How to start a daycare business

Nurture your dream of starting a daycare company with this step-by-step guide.

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When starting a daycare business, It's all about the baby steps. You may feel overwhelmed by everything you need to do and find yourself unsure about which foot should go first. But with the right mix of knowledge and hard work, your dream is achievable.

In this guide, we'll lead you by the hand through the process of setting up your own daycare centre.

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What key skills do I need to start a daycare business?

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A background in childcare will be necessary to start your own daycare business. Spending time with little ones and making them feel safe and supported should be like second nature to you. It will also help to have some understanding of early childhood psychology and how to manage a variety of behaviour patterns.

In addition to childcare skills, you'll need an ability to communicate effectively with parents, guardians and your staff.

On the business side of things, skills in marketing, administration and some fundamental business skills will all help you grow your daycare centre.

What courses or qualifications do I need to complete?

The minimum requirement to work as a childcare worker in Australia is a Certificate III in Early Childhood Education and Care. This course teaches you how to provide care for babies, toddlers and children and will enable you to work as a childcare assistant. The certificate takes 18 months to complete and typically costs $3,700, but this can vary depending on the institution and whether or not you're eligible for a government subsidy.

You can extend your qualifications further with a Diploma in Early Childhood Education and Care which will teach you how to design and implement educational programs for children. This is a fully government-subsidised course available through TAFE and usually costs $4,420.

You'll also need a Working with Children check as well as a First Aid certificate including CPR, Anaphylaxis and Asthma Awareness training.

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Equipment and software needed

From safety supplies to furniture and play materials, there's a lot to consider when setting up a daycare business. You'll need furniture for your kitchen, play areas and office space as well as a variety of appropriate toys to keep the kids occupied. It's a good idea to look at your start-up budget and make a list of the essential equipment you'll need.

A few key items to consider are as follows:

  • Nap mats
  • Playpen(s)
  • Outdoor and indoor play structures
  • Playhouses
  • Round lego table and chairs
  • Infant bouncer car
  • Coat/dress-up rack
  • Dress up clothes
  • Sand and water table
  • Swing sets
  • Toddler slide
  • Sandbox
  • Safety gate
  • Doll furniture such as a high chair, stroller and cradle/crib
  • Infant dolls
  • Doll clothes and accessories
  • Tool workshop
  • Toolbox with tool rack
  • Themed prop boxes such as restaurant, farm and grocery store themes.

Check out the latest discounts on children and baby toys.

You'll also need to fit out your office space with equipment such as a desktop computer, printer, scanner and filing cabinets.

In order to run your enterprise efficiently, you might like to think about some business and/or daycare management software. There are a number of options which could help you manage important information about children and their families, keep parents engaged with your centre and track billing and payments. These may include:

  • Xap. Create family and children profiles, automate invoices and schedule payments.
  • Jackrabbit Care. Includes self-check-in and check out, and calendar management.
  • Child Care Central. Online enrolments, plan programming and automated invoicing.
  • Qikkids. Administration features, playground management and parent engagement with photo and video updates.
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Choose your business structure

Before you start acquiring equipment, one of your first steps will be to decide on a business structure. The three most common types of business structure in Australia are as follows:

  • Sole trader. The easiest and cheapest structure for small businesses, as a sole trader you have full control and are personally liable for the business.
  • Partnership. A partnership means two or more people share the responsibility and income and should operate under a partnership agreement.
  • Company. As a company, your business is seen as a separate entity from you and is owned by shareholders who may be investors or directors.

Since there's a lot of responsibility involved in a daycare business, you may want to set up a partnership so you can share the load with a partner. Otherwise, you can still start as a sole trader and hire staff and transition to a partnership down the track as you choose.

Once you've decided on a structure, you'll need to register your business and get an Australian Business Number (ABN). You can do this online through the government's website. Then you can choose a name for your business.

Before you move ahead, you'll have to gain proper approval to run your daycare business. A provider and service approval from the National Quality Framework is necessary to operate a daycare business in Australia. Check the regulatory authority in your state which may have standards including a compliance history check, results from a Working with Children Check and criminal history checks. You can find some information about this at the Australian Government Department of Education's website.

It may be worthwhile seeking professional legal advice when setting up your daycare business, as there's quite a lot to get right in terms of licensing.

Here are some legal documents you might need to consider:

  • Policy and procedures. This is a guideline for all staff on how to manage the daycare centre. It outlines how the centre will deal with general operational problems and requirements with legislation compliance and codes of practice.
  • Childcare agreement. This is an agreement between you and the parents or guardians of the children which can set out the rights and responsibilities of each party and ensure the child's safety under supervision.
  • Employment agreements. An employment agreement will ensure your employees know what is expected of them and that you are both protected should any legal troubles come up at any point.
  • A privacy policy is a legally required statement on your website which allows you to collect the personal information of people who visit your site.

To make things easier, you can find legal document templates through online legal services such as Sprintlaw, Lawpath, LawDepot and Wonder Legal.

Find a legal template now

Name Product What's offered? Starting price to become a member Annual Fee from Free legal documents available?
Lawpath
Legal documents and templates, Access to lawyers, Legal guides, Legal advice
$79 per month
Essentials: $288, legal advice: $828
You can view samples for free and you can create your first document for free.
Choose an annual plan from just $288 and get unlimited revisions to your legal or business documents. Plus, unlock exclusive partner offers.
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$599 (with fixed fee services starting at $99)
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Some documents are free to download. Get access to all documents with a membership.
Unlimited lawyer phone consultations, free updates to documents, exclusive partner offers & legal discounts.
LawDepot
Legal documents and templates, Legal guides
$4.99 per month
$59.88
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Legal documents and templates, Legal guides
Varies per template
N/A
No
Legal123 offers a range of individual templates or document packages for consultants, app developers, personal trainers and more.
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Legal documents and templates, Legal guides, Legal advice
$49 + GST per week
$2,548 + GST
No
Your business can take advantage of unlimited lawyer consultations, fast turnaround times and free legal templates with LegalVision.
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Grow your customer base

A big part of standing out in the daycare crowd will be establishing your brand. What makes you different when it comes to caring for children? It could be your curriculum, the background of your staff, the location, safety features or any unique amenities. It could be just your caring approach, upbeat energy or a special motto you have for your centre.

You can highlight your values and caring ethos through your website and online marketing. You might like to look into WordPress or the particularly user-friendly Squarespace to set up your website. But if you're really not confident with technology, there are plenty of available web designers who can help you to build your business site.

Some of the most proven ways to reach customers include:

  • Word of mouth. Start telling everyone you know about your business.
  • Set up a Facebook and Instagram profile with your logo and branding.
  • Create some flyers to send out or place in cafes, community centres and medical centres.
  • Start a blog of informative articles on your website.
  • Use Search Engine Optimisation (SEO) to get traffic to your site.
  • Host events or workshops in early childhood care.

Frequently asked questions

Where should I set up my daycare business?

There are a few options. To keep costs low, you could set up your daycare centre from home to start with. You'll just need to get the appropriate approval and make sure you have the necessary insurance. You could buy an existing daycare business, rent a premises or, if you have the investment capital, buy a property and build your own. Think carefully about your target market and convenience for people when choosing a location.

How much does childcare cost in Australia?

A full day in a childcare centre in Australia costs $112.43 on average, according to CareforKids.com.au. Your prices are likely to vary depending on how you package your services, what's included and the length of time a child will be in your care. Also, costs tend to vary from state to state.

What type of insurance do I need for my daycare business?

You may want to consider the following:

  • General liability insurance. This covers bodily injury, personal injury and property damage.
  • Professional liability. This protects you if a child is sexually abused or molested by a member of your staff.
  • Worker's compensation insurance. This means your staff can claim compensation for a variety of reasons including injuries and stress related to work.

Where can I buy childcare products?

You can buy childcare products from exclusive providers such as Childcare Supplies, Step4 and Kesco. You can also find supplies online through retailers such as Amazon Australia and eBay.

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