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Starting a Child Care Business? Government Tools and Resources that Can Help

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Starting a Child Care Business? Government Tools and Resources that Can Help

By Caron_Beesley, Contributor
Published: May 25, 2010 Updated: March 28, 2013

As more and more parents re-enter the work place the demand for quality child care providers has sky-rocketed.

The business of child care offers entrepreneurs the opportunity to pursue a passion for child care and child development while enjoying the independence and responsibility of being your own boss.

Here is a summary of the key steps involved in starting a child care business. It also includes links to government tools and resources that can help connect you with funding programs as well as provide guidance on some of the trickier regulatory aspects of offering child care services.

Matching your Child Care Service to the Community Need

According to U.S. Census data, parents generally look for three types of child care facilities: family care (provided in the homes of other mothers), home care (involves a nanny or sitter in the child's home), or day-care centers (offering programs focused on the developmental growth of children). However, there are other types of child care services that you might consider, including infant care centers (two years or younger), before- and after-school care, nursery school, and so on.

A little market research can help you determine where the most demand exists in your market as well as what child care services currently exist.

Demographic data can also tell you where future demand will lie. For example, if the majority of the childhood population is currently at pre-school age, then you can expect a demand for school-age child care services (such as after-school programs) to increase in future years. 

In addition to quantitative data, you can also get valuable information about market need by talking to parents themselves. Consider posting a quick poll or survey on online community message boards or parenting forums, or simply browse these forums for child care related topics and discussions.

What about You? Are You Ready to be a Business Owner?

Operating a successful business is not for everyone. In addition to doing what you love, you must also deal with the universal requirements of business ownership such as staying on top of business law, managing employees, coordinating sales and marketing, and maintaining tip-top customer service.

If you have any doubts about your readiness to go into business as a child care provider, take time to assess your strengths and weaknesses in the context of the requirements of running a business. 

Find a Location for your Child Care Business

Whether you choose to operate your business from your home or in a commercially-leased property you will need to consider zoning laws as well as get a legal determination whether or not the property can be used for a child care business. ChildCareAware.org breaks down the specific location and space requirements that you need to consider here.

If you are looking to operate a child care business from your home, check out these tips for starting and operation a home-based business. You may also need to make changes to your home to comply with safety regulations and the child care provisions of the Disabilities Act. Be sure to have a licensing specialist visit your home before you renovate and when you complete. Their suggestions and recommendations can save you money.

Get Insured

Adequate insurance protection is another requirement for your child care business. If you intend to operate the business from your home, you will need fire and theft insurance. If you have insurance, make sure your policy covers the supplies and equipment that you purchase. You will also have to purchase liability insurance to protect your facilities, staff and children. 

Child Care Licensing

State-specific licensing requirements ensure that child care providers provide a safe and healthy environment for children who are in day care. It is not an indicator of high-quality care.

To find out the child care licensing laws in your state, use SBA's license and permit search tool (enter your zip code and choose "Child Care Provider" as your business type).

Set Your Business up Correctly

Starting a business involves making key financial decisions and completing a series of legal activities. Read 10 Steps to Starting a Business

Child Care Industry Loans and Grants

To promote the development of new child care providers, a variety of federal, state and local government funding programs provide assistance for everything from start-up to operational costs to general business improvements. In an effort to raise awareness, and assist the business community in finding these opportunities, SBA.gov added a child care section to its Loans and Grants Search tool.

If you own a child care business or are considering starting one, use this tool to help find specific funding that may be available to you based on your location. In some states, a few special loan programs can help business owners access funds at affordable rates. Contact your local licensing office or SBA for information about financing child care as a small business opportunity.

Additional Resources

  • Childcare.gov - ChildCare.gov is a comprehensive online resource designed to link parents, child care providers, researchers, policymakers and the general public with Federal Government sponsored child care and early learning information and resources both quickly and easily.
  • Child Care Aware - A program of the National Association of Child Care Resource & Referral Agencies (NACCRRA), Child Care Aware provides a hub of information for parents and child care providers.
  • Child Care Bureau -The Child Care Bureau serves as an information resource for the child care community and helps improve the quality of early care programs. Each state has a division of its government dedicated to child services. Operating under the Child Care Bureau, the National Child Care Information and Technical Assistance Center provides detailed state profiles and access to your state's lead child care agency.


About the Author:

Caron Beesley


Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley


As with any business, doing your research can help you tremendously! As a small business owner myself, I understand the importance of finding a niche in your market and getting to know your customers to best serve their needs. There's an old business adage that I believe in, "80% of your revenue comes from 20% of your customers." To me, that means that it's not always about finding new customers, but learning to serve your current customers better.

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