Wilson College Online Blog

If you’re a parent of young children, you likely already know the U.S. is facing challenges in providing adequate childcare services. According to an analysis from professional services firm KPMG, as of April 2024:

• About 1,161,000 people in the U.S. had to pursue part-time work instead of full-time work because of childcare issues

• About 113,000 people in the U.S. who had been working full time had to reduce their work hours to fewer than 35 hours because of childcare issues

While the ongoing shortage of childcare services has become an issue for parents, it also presents an opportunity for early childhood education professionals to apply their knowledge by opening daycare centers. It can be worthwhile for anyone considering enrolling in a Bachelor of Arts (B.A.) in Early Childhood Education degree program to explore how to open a daycare and other key factors.

What Are the Benefits of Opening a Daycare?

Opening a daycare that parents trust to be safe and reliable can position you to take advantage of several benefits. For example:

• Daycare services are in demand. The U.S. Chamber of Commerce (USCC) reported in 2024 that 16,000 child care centers in the U.S. had to close during the COVID pandemic, and several others were forced to reduce their hours. While the industry is rebuilding, parents are still challenged by a scarcity of adequate child care services. This suggests strong potential for new daycare centers entering the market.

• You can apply your early childhood education knowledge and skills. Opening a daycare is a great opportunity to use your expertise in areas such as play-based learning and child development to help young children learn and grow.

• Providing daycare services represents a contribution to your community. Daycare is a service that supports almost every other industry. Parents who have access to adequate daycare can work in various roles, allowing their employers to succeed and contribute to the entire economy.

• Operating a daycare can qualify you for certain tax advantages. Daycare providers can qualify for several tax advantages, including tax deductions for supplies, snacks, equipment, and insurance.

• You can be your own boss. Starting a daycare allows you to build a business that aligns with your preferences. For example, you can offer services full time, or you can work part time by specializing in after-school services. As with any entrepreneurial endeavor, you have the opportunity to refine your business and management skills.

What Are the Requirements to Open a Daycare?

The requirements for opening a daycare vary from state to state, so it’s important to become familiar with the specific requirements of the state where you want to start a daycare operation.

Unless a daycare is very small, it will need at least a state license. Depending on the state, this typically requires the following:

• Meeting the minimum age requirement

• Being a high school graduate or the equivalent

• Passing a criminal background check

Other examples of typical requirements include the following:

• Undergoing an inspection

• Conducting background checks on all employees

• Obtaining insurance

• Earning certifications in areas such as first aid, CPR, and food safety

• Adhering to state child-to-staff ratios

In addition, although these aren’t requirements, the following can be beneficial:

• Earning a B.A. in Early Childhood Education, which can provide you with expertise in key areas, such as managing children’s social-emotional challenges and using research-based strategies when working with children

• Earning Child Development Associate (CDA) certification from the Council for Professional Recognition, which can enhance your childcare credentials and demonstrate that you have knowledge of how children grow and develop

How to Create a Business Plan and Open a Daycare

Knowing the general steps for opening a daycare can help you navigate the process. Below are the overall steps in the process.

1. Analyze the Market

The process of opening a daycare starts with analyzing the market and confirming a viable opportunity exists. This can also be an opportunity to identify potential customers who have an interest in the daycare’s services.

2. Develop a Business Plan

After conducting market analysis, the next step is to develop a business plan. Its components include the following:

• Legal requirements for starting a daycare

• Funding sources and ownership

• Services to be provided

• Staffing needs and their roles

• Financial projections (cash flow, income, and profit and loss)

3. Consider Other Important Aspects of the Daycare

As discussed above, obtaining the required licenses and complying with other legal requirements is a key priority when opening a daycare. Other key considerations when establishing a daycare include the following :

• Staff qualifications

• Insurance requirements

• Policies and procedures

• Budget

• Children’s activities (free play, games, and outdoor learning activities )

• Supplies and equipment

4. Prepare to Open for Business

After complying with all legal requirements, subsequent steps in the process of starting a daycare include the following:

• Opening bank accounts

• Developing daycare contracts

• Hiring staff

• Registering for payroll taxes

• Marketing services

Gain the Skills to Start a Daycare and Provide a Much-Needed Service

Starting a daycare is a great way to apply your expertise in early childhood education and child development to offer an in-demand service. Daycare is a critical support for working parents and the entire economy, and launching a daycare can allow you to make a significant contribution to your community.

If you have an interest in gaining knowledge and skills that could help in operating a daycare, then explore Wilson College Online’s B.A. in Early Childhood Education degree program to learn how it can help you achieve your goals. Preparing individuals for certification to teach pre-K to fourth grade in Pennsylvania, the program offers the opportunity to obtain expertise in instructional strategies and important classroom practices. Take the first step on your journey in early childhood education today.

Recommended Readings

5 Child Care Careers With a Degree in Education

Child Care Deserts and Their Impact

Why Are After-School Programs Important?

Sources:

Calbert Design Group, “Benefits of Owning a Childcare Business”

CorpNet, “How to Start a Daycare Business”

Council for Professional Development, About the CDA

Daily Connect, Open a Daycare?

Everlance, “Top 12 Tax Deductions for Childcare Providers”

Illumine Technology, How to Start a Daycare Business (at Home or Center): Child Care Certifications, Steps, and More

KPMG, Crisis in Childcare and the State of Work in America

Moon Invoice, “An Ultimate Guide on How to Start a Daycare Business”

U.S. Chamber of Commerce, “Understanding America’s Labor Shortage: The Impact of Scarce and Costly Childcare”

U.S. Small Business Administration, 10 Steps to Start Your Business