I intent on taking them to small claims for the fee as my contract states, or do you think I should...?? My husband says yes, I am on the fence?

What do you think Judy?
I would have to see your contract in its entirety to answer this question. It depends on what other loopholes you allowed in your contract.

If they hadn't even started yet I would likely not pursue small claims. It's just not worth it. Keep the deposit and move on. But, as the other ladies said, you really need to have a much larger deposit. I like to do at least 2 week's fees worth.

Here is the thing about daycare and business......you always have to make the outcome of non-compliance sting a little, or, at the very least, benefit you in some way. So, if you had taken a full two week's deposit and they don't start care then you are actually getting the same income as that child coming for two and a half weeks or so because you are not actually feeding that child or absorbing costs to care for that child.

So, advertise and start interviewing again. Be VERY picky next time who you accept into care, charge them a larger deposit and ensure you state that it is NOT refundable for ANY reason.

I HAVE taken a family to court before and won but I also have a very extensive contract and the family would have lost anyway so they ended up paying me after they got the summons.