When starting a daycare business, two options are available. Either start your business from home as a home daycare, or start a daycare center in a commercial location. Both options have their own advantages and disadvantages that you should be aware of.
Home Daycare
Advantages
Less expensive to start. Compared to starting a daycare center, a home daycare is less expensive to start, making this reason the single biggest advantage home daycare has over daycare centers. Starting a home daycare with a capacity of 5 children can cost you as little as $1,000 in equipment, supplies and learning materials such as arts and crafts, toys, and books.
Operational cost is less. Your operational costs will also be much smaller compared to a daycare center. For instance, you have the flexibility not to charge rent to your business since it is your home that you are using. This also gives your business a higher chance to succeed.
Parent preference: one-on-one interaction. Some parents prefer home daycare centers because a home daycare can only accept a smaller group of children, giving their child more opportunity for one-on-one interaction.
Licensing requirements are less stringent. Licensing requirements for home daycare centers are often less stringent, making it faster to start the business compared to a daycare center.
Disadvantages
Limited capacity. Compared to a daycare center, the number of children you can accept will be limited by your local bylaws or state or provincial laws, and dependent on the space you can allocate for childcare services in your own home. Often the space you can allocate will be limited to one or two rooms in your house without the business significantly encroaching on the other parts of your home life. As a result, this limits your earnings potential.
Family life mixing with work life. Running childcare services in your own home can potentially encroach with your family life. This can sometimes cause stress or issues with other family members.
If you are ill. If you get sick, you may need to close your childcare services for a few days and notify parents about the situation. Aside from losing income, parents may become upset that they will need to urgently find alternative care.
Daycare Center
Advantages
Known to have structured programming. Since daycare centers are regulated and operate under strict guidelines, parents have the comfort of knowing that there is structured programming for child development (e.g. cognitive, gross motor skills, fine motor skills, etc.). Unlike Mrs. Jones down the street running a home daycare, parents also know that qualified teachers with formal training are hired to take care of their child. This attracts parents to licensed daycare centers.
Safe and secure. Through the state or provincial licensing process, parents know that daycare centers are required to comply with various rules relating to safety, health, security and sanitation.
Bigger capacity. Relative to a home daycare, a daycare center has a bigger space, which can accommodate more children. Larger capacity can potentially generate more revenue and income.
Daycare services continue even if you are sick. If you are sick and cannot come to the center, you have staff to continue and operate the daycare.
Disadvantages
Expensive to start. Compared to a home daycare, building and starting a daycare center is more expensive. Renovating a commercial space to comply with various building codes and childcare licensing requirements can become very costly and will require more capital to start.
Operational costs are higher. Unlike a home daycare, you have rent commitments specified in a lease agreement for a certain period of time. In addition, due to the larger space, you will have to pay more for utilities and maintenance. As a result, operational costs are higher compared to a home daycare.
Home Daycare
Advantages
Disadvantages
Daycare Center
Advantages
Disadvantages