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How Much Does it Cost to Start a Daycare?

By Edited Sep 18, 2015 6 6

Opening a daycare in your own home is a great way to earn a full-time income. If you already stay home with your children, this is an easy way to add extra income to your budget. More and more families are relying on the incomes from both parents and are sending their children to daycare. The waiting lists for daycare programs are growing by the day. You can take advantage of this phenomenon by learning how to start a daycare in your home. Starting a daycare costs a lot of money but if you create a balanced budget, you can make a good profit your first year in business.  

Starting a Daycare

Before you can set up a budget for your new daycare, you need to know exactly how to start an in home daycare. The first thing you should do is decide on the location of the daycare. You will need a large area for the children to play and a backyard where the children can run around. A basement is a popular option for in-home daycares because it is away from the main living area. Living in a separate area from where you work has many advantages.

Once you decide on the location for the daycare, you need to contact local government agencies. These agencies will let you know what permits you need and what requirements you need to meet. Most daycare providers will need a license and many cities will require you to learn first aid and CPR.

After you have gotten the legal stuff squared away, it is time to plan a budget.

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Major Expenses

There are six major expenses when it starting a daycare – remodeling/rent, safety, equipment, administration costs, operating costs and advertising costs. The amount you spend in each of these categories will depend on the kind of business you will run. Some people will need to spend more money to advertise while others may need to remodel their entire basement to make it suitable for a daycare. When you calculate these costs for your business, I suggest that you make an Excel spreadsheet and write down each of the costs. It will make it easier to add up the costs and figure out how much you need to charge to bring in a profit.


If you already have a large empty space with a kitchen and a bathroom that can be used for a daycare, you will not need to spend anything on remodeling or rent. Most people aren’t that lucky and will need to do some remodeling of their homes before it is ready for children. You must have a room for the children to play and a nearby bathroom that is easy for the children to find. This is especially important when you are taking care of children who are learning to use the potty. A kitchen should also be nearby so you can prepare snacks and lunch while still being able to keep an eye on them. If you do not have an appropriate space in your house for a daycare, you may also rent out office space. This can get very expensive and most people who rent office space to start a daycare will not make a profit right away. Also make sure you budget for maintenance costs. Kids love to write on walls and spill their sticky fruity drink onto carpet.


Most homes are safe for little ones but when you start your own daycare, there is more that needs to be done when it comes to safety. You need to have a smoke and carbon monoxide detector in each room. A fire extinguisher should be in the kitchen and locks should be on all cabinets. There should also be plugs in the electrical outlets. If you have stairs, you need to have child safety gates at the top and bottom. The bathroom toilet should have a lock that is easy for older children to figure out but will protect younger children from drowning. Make sure there is at least one first aid kit in the house and you know exactly where to find it. It is a good idea to stock up on band aids and anti-bacteria soap. Outside, you should have a fence around the yard, especially if you live near on busy street. You could easily spend a couple hundred dollars on safety equipment and it’s worth it to ensure that the kids are safe.


Equipment consists of toys and educational material needed to help take care of and teach the children. This might include nap mats, books, movies, music, toys, chalk board, chalk, finger paint, tables, chairs, shelves, organizational equipment and storage equipment. You may also need to purchase kitchen supplies such as plates, cups, children’s size forks and spoons, cooking utensils, booster seats and serving dishes. You’d be surprised at how much stuff you will need to buy when starting a daycare.

Administrative Costs

Administrative costs refer to the business side of running a daycare. Most of this stuff can wait until you start seeing a profit but you will need some things. A desk and chair will be helpful so you have a place to work when you are planning your day or going over the budget. A computer and printer are must-have purchases. You will also need paper. This will allow you to print bills and letters for the parents. Other items to consider purchasing include ink, pens, a stapler, paperclips, pencils, notepads, a calendar and tape. A stroll down your local office supply retailer will give you more ideas of what you might need.

Operating Costs

Operating costs are basically utility costs. Stuff such as electricity, cable, internet, phone, water, food, diapers, wet wipes, paper towels, paper plates, toilet paper, cleaning supplies, and other disposable items go into this category. Something you might not think about when you think about operating costs is people. If you need to hire an assistant, their hourly wage can be placed under operating costs.

Advertising Costs

The most important cost when starting a daycare is the advertising cost. You won’t make any money if you don’t have clients. You will need to purchase business cards, flyers, posters and get a website designed. You may also want to pay a professional marketer to advertise for you. You will want to make sure that the advertising costs will be worth the return. There is no point in continuing to advertise your daycare if you already have enough children.

After you find out the answer to the question, "How much does it cost to start a daycare?" you can begin to figure out how much you need to charge to make a profit.

Business Plan for How To Start Child Care Daycare Services
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Jul 6, 2010 11:05pm
Hi AllyG47, good information for someone thinking about venturing into the world of small business ownership. People don't realize how big the initial investment will be until they research. Operating costs also take a big bite out of the budget, so people really have to do their homework and know what they are getting into.
Jul 7, 2010 2:07am
Great article! Your useful tips are relevant to all kind of business, not just daycare. Thumbs up!
Jul 7, 2010 2:17am
good article, people need to know what type of expenses they will incur before starting any business. Good helpful info. rated up
Jul 8, 2010 10:25am
Great information for those looking to start their own daycare.
Jul 8, 2010 3:23pm
Among the operating expenses is the very necessary liability insurance in case a child gets injured while under your care. Business ownership is the dream of so many. With adequate capital and a written business plan it can become a profitable and rewarding adventure. Enjoyed your well written article.
Dec 7, 2010 12:06am
Actually if you sign up as private daycare with the city, you are given a budget for toys, books, furniture, etc... You also get training. My mom had opened one in her earlier years.
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