How to Write a Home Daycare Business Plan in California
You do not need a 40-page document with charts and executive summaries to start a home daycare. But you do need to think through the basics before you open — and writing them down forces you to do that.
A good home daycare business plan answers five questions: What will you offer? Who will you serve? What will you charge? What will it cost to start and run? And what happens when something goes wrong?
This article walks you through each section. By the end, you will have a plan that is actually useful — not just something that sits in a drawer.
Quick answer
A home daycare business plan covers your capacity, target families, rates, startup costs, monthly income and expense projections, and your policies for enrollment, sick days, and payment. You do not need financing to start — you need clarity before you open.
Why a Business Plan Matters
Many first-time providers skip the business plan because they think it is only for people seeking a loan. But the real value of a business plan is what it forces you to figure out before you open:
- How many children do I need to break even?
- What happens if a family leaves mid-month?
- How will I handle a sick child — mine or theirs?
- What will I charge, and is that enough to make this work financially?
Answering these questions on paper before you open saves you from making them up under pressure later.
Section 1 — Your Business Overview
This section is short. Write one or two paragraphs that describe your daycare:
- Your name, the name of your daycare (if you have one), and your location
- The license type you will operate under (small or large)
- Your hours of operation
- The ages of children you will serve
- Any special focus you plan to offer (bilingual care, outdoor play emphasis, infants only, etc.)
Example: Sunshine Family Daycare will operate as a licensed Small Family Day Care Home in [City], California. I will be open Monday through Friday, 7:00 AM to 5:30 PM, caring for children ages 6 weeks through 5 years. Maximum enrollment is 6 children. I am bilingual in English and Spanish and plan to serve families in the surrounding neighborhood.
Section 2 — Your Capacity and Enrollment Plan
What your license allows
- Small license: Up to 6 children at one time (up to 8 under specific conditions)
- Large license: Up to 12 children, assistant required when over 6
Your own children under age 10 count toward your capacity. Subtract their number from your licensed limit to get your available spots.
See Small vs. Large Home Daycare License in California for the full breakdown.
Infant cap
A small license allows no more than 2 infants (children under 2 years old) at any one time when your total exceeds 6. Under 6 total children, you can have more, but plan your mix carefully.
Your enrollment plan
Write down your realistic enrollment target for:
- Month 1 (likely 1–2 children as you spread the word)
- Month 3 (building)
- Month 6 (near full or full capacity)
How will families find you? List your initial marketing plan: word of mouth, local Facebook groups, Care.com, referral from your Regional Office, flyers at pediatric offices, Nextdoor. You do not need a big marketing budget — you need a specific list of what you will do in your first 30 days.
Section 3 — Your Rates
Set your rates before you open. Write them down. Commit to them.
How to set your rate
- Call or message three to five other licensed providers in your zip code. Ask what they charge per week.
- Look at Care.com and similar sites for posted rates in your area.
- Set your rate within the local range based on your experience, any special offerings, and your target family.
Rate structure options
Weekly flat rate: Simple and predictable. Most home daycares use this. A set rate per week regardless of days attended.
Daily rate: Works if you expect a mix of full-time and part-time families. Usually 20–25% more than the full-week equivalent per day.
Part-time rate: Some providers offer a 3-day or 2-day rate. If you do this, make sure a mix of part-time families can realistically fill your capacity.
What to include
Be clear about what your rate covers: meals, diapers, sunscreen, field trips. Most providers include meals (especially if enrolled in CACFP) but not diapers. Whatever you decide, write it down — and put it in your parent contract.
Your deposit and registration fee
Most providers charge a one-time registration fee ($50–$150) and a refundable deposit equal to two weeks of tuition. The deposit protects you if a family leaves without notice.
Section 4 — Startup Costs
Estimate what you will spend before your first child walks through the door.
| Item | Estimated cost |
|---|---|
| State application fee | $73 (small) or $140 (large) |
| Fingerprints (per adult in home) | $70–$100 each |
| City business license | $25–$75 |
| Home safety fixes (fire extinguisher, latches, etc.) | $50–$200 |
| Liability insurance (first year) | $300–$800 |
| Initial supplies (art, cleaning, paper goods) | $75–$150 |
| Play equipment and toys | $100–$400 |
| Cots or sleeping mats | $100–$300 |
| First aid kit and safety supplies | $30–$75 |
| Total estimate | $825–$2,240 |
Most providers can get started for under $1,500 if they already have a furnished, child-friendly home. For a full cost breakdown, see How Much Does a Home Daycare License Cost in California.
Section 5 — Monthly Income and Expense Projection
This is the most important section. It tells you whether your plan is financially viable before you open.
Monthly income projection
| Scenario | Calculation | Monthly gross |
|---|---|---|
| 3 children at $225/week | 3 × $225 × 4.33 | $2,923 |
| 5 children at $225/week | 5 × $225 × 4.33 | $4,871 |
| 6 children at $225/week | 6 × $225 × 4.33 | $5,846 |
| Add CACFP (Tier 1 estimate) | — | +$850–$940 |
Use your local rate — $225 is just an example. Run the math at your actual rate.
Monthly expense projection
| Expense | Monthly estimate |
|---|---|
| Food (if not covered by CACFP) | $150–$400 |
| Supplies | $75–$175 |
| Liability insurance | $25–$67 |
| Utilities increase (SDGE, PG&E, etc.) | $50–$100 |
| Phone (business use portion) | $20–$40 |
| Miscellaneous | $50–$100 |
| Total monthly expenses | $370–$882 |
Break-even calculation
How many enrolled children do you need to cover your expenses?
Example: If your monthly expenses run $600 and you charge $250/week ($1,083/month per child):
- Break-even at 1 child ($1,083 > $600)
- 3 children gets you to a modest profit
- 5–6 children is when you see real income
Write your own numbers in. Know your break-even before you open.
Section 6 — Your Policies
Policies are not bureaucratic paperwork — they are how you protect your income and your sanity. Write them before you have families enrolled, not after a conflict arises.
Sick child policy
When will you send a child home? Most providers follow these rules:
- Fever of 100.4°F or higher: child goes home, cannot return until fever-free for 24 hours without medication
- Vomiting or diarrhea: child goes home, cannot return until symptom-free for 24 hours
- Contagious illness (pink eye, strep, hand-foot-mouth): exclusion until cleared by a doctor or until no longer contagious
Write this down and include it in your parent contract. "I'll know it when I see it" is not a policy.
Payment policy
- Due date: most providers collect on Friday for the following week, or on Monday for the current week
- Method: check, Venmo, Zelle — whatever you accept
- Late fees: $10–$25 per day after a 3-day grace period is common
- No pay, no care: enforceable and appropriate — include it explicitly
Closure days
Which holidays will you close? Will you charge full tuition for closed days? Most providers charge for all scheduled weeks (holidays included) if they are closed for less than a week at a time. Write this down before you get asked.
Withdrawal notice
Require 2 to 4 weeks' written notice before a family withdraws. This protects you from an empty spot with no income while you find a replacement.
Emergency and backup care
What happens if you are sick? If your home has a water or power emergency? Having a plan — even a simple one — shows families you have thought this through. Most solo providers simply close when ill and have a substitute plan they communicate upfront.
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Section 7 — Your License and Compliance Plan
Your business plan should acknowledge the regulatory side of operating a licensed daycare.
Initial license: Which license type, application timeline, and expected open date.
Renewal: California home daycare licenses renew annually. Add the renewal date to your calendar and set a 60-day reminder. See California Home Daycare License Renewal.
Training hours: Your license renewal requires ongoing training hours. Note how many hours are required and where you plan to complete them. See The 16-Hour Training Requirement for California Home Daycares.
CACFP enrollment: Plan to enroll as soon as you open. Find your sponsoring agency before your first child starts. The reimbursement income ($700–$940/month for a full small daycare) should be in your income projections. See CACFP for California Home Daycares.
One Page Is Enough
Your business plan does not need to be long. A one-page summary with the key numbers and policies is more useful than a 20-page document you will never look at again.
Put it in a folder with your license, your parent contracts, and your CACFP enrollment paperwork. Revisit it every six months and update the numbers based on what actually happened.
What to Do Next
- Set your rate based on local research — call three providers this week.
- Run your break-even calculation. How many children do you need before this makes financial sense?
- Write your sick child and payment policies before you interview your first family.
The full License Kit includes all 7 state forms, a room-by-room inspection checklist, and a step-by-step guide to the full application process. Get the Kit →
This article is for general information only. Business and financial decisions depend on individual circumstances. Consult qualified professionals for tax, legal, and financial advice specific to your situation. Daycare License California is not part of the California state government.