How to start my own daycare business

Since most parents are working professionals, most children receive some form of daycare. With over 2,500 nurseries closing in the first months of 2021, there’s a gap to fill, which presents a golden opportunity to open your own daycare centre.

If you’re ready to take the plunge but think, “I have no idea how to start my own daycare business”, this guide is for you. This guide will cover:

• Why starting a daycare is a good idea
• How to start your own daycare business, including:
  • Qualifications and regulations
  • Registering your business
  • Finding a location
  • Business plan
  • Insurance
  • Branding and marketing
  • Financial management

Starting your own daycare business can benefit you in multiple ways. For one, you get the satisfaction of knowing that you built a business from scratch. You also get the joy of spending time with children, which can be fun and affirming. 

As a business owner, you can also write off some costs as business expenses and save money on your taxes. Allowable expenses can include child care supplies, your phone bill, your vehicle, or utility bills. 

Running your business also means you get more flexibility in terms of when and how you work, which can help you create a better work-life balance. If you’re a stay-at-home parent, you can also care for your own children while making some extra money. 

When starting a daycare business, there are a few steps you need to cover to help your nursery get off to the best start. We’ve listed the things you need to get sorted below:

1. Look up what qualifications you need

Simply setting up a nursery doesn’t require any specific qualifications, but since you’ll also manage the nursery business, you’ll need some specific training. As a manager, you need a relevant nursery qualification to open your own daycare. You must also have at least two years of experience as a qualified nursery nurse and a couple of years in a supervisory role. 

That’s because managing a nursery requires a lot more experience and knowledge than if you were to hire someone to do it for you. If you’re just there to look after the children, you only need sufficient knowledge of childcare to do it. 

2. Make sure you comply with regulations

Aside from the relevant experience and training we just mentioned, you also need to make sure your new nursery complies with all necessary regulations.

If you plan on preparing and serving food or homemade snacks at your daycare, you need to have qualifications, as noted by the Food Standards Agency (FSA). Adequate food and hygiene standards are essential. 

The FSA also has a specific information pack called Safer food, better businesses, which offers guidelines on food safety management and hygiene regulations for small businesses. This pack will tell you everything you need to know about safely storing, cooking, and chilling food in your nursery. 

You also need to adhere to strict health and safety requirements and put a health and safety policy to demonstrate how you’ll conduct procedures like:

• Risk assessments
• Fire safety and risk
• Evacuation procedures
• Maintenance
• Storing and handling hazardous substances
• Reporting injuries

3. Register your daycare business

When starting a daycare business anywhere in the UK, you need to register it with your country’s specific regulator. In addition, you must make sure that your nursery meets the national standards before you approach the relative authority.

The regulators for the different UK countries are:

• For England – this is OFSTED (Office For Standards in Education). Find out more on the government page.
• For Wales – this is CSSIW (Care and Social Services Inspectorate Wales). Find out more on the government page.
• For Scotland – this is the Care Inspectorate. Find out more on the government page.
• For Northern Ireland – this is the Health and Social Services Board (HSSB). Find out more on the government page.

It’s recommended to look into the registration process for your country early on since there usually are some pre-registration boxes you need to tick, such as Disclosure and Barring Services (DBS) checks and health checks. 

4. Find a location for your nursery business

Once you’ve registered your new nursery, completed the necessary checks, and put your required policies in place, you need to find a suitable location. The UK also has strict rules around nursery premises to ensure the location is suitable for childcare. 

One requirement is to have enough space per child according to their age. According to UK requirements, the premises must be at least:

• 3.5 square metres per child under the age of two
• 2.5 square meters per child aged two
• 2.3 square metres per child aged three to seven

If you need a space that’s not in your home for your nursery, there are a few things you need to consider to make sure it’s suitable. You’ll want to ask yourself the following questions when looking at premises:

• Is it in a safe neighbourhood?
• Is it in an area with plenty of family homes or schools (so it’s near your target customers)?
• Are there other nurseries in the area?
• Will the nursery be near or attached to a religious facility?
• Is there parking outside or nearby?
• What is public transport like in the area?
• Does it have a decent garden for outdoor play?
• Does it have all the necessary facilities like toilets and changing rooms, or space to install them?

It’s a good idea to consult an architect to see how much it’ll cost to convert your chosen premises into a nursery. This way, you’ll get a better idea of how much money you’ll need to start your new daycare business. 

5. Create a business plan

Every new business needs a plan to succeed. A business plan is like a roadmap for your new daycare that helps you set goals and decide how to get there. In other words, your business plan works to keep you on track and strive towards success.

This is also where you share details about your business structure (will you operate as a sole trader, limited company, or partnership?), services, prices, and much more. Your business plan defines your daycare’s mission statement, different procedures and operations, projected costs, staffing requirements, and budget. 

Your business plan also needs to include a financial plan that describes how much money you have and how much you’ll need to start your daycare. If you need funding, this is where you put that information. 

If you need help creating your daycare business plan, check out our guide on how to write a business plan.

6. Take out the appropriate insurance cover

Another crucial step when starting your own daycare business is to make sure you’re protected in case something goes awry. Here’s a list of insurance covers that every nursery needs:

• Public liability insurance – to cover the cost if someone gets injured or has their property destroyed while on your premises.
• Professional indemnity insurance – to cover you if you get something wrong, like giving the wrong advice to parents.
• Commercial property insurance – to cover the costs of any repairs you need to make in case of a flood, fire, or alike.

It’s also good to look at insurance policies that cover you and the children away from the nursery in case you make a trip at some point. In addition, business interruption insurance will cover you if you have to close your nursery for a period of time. 

7. Establish policies and procedures

We’ve touched on health and safety policies you need to implement, but you also need to establish policies and procedures for the families that attend your nursery. You need to include an emergency plan, safety procedures, privacy protocols, and other rules for your facility. 

Having these procedures in place will help keep the children safe and protect you, too. The best way to protect yourself is to have these procedures included in a contract that you have all families sign. Drafting a contract will ensure everyone is on the same page and will offer protection for your business and clients.

8. Develop a brand and marketing plan

Next, you need to develop a brand and marketing plan to help you promote your new daycare business. Branding covers everything from your logo and colour scheme to the way you communicate with parents and choose your teaching methods. Everything must align to create a strong brand. 

Once you’ve established your brand, you can start building brand awareness, which is where your marketing strategy comes into play. You’ll want to create a professional website where parents can find information about your new daycare. 

Social media is excellent for spreading the word about your new business. You can use your platforms to join groups and communities, connect and engage with potential customers, and share posts to demonstrate your knowledge about childcare. 

It’s important to know the rules around sharing pictures, videos and other content about children in your care. These rules are as follows:

• Taking a picture of a child needs its parents’ permission
• You can’t name the child on your website or social media
• You must communicate a clear policy with the parents and respect their privacy

9. Organise your finances

Organising your finances is an important part of running a successful business. Follow the steps below to get your finances in order from the get-go.

The first thing you need to do is set up a separate business current account for your daycare business. Keeping your business and personal finances separate will save you from having to sift through your bank account to find the ones relating to your business. Having a business account is the easiest and best way to keep your finances organised. 

Tracking your income and expenses is essential to keeping your finances organised. If you also categorise your costs, controlling your expenses is much easier since you’ll have a clear picture of where you spent money.

Since you’ll most likely be able to deduct some of your expenses from your taxable income, keeping track of your incoming and outgoing funds can help you save money. You can then reinvest that money into the nursery.

Your business plan will already include a budget for different types of expenses your nursery will likely incur. Still, getting hit by a massive tax bill at the end of the year could take you by surprise if you haven’t kept track of your income and expenses throughout the year. 

If you consistently track your financial transactions, you can estimate how much tax you might need to pay each tax year. Alternatively, accounting systems like Countingup will create tax estimates for you based on your financial activities, so you know what to expect. Learn more about what tax businesses and sole traders pay here.

10. Invest in simple accounting software

Starting a new business is exciting but also time-consuming, especially when it comes to financial management. That’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here.