Home Business How to Start a Daycare and Home-based Preschool Business

How to Start a Daycare and Home-based Preschool Business

Preschools and daycare centers help prepare children for better learning as they get ready to go to school. Because a lot of the new Indian parents want to give their children a strong educational foundation and an all-round personality development, the preschool and daycare business is growing in India. The low entry barriers such as acquiring fewer legal permissions and low investment costs make the pre-school and daycare business even more lucrative for aspiring entrepreneurs.

The market size is also huge as the Census 2011 data showed that there are 164.48M children in India in 0-6 years age bracket. Let’s now see how you can start a preschool/daycare business in India.

 How to start a Preschool and Daycare Business

1. Create a preschool and daycare business plan 

Daycare Business Plan

Just like any other successful business, a profitable preschool and daycare business also starts with a business plan.

At the very least, your Business plan must clearly list details such as:

  • The no of children you need, the staff you need
  • Funds required (Loans/grants)
  • Fees structure
  • Business mode
  • Location and Infrastructure
  • School policies
  • No of hours of operation

For some help, check out this detailed report. It’s a good starting point to create your own business template.

Also Read : 15 Most Rewarding Home Based Business Ideas

2. Find a location 


Your location is critical to making your preschool or daycare business a success. Generally, a preschool closer to residential areas will be a preferable location than the one in a remote place because parents would find it more convenient to send their children nearby as it’s easier to commute. Parents also prefer a preschool that’s located in a clean environment and has rich amenities like like fenced gardens and airy and large playrooms.

To find the right location to open your preschool or daycare business, do some online searching and make a list of all the existing pre-schools in the region you’re interested in. Next,  spot the locations that attract the most students. Such locations will generally be good options.

You can also hire a real estate broker who can help you find the most appropriate site for your business. 

3. Obtain a preschool and daycare business license

Business License


Business licensing rules vary from state to state, so you need to do thorough research here to get the required approval for starting your preschool business. You’ll also need to register your preschool as proposed by the Early Childhood Care and Education (ECCE) Policy. So make sure to comply all the requirements. Many India states like Maharashtra and TN even need the compliance of the Acts like the Private School Education Act among others.

Also, complete all necessary formalities with the municipal cooperation and the education department of your city where you’ve decided to start your preschool/daycare business.

You’ll also be required to incorporate as a Private Limited Company or a Limited Liability Partnership.

Here’s more information on your pre-school business’s licensing needs.

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4. Hire employees 

Hire employees 

Your preschool/daycare staff will make a big difference to your success. Parents like their children to stay amongst people who are empathetic for their children and can keep them safe while they’re away.

In addition to finding people with the right skills, also perform proper background checks before hiring employees for your pre-school. Verify their educational background, qualifications, and experience. Also, check all the teachers and the entire staff for any criminal background history.

Either you can do all the hiring on your own, but if you have the budget, try a staffing agency.

5. Apply for a loan 


Unless you have all the needed capital, you’ll likely need a loan to start your preschool/daycare business.

You’ll need money to rent out a location, arrange the logistics, buy supplies like furniture, toys, equipments, pay your staff and more. You can meet some of these expenses with loans. Banks often float schemes such as the Bharatiya Mahila Bank: Parvarish specially for funding daycare centers. Find out if you’re eligible for any special loan schemes for your business.

While bank loans will help you build infrastructure and buy furniture and equipments for your preschool/daycare business. However, it can’t fund expenditures such as maintaining and paying the staff or other such operational costs. You’ll have to explore the Equity funds options for these until your business becomes profitable enough to meet all the expenses.

Also Read : Points to Ponder Before Starting Your Business as an Online Seller

6. Obtain Insurance 


Insurance protects you in instances of unfortunate happenings. As a preschool/daycare business owner, you might want to get Property coverage, Contents coverage, Outdoor equipment coverage and so on. You might also want to explore options for securing your employees against unforeseen events.

7. Prepare curriculum Prepare curriculum

You preschool’s curriculum can help you differentiate your pre-school from the others. So spend a lot of time developing your curriculum.Engage a mix of different learning techniques using colors, drawings, letters, numbers, object sorting and more. Also, try to teach other activities such as play, art, music, etc.

You can seek help from consultancies that help develop rich curriculums for pre-schools and daycare centers.

Merely starting the business is not enough. You need to market your business to get leads. Lets see how to market the Preschool business. You can also find some inspiration on these Pinterest boards.

8. Preschool and Daycare Business Marketing 

To attract leads for your preschool business, work on a marketing plan.

Your marketing plan should include tactics such as:

  • Printing and circulating print ads like fliers
  • Social media marketing where you use your social media channels to engage with your local target audience
  • Listing in local business directories
  • Regularly gathering reviews from parents who are already sending their children to your pre-school
  • Run local kids’ events.

All these marketing efforts will help generate buzz around your preschool/daycare business and get more people to visit your center your center.

Preschool and daycare Business Setup costs

A preschool setup cost can vary between Rs 2-20 lac depending on the expenses to build infrastructure, prepare documents, maintain the staff, pay salaries and other marketing costs.

You can divide these expenses into the following categories:

  1. Infrastructure expenses: This includes purchasing the land or rental charges. It also includes money to buy equipments, furniture, books and more.
  2. Document expenses: This involves expenses needed for registrations and clearances. And also the necessary documents such as training material for teachers, files to maintain office records, computers, etc.
  3. Marketing expenses: These are expenses spent on executing the marketing plan. Say paying vendors, advertising, designing teams and more.

In addition to these setup costs, also keep provision for some ad hoc expenses that can always come up.

Once your school starts running, you’ll also incur recurring expenses such as staff pays and others. It’s always safe to plan these a little ahead of time.

9. GST GST Policy

As any other aspiring entrepreneur, you too might be worried about the implications of the GST on your business. While there was some news about pre-schools being completely exempted under GST, the same haven’t been confirmed.

In fact, just like other services/businesses, your pre-school, too, will be subject to an 18% GST, expect for the following services:

(i) transportation of students, teachers, and staff;

(ii) mid-day meals and other catering

(iii) security and  housekeeping services performed in schools

(iv) admission to, or conduct of examination by, such institution upto higher secondary.

10. Preschool and Daycare Business Income and Profit Margin 

One of the biggest benefits of opening a preschool or a daycare business is that it reaches the break-even point fast. Not only that, it also offers high returns for a low investment. Besides, you can also scale your business and even expand to formal schooling, thereby making your venture even more profitable.

So how much can you expect to make as a preschool owner?

To start with, your income will depend on the location of your school. For example, a pre-school business in a tier-1 city like Pune will be more profitable than a tier-2 city. Also, the number of children in your school will directly impact your earnings.

Amit Nahar, Co-founder of FranchiseBazar.com says:

 “You must make atleast 50k per month after all expenses once the school has achieved optimum admissions in all classes. This generally takes 2 years after the school has opened and has a good service offering and is extremely professional in approach.”

Also Read : 15 Best Manufacturing Business ideas

11. Preschool and Daycare Business Future in India 

As per Market research analysts at Technavio, “the preschool or child care market in India will grow impressively during the forecast period and will also post a CAGR of almost 22% by 2020.”

In the present scenario with nuclear families and twin working culture, preschools and daycare centers are thriving. And because education plays one of the most vital roles in a child’s life, parents are even willing to spend money for the bright future of their kids. Also, as per the Preschool or Child Care Market in India 2016-2021 Report, “The market has a huge potential for growth, and this will attract several international schools and kindergartens to get into the market. This, in turn, will lead to a significant change in the educational curriculum.

Given all the growth the Indian preschool and daycare industry in witnessing, this is the perfect time to open a preschool franchise

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