The Basics of Starting a Child-Care Business

The Business of Child Care

Marnie Forestieri

• Publisher: Gryphon House Inc.
• Year: 2020
• Print ISBN: 9780876598375
• eBook ISBN: 9780876598382
• Topic: Education
• Subtopic: Early Childhood Education

The Basics of Starting a Child-Care Business, the first book in The Business of Child Care series, walks readers through each step of planning, developing, and launching their own child-care business. Regardless of the scale-- joining an established franchise, creating an on-site center at your office, or hosting a program in your home-- entrepreneurial expert Marnie Forestieri, CDA, will guide you from start to finish:

• Understand the economics of the child-care business
• Write a comprehensive business plan
• Prepare a thorough financial plan
• Develop efficient operations for smooth day-to-day functioning
• Master marketing to promote your business to potential customers
• Provide excellent quality control and customer service

1

Overview
of the
Child-Care
Business

Children are likely to live up to what
you believe of them.

—Lady Bird Johnson,
former First Lady of the United States

The Demand

Child care represents a great opportunity for entrepreneurs because of the high demand for this service. Education researcher Suzanne Bouffard points out that 70 percent of single mothers and 80 percent of single fathers work outside the home. And in more than 60 percent of married households, both spouses work outside the home. According to their article for the Center for American Progress, “A New Vision for Child Care in the United States,” Katie Hamm and Carmel Martin assert that about 12 million U.S. children younger than age five have working parents. For most of those families, child care is an economic necessity, as 65 percent of children under six years old have all their available parents in the labor force.

*Definitions are from Merriam-Webster’s Collegiate Dictionary, 11th ed., or Investopedia.com

The early childhood industry in the United States emerged during the twentieth century in response to the expanding demand from employers and dual-income families for child-care services. As a result, a diverse patchwork of solutions has arisen to support the growing need. These solutions vary in cost, characteristics, level of quality, and organizational structure.

The Market Segments

Policies, funding initiatives, tax credits, and regulations have shaped the child-care market. From a business perspective, we need to understand that financial statements and business plans will vary depending on the market segment and legal structure of an organization.

In a national landscape plagued by income inequality, different child-care solutions have developed organically to serve the different market segments. Sonia Michel, author of Children’s Interests/Mothers’ Rights: The Shaping of America’s Child Care Policy, says that low-income parents typically enroll their children in publicly supported programs such as Head Start or programs that use Title I funding. Middle-class parents tend to choose group care centers, not-for-profit settings, or day-care solutions. Upper-class parents have a preference for in-home caregivers or child-care programs. Let’s look at these segments more closely.

Programs Serving Low-Income Families

Providers serving low-income families are heavily dependent on public funding sources. Historically, as described in the Handbook of Early Childhood Education, edited by early childhood researcher Robert Pianta, a goal of public funding initiatives was to encourage low-income mothers to work to reduce their dependency on public assistance. These programs were intended to offer disadvantaged children a high-quality education so that they could eventually escape from poverty.

Head Start is a federal program that focuses on providing comprehensive services that promote school readiness, including education, health, and nutrition, for children from birth to age five.

Many Head Start programs also provide Early Head Start, serving infants, toddlers, and pregnant women and their families. According to the US Department of Health and Human Services Administration for Children and Families, during fiscal year 2010 Head Start received $7.2 billion to support about 900,000 children. Nevertheless, Head Start historically has not received funding sufficient to serve all the eligible families in the income bracket.

In response to growing demand, private providers have started businesses relying on other funding streams tied to specific goals at state and local levels. Providers serving low-income families vary tremendously in quality and size. Regrettably, that means that some children of low-income families participate in high-quality programs while others with a similar background can access only lower-quality child care. According to the Center for American Progress and the US Department of Education, most children who have access to preschool attend moderate-quality programs. However, African American children and children from low-income families are the most likely to attend low-quality preschool programs and, conversely, the least likely to attend high-quality programs.

Programs Serving Middle-Class Families

When selecting options for their children’s care, families in the middle-income bracket might choose public programs, such as preschools in public schools. However, many select private alternatives, such as employer-sponsored, faith-based, family- or home-based, independent, or franchise or corporate child-care centers.

Providers serving the middle-income market segment receive funding from various sources, including parent fees, private contributions, and, in some instances, state funds. Therefore, providers have to coordinate multiple funding streams and regulations from such agencies as the US Department of Education and state child-care departments.

Beginning in the 1970s, corporate chains and franchises figured out that middle-income families were moving to affluent subu...

Table of contents

• Introduction
• 1
• Overview of the Child-Care Business
• 2
• Business-Plan Fundamentals
• 3
• Creating Your Market Analysis
• 4
• Putting Together a Financial Plan and Projections
• 5
• Your Organization, Strategy, and Implementation
• 6
• Applying for Financing and Meeting with the Bank
• Glossary