The 10 Biggest Mistakes New Childcare Owners Make (And How to Avoid Them!)
This post may contain affiliate links, which means I'll receive a commission if you purchase through my link, at no extra cost to you.Thinking about opening a daycare but feeling overwhelmed by the process? You’re not alone.
When my husband and I started our childcare center in 2001, we had no clue where to begin. We were suddenly responsible for design, licensing, staffing, enrollment, and everything in between. We made plenty of mistakes along the way, and I want to help you avoid the stress and frustration we faced early on.
If you're planning to open a daycare, keep reading to learn about the biggest mistakes new childcare owners make and, more importantly, how to avoid them so you can set your business up for long-term success.
Before we get started, If you're new to my site, remember to snag my FREE Family Screening Guide to select the families right for your program! Yes, you can carefully accept the right families and avoid the high-maintenance ones 🙌
Now let’s dive into how to avoid the 10 biggest mistakes new childcare owners and directors make.
1. Not Understanding State Licensing Requirements
Failing to understand your state’s childcare licensing requirements can lead to delays, fines, or even forced closure. Some states allow home daycares to operate with minimal licensing, while others require permits, inspections, and extensive training—even for just one child.
Many new daycare owners assume licensing is a one-step process, only to find out there are multiple inspections, paperwork deadlines, and compliance checks that take months to complete. Without proper planning, you could delay your opening, face unexpected costs, or even fail to get approved.
How to Avoid This Mistake
Contact Your State’s Childcare Licensing Office – Get the most up-to-date information before making any financial commitments.
Understand Zoning & Safety Regulations – Ensure your facility meets local zoning laws, fire codes, and child safety requirements before leasing or purchasing a space.
Complete Required Training & Background Checks – Many states require CPR certification, child development training, and criminal history checks for all staff members.
Ask Questions & Get Clarification – Licensing requirements can be confusing and change frequently. If you're unsure about something, reach out to a licensing specialist before investing time and money.
Prepare for Inspections Early – Many licensing agencies require multiple inspections (health, fire, and safety) before issuing final approval. Start preparing early to avoid delays.
How to Find Your State’s Childcare Licensing Department
Visit the National Database – The best place to start is the National Database of Child Care Licensing Regulations, maintained by the Office of Child Care.
Go to ChildCare.gov
Click on “Find Child Care Licensing Regulations”
Select your state to be directed to your licensing agency’s website
Google Your State’s Licensing Office – Try searching for:
"[Your State] Childcare Licensing Office"
"[Your State] Department of Early Childhood Education"
"[Your State] Daycare Licensing Requirements"
Understanding your state’s licensing process early on will save you time, money, and frustration—ensuring a smooth path to opening your childcare business successfully.
2. Underestimating Startup Costs
Many new daycare owners assume they just need toys, cribs, and snacks, but the reality is that hidden costs quickly add up. Underestimating expenses can leave you financially stretched, struggling to pay bills, or even delaying your opening.
Common Expenses New Owners Overlook
State Licensing Fees & Inspections – Application fees, background checks, fingerprinting, and facility inspections.
Required Training & Certifications – CPR/First Aid, child development courses, and other mandatory staff training.
Liability Insurance – Coverage for accidents, injuries, and business protection. Read all about liability insurance here.
Marketing & Advertising – Website development, branding, social media ads, and local outreach.
Regulatory & Compliance Costs – Includes building permits, city zoning approvals, fire safety inspections, occupancy permits, and other required legal compliance fees to operate a licensed daycare.
Facility Modifications & Safety Upgrades – Expenses for childproofing, fencing, adding or removing walls, and meeting fire and ADA compliance requirements.
Business Registration & Tax Filing Fees – LLC formation, business licensing, EIN application, and accounting costs.
Payroll Costs for Staff – Wages, payroll taxes, and benefits, even if you start with one or two employees.
Classroom & Play Equipment – Educational materials, outdoor play structures, furniture, and sanitation supplies.
Unexpected Costs – Repairs, legal issues, supply shortages, and emergency fund requirements.
How to Avoid This Mistake
Create a Detailed Budget – Include both startup and ongoing costs so you’re financially prepared for the first year.
Research Funding Options – Look into childcare grants, SBA loans, and community funding programs to ease financial strain.
Start Small & Scale Up – If possible, begin with fewer children or a smaller space, then expand as enrollment grows.
Track Expenses & Adjust as Needed – Regularly review your budget to ensure you’re staying on track and identify areas where you can cut costs.
Helpful Resource: Not sure how much you’ll need? My Budget Template can help. Looking for funding? Grab my Childcare Funding Blueprint for step-by-step guidance on finding and applying for grants.
Failing to budget properly can lead to stress, financial setbacks, and even business failure. Planning your finances early ensures you can open your doors with confidence and long-term stability.
3. Choosing the Wrong Location
Your daycare’s location is one of the biggest factors in your success. If parents find it inconvenient, unsafe, or out of the way, they will likely enroll elsewhere. A poorly chosen location can make it difficult to fill spots, regardless of how great your program is.
How to Avoid This Mistake
Research Demographics & Demand – Look for areas with a high concentration of working parents and a growing need for childcare. Check household income, number of children under age 5, and local employer density to gauge demand. You can research demographics on Neighborhood Scout.
Check Zoning, Licensing & Safety Regulations – Ensure your chosen space complies with childcare zoning laws, fire safety codes, and state licensing requirements before signing a lease. Some buildings may require costly renovations to meet compliance.
Prioritize Convenience & Accessibility – Your location should be easy for parents to drop off and pick up their children. Consider:
Traffic patterns – Is there heavy congestion during peak hours?
Parking availability – Do you have enough dedicated spots for parents?
Public transportation access – If applicable, is your center accessible by bus or train?
Choose a Safe & Visible Location – Parents want a secure environment for their children. Avoid areas with high crime rates or heavy industrial traffic. A location on a well-traveled road with good signage can increase awareness of your daycare.
Consider Surrounding Businesses & Competition – Nearby schools, pediatricians, office parks, and family-friendly neighborhoods can drive traffic to your daycare. If there are other childcare centers nearby, research their rates, services, and reputation to ensure you can compete effectively.
Helpful Resource: Before signing a lease, read my guide: Choosing the Perfect Location for Your Childcare Center.
Selecting the right location sets the foundation for your daycare’s long-term success. A great program in the wrong location won’t thrive—so choose wisely.
4. Skipping a Business Plan
Many owners believe they can figure it out as they go, but this leads to financial and operational struggles.
How to Avoid This Mistake
Use a structured business plan template to map out your vision, finances, and marketing plan.
Include financial projections, tuition pricing, staffing plans, and enrollment goals.
Update your plan regularly as your business grows.
Key Elements to Include in Your Childcare Business Plan
Executive Summary – Brief overview of your daycare’s mission, vision, and goals.
Business Description – Type of childcare program (home daycare, center, preschool) and services offered.
Market Research – Local demand, competitor analysis, and target audience demographics.
Location & Facility Details – Information about your chosen location, licensing requirements, and facility setup.
Organizational Structure – Ownership type (LLC, sole proprietorship), management team, and staffing plan.
Programs & Curriculum – Age groups served, daily schedule, and educational approach.
Marketing & Enrollment Strategy – How you will attract and retain families (website, social media, word-of-mouth referrals, tours).
Tuition Pricing & Fee Structure – Rates, sibling discounts, payment policies, and late fees.
Financial Plan & Budget – Startup costs, operating expenses, revenue projections, and funding sources.
Policies & Procedures – Health and safety protocols, discipline policy, parent communication, and emergency preparedness.
Growth & Expansion Plan – Long-term goals, potential for expansion, and contingency plans.
Helpful Resource: Need an almost done-for-you business plan template? Grab my Business Plan Template.
5. Setting Tuition Rates Too Low
Many daycare owners undervalue their services, thinking lower rates will attract more families. But underpricing can hurt your profits and make it harder to provide high-quality care.
Your tuition rates should be based on your expenses, the level of care you provide, and your local market rates—not just what feels reasonable.
How to Determine the Right Rates for Your Daycare
Calculate Your Costs: Add up all expenses, including rent, payroll, insurance, supplies, food, and unexpected costs.
Consider Your Program’s Value: Are you offering a structured curriculum, experienced teachers, and enrichment programs?
Research Local Tuition Rates: Compare rates from nearby daycare centers and home programs to remain competitive.
Build in a Profit Margin: Setting rates too low can cause financial strain—factor in a reasonable profit to sustain and grow your business.
Offer Premium Services: Instead of lowering rates, offer added value like extended hours, parent workshops, or a stronger curriculum to justify premium pricing.
Helpful Resource: Not sure how to budget properly? My Budget Template walks you through step-by-step.
Pro Tip: Parents are willing to pay more for quality, so highlight curriculum, safety, and staff expertise.
6. Not Having Clear Policies for Parents
Without clear policies, you’ll constantly deal with late payments, schedule changes, and conflicts with parents. A strong Parent Handbook sets expectations and protects both your business and families.
How to Avoid This Mistake
Create a Comprehensive Parent Handbook – Cover essential policies, including:
Tuition & Payments – Due dates, late fees, and payment types accepted
Attendance & Sick Policies – absences, handling illnesses, and notifying parents when a child is sick
Drop-Off & Pick-Up Rules – Late pickup fees and authorized pickup procedures
Health & Safety – Medication administration, allergies, and emergency plans
Behavior & Discipline – Expectations and approach to handling challenges
Parent Communication – How families receive updates and important notices
Require a Signed Contract – Ensure parents review and agree to all policies before enrollment.
Be Consistent with Enforcement – Making too many exceptions weakens your policies and creates confusion.
Communicate Policies Clearly – Go over key policies during tours, enrollment, and parent meetings. Use newsletters or a parent portal for reminders.
Update Policies Annually – Licensing regulations and business needs change, so review your handbook regularly.
Helpful Resource: Read my guide: 30 Daycare Policies You Need in Your Parent Handbook.
Having clear, written policies prevents misunderstandings and ensures a smooth, professional experience for both parents and staff..
7. Poor Marketing Strategy
Many daycare owners focus on setting up their business but wait too long to start marketing. The result? Empty spots, lost income, and unnecessary stress trying to fill openings at the last minute. Without a solid marketing plan, even the best childcare program can struggle to attract families.
How to Avoid This Mistake
Start Marketing Before You Open – Build interest early by creating a waitlist, running promotions, and networking with local businesses before your doors open.
Have a Professional Website – A website that ranks well on Google makes it easier for parents to find you. Include clear program details, tuition info, photos, and a contact form.
Claim Your Business on Google & Directories – List your daycare on Google My Business, Yelp, and local childcare directories so parents can easily find you online.
Leverage Social Media & Facebook Ads – Regularly post engaging content like behind-the-scenes videos, parent testimonials, and enrollment updates. Use targeted Facebook ads to reach local parents searching for childcare.
Encourage Parent Referrals – Offer incentives like a tuition discount or a small gift card when current families refer new enrollments.
Network in Your Community – Connect with pediatricians, real estate agents, OB-GYN offices, and local businesses that frequently interact with parents of young children.
Host Open Houses & Community Events – Organize meet-and-greets, free playdates, or parenting workshops to introduce families to your center.
Helpful Resource: Need more ideas? Read my article: 10 Ways to Max Your Daycare Enrollment.
A consistent marketing strategy ensures that parents know, trust, and choose your daycare—keeping your enrollment full and your business thriving.
Thinking about starting a daycare but have no idea where to begin? 😫
Grab the Daycare Starter Bundle to start your own childcare business for only $7 🙌
8. Weak Enrollment & Tour Process
Your tour is one of the most critical moments in the enrollment process. If parents walk away feeling uncertain, uninformed, or unimpressed, they will enroll elsewhere—even if you have a great program. A weak tour process, lack of engagement, or poor communication can cost you enrollments.
How to Avoid This Mistake
Start with a Warm Welcome – First impressions matter. Greet parents warmly, use their child’s name, and make them feel valued and comfortable from the start.
Engage, Don’t Just Inform – Parents don’t just want facts; they want to feel the environment. Tell stories about your program’s success, showcase happy children in action, and highlight what makes your daycare special.
Tour with Purpose – Walk through your facility in a logical order, emphasizing safety features, curriculum, and daily routines. Use a script to ensure consistency while keeping the conversation natural.
Use Parent Perspective – Address the concerns parents actually have, like cleanliness, teacher interaction, and how their child will be cared for during the day.
Encourage Questions – The best tours are interactive. Ask parents what’s most important to them and tailor your responses to their concerns.
Overcome Objections Gracefully – If parents hesitate about pricing, policies, or curriculum, confidently explain the value of your program rather than justifying the cost.
End with a Clear Next Step – Don’t just say, “Let us know if you’re interested.” Hand them an enrollment packet, highlight deadlines, and ask if they’d like to secure a spot today.
Follow Up Within 24 Hours – Send a thank-you email or call to answer any remaining questions and remind them about enrollment availability.
Helpful Resources: Want to book more tours and convert them into enrollments?
Read my articles: How to Give an Amazing Tour Parents Can’t Refuse & Expert Tips for Answering the Phone.
9. Trying to Do Everything Alone
Many new daycare owners take on too much, thinking they can handle everything—enrollment, teaching, cleaning, finances, and marketing—on their own. This leads to burnout, frustration, and business inefficiency.
How to Avoid This Mistake
Hire Help Early – Even if you start small, consider hiring an assistant, floater, or part-time support to help with daily operations.
Automate Where Possible – Use tools like Procare, Brightwheel, or Playground for billing, scheduling, parent communication, and attendance tracking to reduce manual tasks.
Delegate Non-Childcare Tasks – Instead of managing bookkeeping, marketing, and admin work yourself, consider outsourcing to a virtual assistant or accountant.
Set Boundaries – Running a daycare can be all-consuming, so schedule work-free hours and take breaks to avoid burnout.
Build a Support Network – Connect with other childcare providers, mentors, or business coaches to share strategies and prevent isolation.
Trying to do it all alone can limit your growth and success. The most successful daycare owners focus on what they do best—caring for children—while building a reliable support system around them.
10. Not Planning for Growth
Many daycare owners focus on getting to full enrollment, but what happens once you reach capacity? Without a growth plan, you may find yourself turning families away, overworking staff, or struggling with finances because tuition rates haven’t kept up with rising costs. Successful childcare businesses don’t just fill spots—they plan for long-term sustainability and expansion.
How to Avoid This Mistake
Track Demand & Your Waitlist – A growing waitlist is a strong indicator that it’s time to expand services or increase tuition. Monitor how often you turn families away and consider whether an expansion is needed.
Evaluate Your Space & Capacity – Is your facility maxed out? Can you rearrange or renovate to accommodate more children? If not, it may be time to look for a second location or a larger space.
Plan for Staffing Needs – Growth means hiring more staff to maintain ratios and quality of care. Start by creating a staffing plan that outlines when you’ll need additional teachers and how you’ll afford them.
Increase Tuition Strategically – Raising tuition isn’t just about making more money—it’s about ensuring long-term financial stability. If your costs increase due to inflation, payroll, or supplies, a small annual tuition increase will keep your business healthy without shocking parents. Click here to read my article, Why Raising Tuition Rates is Essential for Your Daycare.
Expand Your Services – Growth doesn’t always mean adding more children. Consider offering:
Extended hours for working parents
Drop-in care for flexible scheduling
Summer or after-school programs
Parent workshops on child development
Reinvest in Your Business – Set aside a portion of your profits each month for future upgrades, whether it’s facility improvements, new curriculum materials, marketing, or technology to streamline operations.
Create a Long-Term Vision – Where do you want your daycare to be in five years? Do you want to open multiple locations? Franchise? Specialize in a niche like Montessori or bilingual education? Mapping out long-term goals will help you make smart business decisions today.
By planning ahead, you won’t just run a daycare—you’ll build a business that grows with demand, adapts to changes, and continues to serve families for years to come.
Final Thoughts
Starting a daycare is a huge step, but avoiding these mistakes will help you build a stress-free, successful childcare business.
Get my FREE Daycare Starter Guide!
Click here to download it now.
Here are some other articles packed with valuable content you are sure to enjoy:
10 Ways To Increase Revenue In Your Daycare Business
6 Must-Do’s To Effectively Communicate To Staff
How To Avoid Burnout in Childcare
How To Screen Families For Your Daycare
6 Tips To Ace Your Licensing Inspections
30 Daycare Policies You Need in Your Parent Handbook
Important Daycare Forms You Need For Your Childcare Business
How To Deal With Parents Who Consistently Pay Tuition Late!
Download my FREE Family Screening Guide to select the families right for you.
Download this guide to help you carefully accept the right families and avoid the high-maintenance ones. Includes 13 questions and a Family Information Card for easy follow-up.
Grab my FREE Daily Schedules for Infants, Toddlers, & Preschoolers!
Download 3 PDF schedules designed for each age; Infants, Toddler, and Preschoolers. A Canva link is provided to edit the schedules for your program. It’s absolutely free and only takes 5 seconds!
Download my FREE Daycare Starter Guide to start your own childcare business.
If you don’t know where to start, this guide is perfect for you! Click the button to get instant access. It’s super easy and absolutely free!
Childcare Funding Blueprint
Unlock the funding you need to start your dream childcare business—Discover creative ways to secure funding, no matter your financial situation.
This is a digital downloadable policies & procedures form to be given to parents. This complete printable handbook is designed for licensed childcare centers, in home daycares, and preschools.
Are you looking for an easy way to advertise your in-home daycare, preschool, or childcare center? Look no further! Our new Child Care Business Advertising Bundle is the perfect solution for you.
Spread the word about your amazing services with a colorful, editable, and printable childcare flyer and social media graphics to post on your social media pages.
This is a digital downloadable Child Enrollment Form with Parental and Center Agreement/ Contract to be given to parents. This complete printable packet is designed for licensed childcare centers, in home daycares, and preschools.
In this online program, you'll learn the exact steps to confidently start your own profitable childcare business, going from feeling clueless and overwhelmed to feeling confident and knowledgeable, even if you currently lack the experience, credentials, or funding you need. (Includes Childcare Funding Blueprint)