Business development

What to consider when opening a childcare business

Simplifying the process on how to get your childcare center up and running
an illusration of a woman shrugging with 3 thought bubbles over her head
April 5, 2024
Reading time:
a light bulb with the letter p inside it

a black and white image of two hearts

famly icon - piggy bank

a black and white image of two houses



a black and white image of a bunny and a bottle


a black and white heart icon

With Famly since

In a rush? Here's a quick breakdown:

  • Thinking about opening a childcare center? Or scaling your current childcare business? Overwhelmed by the process? You came to the right place.
  • We spoke with Head of Business Development for Kido Preschools, Kawanbir Singh, for a step-by-step overview of the essential information.
  • From location to floor space allocation, to city and state requirements, and to staying compliant, he covers it all.
  • Plus -- get some marketing tips for your newly opened childcare center.
  • And finally, Kawan also explains some of his pros and cons of expanding and scaling your childcare business.

When I was asked to write an article about opening a childcare center, my first reaction was, “well I need to do quite a bit of research in order to do that.” Then, my next reaction was - “wait, for which state, because as we know childcare regulations are specific to state and local regulations and policies.”

So, I decided to go to an expert on how to start a childcare business - our Texas-based customer, Kawanbir Singh, who is the Head of Business Development for Kido Preschools in the US. 

Kido operates preschools and nurseries in India, the UK, China and the US (currently in Texas). 

Although based in Texas, Kawan provided a comprehensive, simple overview for anyone interested in opening and scaling a childcare business. Let’s take it step-by-step.

teacher panting and playing with children in preschool

7 steps on how to start a childcare center

1. Understand city regulations and state requirements

First and foremost, you need to research city and state requirements. Like,

  • What is the square footage requirement? 
  • Is it different for infants and toddlers? 
  • What about outdoor requirements?
  • Parking or drop-off zone policies? 
  • Health and safety policies? 

Of course, policies and requirements will differ from state to state and town to town, but in general, I was confused about what the city specifically regulated and what the state regulated.

Kawan made an important distinction that simplified it for me: the city determines whether you can occupy a building, and the state gives you a license and determines if you can specifically run a childcare business.

2. Location & neighborhood

“The top three most important things when opening a childcare center: location, location, location”

The big ideas

The next - and according to Kawan, the most important step - is determining the location of your preschool or daycare center. To do this, it is best to find a broker who has experience in finding sites for early childhood education (ECE) centers.

Just like when using a broker to purchase a home, you need to provide a profile of what you want, such as demographics and median income. 

And don’t forget to tell the broker about the requirements and minimum standards that influence your location, such as indoor square footage and outdoor space requirements. You don’t want to waste time visiting countless properties that won’t meet city or state rules and regulations.

Another important factor of location is accessibility and convenience for both families and staff. Kawan mentioned all the details he thought about when opening Kido Preschools in Houston, like which side of the highway will have the least amount of traffic in the mornings? Sometimes being on the left side of the highway can add an extra 30 or 40 minutes to the morning commute for both families and staff.

Kawan also mentioned that it is important to learn about the neighborhood, the shops, and specifically, the Elementary school. He explained that looking at how the neighborhood feels about the elementary school highlights what families want for their children’s education. This will help you know if your preschool and curriculum are a good fit for the neighborhood.

3. Hire an architect to help with floor space allocation

No one expects you to make sure all the requirements are met alone. With all the measurements, square footage and space requirements, it is recommended that you hire an architect to help you plan out and allocate all the necessary space. 

Further - and what I thought to be the most interesting and important point - Kawan mentioned the importance of having rooms that are flexible. He mentioned that recently, he has noticed a much higher demand for infants in childcare. Therefore, it is beneficial to have rooms that can change and meet various square footage requirements based on demand. 

For example, let’s say your center has three rooms with space requirements for 2-3 year olds, but only two of the classrooms are at full occupancy. But, your center has two infant rooms, and could fill up a whole other classroom. How easily can you change the extra 2-3 year old room to fulfill the space requirements for infants? This is another way an architect can help.

two young girls playing hopscotch

4. City approvals

Now it is time for city inspections and approvals. This step is, of course, determined by your specific city’s requirements and minimum standards. However, the city usually inspects things like parking zones or drop-off and pick-up zones and approval from the Health Department, the fire department and other departments in the city. 

Whatever the specific city’s requirements are, getting the city’s approval means that you are able to occupy your center, and apply for childcare licenses from the state.

Know that city inspections and city approvals can take time - hence Kawan referring to it as “the black hole.” It is not an efficient or seamless process, and although frustrating, you should plan for it and expect it. 

5. Fire marshall inspection

Kawan instantly commented on how important this step is for childcare centers and preschools. This inspection is extremely thorough and detailed and typically takes 3-4 hours, depending on the size of your center. 

The fire marshalls confirm your maximum occupancy, check that all classrooms have clear exit plans in case of an emergency, that there are an appropriate number of sprinklers and alarm systems. 

However, in preschools, exits are not as simple as just having one. Instead, you must account for the ages of the children in each classroom. For example, infants cannot walk, so how can you make it as easy and efficient as possible for ECE staff to get them out in case of emergency. 

6.State inspections and licensing

This could also be referred to as another “black hole,” as state inspections are also very time-consuming. The initial inspection also can take about 3-4 hours, depending on the size of your preschool. 

The state needs to triple confirm that all requirements and minimum standards are met - from getting down on the floor with a tape measure to ensure the square footage is correct, to making sure you have the correct amount of faucets, diaper changing stations, toilets, and so much more.

Outdoor requirements are also by the state. Your center must have a certain amount of square footage of outdoor space depending on the occupancy. They will also make sure that the outdoor equipment is safe and age-appropriate.

Initial license to operate

After both the city and state approval, you are given an initial license to operate for 6 months. Within those first 6 months, your center will have anywhere between 1 and 4 inspections. 

Full operating permit or license

If you pass those inspections within the first 6 months, you will get a full operating permit or license. This license has no expiration date - of course, as long as you are in compliance with minimum standards. With a full operating license, your childcare center will have an annual inspection.

preschoolers in a circle on the floor with their teacher

7. Make sure to stay compliant

You have opened your childcare business, but now you want to keep its doors open. Staying compliant is essential, but we won’t lie, it does take quite a bit of work. 

City and state policies, rules and regulations are continuously updating and changing, and unfortunately, there is no easy way to track all of that. As Kawan admits, the information flow is not efficient, and “to be honest, there is a lot of missing information that falls through the cracks.” 

For larger policy changes, the government will likely send an email if you have opted in to receive them. Otherwise, it really is simply word of mouth, and hoping that you and your staff hear about changes and bring it up to each other in your staff meetings. Some Facebook groups are also helpful, because staff members from your state or city will post about any policy changes they heard about. 

Another important - and unfortunate - point that Kawan made is that the inspections and assessments are largely influenced by human biases. It depends a lot on who is coming to inspect your center whether they think you are staying compliant and meeting minimum standards. It really should be more universal, but there is no easy way to do that.

Use technology to help you stay compliant

At Famly, we are definitely a bit biased about how beneficial a childcare management software can be for your childcare business, but Kawan also reiterated it multiple times during our conversation (and we also have proof of how happy our other customers are!). 

“This is a very old industry” and it is, generally, not the most efficient. Also, “ECE staff is time poor. How do you give more time to staff?” Kawan’s answer to both of these shortcomings: modernize with automation and technology.

A childcare software program (like Famly) is the perfect example of just that - stay compliant, manage staff schedules, track and manage all of your finances and childcare billing, communicate with families, and so much more - all in one place.

But, I won’t go more into that, but I definitely recommend you check out more about the benefits and efficiencies of childcare software here.

download pdf

Grants to start a childcare business

Applying for a grant as an established childcare business shares many similarities with the process for new childcare centers. But, the main differences are around your business's track record and reputation - because you don’t yet have one. 

The main difference is the purpose of the grant, and you should research and look for grants that are specifically for new childcare centers. 

How to market your just-opened childcare business 

Kawan highlighted that, as we all know, construction timelines constantly change. Furniture might be backordered, a storm may come through, inspections are delayed, or simply things just take longer than expected. This is important because you do not want to begin marketing or connecting with the community too early. 

This brings us to Kawan’s first question he asks when thinking about marketing: when to connect with the community? He believes that about 3 months before opening, your team should begin integrating, meeting local vendors, joining local community boards and participating in or sponsoring local events. 

The local elementary school is a great place to start. Attend sports games and other community-wide events, or sponsor sports teams and events.

 Kawan also mentioned how active and involved “mom groups” are in some towns and communities. Some meet weekly, and hold monthly events. It is great to connect with them and participate in any way possible, or make them feel comfortable to spread the word around about your soon-to-open childcare center. 

You could also consider budgeting for paid ads on Facebook and social media platforms, and developing an engaging website.

There is a common theme among marketing when opening a childcare center - stay community focused. However, Kawan does point out to always remember that you are a business, and you do need to be profitable and successful. 

preschool children and teacher sitting outside coloring

Pros and cons of scaling your childcare business

It’s not uncommon to dream of opening many childcare centers and expanding your business. I was curious to ask someone who has successfully done it a bit about the pros and cons that he didn’t originally think of. 

Kawan’s pros:

  • It is really efficient to expand in close proximity because of market spillover. When you have multiple centers in a small enough radius, Kawan explained that you can rely on marketing spillover. In other words, marketing for one center will market and promote the other locations as well.
  • It is also efficient to expand in close proximity because it enables more efficient staffing. Staff can work across locations, which means their is less need for a staffing agency, and more substitutes on call. 
  • Opening multiple centers has actually saved him money in ways he didn’t consider. Kawan is now eligible for comprehensive umbrella packages or a “package deal” from insurance companies, food vendors, furniture and equipment vendors, etc. 

Kawan’s cons:

  • Owners lose the ability to make quick decisions and be flexible, because when making one decision at one center, you have to consider how it affects the other centers. 
  • It’s a struggle to not become bureaucratic
“Keep the children at the center of all decisions you have to make.”

Some final words of advice from Kawan

Sometimes, it can get very frustrating waiting for an uncertain amount of time for the city or state to inspect and approve your center. But, during those times, it is important to remember that these steps are for the benefit of the children and their safety and early development. 

Everything from floor plans, learning materials, to furniture. Where do they come from? Are the brands trusted? Have they worked with ECE before? As Kawan simply put, “Keep the children at the center of all decisions you have to make.”

graphical user interface, text, application
Official Danish Government Reopening Advice

Guidance from the Danish Health Ministry, translated in full to English.

Picture of a Guidance document
UK Nursery Covid-19 Response Group Recommendations

The full recommendations from a working group of over 70 nursery chains in the UK.

Please note: here at Famly we love sharing creative activities for you to try with the children at your setting, but you know them best. Take the time to consider adaptions you might need to make so these activities are accessible and developmentally appropriate for the children you work with. Just as you ordinarily would, conduct risk assessments for your children and your setting before undertaking new activities, and ensure you and your staff are following your own health and safety guidelines.

Personal demo

Get a personal demo now

Get a guided 1-on-1 tour of the whole platform. See what features
are the best fit for you, and ask us as many questions as you like.

Book free demo