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Starting a Child Care Business?; Government Tools and Resources that Can Help

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Starting a Child Care Business?; Government Tools and Resources that Can Help

By Caron_Beesley, Contributor
Published: May 25, 2010 Updated: June 11, 2015

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 chil;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 nee- 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.usa.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.


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.go's license and permit search tool (enter your zip code and choose'child care provide' 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



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.

* Note: Hyperlink directs reader to non-government Web site.

About the Author:

Caron Beesley


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


This is great! I currently work in childcare and offer extended service to the public to work after hours and on weekends as a Nanny/Babysitter. I am currently in school for business management because I am considering opening my house as an in-home center. In my class we are needing to create a fictional business and discuss everything that is mentioned above, so this makes an excellent reference to my assignment. I am glad that I found this resource!
I currently run a family child care in my home and am looking for resources to build a new live-in facility so I can provide a wider range of child care services to my low income families. Any suggestions on business loan sites, grants, and other info?
All the points mentioned are successfully followed by a professional nanny agency in San Diego. This is true that to have a child care service agency one needs a license to show that children are safe in their hand. Thanks for sharing this information to all. It is useful in the sense that when a parent wants child care services he/she should be assure of the points regarding a professional agency.
My question is: Are facilities/centers that are play type business' for youngsters up to 12 yrs of age governed by the Child Care industry?
Thanks this information helped me alot, this is what I needed.
I have a friend at the Texas who is starting a child care business and I'll definitely send her a link to this. Thank Caron
i'm searching more info on open a childcare center. Would there be some kind to government grants or assistant?
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
The child care services at home are coming up quite a lot, not the government license, which led to a number of tragic accidents to children. When determining to open a child care center, you need to have qualifications and degrees are allowed. Thanks for the article very much!
Good article. I have a friend who is starting a child care business and I'll definitely send her a link to this.


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