Starting a Daycare Business
Breaking into the Family Childcare Market
By: Lyle Jameson - M.Ed in Adaptive Special Education
Lyle shares ideas, tips, and advice on building a successful program and advice for husbands of family child care operators. Lyle teaches high incidence adaptive special education and partners with his wife Jessica at their own respected home child care business.
The First Step:
First things first, starting a family child care business requires PLANNING and RESEARCH. State licensing requirements will vary, but each state follows a set of minimum guidelines set forth by the Child Care Development Block Grant (CCDBG) act of 2014. The CCDBG requires states to create a lead agency for implementing the licensure procedures. The lead agency in your state is likely the human services department or a joint interagency office established by the governor. Contact the agency about the licensing process for your state. Plan to work closely with an assigned case worker and follow the guidelines required to obtain licensing. Most cities/towns will require you have a business permit. The permit is usually a small annual fee paid to the city. After you receive state licensure you can apply to receive reimbursement for meals and snacks you provide through the Child Adult Care Food Program (CACFP). The CACFP is a federally funded program run by the States, ask your case worker for information about sponsors in your area.
Expect to be very busy when starting out, in addition to the work required for licensing you will need to start preparing your home for accommodating children. Decide how many children you will care for (check your States provider to child ratio) and start looking for bargain deals. You will likely be able to find deeply discounted used equipment/supplies. At a minimum, you will need enough equipment for each child to eat, sleep, and play at your home for the majority of the work week. As a family child care provider, you should expect a large portion of the home to be dedicated to your business. Each child you care for will need a place to store individual items from home such as extra clothes, diapers, creams, etc. You may decide it is useful to invest in space saving storage options such as wall mounted shelves, baskets, hooks, and racks. To prepare for meal times, you will need to decide how you will accommodate each child with a seated position at a table. Infants will need sturdy seating with straps or a high chair. You will want to stock up on a good supply of plates, cups, bottles and utensils. Infants you care for will need a dedicated crib, not easily storable. Older children may be able to sleep in portable playpens. If storage is limited the best option may be folding cots. Children are happier and easier to care for if they have access to fresh toys, games, arts and crafts, and outside time. Toys are relatively easy to find and some may be donated. If you plan to do fieldtrips or school runs you will need to make sure you can legally, and safely transport all of the children. It is not uncommon for family child care providers to require parents to supply car seats. Be sure to check with your auto insurance carrier to ensure you and the children are covered when transporting. In addition to automotive insurance you should find a competitive rate for general liability insurance. It may not be a state requirement for you to have a liability policy but for a reasonable price parents, children, visitors, yourself, and your property are covered against unexpected situations.
Record Keeping and Contracts:
As a self-employed business owner, you will need a systematic process to manage records for tax purposes. Family child care homes can deduct business related expenses, including the portion of utilities used to operate the business, and home depreciation. If you are on CACFP you can only deduct meals and snacks for which you are not reimbursed for. Search for annual IRS publications about specific rules and record keeping ideas for home daycare providers, or contact a tax accountant for more information. Have a plan in place to record your expenses and income as soon as you start out. Before you enroll clients in your family child care home you should consider creating a contract. A contract is optional, but it can be a useful resource for you and your clients.
A standard contract should list expectations and rules you have for your child care home, and what clients can expect from you.
• Hours of operation
• Paid time off
• Fees and tuition
• First Aid
• Sick children
Startup costs can be expensive, you’ll want to have clients ready to start as soon as the licensing process is complete. Changes to traditional family roles mean many households have both adults in the paid labor force, creating a demand for quality, licensed childcare nationwide. The Bureau of Labor statistics expects a 14% growth from 2012-2022. As soon as you have committed to providing family child care services you will need to start marketing yourself. Your local network is the best way to enroll new clients. A good first step is to contact all family and friends you know and ask them to consider passing your information on to potential customers. Direct referrals to the service you provide go a long way in the child care industry. Social media platforms are another excellent source to reach members of your community. Other ideas for promoting your service is to ask permission to post flyers, signs, or business cards at local shops. Get to know other local providers, you may find your community has an organization for other licensed family child care homes. A local network of caregivers is an excellent resource for referrals. Ask your case worker about requirements to accept subsidized child care payments. Low-income families need quality licensed childcare and many family child care businesses routinely receive calls for care. List your daycare in the Daycare.com Registry to reach potential parents and clients.
Establishing a family child care business can feel overwhelming when you start putting together information. Expect many hours of unpaid work just navigating the licensing procedures and the CACFP program. In addition to getting a license, you can expect a nominal upfront investment for permits, supplies, and equipment to operate your child care home. If that weren’t enough you still have plenty of work in marketing your service, and organizing your business. When you finally get started as a family child care provider expect a learning curve in managing your business, caring for children, and engaging with parents. The work day for a family child care provider never stops. You can expect to care for the children throughout the day, and still have business duties in the evening. Many providers schedule parent interviews for new clients in the evenings as well field phone calls about care and speak with current attendees. Operating a family child care business is not for everyone, anyone considering getting started should carefully examine everything that is involved. Before deciding to get started you should reach out to other providers in your area and ask their advice on starting a family child care home. If you share your home with a spouse or children you should have meaningful discussions about the requirements of operating the home business. Share with them what effect the home business will have on them, find out what concerns they may have. Any decision to start this kind of business should have the blessing of everyone in the home. Many of these issues are discussed daily in Daycare.com's Forum for parents and providers. We welcome you to participate in the conversation.
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