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7 Tips to Starting a Successful and Legal Child Care Business

7 Tips to Starting a Successful and Legal Child Care Business

By Caron_Beesley, Contributor
Published: November 23, 2015 Updated: December 1, 2015

Child care is a hugely important part of American life and a key contributor to the economy. According to First Research, the U.S. child care services industry is currently worth $20 billion thanks to an increase in the number of working mothers and the desire to provide young children with educational opportunities. According to the latest data from Census.gov, 25% of children are cared for in organized facilities including preschoolers (ages 0-4) and grade schoolers (ages 5-14).

If you have a passion for child care and child development but also want to enjoy the independence and responsibility of being your own boss, this small business opportunity may be for you.

So what does it take to get started? What laws and regulations must you follow, here’s what you need to know.

Understand the Demand in your Community

Do some research within your own community to gauge what child care facilities are in demand. Considerations include the number of working mothers, availability of other care facilities (and their waiting lists). This useful infographic from Census.gov breaks down some key demographic information about the profile of a typical family in need of child care. 

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. SBA offers a number of free market data and statistic resources that can help you with your detective work.

In addition to quantitative data, you can also get valuable information about market need by talking to parents themselves. You could post a quick poll or survey on online community message boards, parenting forums or social media groups, or browse these forums for child care related topics and discussions.

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.

Here are some resources and questionnaires that can help you gauge your readiness to be a business owner.

In the same vein, think about the kind of business you want to run and the kind of child care service that you want to provide. Will you be licensed? Do you want to operate out of a private residence? What kind of hours do you want to dedicate to your business?

Develop a Business Plan

A business plan is a must. It will help guide your decision making, help you map a path to success and is essential if you want to secure any kind of financing. SBA offers many planning resources that can help including this handy step-by-step business planning tool.

Understand Licensing and Zoning Laws

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. You should also check with your state licensing agency to see how many children you can care for before you need to be licensed (smaller care providers may not need a license while larger ones almost inevitably do). Read more about child care licensing from ChildCareAware.org.

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 as well as the home business zoning laws that may apply. Educate yourself on the 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.

Get Insured

Different types of insurance are needed for different types of businesses. It’s a good idea to get the advice of a lawyer and insurance broker to ensure you have the right coverage for your needs. Read What Kind of Business Insurance Do You Need as well as SBA’s Business Insurance guide.  

Set Your Business Up Correctly

Starting a business involves several legal, regulatory and financial decisions and steps that you’ll need to check off. For example, how will you structure your business? Which authorities and tax agencies do you need to register it with? And so on. These 10 Steps to Starting a Business can help guide you through that process.

Financing your Child Care Business

In addition to traditional bank, credit unions and other alternative finance resources, a variety of federal, state and local government funding programs provide assistance to child care operators for everything from start-up to operational costs to general business improvements. The Business.USA.gov financing tool walks you through some of these options, be sure to check “Child Care” as your industry.

 Additional Resources

  • 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.
  • Office of Child Care – Part of the Department of Health and Human Services, Office of the Administration for Children and Families, the Office of Childcare is as an information resource for the child care community and also provides information on funding opportunities for providers, assistance programs for your customers as well as other child care resources.  

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley