Common Daycare Business Questions with Answers

The decision to start a daycare business is an exciting one. It is also one that will alter your entire life, as well as the lives of those you care about. That is why it is so important that you have all of your questions answered before you decide to take the leap.

Common Daycare Business Questions with Answers Include:

1. Do daycare businesses have licensing requirements? Yes, potentially multiple.
2. Are daycare businesses profitable? Yes, if you make wise financial decisions.
3. Can my business be funded? Grants or loans are offered by location and business structure.
4. How do I provide the best daycare business? Listen to your community.
5. How do I register more children? Market more effectively.

Obviously, there is much more involved with each of these answers! Read on to get a full understanding of each of these areas of frequent confusion.

Question #1: Do Daycare Businesses Have Licensing Requirements?

Answer: Yes, daycare businesses have licensing requirements that vary depending on your location and type of childcare facility. Read on to understand a few requirements you may need to fulfill.

Jumping Through Hoops

Sometimes when people start businesses, they do not realize that there will be hoops to jump through such as licensing requirements.

These hoops are especially important to pay attention to when starting a business like a daycare as there are many legal standards involved with tending to children. People want to make sure their children are safe, healthy, and well-cared for. Do not neglect carefully walking through each step to make sure your business is fully legal.

Business Requirements

Before we get into the childcare-specific licensing requirements, it is important to mention the general business requirements you will need to consider:

• State Registration
• Town or City Registration
• Employer Identification Number

Asking local officials what is necessary is a great way to determine what basic business registrations you will need to file for.

Location Matters!

Whether you operate your childcare center from your own home or a rented establishment, you will likely need to meet certain zoning, health, and safety requirements.

This ensures that your property is one fit for caring for children in. Making sure your location is licensed properly will help parents feel more comfortable about dropping their child off – it also may be legally required!

Background Checks

Your property is not the only thing that will likely need to be licensed – you need to be approved to work with children too! This will also be true of any employees you decide to hire into your company.

Background checks make sure that everyone working with children is approved to do so. This keeps people who may be dangerous to children far away.

Additional Staff Requirements

You and your staff may need to do additional testing and training to be approved to work with children depending on your area and experience.

• Health – determine if there are any necessary vaccinations or medical exams that staff need to have before working with children
• Education – depending on how you position your business, your staff may be expected to have some sort of credentials to lead and teach children
• Safety – there may be necessary training programs for any and all staff to safely work with children, including CPR, first aid, and mandated reporter training

Question #2: Are Daycare Businesses Profitable?

Answer: Yes, daycare businesses can absolutely be profitable. However, this is not guaranteed. Keep in mind the below advice to help with achieving profitability.

Income vs. Expenses

One way to ensure your profitability is to pay close attention to your income and expenses. You want to make sure your income is greater than the expenses you face. If your business does not start out that way, it is okay. Just make sure you have a plan to get there.

Long-Term Planning

Speaking of plans, long-term planning is an important part of making sure you have a successful childcare business.

By setting future goals, you look ahead to where you want to be rather than stay stuck in where you are. This can help you envision new realities you might only dream of. Once you have your goals in place, work backwards, setting shorter term goals which will help you reach your long-term dreams.

You will be on your way to owning a profitable business in no time.

Question #3: Can my business be funded?

Answer: Yes, grants and loans may be available to your daycare business depending on your location and business structure.

Personal Capital

While it is possible to secure funding with grants and loans, is important to recognize the potential need for startup funds before you even receive your outside funding. For that reason, it is good to have some personal money set aside before you start your new endeavor.

Grants

Grants are monies that do not need to be paid back. Some daycare businesses may be eligible for grants, depending on whether or not they are non-profit entities.

If you are operating as a for-profit entity, your grant options may be more limited. Look into the Child and Adult Care Food Program, a federal program that may be willing to provide meals and snacks for certain children.

Loans

If you are a for-profit business, you may have much more luck applying for a business loan. Loans can be extremely helpful to help new business owners get their dream off the ground.

As you are comparing options, keep in mind the fact that loans need to be repaid and often come with an interest rate attached. This can be easy to ignore, but work hard not to do so. You should make sure your loan repayment plan works with your long-term planning so that you do not find yourself with a debt that you cannot repay.

Question #4: How Do I Provide the Best Daycare Business?

Answer: Listen closely to the needs of your community before you start and of your target customers once you are in operation.

What Does “Best” Mean?

The concept of the, “best daycare business,” is relative.

It may mean one thing to someone and something completely different to five other people.

The most important part when considering whether or not your daycare business is the, “best,” is whether or not it is filling a need in your community.

Research Your Community

It may sound silly to research your community, but this is what most successful businesses do before they even get started. This idea of “Market Research” allows business owners to get a feel for the pain points of their community and the best ways to solve them.

Without asking tough questions of your community before you get started, you may actually end up projecting your own desires onto the community.

This might not be such a terrible thing, except if your personal wishes for a daycare center do not match your community’s needs in any way. If you are interested in making the most entertaining daycare center, but your local parents want a more educational option, you are not going to be very successful.

Keep Asking Questions

This idea of asking questions of your target market does not need to die once you finally develop a business plan and open your doors. In fact, it should really continue for as long as you are in operation.

When you continue to ask your parents, families, and local community how you can improve as a daycare center you do two things:

1. You continue to learn new ways to serve your community.

This is important because you will never have it figured out in the beginning. There is always room for improvement and you should continually strive to improve your care for your students and families.

2. Your community learns that you are listening.

To be known as a business that listens to its people is no small feat! When your parents feel that you truly want what is best for them and their children, their trust for you will soar. This will only cause them to spread the word about you more and more.

Question #5: How do I register more children?

Answer: Marketing yourself honestly and consistently will help your daycare business reach more parents who can register their children in your daycare business.

Increase Customer Quantity

As with any business, you need to make sure you have enough customers buying from you to be successful. In this case, those customers happen to be parents registering their children.

So how do you find more children to register?

• Is it being the coolest most modern daycare business in town?
• Is it a matter of offering the lowest rates?
• Do you need to hire the best educators?

No, not necessarily.

Instead, you need to make sure you are constantly marketing yourself well.

Marketing More Effectively

To market effectively you first and foremost must be marketing your business truthfully. That means if you are not the “coolest most modern daycare business,” do not try to be.

Embrace your mission and all that makes you who you are and share it with the community far and wide. This can be done through online and offline marketing. Regardless of the medium you choose, you must remain consistent and constantly try to serve your target customer with every communication.

Related Questions

How can I increase income to become more profitable?

The first way you can increase your income is by increasing the quantity of customers you serve. In this case, that would mean the number of students that you have registered.

The second way you might increase income is by increasing the quality of the customers you serve. In terms of profitability, this means raising your prices so that each student provides you with more income.

A final way you might be able to increase income is by providing value to your community in out-of-the-box ways. A few ideas:

• Host childcare classes of which you make a percentage of the cost
• Rent some of your rooms out to local community groups
• Sell a game that you invent within your daycare center
• Offer a referral discount rate to encourage parents to spread the word about you

How can I decrease expenses to become more profitable?

If your expenses are too high, you need to take a close look at where you are spending your money and how it aligns with your goals.

It may come down to making some tough decisions to cut equipment, supplies, or programming that are less valuable than others. This can be especially difficult when the cut option is only slightly less valuable than another option.

Another area you can focus on in terms of expenses is your larger expenses – often your building fee and your employees. Again, it might be an emotional move to change your location or cut some staff. However, if it keeps your business afloat in tough times, this may be a necessary decision.

Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.

With your questions answered, you are ready to get started with our startup course and documents.