If you love working with children and like the idea of being your own boss, then you may be wondering if you have what it takes when starting a daycare business In 2022, 47% of children received some form of formal childcare and whilst this figure may have fallen a little from previous years it is still a clear indication that there is a significant demand for daycare facilities. As long as parents need to work, and children need taking care of in the years before they start formal education then there will be a demand for daycare.

If you are considering starting your own daycare then there are a lot of different things that you will need to consider. In our guide we will take a look at everything that you need to know, including what qualifications you might need to start your daycare business.

Why might you consider starting a daycare?

Apart from the fact that starting your own daycare business could be an incredibly rewarding business venture there are many other benefits, including:

  • Being involved in and having an influence on the early development of children – early years are really important for children’s development.
  • Potential for growth in this high demand sector – changes in employment conditions make returning to work easier for more parents and this combined with rising costs of living make early childcare availability even more important, empty daycare spots are few and far between.
  • Being your own boss – starting your own daycare can be tough work but you will have the freedom to be your own boss.

What qualifications do you need to start a daycare?

You don’t actually need formal qualifications in childcare if you want to set up a daycare unless you want to be involved in the daily management of the daycare.

As a manager of a daycare you should have the appropriate NVQ level 3 qualification and a minimum of 2 years of experience in daycare. Because OFSTED (The Office for Standards in Education) inspect every provision for childcare within the UK you will also need to ensure that you are registered with Early Years Education and OFSTED. If you are in Wales you should register with CSSIW (Care and Social Services Inspectorate Wales), in Scotland the Care Inspectorate, and in Northern Ireland the Health and Social Services Board (HSSB).

You should also ensure that you register your business properly, which is something that Your Company Formations can assist you with.

What do I need in order to register my daycare?

You need to be aged 18 or over in order to apply for registration of a daycare business. Additionally, you must have the right to work within the UK and you must also have undertaken a DBS (Disclosure and Barring Service) check. These check that you have do not have any criminal convictions that could make working with children an unsuitable choice, The DBS check costs £50. It is also necessary to complete a health declaration booklet that gives details of any health issues you have and any medication you take.

It is important to remember that once you are OFSTED registered, they will conduct inspections of your daycare at least once every three years. They will check that your daycare conforms to the 14 national standards for childcare.

Very briefly the 14 national standards will cover:
  • Safeguarding
  • Health and safety
  • Food safety
  • Documentation
  • Equal opportunities

Create a business plan

The very first thing that you will need to do to set up your daycare business is to create a business plan. This will help you stay within budget and on track. The things to consider on your business plan are:

  • How will you be financing your new business – will you need a loan? You should also consider how you will find your running costs in the early days whilst you are still establishing the business.
  • Market research – you should check if there is a need for a daycare in your area, your local authority will be able to tell you about current provisions and if there are a lot of children looking for spaces. Your research should also look at what is on offer in other daycares and the fees that they charge.
  • You should also consider if you would take children who qualify for the Tax-free Childcare scheme.

Choosing a location

The location and premises of your daycare will be really important to prospective parents. If you are running your daycare from home, you will need to apply for planning permission. You will need 3.5 square metres per child if under 2, 2.5 square metres for those aged 2 and 2.3 square metres for children aged 3-7.

If you are looking to find premises for your daycare then you should consider:
  • Location - it should be easy to get to and not too near to other daycares, close to local schools for those parents with several morning drop-offs.
  • Access – there should be good access and sufficient parking.
  • Outdoor facilities – are these safe and is there a good amount of space for the children to play?
  • Indoor facilities – necessary facilities include toilets, you will need one for every ten children aged 2 and over, changing areas, kitchen. The building should be properly ventilated and well lit. You will need plenty of room and storage.
  • Possible hazards – are there staircases, can you stop children from getting access to other rooms, particularly the kitchen.


Whilst insurance needs to be included in your running costs it is important enough that it is worth mentioning on its own. You will need a range of different insurances to cover your daycare business:

  • Public liability insurance
  • Employers liability insurance
  • Professional indemnity insurance
  • Commercial property insurance
  • Personal accident cover
  • Business interruption insurance

It can be a good idea to discuss your insurance needs with an insurance specialist to ensure you are fully covered.

Choosing your staff

Having the right staff in your daycare can make or break your business. Good staff should be:

  • Patient and enjoy working with children
  • Able to manage behaviour effectively

You will need to look at their qualifications too. Around 50% of your staff should be Level 2 qualified, and others should have level 3. You may also want to look for some staff who are trained in SEND (Special Educational Needs and Disabilities).

For daycare, the minimum staffing ratio is 1 adult for every 3 children under 2, 1.4 for children aged 2 and 1.8 for those aged 3-7 years. You also need 2 staff on duty at all times to comply with all of the regulations.

Hopefully, you should now be confident in what to consider when starting a daycare business. Should you require additional help, speaking to experts such as those at Your Company Formations can help you ensure you’ve ticked all the boxes to set your daycare up right.

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