How does having strict policies ( and following through with them ) affect your ability to get new clients ?
I think that parents respect that this is my business, and that my policies are necessary to it's smooth and continued operation.
Do you think that having a strict illness policy will make parents go elsewhere?
Exactly the opposite. Parents love that I don't let sick kids play with their own kids. I think this HELPS get clients. The last child that signed on with me has parents who were quite impressed that we have had NO illness in our daycare all winter (Until about 2 weeks after this child signed on 
). The other parents are very respectful of the rules, and follow the golden rule.
Do these policies make parents term because you follow through on your policies ?
Not yet, but if they choose to term over it, I won't feel a loss. They all agreed to these policies when they signed on.