How to start a daycare

Two decisions before anything else

First: home or centre. A licensed family child care programme has a fraction of the entry cost, licenses faster, and is how a large share of centre owners learned the business. A centre serves more children, needs staff from day one and needs a building that can be licensed. There is no wrong answer and there is a wrong order — deciding this after signing a lease is expensive.

Second: your runway. How many months of payroll and rent can you pay before enrolment covers them? Four is a common answer and one is not an answer. Programmes do not usually fail on the build-out; they fail in month three with half-full rooms and a full payroll.

Everything else in this guide is execution. These two are the plan.

Research the licence, not the market

Attend your state's pre-licensing orientation first. Several states — California states it plainly — will not accept an application until you have. It is also where you learn the square footage rule, the fencing spec and the bathroom requirement that decide which buildings are even candidates.

Read the ratio and group-size tables for every age you intend to serve, in months. Read the director qualification. Read the exemption definition if you are near a threshold.

Then look at demand. Waiting lists at nearby programmes tell you more than any market report, and infant waiting lists are usually the longest — which is also the hardest room to run.

The money, in order

One-time: build-out, furniture and equipment, licensing fees and inspections, insurance deposit. Build-out is dominated by bathrooms, hand-washing sinks and a kitchen the health inspector will pass, which is why an office conversion costs more than people expect.

Recurring, before revenue: payroll and rent for the runway months. Payroll starts before children do — several states require qualified staff in place before the licence issues.

Then the revenue side: your rate, worked from cost and realistic occupancy rather than from the programme down the road. Plan at 85% occupancy, not 100%.

Hire before you think you need to

Background checks are the slowest item in the whole process and they are outside your control. Submit for every adult the week you begin, including household members in a home programme.

The director qualification is the other constraint. If you are not qualified yourself, you need someone who is, named on the licence, before you can operate — and that is a specific search, not a general one.

Post rates. The BLS median for childcare workers was $16.82 an hour in May 2025; preschool teachers $18.34. Where your local market sits above that, say your number in the posting, because every applicant assumes silence means low.

Opening, and the first families

Enrol before you open. Tours during the fit-out, a waiting list, and a start date families can plan around — a programme that opens and then starts marketing has bought itself an extra empty month at full payroll.

Have the paperwork ready on day one: enrolment packets, handbook, contracts, daily sheets, attendance, medication log, incident forms. The first week is not when to design a form.

And join the food programme early. CACFP reimbursement — $2.54 for a free-rate breakfast, $4.76 for a free-rate lunch or supper in centres for 2026-27 — starts paying against a cost you have from the first meal.

• Tours during fit-out, with a real start date.
• Waiting list, in writing, with deposits where you can.
• Every form printed before opening day.
• Food programme application filed early.
• First drill run and logged in week one.