Deciding to start a childcare business is an exciting venture. One of the first and most significant decisions you will make is choosing the right setting. Will you open a program in your own home or lease a commercial space for a childcare program? This choice impacts everything from your initial investment and daily operations to your work-life balance and long-term growth potential.
Making this decision requires careful consideration of costs, available space, licensing regulations, and your personal and professional goals. There is no single "right" answer, as the best path depends entirely on your unique circumstances and vision.
This article provides a balanced comparison of a home-based daycare vs. a center-based daycare to help you make an informed choice that aligns with your business aspirations.
Cost considerations
Your budget will be a primary factor in your decision. Home-based and center-based programs have vastly different financial requirements.
Home-based daycare
- Lower startup costs: Operating from your home eliminates the need to rent or lease a separate commercial space, which is often the largest expense for a new childcare program.
- Potential tax benefits: You may be able to claim tax deductions for using a portion of your home for your business, including a percentage of your mortgage or rent, utilities, and home insurance.
- Limited revenue potential: Your income is directly tied to your capacity. Since home-based programs are typically smaller, your revenue potential may be lower compared to a larger childcare program.
Center-based daycare
- Higher upfront costs: Securing a commercial space involves significant expenses, including rent, security deposits, and utilities. You will also need to furnish the entire facility, from classrooms to administrative offices.
- Greater revenue potential: With a larger space, you can enroll more children. This increased capacity can lead to substantially higher revenue, helping to offset the greater initial and ongoing costs.
- Additional expenses: Operating a commercial childcare program comes with added costs, such as higher insurance premiums, staff salaries and benefits, and marketing budgets to maintain enrollment.
I would say that if you are a new program that you should definitely jump on brightwheel and just experience it. It’s tools that help make your life easier as the owner and director. There’s no reason not to, with the cost and the effectiveness, it’s 100% a yes for me.” Crystal D., Owner & Director at Lil’ Ranch Hands Family Childcare Home in Minco, OK
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Experience Curriculum allows you to lean into creativity while following the curriculum. It’s all right there, it’s all prepared for you, and then you can lean into it.” Leinani G., Owner of Creative Minds Learning Academy in Bothell, WA
Brightwheel helps us in every way possible. From their onboarding and support team to the features that keep us organized, on track with planning, and communicating smoothly as a team to parents and each other. I couldn't imagine a better management system for our program." Harida H., Administrator at Play Pals Daycare in Maumee, OH
Space and capacity
The physical environment of your childcare program shapes the daily experience for both children and staff.
Home-based daycare
- Limited space: The size of your home will restrict the number of children you can enroll, which is often dictated by state licensing requirements for square footage per child.
- Intimate, family-like environment: A home setting can feel more personal and comforting for some families, offering a cozy atmosphere that resembles a child's own home.
- Home modifications: You may need to make significant changes to your home to meet licensing standards, such as installing child-proofing measures, creating designated play areas, and ensuring outdoor spaces are safe and secure.
Center-based daycare
- Larger, dedicated space: Commercial facilities allow for more children and dedicated rooms for different activities, such as separate areas for infants, toddlers, and preschoolers, as well as nap rooms and art studios.
- Professional, school-like setting: A childcare program can be designed to create a structured, educational environment that appeals to families looking for a more formal preschool experience.
- Greater flexibility: Larger properties offer more flexibility for creating specialized learning areas and ample outdoor play spaces, which can be a major draw for families.
Childcare Licensing and Compliance Checklist
Download this free checklist to simplify the childcare licensing process.
Licensing and regulations
Navigating licensing requirements is a critical step for any childcare provider, and the rules differ significantly between home and center-based settings.
Home-based daycare
- Variable requirements: Licensing standards for home-based daycares can be less stringent than for centers, but they vary widely by state and even by county.
- Easier compliance management: With a smaller operation and fewer children, it can be simpler to manage and maintain compliance with health and safety regulations.
- Zoning and HOA restrictions: Before starting, you must check local zoning laws and any Homeowners' Association (HOA) rules that may prohibit or restrict running a business from your residence.
Center-based daycare
- Stricter regulations: Childcare programs are subject to more rigorous licensing and compliance requirements due to their larger capacity and commercial nature. This includes stricter staff-to-child ratios, educational qualifications for staff, and health standards.
- Frequent inspections: Expect more frequent and thorough inspections from licensing agencies to ensure you are consistently meeting all regulations.
- Additional permits: You will likely need various commercial use permits, fire safety clearances, and health department approvals before you can open your doors.
Work-life balance
Your choice of location will have a profound impact on your daily life and your ability to separate your personal and professional worlds.
Home-based daycare
- Convenience: The most obvious benefit is the lack of a commute. Working from your home allows you to be present for your own family while running your business.
- Potential for burnout: It can be challenging to separate work from home life when your living space is also your workplace. Without clear boundaries, you may feel like you are always at work. It's essential to set specific work hours and create a separate entrance or area for your business if possible to maintain balance.
Center-based daycare
- Dedicated work environment: Having a physical location separate from your home creates a distinct boundary between your work and personal life.
- Team support: In a childcare program, you are more likely to have a team of staff to share responsibilities with, which can help prevent the isolation and burnout that can sometimes affect solo home daycare providers.
Professional image and growth opportunities
How families perceive your program and your ability to expand your business are also key considerations.
Home-based daycare
- Personal appeal: Many families are drawn to the intimate, nurturing environment of a home-based program, viewing it as a more personal alternative to a larger institution.
- Limited growth: Scaling a home-based business is challenging. Expansion opportunities are often limited by the size of your home and strict licensing caps on capacity.
- Perception of formality: Some may view home-based daycares as less formal or structured than center-based programs, which could be a pro or a con depending on what a family is looking for.
Center-based daycare
- Professional image: A commercial facility often projects a more formal, professional image that can attract families seeking a structured, school-like environment for their children.
- Scalability: It is much easier to grow and scale a center-based business. You can expand your facility, open additional locations, and hire more staff to increase enrollment.
- Specialized programs: With more space and resources, you have the opportunity to offer enrichment programs, such as language immersion programs, STEM-focused activities, or after-school care.
Find the right path for your business
Choosing between a home-based and a center-based childcare program is a decision that depends on your financial situation, personal preferences, and long-term vision. A home-based daycare offers lower startup costs and a cozy setting, while a center-based program provides greater revenue potential and opportunities for growth.
Carefully weigh the pros and cons of each option in relation to your goals. Think about the kind of environment you want to create and the work-life balance you hope to achieve. Whichever path you choose, having the right tools and resources can help you succeed.
