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How to Start a Childcare Business

How to Start a Childcare Business

Working parents rely on quality facilities to care for their kids while they are on the job. Despite the recent recession, growth in the childcare industry has remained sound, and the Bureau of Labor Statistics reports that the industry should grow by at least 5 percent through 2020.

If you love kids and are looking to launch a small business, opening a childcare business may be right for you. However, running a successful childcare business requires careful planning and preparation. Here are seven steps to launching your own childcare business.

Choose Your Location Carefully

While many successful childcare business start out in the provider’s home, not just any home will do. You will need open space both indoors and outdoors for play, space for napping, toilet facilities that are suitable for toddlers and changing areas for babies.

Your home or other location will need to be clean and secure for children. Sharp edges and stairways must be made safe. Cabinets should be locked, breakables put out of reach and outlets plugged. Outdoor areas need to be securely fenced.

Additional Needs

A good childcare facility offers plenty of age-appropriate toys and games. Outdoor play equipment should be safe, secure and in good repair. You will need space to prepare and store healthy snacks and drinks.

If you will be taking the children on any trips, such as to the neighborhood playground, you will need the appropriate vehicle with car seats for driving or the right strollers or wagons for walking

Check your lease, if you rent, for any restrictions for running such a facility, and make sure of any zoning or fire department restrictions on occupancy. Whether you own or rent, devise a fire safety plan for quick exit in case of emergency.

Legal Requirements

Childcare licensing requirements vary from state to state. To find out your state’s requirements, visit your state’s Department of Social Services, Department of Health or Department of Family Services websites. Typically, you must fill out an application and schedule a visit from an inspector who will check for safety and for current paperwork on each of the children in your care.

In order to care for children, some states require a criminal background and/or a safety screening. Be sure to leave plenty of time in your planning timeline to have these tests completed before you are due to open your business.

Contract Creation

Do some research into other daycare centers in your area. Compare costs, hours and services in order to come up with a solid business plan. Determine your hours, your services (including meals) and then write up a parent contract that details what you will be providing and how much your services cost. Include specific expectations for both parent and child behavior. These expectations could include when drop off and pick up is expected, what supplies (such as diapers) parents should provide, when children should be potty-trained, sickness policy, bad weather policy, vacation policy and payment schedule.

You can search online for examples of daycare contracts and choose what version or combination of versions fits your business. It never hurts to consult your attorney before drawing up the contract. Many attorneys specialize in this area of law.

Consider Tax Credits

Especially if your business space doubles as your home, you may be able to claim some deduction on your taxes. Discuss these options with your tax preparer or visit for more information.

Market Your Business

Take the time to promote your new business. After you are in business, word-of-mouth advertising will take off, but in the beginning, use friends, social media and posters and flyers placed where parents will see them to spread the word about your new business.

Think of a way you can set your business apart from other childcare centers. What will you be offering that is different? It could be as simple as extended hours or proximity to a great playground.

Prepare a Budget

Just like you would with any small business, create a detailed operating budget. Your budget will include day-to-day expenses as well as staff salaries (if any), rent, utilities, licensing and zoning fees (if applicable) and costs associated with food and other supplies.

Finally, don’t discount getting your feet wet in the childcare business by becoming a franchisee. There are thousands of daycare franchise companies in the United States. When you purchase a franchise operation, you start out with name recognition and a business plan already in place.

A franchise takes away many for the initial headaches associated with launching a new business and provides you with an educated clientele right from the get go. You can then use your franchise experience, and the client base you build, to branch out on your own later, if you so choose.

Childcare can be a rewarding and lucrative way to become a small business owner, and, especially if you are a parent, it may be a job for which you are well qualified. In addition, the hours are favorable, with nights and weekends generally free. With time and preparation, you can be well on your way to a successful career.

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by Tricia Drevets // Regular Contributor to Businessing Magazine. Tricia Drevets is a freelance writer who specializes in business and communication topics. A community college speech and theater instructor, Tricia lives in beautiful Southern Oregon.

Opinions expressed by contributors are their own.