Editor's note: This article was excerpted from our Child-Care Services start-up guide, available from Entrepreneur Bookstore.
The number of working parents--including single-parent families and families with both parents employed--is climbing, creating an ever-growing need for quality child care. That need is creating a tremendous entrepreneurial opportunity for people who love children and want to build a business caring for them.
Child-care services range from small homebased operations to large commercial centers and can be started with an investment of as little as a few hundred dollars. You can stay very small, essentially just creating a job for yourself, or you can grow into a substantial enterprise with potentially millions of dollars a year in revenue.
You also have a tremendous amount of flexibility when it comes to the exact services you choose to offer. You may limit your clientele to children in certain age groups or tailor your operating hours to meet the needs of a particular market segment. You may or may not want to provide transportation between your center and the children's homes and/or schools. You may want to take the children on field trips. As an alternative to child care, you may want to consider a business that focuses solely on providing transportation for children.
Of course, the basic work you'll be doing--caring for someone else's children--bears a tremendous amount of responsibility and requires a serious commitment. When the children are in your custody, you are responsible for their safety and well-being. You will also play a key role in their overall development and may well be someone they'll remember their entire lives.
Filling an Important Need
One of the biggest challenges facing American families today is caring for their children while the parents work. According to the Bureau of Labor Statistics, only 13 percent of all families fit the traditional model of husband as wage-earner and wife as home-maker. In 61 percent of married-couple families, both husband and wife work outside the home. Six out of every 10 mothers of children under age 6 are employed, and the labor-force participation of women in their childbearing years continues to expand. As the number of working parents rises, so will the demand for child care.
Another issue that has an impact on child-care issues is the new, 24-hour global market. Occupations with a high number of employees working nights and weekends--such as janitorial, hospitality, customer service and technical support--are experiencing substantial growth, and workers in these fields find obtaining quality child care an even greater challenge than their 9-to-5 counterparts.
For many working parents, there is no single solution to their child-care needs. More than a third use more than one option, such as day-care centers part of the time and friends, neighbors or relatives on other occasions. A recent study conducted by the Urban Institute, a nonprofit policy research organization, revealed that about 30 percent of working parents have two child-care arrangements, and another 8 percent are using at least three. The study found that 65 percent of parents juggling multiple child-care arrangements use a combination of formal day-care centers, Head Start programs, and baby-sitting by relatives and friends. Another 20 percent use two separate day-care centers.
Do You Have What It Takes?
What are the characteristics of a person who would do well operating a child-care center? Lois M., who began the first of her six child-care centers in Toledo, Ohio, in 1982, answers, "The person needs to be energetic, business-minded, a competent leader, have a pleasant personality, be professional, be willing to take calculated risks, be a good role model, have strong financial resources, be consistent in expectations of the staff, and be consistent in the delivery of service."
If you're going to be running a family child-care center, Brenda B. of Stockton, Illinois, adds, "You have to really like kids." Janet H. of Exeter, California, agrees; she says, "A person who is going to own a child-care center needs to love children, be a people person, have a high tolerance for stress, have good insurance, and have some management skills."
A child-care business can easily be started in your home with just a few weeks of planning and a modest amount of startup cash. A commercially located center takes a greater investment of time, energy and money. The size and type of business you choose will depend on your start-up resources and goals for the future. Many child-care providers are satisfied with a one-person operation in their home that generates a comfortable income while allowing them to do work they enjoy (and possibly even care for their own children). Others may start at home and eventually move to a commercial site as the business grows. Still others begin in commercial locations and are either content with one site or have plans to expand.
As you complete your startup efforts, use this checklist (and tailor it to your own needs) to make sure you've covered all your bases before you open your doors.
- Type of center: Will you operate from your home or a commercial location?
- Licensing: What licenses are you required to have and from which agencies? What are the requirements, costs and lead times?
- Training and certification: What types of training and/or certification do you need?
- Market: What are the child-care needs of your community?
- Location: Choose a site that is appropriate and affordable.
- Legal requirements: Check on zoning and any other legal issues.
- Financial issues: Estimate your startup costs and identify the source(s) of your startup funds.
- Health and safety issues: Plan for accident and illness prevention, and develop emergency procedures.
- Programs: Develop an appropriate schedule of activities for the children.
- Equipment: What do you need to adequately equip your center, where will you get it, and how much will it cost?
- Insurance: What coverage do you need to adequately protect yourself and the children in your care?
- Staffing: If you plan to hire people, know the required staff-to-child ratios and develop your human resources policies.
- Links: What community and professional resources are available to you?