How to Start a Child Care Business

Child care services are quickly growing in demand as more and more women join or return to the workplace and tax incentives are offered to parents.

Here is our 12-step plan to get your new child care business off the ground:

1. Figure out what kind of business you want to start. This may sound basic, but it is essential that you put time and effort into researching the child care market, and any businesses you can use as a model to create your own. One option is to find a child care franchise that has the brand name recognition, a successful marketing scheme, and the training and support system that will ensure your success. Another option is to come up with your own ideas for a revolutionary child care business that will really differentiate itself from the rest of the market. A great resource for children’s franchise opportunities is Franchise Direct.
2. Give your business a name and structure. This includes choosing what kind of business you’ll be starting (e.g. a sole proprietorship, partnership, incorporation, etc). These questions are easily answered if you become a franchisee, as they will already have a recognizable name and established legal structure. But, if not, consider hiring a lawyer that can help walk you through the differences and financial ramifications of choosing your choice.
3. Determine what licensing you need to obtain. Depending on the state, city, and/or county in which you are planning to start your business, there will be different licensing requirements for your child care business. Consider factors such as physical space, staffing, health regulations, what kind of food you can serve, sanitation requirements, safety codes and fire regulations for the building, as well as any zoning regulations that may apply. Check this website for more information on different requirements in each state.
4. Decide on a location. This is an important step, as you will need to determine whether you will set up your child care business in your home, or at an out-of-home location. This decision will affect how much capital you need to start the business, because leasing space will be more costly than a home-based business. A home-based business also means you will have to limit the number of children you can oversee. The location should be in a strategic area that has a need for child care, like a neighborhood with young families.
5. Create a business plan. Once you figure out the fundamentals of your child care business, a sound business plan is the basis for further development. Estimated financials, growth projections, risks, staffing needs, etc. will all need to be included. The plan will serve both as a guide for you as well as your justification for obtaining funding. Be practical about this, and involve an accountant or trusted financial advisor, if needed.
6. Obtain funding. There are many different sources from which you can fund your new business, including your own savings, borrowing from friends or family, or obtaining a bank loan. Most banks have specialists that assist you in applying for a loan. The Small Business Association has a helpful website on funding a start-up.
7. Learn your tax obligations. The IRS website is a great resource to start learning more about the taxes you will have to pay for your child care business. In large part, the type of business you’re running, whether you decide on a sole proprietorship or to join a franchise network, will determine your tax obligations. Check out this IRS guide to taxes for new business owners.
8. Find insurance. It is important to have both liability insurance and accident coverage for your child care business. You might want to check out this website that gives details on liability insurance.
9. Market your business. Advertising will get you the most important thing: customers. That’s why investing in a franchise may be the easiest way to ensure you have the marketing and advertising you need for your business to succeed. Most franchisors will engage in national advertising campaigns and provide marketing materials at no extra charge.
10. Obtain child care training. The requirements for training vary from state to state, so check out this website to find out a bit more on what your state requires.  Generally, you will need at least 15 hours of early childhood education training in order to run a licensed child care business.
11. Plan a program. Develop a schedule and activities for the children. Some child care businesses are specifically designed to promote learning, sports and other educational activities. There are many children’s franchises that are geared towards educating children, so be sure to check those out on Franchise Direct.
12. Prepare to launch your business. Once you have the planning aspect in place, you will need to implement everything! This includes actually leasing the location, making your start-up purchases and advertising the new business. You will need to buy kid-appropriate furniture and toys. Keep in mind you will need to childproof the facility for safety purposes.

The rapidly growing market is a great incentive for starting your business in the child care industry, and these 12 step should bring you well on your way to starting and running your own successful child care business.