As more and more parents re-enter the work place the demand for quality child care providers has sky-rocketed.
The business of child care offers entrepreneurs the opportunity to pursue a passion for child care and child development while enjoying the independence and responsibility of being your own boss.
Here is a summary of the key steps involved in starting a child care business. It also includes links to government tools and resources that can help connect you with funding programs as well as provide guidance on some of the trickier regulatory aspects of offering child care services.
Matching your Child Care Service to the Community Need
According to U.S. Census data, parents generally look for three types of child care facilities: family care (provided in the homes of other mothers), home care (involves a nanny or sitter in the child’s home), or day-care centers (offering programs focused on the developmental growth of children). However, there are other types of child care services that you might consider, including infant care centers (two years or younger), before- and after-school care, nursery school, and so on.
A little market research can help you determine where the most demand or "community need" exists in your market as well as what child care services currently exist.
Demographic data can also tell you where future demand will lie. For example, if the majority of the childhood population is currently at pre-school age, then you can expect a demand for school-age child care services (such as after-school programs) to increase in future years. Visit Business.gov for links to up-to-date Business Data and Statistics.
In addition to quantitative data, you can also get valuable information about market need by talking to parents themselves. Consider posting a quick poll or survey on online community message boards or parenting forums, or simply browse these forums for child care related topics and discussions.
What about You? Are You Ready to be a Business Owner?
Operating a successful business is not for everyone. In addition to doing what you love, you must also deal with the universal requirements of business ownership such as staying on top of business law, managing employees, coordinating sales and marketing, and maintaining tip-top customer service.
If you have any doubts about your readiness to go into business as a child care provider, take time to assess your strengths and weaknesses in the context of the requirements of running a business. This Small Business Readiness Assessment Tool from the SBA can help.
Find a Location for your Child Care Business
Whether you choose to operate your business from your home or in a commercially-leased property you will need to consider zoning laws as well as get a legal determination whether or not the property can be used for a child care business. ChildCareAware.org breaks down the specific location and space requirements that you need to consider here.
If you are looking to operate a child care business from your home, check out these tips for starting and operation a home-based business. You may also need to make changes to your home to comply with safety regulations and the child care provisions of the Disabilities Act. Be sure to have a licensing specialist visit your home before you renovate and when you complete. Their suggestions and recommendations can save you money.
You can also use this Child Care Safety Checklist as a quick reference to see if you are on par. The checklist (developed by the U.S. Consumer Product Safety Commission) is also available in Spanish.
Get Insured
Adequate insurance protection is another requirement for your child care business. If you intend to operate the business from your home, you will need fire and theft insurance. If you have insurance, make sure your policy covers the supplies and equipment that you purchase. You will also have to purchase liability insurance to protect your facilities, staff and children. More detailed information on insurance is provided by Business.gov here.
Child Care Licensing
State-specific licensing requirements ensure that child care providers provide a safe and healthy environment for children who are in day care. It is not an indicator of high-quality care.
To find out the child care licensing laws in your state, use Business.gov’s license and permit search tool (enter your zip code and choose "child care provider" as your business type).
Set Your Business up Correctly
Starting a business involves making key financial decisions and completing a series of legal activities. Read 10 Steps to Starting a Business for information that will help you plan, prepare, structure and manage your child care business.
Staying Competitive
In tough economic circumstances, some American families have been forced to re-evaluate which is friendlier to the checking account: staying at home with the kids or paying for child care to bring in an extra income. This is making the competitive market of child care all the more fierce. If you are a child care provider, you may be eligible for additional tax credits for your business that will allow you to keep prices at a competitive level. Read more in this earlier Business.gov article: "How Child-Care Providers Can Get Government Help". Get more marketing tips for your child care business from ChildCareAware.
Child Care Industry Loans and Grants
To promote the development of new child care providers, a variety of federal, state and local government funding programs provide assistance for everything from start-up to operational costs to general business improvements. In an effort to raise awareness, and assist the business community in finding these opportunities, Business.gov added a child care section to its Loans and Grants Search tool.
If you own a child care business or are considering starting one, use this tool to help find specific funding that may be available to you based on your location. In some states, a few special loan programs can help business owners access funds at affordable rates. Contact your local licensing office or SBA for information about financing child care as a small business opportunity.
Additional Resources
- How To Start A Quality Child Care Business - This excellent guide from the SBA, covers every step of planning, starting, managing and growing a child care business.
- Childcare.gov - ChildCare.gov is a comprehensive online resource designed to link parents, child care providers, researchers, policymakers and the general public with Federal Government sponsored child care and early learning information and resources both quickly and easily.
- Child Care Aware - A program of the National Association of Child Care Resource & Referral Agencies (NACCRRA), Child Care Aware* provides a hub of information for parents and child care providers.
- Child Care Bureau - The Child Care Bureau serves as an information resource for the child care community and helps improve the quality of early care programs. Each state has a division of its government dedicated to child services. Operating under the Child Care Bureau, the National Child Care Information and Technical Assistance Center provides detailed state profiles and access to your state's lead child care agency.
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