I'm just going to say it outright: You don't get into the daycare business to make a ton of money. You will not be breaking any financial barriers by owning your own daycare. In fact, you can pretty much expect to not make any money at first. I'm greatly bothered when I hear people tell a mom looking to make money "you should watch a couple of kids." I can promise you it's not that simple.
I've been in business six years now and I definitely did not start showing a profit until year four. Four years to make money. Yes, I had money to pay my bills, but that's about it. That's because of how I decided to run my business. Before I turned my daycare into a profitable business for myself and family, there were a few big things I did first:
1.) I hemmed and hawed over "watching a couple of kids" for a year or more beforehand. I never particularly wanted to work with children before I had kids, however after I quit my job in the medical field (when my first was six months old) I found myself stuck as to what I wanted to do. I had numerous people tell me that since I expected such high quality care and standards, I should open my own daycare. I didn't take the decision lightly and I started as a temporary caregiver for two kids (who only needed temporary care). Obviously things went so well that it didn't stay temporary, however, when opening a daycare, you should not look at it as a way to earn quick money.
2.) I created a business model. You can create it however you want (it helps that I worked in business, took classes in business, and had some excellent role models--and a lot of models who I knew I wanted nothing to do with). My model was created on my own personal ethics and how I wish daycare's would charge and be run. Because of this, I have families that come back whenever I have room. Therefore I rarely have any spots to fill.
3.) Research. I did research about what other inhome daycare's in my area charged, their hours, policies, how they ran things, etc. I quizzed my mom friends about where their child(ren) went, what they liked and disliked, and what they looked for in a daycare. Once I was done collecting data, I had set my price point (which was low to begin with since I had no previous experience). I also knew based on my research, if I would be able to pay bills with what I was making. I knew what was needed and I created a business model that set me apart from many daycares.
4.) I used one motto to grow my business (and at this point businesses): You have to spend money to make money. More on this later, but this motto alone is what has helped my daycare business stay strong.
So, now you're wondering how to actually turn your daycare into a profitable business and not just a "job" (I've never once thought of this as a job because it's something I love) that pays your bills. Most of these are easy to do as long as you're willing to put the work in and you're truly committed to your business.
1.) Plan on not making money the first few years. Maybe you can do it in less time, but I found it took me that long to accumulate toys (indoor and outdoor), puzzles, games, learning toys and tools, arts and crafts, sensory activities, storage units, etc. Of course I had to buy all of this stuff without going broke, so I bought a little bit each week after pay day. I didn't save a lot during this time but again, back to number 1. After I spent money, I was able to pocket (aka save) a ton of money each month. We now have four large Sterilite containers filled with art supplies, we have soooo many books, just as many toys, tons for our group games and activities, different types of high chairs and booster seats, pack n plays and nap cots/mats, all sizes of baby gates. You name it, we probably have it. I have a good inventory of items and no longer spend a ton of money other than on groceries (and a few random supplies here and there).
2.) Create an environment that children and parents love and feel safe (and want to come back to). It should go without saying, but treat each one of your daycare children as your own. Have play spaces, activities to do, a routine that can be flexible when needed, create a homey feeling for all who enter.
3.) Don't advertise where you don't feel comfortable. One glance at some of the 'daycare needed' posts on Craigslist made me extremely nervous. I'll never forget one ad I read from a mom that said "I want a daycare where I can leave my kid for up to three days." Um, no. I'm a low drama type person and don't like dealing with other's either. I've been quite lucky with how I grew my daycare. I put a Facebook status that read: "thinking about opening up an inhome daycare. Please message me if you're interested or share with others who may be interested." Since that post (over six years ago), I have watched the children of people I went to school with, people I grew up with, people I knew I wouldn't have to worry about. I know it doesn't work out that way for a lot of people, but my waiting list is all people I have known since high school or before and their family members.
4.) Speaking of waiting list, keep a waiting list! You never know when something comes up and a spot opens up or kids go off to school. This way you will never be left with an empty spot.
5.) Decide if you will be/want to be licensed or unlicensed. There will be fees required to get your license. You may find your home or area you plan on using as a daycare doesn't meet requirements (electrical, square footage, proper outside space, just to name a few of the big ones). Be sure to look up the requirements in your city, county, state beforehand.
6.) Back to the "you have to spend money to make money." Spend the money to keep your equipment, toys, etc. updated. Once baby gear is five years old, I trade it in for a newer piece. If a pack n play is looking rather used (or has a hole in the side, which has happened a time or two), replace it asap. Keep children's books updated. Invest money into your business. Spend the extra money on healthy food and snacks and the occasional treats. Do activities that (while not always economical) kids will remember. The kids here LOVE shaving cream pools in the summer. What's that you say? Oh, it's a kiddie pool filled with shaving cream. About $20 worth of it. The kids will spend a few hours sliding down a kiddie slide and slipping around in the cream. Now, to some that $20 and all of the shaving cream was a waste. However, if you mention shaving cream and pools to the kids they'll tell you ALL about it. Those things WILL show to your families. Anyone who owns a business can tell you it's all about word of mouth. A good word will spread fast.
7.) Enjoy what you do and do it well. If you don't enjoy children or can't find the humor in changing seventeen poopy diapers in one day, then daycare probably isn't for you. If you mind messes and don't do well in chaos, daycare isn't for you. If you can't stomach examining a booger that did not come from you or your own child, then daycare isn't for you. If you enjoy what you do, you'll do it well. That will show to all families, prospective families, and anyone who sees it in action.
8.) Have your policies in place from the beginning and stick to them. Remember you are the business owner providing a service.
9.) Be flexible. Yes, this may contradict number 8, however I can't tell you enough how much it pays to be flexible. Opening a few minutes earlier for a family occasionally, staying open a little bit later, coming up with a payment schedule that works for each individual family rather than a "everyone has to pay on ____ date or no daycare." I have only ever been met with gratitude when doing these simple things for daycare families. You've heard of the saying "it takes a village." Yes, yes it does.
10.) Keep any and all receipts and records. Anything that is used for/by daycare is a write off. That includes (by may not be limited to): a percentage of rent/mortgage payment, a percentage of utilities, phone bill(s), internet, any media (Netflix, Hulu, etc.), Amazon Prime (that's how I buy 90% of my craft supplies and toys for daycare), groceries, toys, games, books, furniture, appliances, any yard work/care you have done, bug spraying, etc. Pro tip: if buying something used on Craigslist (which I've done plenty of), write up a receipt for your records and have the person selling sign it when you pick it up. You must be able to have proof of purchase for things you are writing off.
As for records, be sure you keep track of hours. Hours you are open, hours kids are at daycare, hours you spend cleaning/prepping things for daycare. Not only do I keep track of these things on the computer in a spread sheet, I also keep handwritten hard copies of everything as well. For example, I have a big blue book that I put who was here each day, what was charged for the day, how many meals and snacks they were served (served is the important word here, not necessarily if they ate them or not!), and what hours the child was here (ex: 8 a.m. - 4:30 p.m.). It also includes what hours I worked that day (open 7:30-5:30, then spend an hour cleaning, so my hours would be 7:30-6:30 p.m.). In general I put in about 60 hours of work a week in between cleaning, grocery shopping, prepping activities, and doing toy rotations. These things all effect your taxes. It's important to have the proper documentation for everything (just in case). Be sure to look up what your state regulations and requirements are for taxes.
11.) Save money when you can. Buy things that are on sale, use coupons, shop the deals. We ate blueberries for an entire week for morning snack because blueberries were extremely cheap that week (and I kinda overbought, but a big bonus that all of the kiddos love them). Other than groceries, other ways that I've saved money includes using a Target Red Card along with Cartwheel. I only buy craft supplies from Michael's Craft Stores when I have a coupon. Quite often they'll have 40% off coupons that can be combined with other offers. I've easily bought over $100 worth of supplies and only paid $20. A lot of larger purchases have been made during special sales (between Thanksgiving and Christmas and around Easter is when most stores put a good percentage of their toys on sale; right after Christmas into middle of January has a lot of clearance toys from the holidays), used on Craigslist, or on Amazon (using Prime of course).
These are a few things that I have done that have created a profitable and loved business for myself. I cannot stress enough that you will not be making money right away. It will take time, commitment, love, trust, and experience to make that happen.
* I did not include how I charge my families. I wrote a post regarding that topic earlier this year entitled Are You Paying Too Much For Daycare? In that post I go over how I charge and one of my big policies I will always stick to. I did not include specifics on how I saved money either. I plan on doing a post in the future about how I save money and what works for me.
** Any businesses that I have been mentioned above have not paid me a thing. These are places I shop at, have had good experiences with, and have proven to save me money.