalency of 4.0 for the week.

FTE: Add Five Half-Day Children, 2 Days/Week

FTE Graphs and More

Some software packages let you print graphs to get a feel for your FTE numbers in a more visual way. You may even wish to run reports by department, rather than classroom, especially if you have multiple rooms for each age level. For example, you might have two classrooms called the Blue Whales and Green Turtles, but they are both part of your preschool department. Breaking it down this way provides an additional layer of organization to your daycare scheduling process and data organization.

FTE Pie Chart Graph

Final Thoughts

Having a clear understanding of your enrollment numbers and schedule availability is necessary to optimize operations at your child care center. By calculating the FTE of your students, you can better understand the resources and staff you need day-to-day, as well as days or time slots that can be improved upon.

Depending on how many students you have enrolled and the variation in their weekly schedules, it can be easy to be overwhelmed by FTE calculations. Using a child care management tool can keep track of FTE calculations and reports for you and your staff automatically. We hope this introduction to FTE helps you better manage enrollment in a predictable way, just like the steady beat of the metronome.

Learn more about how Procare can help you keep track of daycare schedules and enrollment.

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