Oct 27, 2022

What to Consider When Opening a New Childcare Center

Dr. Tamar Andrews

Thinking of opening up a child care center? Child care centers provide a very much needed benefit to the communities that they are in. They provide jobs to teachers and more importantly, they provide the care needed by families so that parents can work and earn a living themselves. However, to be successful both financially and professionally, you should do your homework and make sure that this is the path for you.

What type of child care center will you open?

Family Child Care:

In most states, the requirements to open a family child care are simple and almost anyone will qualify. You usually do not need any formal education but you will likely be limited to just a small number of children, usually no more than 12. The benefits of this type of program is you are in your own home, you can easily care for your own children and you can set your own hours and number of children. The downside is that you are very limited in how many children you can take and so your profit will be limited.

Child Care Centers:

In most states, the requirements to open a child care center are regulated fairly strictly with requirements for college units, ratios of adults to children, what to serve for snack and meals, building codes, etc. The benefits are that the larger the facility, the more children and more money you can earn, but you would need to be prepared to accommodate the responsibilities associated with this including hiring staff, budgets and payroll, teachers calling in sick, and more. While it is a huge responsibility, the rewards can be equally as big. These can be for-profit and non-profit and each has its strengths and weaknesses.

Is there an actual need for a(nother) child care center in your area?

If your area has a licensing agency for child care and/or a Resource and Referral agency, you will want tocontact them and get a list of the child care centers already established in your area. They may also be able to help you understand the child care landscape in your area. For example, maybe you would have stiff competition if you opened up for three- to four-year-olds but there may be very few to no infant care facilities. Maybe there is a need for a child care center that is open with longer hours. Are there more families moving into your area with small children so that another child care center would help fill a need and actually not be perceived as competition.

What are other child care centers doing?

Make sure to look at what the average cost of child care is in your area. Do a market analysis so that you are not underselling yourself nor are you pricing yourself too high and out of reach. Find out if there are any child care subsidies in your area and where can parents access these? If you were to accept these subsidies, how would you need to configure your center in order to accept these subsidies?

Budget analysis

Based on the number of children you would be able to enroll, what would it cost you to operate your center?

To do this calculation, you would need to know what you would be earning in total for the number of children enrolled. You would also need to calculate how many teachers you would need and what the total cost for their salaries would be including payroll, taxes, insurance, benefits, etc. Now budget for recurring monthly costs such as utilities, phone, rent or mortgage, cable, food, consumable goods (glue, paint, paper, chalk), cleaning supplies, anyone else you may need to hire such as gardener, cleaning crew, office staff, preschool management software, etc. This is your expenditure line.

You also will need to take into account start up costs and figure this amount into the first few years of operation. This would include any repairs you need to make to the facility, purchasing furniture and non-consumable supplies such as puzzles and blocks, and any computers, phones, insurance, etc.

Do you have the education necessary to operate a child care business?

In many states, there are educational requirements that are necessary for you to complete depending on which type of child care business you are opening. In addition to this, do you understand how to manage a business? This includes understanding the labor laws in your state and for the United States in general. For example, do you understand the difference between an exempt and a non-exempt employee? Do you know how to keep track of employee hours and when you are obligated to provide rest and meal breaks? Do you understand how to manage employees and provide professional development to them? If not, that is ok, but you will need to add this to the budget so you can afford someone from outside of your business.

Final thoughts

If you are invested in opening up a child care business of any type, it can be an amazing opportunity to not only support yourself and your family, you will also be providing a valuable service to your community. Make sure to reach out to those of us who have done it already. There are so many resources out there including Facebook groups, companies such as Playground, and state certified mentors who want to help you.

Playground is the only app directors needs to run their early child care center. Playground manages billing, attendance, registration, communication, paperwork, reporting and more for child care programs. Tens of thousands of providers, educators, and families trust Playground to simplify their lives. Learn more by scheduling a personalized demo here.

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