A useful document for you and potential business partners, a daycare business plan outlines critical information about your goals, resources, and intended services before you open and scale a daycare facility.
There is a large target market with a demand for childcare solutions. In 2026, the average parent spends 20% of their annual income on childcare.
Read on to learn about different types of childcare business models, as well as the qualifications you need and the steps necessary to create a comprehensive daycare business plan.
Types of daycare businesses
Childcare services and daycare business models fall into four broad categories:
Group childcare
Group childcare takes place in a private residence or private daycare center. These locations are subject to regular compliance checks to ensure they’re meeting essential requirements for licensing. This includes physical space guidelines, which require a certain square footage per child.
School-based
School-based daycares take place in, or as part of, an established school, providing either a hybrid of toddler and preschool-aged education, after-hours care, or activities for younger students. These activities typically occur on or near campus and may require an extra hourly fee, even if the school itself is free.
Summer camp
Summer camps provide seasonal childcare in between school calendar years. Sessions may run for one or two weeks at a time, either operating locally throughout the day or at destination locations for overnight sleepaway camps.
Nature-based
Nature-based early childhood educational institutions, also known as nature schools or forest schools, provide childcare in an outdoor environment. These programs place an emphasis on activities and learning in natural settings year-round. Some nature schools function as an alternative option to traditional schooling and cater to slightly older children, ages five to 12 years old, but other programs operate more like a daycare or camp model, and accept younger children as well.
Common childcare business models to consider
There are a few common childcare services that are sometimes discussed interchangeably: daycares, nanny services, and preschools. Each model has different licensing requirements for operation and associated overhead costs:
Daycare
A daycarerefers to a physical location where childcare is provided, either in a private residence or a commercial building. Though the exact numbers vary by state, there are mandated ratios of caregivers to children. Daycares accept children from newborn to school age and generally offer flexible attendance options.
Nanny services
While a single nanny may work with just one family, a nanny shareinvolves two or more families employing one caregiver between them. Each family must act as an employer to the nanny, obtaining an employer identification number (EIN) and paying their share of wages, payroll taxes, insurance, and workers’ compensation. Alternatively, families can work with a nanny agency, and the agency handles the employer relationship with the nanny.
Preschool
A preschool takes place in an established school or center, and involves more direct preparation for the learning environment of kindergarten, with regular daily schedules and more structured lessons. Preschools usually accept toddlers and younger children, ages two to five, or offer a combination of daycare and preschool on-site for a wider range of ages. State-mandated staff-to-children ratios still apply. Some preschools choose to follow the school year and require that teachers possess at least a BA or an associate’s degree.
Qualifications needed to open a daycare business
The best qualification to open any kind of childcare business is experience itself, either through long-term babysitting, experience working for an established daycare, or a background in early childhood education. There are a few key certifications that many states, like California, require you to have in order to operate:
- A successful background check
- Up-to-date immunizations (and completed TB test)
- Safety trainings (e.g., CPR and pediatric health and safety training)
Perform research through websites like Child Care Aware of America, which has pages dedicated to childcare licensing, background checks, insurance considerations, federal and state employment laws, and more.
Obtaining additional certifications can give parents peace of mind. For instance, Heart 2 Heart Childcare, an in-home facility in California, makes it clear that in addition to being licensed through their local authorities, they are also certified in CPR, AED, first aid, and EMSA.
How to write a daycare business plan
- Draft an executive summary
- Write a company overview
- Conduct a market analysis
- Address state regulations
- Describe your services
- Build a marketing plan
- Map out logistics and operations
- Create a financial plan
When you’re ready to turn your childcare business dreams into a reality, a daycare business plan can help you stay on track and organize your tasks and goals. It’s also a necessary document if you need to apply for external funding, like a small business loan or an investment.
Here’s a breakdown of a daycare business plan template that you can adapt:
1. Draft an executive summary
Your executive summary provides a high-level overview of your business, charting your business model, goals, target audience, and necessary funding to get things off the ground. It should communicate your vision to a potential investor in a way that compels them to support your business.
Some business owners prefer to write the executive summary last, once they’ve had a chance to iron out all the details in the following sections. You can always start with a broad, aspirational summary, and add more concrete information as you go along.
2. Write a company overview
Your company overview is an opportunity to go deeper into your unique value proposition as a business. Consider: How will your daycare be better than the competition? What is the key differentiating factor—whether that’s your experience, focus, or caregiving philosophy—that will distinguish your business from all the others out there?
Next, decide what will be the focus of your daycare’s day-to-day activities or curriculum. Some daycares promote problem-solving, kinetic creativity, or the exploration of nature. For example, Ma’aama’s Daycare website describes the three tenets of its childcare philosophy: a child-centered approach, play-based learning, and partnership between parents and caregivers.
Maybe you plan to emphasize academic standards like counting and letters, or value self-expression, or are trained in a particular early-learning approach like Montessori, Reggio Emilia, or Waldorf. If you’re a staunch advocate for screen-free environments, say so. All these details communicate what will set you apart in your market.
3. Conduct a market analysis
Include a market analysis to demonstrate that your business will open in a community where there are families with children in your target age group and demands for your services. Research your target audience, industry, and competitors, then add your findings to your daycare business plan.
Some important datasets to include are:
- Demographic information. Find the number of working families in your target market, average income levels, and number of daycare-aged children in need of care. You can find these numbers through your local library or census office.
- Economic indicators. From your local chamber of commerce, get the number of businesses opening and closing, plus how many people work remotely versus in-office.
- Market saturationdata. Check the current state of the childcare market in your area, operating privately or through churches and schools, and the demand for those programs. Get granular, outlining the number of service providers that have a waitlist, their staff size, and more.
- Pricing. Learn what competing businesses charge for their services.
For example, if you were evaluating whether or not to open a daycare in Frisco, Texas, you may first uncover and weigh the following facts:
- The population is growing. Frisco’s population was estimated to be about 240,000 in 2025, up from 200,500 in 2020. This could indicate medium-term growth potential.
- Many families have young children. As of 2026, children (zero to 17 years) comprised 26.2% of the population—higher than the national average of 20.7%. This could indicate existing demand for childcare solutions.
- Parents may be able to afford childcare. In Frisco, the median household income is $145,444—significantly higher than the national median of just under $84,000—meaning working parents may be able to budget for daycare tuition.
- The market is competitive. Searches across directories like Care and Winnie indicate there are already more than 100 providers in the area, highlighting the need to clearly differentiate your value proposition.
- Tuition is in line with the national average. According to Winnie’s FAQs about Frisco daycares, full-time daycare costs an average of $1,376 per month, which is on par with the national average (about $1,372 per month, according to Wonderschool). This could help you determine competitive pricing.
Consider also conducting and including a SWOT analysis to outline your business’s strengths, weaknesses, opportunities, and threats. This may be useful to measure your business against other offerings in your market.
4. Address state regulations
To be licensed as a group childcare provider, you must meet specific teacher-to-child ratios that vary by state and depend on whether a program is subsidized or not. In California, for example, children zero to two years old need an adult-to-child ratio of 1:3, or 1:4 in combined-age classrooms. For two- to six-year-olds, the ratio is 1:8, or 1:12.
For example, Koinonia Kaleidoscope, a North Carolina provider caring for children ages six weeks to five years old, lists its child staff-child ratios on its website, communicating that they are well within the state’s licensing requirements.
Each child must also have access to a specific square footage of both indoor and outdoor space, which may impact attendance. Check your state’s requirements and note in your plan how your place of business will meet them.
Make a list of the certifications, licensing, and business insurance your state requires for daycare businesses and any associated costs or paperwork you’ll need to secure them. Note which ones you may have already acquired and the timeline by which you plan to acquire the others. Daycare centers also require up-to-date food handling and food safety certifications, plus standard safety certifications, like CPR and first aid.
5. Describe your services
Use the data you included in your market analysis to inform your decisions about the services you’ll offer, and then describe them for your potential investors in your daycare business plan. Include key aspects of your services, such as:
- The ages you’ll accept
- The hours you plan to be open
- Which meals you’ll provide, or if children will be required to bring their own
- The number of children you anticipate caring for at one time (estimate based on the space you will have, the staff you plan to hire, and your state’s licensing requirements)
- Your tuition rates for full- or part-time enrollment
- Any additional services you’ll offer, like after-hours or weekend care
- Any supplies or merchandise you plan to sell, such as through a Shopify online store
Potential customers will also need to know these details. Robin’s Nest, for example, specifies that kids receive two meals and three snacks throughout each day. Meanwhile, Koinonia Kaleidoscope lists its weekly tuition fees, broken down by age group.
If possible, also describe the ideal flow of a day at your facility so potential investors can see you have a plan for managing the children’s schedules on a daily basis. For example:
- 6:30–8:30 a.m. Dropoff
- 8:00–9:00 a.m. Breakfast
- 9:00–10:15 a.m. Activities
- 10:15–10:30 a.m. Cleanup time
- 10:30–11:30 a.m. Outside playtime
- 11:30 a.m.–12:00 p.m. Lunch
- 12:00–12:30 p.m. Cleanup time
- 12:30–2:30 p.m. Nap time
- 2:30–3:30 p.m. Snack time
- 3:30–4:30 p.m. Outside playtime
- 4:30–5:30 p.m. Activities
- 5:30–6:00 p.m. Pickup
6. Build a marketing plan
Every new company must market itself to facilitate growth, such as through direct mail, paid advertising, email marketing, or social media marketing. In the marketing section of your daycare business plan, outline how you plan to create awareness of your business and acquire and retain customers.
Shopify’s website builder makes it simple to create an attractive, functional website that is automatically optimized for discoverability to help your business surface in search engine results. You can lean further into organic search by developing a strong local search engine optimization (SEO) strategy or focus on paid search engine marketing.
Here are a few ways to improve your daycare business’s local SEO results:
- Use local keywords. Incorporate the right keywords or phrases into your business descriptions and content, particularly ones that local families might use in their searches, like “best daycare in Chicago,” “Montessori schools near me,” or “childcare options in Bay Area.”
- Prove your authority. Google favors authoritative content written by experts possessing firsthand experience. Tout your credentials and your background with an in-depth bio, and make it clear that any editorial content (like blog posts) is written by you and informed by your expert knowledge.
- Create a local business profile. Creating a Google Business Profile allows you to manage how your business shows up in searches, list important information like hours, pricing, and customer reviews, and incorporate strong keywords like “outdoor play” or “parent-teacher community”—whatever you feel best describes your approach and general atmosphere.
Additional marketing tools that are accessible to you through Shopify include:
- Shopify Forms. Build pop-ups with Shopify Forms to collect customer information and help grow your subscriber list.
- Shopify Messaging. Send email and SMS campaigns, and automated messages (like payment confirmations) with Shopify Messaging.
- Shopify Campaigns for multichannel marketing. Organize and track ads you’ve created inside and outside of Shopify all in one place with Shopify’s Campaigns for multichannel marketing features.
You can also focus on building a strong offline presence by advertising in local media and putting flyers in local gathering spots popular with parents of young children. You can participate in school fairs, street cleanups, and cultural events, and host open houses for prospective parents. These practices, along with word-of-mouth marketing via happy clients, can help cement your reputation as a trusted part of the community.
7. Map out logistics and operations
Now it’s time to detail all other logistical actions you’ll take before opening your doors. Your daycare business plan should describe how you will:
Secure a physical space
Describe the size and type of space you are seeking, and how you plan on securing it. That might include leasing a commercial space, outfitting your own home, or renting a second residence from which you’ll base your business.
Establish a staff pay rate and budget
Outline how many staff members you plan to hire and what you’re budgeting for their wages. Factor in any health insurance benefits and continuing education costs you plan to cover for your staff.
Map out policies
All daycare businesses have a handbook that defines expectations for parent-caregiver communication, rules around attendance, behavior, and more.
- What will your sick policy look like?
- How will you schedule and pay staff members?
- How will you deal with emergencies?
Children’s Learn and Play, for example, documents its key fire safety measures on its website, pointing out monthly fire drills, inspections by local and state fire departments, and on-property fire alarms and fire extinguishers.
Write down the most important internal and customer-facing policies and procedures you intend to use in daily operations.
8. Create a financial plan
Your financial plan should illustrate the funds you need in order to open your daycare center doors, show how you would use funding to support your operations, and provide a path toward profitability.
Average profit margins for daycare centers vary widely in the US—from less than 1% to 15% or more. Determining factors include the facility’s location, size, operating costs, and tuition fees.
Take care to design a realistic budget that accounts for all the money you anticipate coming in and going out. This should include:
- Startup costs. This should include the costs of acquiring a space (and any anticipated repairs or retrofitting), completing all the required licensing certifications, and furnishings and equipment like play structures, craft supplies, food (or infant formula), diapers, and first-aid supplies.
- Ongoing costs. Ongoing costs include things like rent, staff payroll, activity supplies, and food.
- Projected income. Project what you anticipate making each month based on your pricing and anticipated attendance.
- Budget and cash flow projection. What you expect to make, based on operating expenses and tuition payments, and what your month-to-month cash flow will look like. Some daycares require monthly payments upfront or require annual tuition paid in full, while others use a week-by-week payment plan.
Your financial plan also should outline how you’ll fund your business initially. The scale of your operation will determine your investment. Some startup funding options, which you may choose to use in combination, include:
- Traditional business loans. Lenders will consider your credit and industry experience when determining your eligibility and the terms of your startup business loan.
- Small Business Administration loans. SBA loans offer funding at a specific interest rate for an agreed-upon repayment period.
- Microloans. Ranging from a few hundred dollars up to $50,000, microloans are designed to be accessible to startups and can help cover a business’s early costs.
- Grants. Non-repayable funds, grants are available through federal, state, and local government agencies, private companies, and nonprofits.
- Self-financing. If you plan to open a relatively small, in-home daycare, you may be able to cover startup costs with funds from your savings. Your friends and family may also be willing to help you with startup capital.
If you elect to operate your daycare out of your home, you may have to pay for only minor space renovations since you’ll likely already have a kitchen, outdoor space, and utilities at your disposal. That still leaves some major expenses. Here’s a sample startup budget for a small at-home daycare with two employees and six to eight kids:
| Expense | Cost Estimate |
| Working capital to cover initial payroll, day-to-day expenses, and financial emergencies | $10,000-$30,000 |
| Furniture and equipment | $2,000–$8,000 |
| Upgrades for home safety | $1,000–$5,000 |
| Toys and learning materials | $1,000–$3,000 |
| Insurance | $500–$2,000 |
| Food and kitchen supplies | $500–$2,000 |
| Website setup and marketing | $500–$2,000 |
| Emergency response training (CPR, first aid) | $200–$1,000 |
| Cleaning and sanitation supplies | $200–$1,000 |
| Licensing, permits, fingerprinting, background checks | $200–$1,000 |
| Administrative setup and payment processing | $200–$1,000 |
| Estimated total costs | $16,300–$56,000 |
A daycare startup timeline
There’s a lot to do to take a daycare from concept to opening day, although you may need less time to get an in-home business off the ground than you would a free-standing daycare facility. To keep you organized and on track, here’s a 12-month timeline you can adapt to your own business situation:
| Time until opening day | Actions to take |
| 12 months | Begin writing your daycare business plan, conduct market analysis, and research your competitors |
| 11 months | Estimate your startup costs and start exploring funding options |
| 10 months | Familiarize yourself with all necessary restrictions (zoning, staff-child ratios, etc.) |
| 9 months | Start your licensing paperwork with state and local authorities, complete all necessary trainings and certifications, and finalize your location |
| 8 months | Begin designing your curriculum, develop staff training plans, and oversee property renovations (such as the installation of safety features and playground equipment) |
| 7 months | Buy furniture, appliances, technology, and classroom supplies |
| 6 months | Develop your company handbook, and draft enrollment contracts, emergency procedures, and other operational policies |
| 5 months | Finalize your staff compensation and benefits packages, and draft and distribute job descriptions to recruiters or career search websites |
| 4 months | Conduct staff interviews, design and launch your website, and start collecting the email addresses of interested families |
| 3 months | Finalize your hires, begin staff training, and schedule all necessary licensing and compliance inspections |
| 2 months | Perform your final walkthroughs and address any concerns found during inspections |
| 1 month | Schedule tours and open house events, finalize enrollment contracts, and prepare to welcome the enrolled families |
Daycare business plan FAQ
How profitable is owning a daycare?
Daycares can be profitable, depending on enrollment (how often you reach capacity and experience turnover), location (cost of leasing a space and total population in need of care), and operational costs (staffing, equipment, and supplies). Offering services like after-school care for older children can be another effective business model.
How much does it cost to start a daycare?
The cost of opening a daycare varies depending on the size of the space (and if you’re buying or renting) and the number of children you plan to enroll. Consider costs like teacher/carer fees, licensing, business insurance, utilities, real estate, furniture, toys, and any renovations you need to do to make your daycare facility safe and functional.
Are daycares for profit or nonprofit?
Daycare businesses can be for-profit or nonprofit operations. While for-profit daycares receive funding from investors or tuition fees, nonprofit daycares may operate thanks to grants or government funding.
How do you build a successful daycare?
What makes a daycare business successful is consistent, high-quality care for individual children at scale, replicated over time. Start by prioritizing strong communication and trust with your families and building a safe and nurturing environment that follows licensing requirements.
