It seems to be a sign of the times lately. With the economy doing so poorly a lot of parents are getting help from grandparents or friends.
I started filling my daycare by dropping off notices at schools, churches, rec. centres, doctors and dental offices in the area. I made a point of taking the children I had to the grocery store with me and talking to customers that were shopping with children. I would tell them about my daycare and hand out business cards. The more I was seen in the area the more calls I got for daycare. I would go to the schools at the end of the day and meet with parents and other caregivers picking up from the school. I'd hand out my cards and let them know that I had space for children.
We formed a networking group with other daycares in our area and soon we were referring to each other. The more you are out in the public the more chance you have of increasing your business. We have a resource and referral program offered by the province and I registered with them as well. Being a licensed daycare seems to help fill my spaces, as parents seem to prefer the regulated daycares to the non licensed ones.

Hang in there hopefully the economy picks up soon and business will get better.