Why Starting a Daycare is Becoming More Popular

Starting an in-home family daycare is becoming a more and more popular alternative to going back to work for parents.

Michelle Williams, an in-home family daycare provider in a rural Minnesota town, started her daycare because she wanted to be home with her kids, while also contributing to the family’s income.

“When I had my daughter, I missed her every day when I went to work. I wanted to be home with my own kids and raise them, but to make it feasible for me, I had to open my own business. I knew I couldn’t work from home online or on the computer, because that was not what I wanted. So, I started a daycare, and I enjoyed every moment of it.”

The continuing demand for daycare

There is a continuing demand for quality daycares, and starting an in-home family daycare fulfills a huge hole in the market. According to a recent report, half of all families in need of daycare say finding daycare is difficult. Quality of care, affordability, and availability are the primary reasons families struggle to find care for their children, with 27% of families reporting the lack of open slots as the biggest challenge.

Daycare is also expensive, costing more than college tuition in some states. For dual-income families, it might not be worth it for both parents to work. In fact, nearly half of all families are spending 15% or more of their annual income on childcare, with some families spending up to 29%. In-home family daycare typically costs less than center care, so for many families it is also a more affordable choice.

A lucrative business option for stay-at-home parents

The number of in-home family daycares dropped by 20% in recent years, leaving parents with fewer options. This makes the childcare industry a lucrative option for stay-at-home parents looking to start a business.

Total revenue for the childcare industry increased to $56 billion in 2019, and it is predicted the industry will continue to grow, as government initiatives emerge to support childcare, and corporate profits enable companies to provide better childcare benefits to their employees. If you’re a stay-at-home parent already caring for your own children, why not add a few more and turn it into a business?

Finding a safe place for children to grow and learn

The benefits of daycare reach far beyond just having a place for kids to go while parents are at work, however. The focus of many daycares has shifted from simply caring for a child to caring for the developmental needs of a child. This shift is important, because the experiences a child has in the first few years of life greatly impacts brain development and shapes future learning.

Experienced daycare centers understand this impact and use their curriculum to enhance the developmental needs of the children in their care.

A focus on safety can distinguish you from other businesses

When selecting a daycare, parents are also seeking a safe place for their children to be while they are at work. Keeping our children safe is more of a concern now than ever before, with reports of threats, suspicious accidents, and child deaths appearing in the news. 

Health and safety issues have experts advocating for better-trained staff and increased regulations for daycares, and the use of technology to increase security can offer much-needed peace of mind to parents. 

By focusing on safety and security when starting a daycare, you can distinguish yourself and serve the market in a unique way. To get started, you’ll need to ensure your daycare adheres to state regulations. These regulations provide a minimum standard that all daycares must meet. From there, you’ll want to ensure additional home security measures are in place, which we’ll cover later on in this guide.

For help locating appropriate authorities and for general guidance on starting your business, contact a nearby Small Business Development Center, SCORE Chapter, or your local Childcare Resource and Referral Agency.

Daycare vs. childcare

The difference between the terms “childcare” and “daycare is subtle, and people use them interchangeably. However, they have two very different meanings. Childcare is care for children provided by someone other than the parent, and daycare is the supervision of children during the day, by someone other than the parent. They sound like the same thing, but they are not.

Childcare can really be defined as two things: the type of care a child receives and the quality of care provided.

For example, there are many types of childcare:

  • In-home family daycares
  • Daycare centers
  • Nannies
  • Relative care
  • Babysitters
  • Au pairs
  • Preschool programs
  • After-school programs

The term “childcare” also sheds some light on the quality of care provided. Using “childcare” instead of “daycare” highlights the developmental needs of the child and not the parent’s need for convenience.

The term “daycare” applies to a specific type of childcare, and it also refers to a time when the childcare industry was less professionalized. Many childcare providers have Master’s degrees in Early Childhood Education, so to them, the term “daycare” can feel a little dismissive.

For your in-home daycare, it’s fine to use the term “daycare,” but you’ll want to stress to parents that what you’re offering is quality childcare in an in-home setting.

Proper licensing considerations when running a business from your home

Licensing requirements vary from state to state, so be sure to contact your state licensing office. The best place to start is with Childcare Resource and Referral, or you can click on this map

Common steps to become a licensed daycare provider include:

  1. Complete an application for licensure
  2. Complete a background check
  3. Complete a home inspection
  4. Some states require the provider to meet a minimum education level or to take certain classes

In order to stand out from the competition, you may also want to become accredited. Accreditation shows parents that you have reached a higher level of quality than a typical licensed daycare. 

To get started, contact your local Childcare Resource and Referral, the National Association for the Education of Young Children, or the National Association for Family Child Care.

Another way to take licensing one step further is to find out if your state offers quality ratings. The Quality Rating and Improvement System is a system that helps parents understand the level of quality in a childcare setting. 

Important Items to Consider When Starting a Successful Daycare/Childcare Business

There is a lot of behind-the-scenes work that needs to happen before you ever open your doors for business.

Create goals and a business plan

One of your first tasks when getting started is to set goals and create a business plan. Do you eventually want to scale to a larger business? What are your financial goals? Envision the future of your business, and then get started working toward those goals. 

Hiring staff and taking on more children

When your business grows to the point where you find yourself turning children away, it might be time to hire another childcare worker. This person can be another childcare provider or an assistant who works under you. You can also consider hiring a substitute provider for the days you need time off.

If you want to care for more children, you need to pay special attention to the child-adult ratio for your state. The federal guidelines are as follows:

  • 3-4 infants per adult
  • 3-6 toddlers per adult
  • 6-10 preschoolers per adult
  • 10-12 school-aged children per adult

Set your financial goals

An important part of your business plan is establishing your financial goals. Set realistic goals for your childcare business, keeping in mind that most small daycares net around $20,000 a year. To make more than that, you will need a solid business plan with a unique selling point, and a great marketing strategy.

Potential grants that could reward you for starting a daycare

  • The Community Development Block Grant
  • The Community Facilities Grant Program
  • The Child Care Development Block Grant
  • Child Care Food Program

Utilizing safety in the home to distinguish yourself from the competition

There are many ways you can set yourself apart from the competition. Offering a unique service, meeting the needs of your families, and focusing on safety in the home are great places to start.

Research and find opportunities in your community

Talk to parents and find out what they need in a daycare. What are some childcare services they’d find valuable, yet they’re unable to find? What services are other daycares offering? What needs do their parents have? 

Michele Hutchinson, Director of the Discovery Place Childcare Center, states parents have many concerns when signing their children up for daycare. “The themes I have noticed through the years are: a safe environment, caring providers, educational experiences, hours open/closed, other children/families that are also attending, like values in child-rearing or acceptance of the family preferences (customs, religion, foods), and last but NOT least affordability.” 

If you can find out the common needs of parents in your community, you can offer services that provide them with solutions.

For example, consider some of the following services:

  • Hold extended hours: Often parents need to fill unique care gaps, and offering extended hours can be a solution. If you do end up offering services that extend into the evening, consider using security cameras, doorbell cameras, and email/text options to ensure the appropriate adult is picking up the child.
  • Accommodate special dietary needs: Whether a child has food intolerances, life-threatening food allergies, or dietary preferences, such as eating vegan, offering special dietary menus and being food allergy aware can set you apart. Consider providing a checklist during the registration process, so both the parents and caretakers are taking measures to ensure the health and safety of each child.
  • Care for children with special needs: Does a child have specific triggers or behavioral patterns that you, as a care provider, should be aware of to ensure you’re offering a safe environment for all of the children in your care? Upon intake, it’s important to learn about any behavioral issues and/or special accommodations a child may need.
  • Promote and provide accurate insurance for your business: Unexpected bumps and bruises are a common occurrence with children. However, sometimes serious accidents happen, setting you up for a lawsuit. To protect yourself, and to reassure parents, you need liability insurance for your business. In fact, most states require you to carry home daycare insurance in order to maintain your license. 

Provide safety measures throughout the home

Parents want to know that when they drop off their child, they are going to be happy and safe, so it’s important to get this message across. Safety can be your unique selling point and a home security system can make it happen. 

Set up security cameras

Security cameras can give both parents and providers peace of mind. The mere presence of cameras deters criminals when displayed in prominent areas, and when an unexplained incident or accident happens, cameras allow staff to review the situation.

Technology allows for daycare providers to monitor the areas where care is provided via video. This does not replace actual supervision, but is intended to aid in the review of the care provided. 

Some parents appreciate access to a live video feed, where they can watch what happens inside the daycare at any given moment. Parents will usually be able to access this live stream from an app on their phone or computer.

While live streaming a child’s care can be reassuring for many parents, others may worry about privacy laws. 

“There are some big arguments based on children privacy laws lately as we are becoming a society that can seriously impact on any privacy a child may have once they have access to the internet,” advises Andrew Taylor, the Director at Net Lawman, “I think the benefits outweigh the negatives in these situations, however.”

In an age where everyone is equipped with video recording, it can be tricky to determine what is legal and what is not. 

Generally speaking, it is legal to take photographs or to film children without parental consent in a public setting like a park, or for editorial purposes, such as an image meant to accompany a newspaper article. 

It gets a little tricky inside your in-home family daycare, however. According to David Reischer, Esq., Attorney and CEO of LegalAdvice.com, “The laws for how and what you can record on a video feed without consent do vary from state to state. Some states do not require a person to get consent or notify them of the existence of a camera recording device, but some states do mandate notice.”

If you will be photographing, videoing, or live streaming children in your care, keep written parental consent on file, along with written policies that clearly spell out what the photographs, videos, and live streams will be used for, including who has access to the footage. 

If you are live streaming, you need to set it up in a way so that only parents have access to the live video stream. Bathrooms, private offices, changing rooms, and anywhere else that you would expect privacy cannot have cameras. Your written policies need to disclose the location of all cameras.

Reischer adds, “Ultimately, it is important for the parents to determine the best course of action of whether they want their children recorded on a live video feed or not. Consideration should be given to whether the video or audio footage will be accessed by third parties. All parents will need to provide written consent before their children are allowed to participate in the live stream. The default is that a parent is automatically opted-out unless they decide affirmatively in writing to opt-in.”

Outside security cameras are a good idea as well, particularly in the play area. If a child gets hurt, cameras are useful not only for reviewing the cause of the incident, but also for reviewing how the incident was handled. 

Cameras can monitor sidewalks, the backyard, fencing, and any property openings, such as gates or driveways.

Window sensors and doorbell alarms add another layer of security. Installing keyless locks on your doors can give parents instant access, while keeping out unauthorized people, such as delivery drivers. These systems can be disabled after hours, so that you do not have parents entering your home uninvited during non-daycare hours.

Utilize Alexa

When you run an in-home family daycare, you need to keep many logs, notes, and records of the children in your care, such as tracking eating and sleeping habits, or making note of major milestones. 

Alexa can help with those tasks.

Use Alexa to record notes and set up alerts and reminders for yourself or for the children, such as when playtime is over, or when it’s time for a bathroom break. Alexa can play clean up music or calming music during nap time. And, of course, it’s easy to use Alexa for daily observations.

Ready to Start Your Own Daycare?

If you decide to start your own daycare, the best way to set yourself apart from the competition is to focus on your unique selling points, including the special accommodations you can offer, with a serious focus on safety and security. 

Do your research before starting out, create a safe, quality learning environment, and have fun!

Resources for starting an in-home family daycare