Running a Home Daycare: The Business Advice You Need to Succeed

You’ve always loved taking care of kiddos—playing games, planning healthy meals and watching them grow and develop has always been rewarding for you. Why not make all that a career?

Starting your own in-home childcare sounds like the ideal way to pursue your passions while being your own boss, but you want to know what you’re getting into. What exactly does it take to run an in-home childcare center? Starting a business of any type is difficult and demanding, no matter how passionate you are about the subject.

Before you pursue this as a potential career option, you’ll want to have a strong understanding of what it takes to run a home childcare center and plans for accomplishing your goals. We’ve dug in and done the research so you can approach this new business venture with a clear view of what you’ll need to do. 

What to consider before starting a home childcare center

There’s more to running a home daycare than caring for kiddos. You’ll want to consider the following factors as you plan your next steps.

1. Creation and enforcement of policies

When home becomes your workplace, lines can blur quickly, especially if some of the children you care for belong to friends or family. One of the best ways to prevent this is to set clear boundaries by crafting clear guidelines and policies for families to adhere to.

Chances are you’ve already thought of having some formal policies around your operating hours and billing, and that’s a great start. But you’ll also want to flesh out policies for topics like discipline, required forms and emergency contact procedures and more to help you maintain healthy boundaries and project professionalism.

A policy handbook for families can be extremely helpful—saving you time explaining various policies to individual parents during busy pick-ups or drop-offs.

Family handbooks can include information regarding:

• Mission and philosophy of your program
• Operating hours
• Ages of children you serve
• Information on tuition payments and late charges
• Curriculum and daily schedule
• Required forms—health, medication, emergency contact info, field trip forms
• Policies regarding discipline, drop-off and pick-up, and food

Consider posting your family handbook on a business website or Facebook group so parents can easily access the information and reference it when questions arise.

2. Mastering your finances

Whether you consider yourself good with money or not, it’s important as a small business owner to get your financial house in order. Creating a budget and determining the cost of tuition means accounting for overhead costs like food, cleaning supplies, insurance costs and dues for licenses while also paying yourself and any potential employees.

ChildCare Aware suggests an in-home childcare budget should include allotments for the following:

• Events and fundraising
• Employees health benefits
• Employee payroll
• Accounting and legal fees
• Repairs and maintenance
• Marketing and promotion
• Child care supplies (per week, per child)
• Utilities

Getting a big picture look at all of these potential expenses will help you determine how much to charge for tuition per child and how much to charge for late payments. Additionally, some parents may be interested in seeing an itemized list of costs so they understand what their tuition pays for. This transparency could also give you a competitive edge—child care isn’t cheap and people like to know where their money is going.

Another avenue you may want to explore when getting your budget in order is funding from government programs. Some options include:

• The Child and Adult Care Food Program— a food reimbursement program for qualified and licensed providers.
• Child Care and Development Fund — a federally funded grant to states to support child care subsides.
• S Small Business Administration— offers a variety of information on loans, grants, and other funding opportunities for small businesses.

3. Where your business fits in the market and how to promote it

Though there are many ways to advertise your in-home child care, the first-step is knowing exactly what sets your child care apart from the rest. Do you only serve organic food? Do you focus on music or reading? Do you prioritize the children’s time in nature? Are you a no-fuss, convenient option?

ChildCare Aware recommends that in-home childcare providers complete a need assessment that helps you evaluate the childcare market around you. This will give you a better understanding of who your competition is, potential demand for childcare in your area, and any potential services that may be lacking in your area.

Once you have a stronger understanding of the market around you and where your business will fit in, you’ll need to spread the word! You can advertise your in-home daycare in many ways:

• Create a quality website
• Remain active on social media both for current and potential parents
• Host an event or partner with local businesses
• Provide incentives for parents to leave reviews online
• Seek referrals from parents you currently work with

4. Obtaining licensure and certifications

Whether or not you need a child care license depends both on your state and how you plan to run your business. Though federal law requires background checks for all adults living in the family child care home, the remaining stipulations will depend on your goals. For instance, some states don’t require a license to run a small business out of your home, but if you’re hoping to hire employees, accept a certain number children or expand to a new location, you’ll likely need to pursue a license.

If this all sounds like a hassle, you may be a surprised to find that it’s easier than you think. ChildCare Aware suggests checking with your state your state licensing agency or your local Child Care Resource and Referral Agency to find out exactly what it takes to become licensed.

If you decide to take those steps, a license can benefit you and your business in many ways. For one, seeing that framed license hanging on the wall may bring them some peace of mind. Earning state licensure generally means you’ve met standards for health and safety, staffing ratios, education and training and more. Not only will this reassure current parents, it may also help attract new ones.

Beyond state licensure, you may also want to consider bolstering your credibility as a childcare provider by pursuing formal education in an Early Childhood Education program or a Child Development Associate credential. These steps will bolster your ECE knowledge and potentially provide you with a way to stand out among child care providers.

5. Insurance requirements

Like child care licensing, insurance requirements for in-home providers will vary from state to state. You’ll first want to check with your state licensing agency to find out what’s required of you specifically. Generally speaking, there are three primary types of insurance to consider as an in-home childcare provider:

• Business owner’s insurance—a combination of general liability and property insurance
• Professional liability insurance—covers losses your business may suffer due to staff’s negligence
• Worker’s compensation insurance— pays benefits if an employee is injured while working

Though sifting through insurance policies might not be the most exciting step, it’s incredibly important. These policies are meant to protect both you and your home—and may even be a requirement of your personal homeowner’s insurance. The consequences of being underinsured when you’re living in your place of employment could be catastrophic if something goes wrong—you’re not just out a business, you could lose the roof over your head. Do not take insurance lightly.

Ready to start your own in-home daycare?

Between balancing budgets and staying compliant with state and federal regulations, running an in-home childcare center isn’t simple, but the rewards—building relationships with families and their children, being your own boss and working out of your own home— can make it all worth it.

Now that you know more about what it takes to run a daycare, you’re likely wondering what exactly you need to do start your own home day-care. Take a deeper dive with our article, “Your Step-by-Step Guide to Opening a Daycare.”

Editor’s note: While the term “daycare” is commonly used, many early childhood educators prefer to use other terms to better reflect the professionalism of the field. We explain this further in our article, “Childcare vs. Daycare: What’s the Difference? (And Why It Matters).”

Graduates of Early Childhood Education programs at Rasmussen College are not eligible for licensure as a teacher in an elementary or secondary school. A Bachelor’s degree and a state teaching license are typically required to work as a teacher in a public school and some private school settings. States, municipalities, districts or individual schools may have more stringent licensing requirements. Students must determine the licensure requirements in the state and school in which they intend to work.
Childcare facilities and the states in which they are located establish qualifications for staff who work with children, and often implement guidelines regarding age, education, experience and professional development. Students must determine the licensure requirements for the state and facilities in which they work.
This program has not been approved by any state professional licensing body, and this program is not intended to lead to any state-issued professional license. For further information on professional licensing requirements, please contact the appropriate board or agency in your state of residence.