A daycare is a facility designed basically for taking care of babies and children during the day until their parents come to pick them up. Many professionals agree that introducing a baby to daycare at the age of 12 months is ideal as separation anxiety peaks at 9 months.
Most daycares have a regular daily schedule for kids that includes; food and nap periods, playtimes, and educational activities.
For the 2022-23 school year, there are 1,457 private daycares & preschools serving 251,753 students in Texas. The average tuition cost is $8,942, which is lower than the Texas average tuition cost of $10,406. 59% of private daycares & preschools in Texas are religiously affiliated (most commonly Christian and Catholic).
Steps on How to Start a Daycare
Table of Content
Conduct Market Research
You must undertake in-depth market research if you plan to open a daycare center. With a successful market analysis for your daycare, you will be able to delve into uncharted territory and discover fresh opportunities in the field. Please note that creating market-based research questions that are consistent with your daycare’s overall goal and objective is the first step in the market research process.
a. The Target Market for Daycare Facility
The target market for daycare facility are parents with children who are under 4-year-old.
b. Is Daycare Business a Profitable Business in Texas?
Yes, the daycare business is very profitable. The average profit realized from this industry is $59,100. In Texas, the average yearly cost of child care is $9,324; this works out to $777 per month.
c. Are There Existing Niches You Can Focus On?
- Daycare for children under 4 years old
- Daycare for adults
- Daycare for children with special needs.
d. Who are the Major Competitors?
- Royalties Childcare Center
- Little Dumplings Daycare
- Texas Tykes Daycare
- Precious Stars Home Childcare/Daycare Frisco Texas
- Tiny Texans Child Care Center
- My Little Team Texas Daycare
- La Petite Academy of Bedford
- Precious Lambs Learning Center, Inc. Lancaster, TX
- Kidz Town
- Kids N Motion
- La Petite Academy of Euless
- Central Texas Children’s Center
- Letty’s Tiny Tots Registered Home Daycare
- Texas Kids Childcare
- Childtime of Fort Worth
- Childcare Network
- Eden Community Childcare
- Promise Land Learning Center – Conroe Daycare
- Small World of Learning
- Next Generations Child Care.
e. Are There County or State Regulations or Zoning Laws for Daycare Businesses in Texas?
Yes, there are state regulations for daycare businesses in Texas. Operators of home daycares must abide by zoning laws, some of which are exclusive to home daycares. These regulations are made to deal with the special conditions that arise from a business operating in a residential area.
Other laws govern how properties are changed, including restrictions on the installation of business signs, playground equipment, and fences. Zoning regulations also include standards intended to handle the unique conditions surrounding these enterprises.
Please be aware that many localities have zoning regulations that request home childcare providers to apply for a city permit. Permits guarantee that all home daycare facilities have valid licenses from local or state authorities.
f. Is There a Franchise for Daycare Business?
Yes, there are franchise opportunities for daycare business, and here are some of them;
- The Goddard School
- Primrose Schools
- The Learning Experience Academy of Early Education
- Kiddie Academy
- College Nannies, Sitters, and Tutors
- Kids ‘R’ Kids Learning Academies
- Children’s Lighthouse Learning Centers
- Lightbridge Academy
- Discovery Point
- Creative World School.
g. What Do You Need to Start a Daycare Business in Texas?
- Conduct your market survey and feasibility studies
- Learn everything you need to learn about owning and operating a daycare business
- Choose a name and register the business
- Draft a detailed Business Plan
- Secure the required licenses and permits
- Apply for an EIN (Employer Identification Number)/Federal Tax ID Number.
- Open a corporate bank account
- Lease, equip and furnish your daycare facility
- Hire employees
- Market and promote your daycare.
Choose a Memorable Business Name
When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable.
Some of the catchy business name ideas suitable for a daycare business are;
Creative Daycare Business Name ideas
- Golden Castle© Daycare, Inc.
- Learning Pros® Daycare, Inc.
- Gifted Kids© Daycare, Inc.
- Royal Courts® Daycare, Inc.
- Green Tower™ Daycare, Inc.
- Hero Now™ Daycare, LLC.
- Born Genius© Daycare, LLC
- The SAINTS® Daycare, Inc.
- Dallas Stars© Daycare, Inc.
- Jeff Johnson© Daycare, Inc.
- Kent Krest® Daycare, Inc.
- Edu Pro® Daycare, Inc.
- Joseph School® Daycare, Inc.
- Little Genius® Daycare, Inc.
- The Future® Daycare, Inc.
- Houston Kids© Daycare, Inc.
- Free Minds™ Daycare, LLC
- Nevada City® Daycare, Inc.
- San Diego Edu® Daycare, Inc.
- Jeff Boaz™ Daycare, Inc.
Register your Business
a. What Type of Business Structure is Best for Daycare Business in Texas?
The company structure that most daycares and preschool providers consider is an LLC. A provider will consider forming an LLC in a bid to defend themselves in court. An LLC will require an EIN if it is required to file any of the excise tax forms listed below or if it has any employees. The majority of newly formed single-member LLCs that are considered disregarded businesses must obtain an EIN.
b. Steps to Form an LLC in the United States of America
- Choose a name for your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Daycare Business in Texas?
Here are some of the licenses you would need if you want to start a daycare business:
- Diploma or GED
- Family Child Care Home License (in-home daycare)
- General Business License
- Group Family Child Care License
- Health and Safety Permit
- Zonal Permits
- Director’s License
- State Facility Inspections
d. What Type of Certification is Needed to Open a Daycare Business?
- Early Childhood Education Certification
- Food Handler Certification
- First Aid and CPR Certifications
- Degree or Diploma in related courses
e. What Documents are Needed to Open a Daycare Business in Texas?
- Business and liability insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval
- Federal Export Licenses
- Certificate of Incorporation
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
You might not need to register a trademark or intellectual property if you are thinking about starting a daycare business in Texas. This is because the nature of the business allows you to successfully manage the firm without having any reason to sue anyone for using your intellectual property.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Daycare Business in Texas?
You would need an estimate of $150,000 (it could be more and it could be less) to successfully set up a daycare facility in Texas. Please note that this amount includes the salaries of all the staff for the first month of operation.
b. What are the Costs Involved in Starting a Daycare Business in Texas?
- Business Registration Fees – $750.
- Legal expenses for obtaining licenses and permits – $3,300.
- Marketing, Branding and Promotions – $5,000.
- Business Consultant Fee – $2,500.
- Insurance – $5,400.
- Rent/Lease – $150,000.
- Other start-up expenses including, commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($2,800).
- Operational Cost (salaries of employees, payments of bills et al) – $60,000
- Start-up inventory – $15,000
- Store Equipment (cash register, security, ventilation, signage) – $4,750
- Furnishing and Equipping – $80,000
- Website: $600
- Opening party: $3,000
- Miscellaneous: $2,000
c. What Factors Determine the Cost of Opening a Daycare Business?
- The Type of Daycare business
- The Choice of Location
- The Required Licenses and Permits
- The Type of Facility
- Additional Services Offerings
- The Number of Babies (Children) They Want to Admit
- The Cost for Branding, Promotion, and Marketing of the Daycare facility
- The Cost of Furnishing and Equipping the Daycare facility
- The Cost of Insurance Policy Covers
- The Cost for Registering the Business
- Source of Your Supplies and Ongoing Expenses
- Cost of Recruiting and Training Your Staff
- The Cost for the Purchase and Customizing of Uniforms, Shoes and Caps for Your Employees
- The Cost of the Grand Opening of the Daycare business
d. Do You Need to Build a Facility? If YES, How Much Will it Cost?
As regards the facility, you have the option of renting, leasing or constructing your own daycare facility from the scratch. With renting and leasing a facility, you may spend extra to modify the facility to fit into what you have in mind, but there is a limit to how far you can go and it will be dependent on what the landlord of the facility wants.
If you want to construct your daycare facility from the scratch, you will buy the land or property, design, construct and equip the daycare facility to fit into what you have in mind. On average, it will cost you over four hundred and fifty thousand dollars ($450,000) to construct a daycare facility.
e. The Ongoing Expenses for Running a Daycare Business?
- Rent and lease
- Cost of stocking up supplies such as first aid medications, toiletries, disinfectants, sanitizer, hand gloves, and bedding et al
- Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
- Salaries of employees.
f. What is the Average Salary of your Staff?
- Head of Day Care (President) – $45,000 Per Annum
- Day Care Administrator – $36,034 Per Annum
- Account Officer – $35,000 Per Annum
- Early Childhood Educators – $33,300 Per Annum
- Front Desk Officer – $28,000 Per Annum
- Cleaners and Nannies – $22,000 Per Annum
- Security Guard – $22,000 Per Annum
g. How Do You Get Funding to Start a Daycare Business?
Here are some of the options you can explore when sourcing start-up capital for your daycare business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Source for soft loans from your family members and friends.
Write a Business Plan
a. Write a brief executive summary
Kent Krest® Daycare, Inc. is a standard for-profit daycare that will be based in Dallas, Texas. Our daycare center is designed to provide care and early childhood education for children between the age of 0 to 4 years during the day. Our programs are designed to offer relief to family members and caregivers, allowing them to go to work, handle personal business, or just relax while knowing their children are well cared for and safe.
b. Products and Service
- Daycare services
- Early education services
- Meal services
- Transportation services
- Play activities.
c. Mission and Vision Statement
Our mission is to create a highly effective daycare facility that offers early childhood education and daycare services to children under the age of four in the neighborhood.
Our vision is to create an international model for the daycare center industry in Dallas, Texas.
d. Goals and Objectives
The goals and objectives of a daycare center are to provide quality care and early childhood education for children under the age of 4 years.
e. Organizational Structure
- Head of Day Care (President)
- Day Care Administrator
- Account Officer
- Early Childhood Educators
- Front Desk Officer
- Cleaners and Nannies
- Security Guards
a. SWOT Analysis
This is the summary of the SWOT analysis that was conducted for the Daycare;
The fact that a group of highly skilled experts fills a variety of employment positions within the daycare center is one of its strengths. They actually rank among the best hands in the state. Additionally, the company’s great customer service culture, location, business model, and well-equipped facilities will all be major assets for the daycare center.
The daycare is a young company owned by a single person (family), thus it is possible that they lack the financial resources to provide the kind of publicity that will give it strong awareness and help it draw in some of the most skilled workers in the daycare services sector.
Given the abundance of children under the age of four in Dallas, Texas, as well as the busy schedules of working-class parents, daycare facilities offer countless prospects.
Like any other business, you are likely to face a number of dangers, including economic slump and adverse government regulations. It is true that a downturn in the economy has an impact on purchasing and spending ability. The opening of a new, larger, and more established daycare facility in the same neighborhood as your facility is another danger you will face.
b. Sources of Income
Below are the sources you can explore to generate income for a daycare business;
- Daycare services
- Early education services
- Meal services
- Transportation services
- Play activities
- Government grants
c. Payment Options
Here are the payment options you can use for your daycare business;
- Payment via bank transfer
- Payment with cash
- Payment via credit cards
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
d. Sales & Advertising Strategies
Here are some of the platforms you can utilize to market your daycare;
- Introduce your daycare facility by sending introductory letters alongside your brochure to households and key stakeholders in and around the location where your daycare facility is located
- Open your daycare services with a party so as to capture the attention of residents who are your first targets
- Print out fliers and business cards and strategically drop them in offices, libraries, public facilities, train stations et al.
- Making your first impression count positively to those making inquiries about your daycare facility for the first time
- Make use of attractive handbills to create awareness and also give direction to your daycare facility
- Advertise your services in community-based newspapers, local TV and radio stations
- List your business and products on yellow pages ads (local directories)
- Leverage the internet to promote your daycare facility
- Engage in direct marketing and sales
- Encourage the use of word-of-mouth marketing (referrals)
- Leverage the internet to promote your daycare facility (when you blog regularly on key issues as it relates to your business, people who consider you an expert in the field)
- Join local chambers of commerce and industries around you with the main aim of networking and marketing your daycare facility; you are likely going to get referrals from such networks.
- Engage the services of marketing executives and business developers to carry out direct marketing for you
a. How Much Should You Charge for your Service?
We will charge based on industry standards in the United States of America and the average annual fees for full-time center care for an infant range from $4,822 to $14,366, and the cost for a 4-year-old child ranges from $3,997 to $11,700. Please note that the variability is attributed to geographic location.
b. How Much Profit Do Daycare Business Owners Make a Year?
Owners of daycare centers profit an average of $37,000 per year. While some owners of daycare centers report earning over $60,000 profit per year, the other side of the spectrum reported making well over $80,000 annually.
c. What Factors Determine the Amount of Profit to Be Made?
Here are some of the factors that determine the amount of profit a daycare business can make;
- The capacity of the daycare
- The location the daycare facility is covering
- The management style of the daycare facility
- The business approach of the daycare facility
- The advertising and marketing strategies adopted by the daycare facility
- The number of years the daycare facility is in business
d. What is the Profit Margin of a Daycare business?
The profit margin of daycare business services is not fixed. It will depend on some factors that are unique to your location and the number of children and babies you have enrolled in your daycare.
e. What is the Sales Forecast?
- First Fiscal Year: $240,000
- Second Fiscal Year: $350,000
- Third Fiscal Year: $480,000
Set Up your Shop/Office
a. How Do You Choose a Perfect Location for Daycare Business in Texas
- The demography of the location especially as it relates to young parents and children between the age of 0 to 4 years old
- The demand for daycare services in the location
- The purchasing power of residents of the location
- Accessibility of the location
- The number of daycares in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What City is Best to Open a Day Care Business in Texas?
- Corpus Christi, Texas
- Grand Prairie, Texas
- Plano, Texas
- Dallas, Texas
- Austin, Texas
- Fort Worth, Texas
- Houston, Texas
- San Antonio, Texas
- El Paso, Texas
- Arlington, Texas.
c. What Equipment is Needed to Operate a Daycare Business?
When starting a daycare, you will need early childhood educational materials, first aid kits, smoke detectors, carbon monoxide detectors, fire extinguishers, an emergency preparedness kit, and an emergency plan, among other things. In setting up a small office, you will need a computer, printer, software apps, telephones, pager, photocopier, scanner, and fax machine.
As regards the number of employees that you are expected to kick start the business with, you would need to consider your finance before making the decision.
Averagely, when it comes to starting a standard daycare facility business on a large scale, you would need the services of the following professionals; the head of daycare (you can occupy this position), daycare administrator, early childhood educator, front desk officer, security guards, and cleaners and nannies.
Launch the Business Proper
Presently, no daycare opens its doors for enrollment without first planning an opening party to formally open for business. If you have a limited budget, you may want to hold a soft opening party rather than a large opening party. The fact is that a successful daycare launch will enable you to publicly notify residents of your city that the facility is open for business.
a. What Makes a Daycare Business Successful?
The benchmark for the success of a daycare business may vary but, on average, your daycare business is booming when;
- You have the required number of babies and children
- You are generating profits from the business
- Your babies and children are improving on all the indices of rating (can comprehend better, carry out tasks on their own, are social, and can compete favorably with others)
- Parents and guardians are happy and satisfied with your services
- Your employees are happy and satisfied with the organization
b. What Happens During a Typical Day at a Daycare business?
- The daycare is open for the day
- The facility is cleaned and prepared to welcome babies and children
- Students are provided with special care, nursing, supervision, assistance in daily living and feeding et al
- The school is closed for the day and parents and guardians come in to pick up their wards
c. What Skills and Experience Do You Need to Build a Daycare Business?
Here are some of the skills and experience you would need to build a daycare business;
- Good managerial and human development skills
- Excellent communication and negotiation skills.
- Organizational skills.
- Problem-solving ability.
- Experience working as an Early Childhood Educator
- Experience in the daycare industry
- Experience in daycare administration.