How to Offer Child-Care Services(B)

Target Market

Prime candidates who need full-time child care are parents with infants to 5-year-olds. Parents with children over 5 are good prospects for after-school care programs. The market segments most likely to use child-care services are dual-income families and single-parent households in most income brackets. A number of government programs help low-income families pay for child care so the adults can stay in the work force.

Within this very broad market is the more narrow group of clients you'll serve. Use market research to figure out who these people are and how you can best attract them to your center. Lois M. says the primary market at four of her six locations is parents who are upper-income working professionals; the other two centers serve a number of middle-income families as well as those being subsidized by public funds. Janet H. says about half her clientele consists of dual-income families, and the other half is single mothers who receive government assistance as they work through programs designed to get them off welfare.

The goal of market research is to identify your market, find out where it is, and develop a strategy to communicate with prospective customers in a way that will convince them to bring their children to you.

When Lois M. opened her first center, her demographic research revealed that there were 9,000 children from infant to 5 years old within a 5-mile radius of the site; half the preschool children in the area were in day care of some sort because their mothers (or both parents) worked; and the number of households in the area was expected to double within a decade. Contained in that 5-mile radius were six child-care centers serving approximately 800 children.

Brenda B.'s research wasn't as sophisticated. Living in a small town, she knows just about everyone and is well aware of the lack of child-care services. "There's such a need for day care," she says. "I go through periods where I'll get as many as five calls a week from parents needing care, and I don't have room for them. I've had families on my waiting list for up to two years."

Types of Services to Offer

Before you open your doors to the first child, you should decide on the services you'll provide and the policies that will guide your operation. To simply say you're going to "take care of children" is woefully inadequate. How many children? What ages? What hours? Will you provide food or ask their parents to? What activities will you offer? What sort of price and payment policies will you have? And the list goes on.

Your first step is to check with the appropriate regulatory agencies to find out what's involved in providing particular services. For example, each state has its own guidelines for the maximum number of children and maximum number in each age group in a family child-care facility. States also have guidelines regarding the number of caregivers required per number of children in each age group for commercial facilities. There will likely be other requirements and restrictions, depending on the type of facility you run.

Decide what services to offer based on your own preferences and what your market research says your community needs. Your choices include:

• Full-time care during traditional weekday hours

• After-school care

• Nontraditional hours (very early mornings, evenings, overnight care, weekdays and/or weekends)

• Drop-in or on-demand care, either during traditional or nontraditional hours

• Part-time care

• Parents' night out (weekend evening care)

• Age-based care

• Transportation

Startup Costs

Caring for children can be enjoyable and rewarding, but if you're taking care of other people's children and accepting compensation for it, then caring for children is a business and it needs to be managed accordingly. Even though you probably want to get into this business because you love children and not because you love to keep records, pay taxes and worry about staffing, you must do these tasks effectively if you're going to maintain a viable operation.

The high rate of attrition in the child-care business is driven in large part by the fact that many caregivers focus almost exclusively on nurturing and caring for the children in their charge, and neglect the financial and management sides of their operations. But whether your goal is a small, family child-care center or to build a chain of commercial locations, you must deal with administration and management issues if your business is going to survive. If you plan ahead, that won't be hard.

Set up your financial record-keeping system from the outset in a way that will provide you with the information you need to monitor your profitability and handle your tax reporting. You may want to hire a consultant or an accountant who specializes in small businesses to help you at first; this small investment could save you a substantial amount of time and money in the long run.

Expect to spend a significant amount of time on management, marketing and administration. If you have employees, they need to be trained and supervised. Although the demand for child care is high, parents won't be able to find you if you don't market your service. And keeping up with administrative details--paying bills, buying supplies, doing budgets and forecasts, meeting ongoing licensing requirements, facility maintenance, etc.--is a never-ending process.

If your goal is a sizable commercial center, you're not likely to spend much time actually caring for children.

Though Lois M. spends plenty of time in her centers around the children, she hasn't actually been a caregiver for at least 10 years. "I made a very conscious decision when I began," she explains. "I knew I could hire a secretary to cover the office and I could be a teacher in the classroom. Or I could be the one in the office, and I could hire the teacher. I decided it was better for me to be the one in the office answering the phone and giving the tours because no one else had as much invested in this business as I did. A secretary might go through the motions and give out information, but a secretary is not going to convey the same passion that I'm going to convey when I know I'm responsible for meeting payroll on Friday night." In the beginning, you may double as a caregiver as well as the director, but, Lois adds, "you don't want to get in the habit of doing that on a regular basis or your program will suffer." Her six centers employ more than 100 full-time people, plus approximately 30 substitutes.

Finding a Location

If you're going to open a center on a commercial site, it makes sense to locate your facility close to your target market. Some parents may prefer a center close to home; others may choose a center close to their workplace. In the latter case, parents get to enjoy more time with their children during their morning and evening commutes, as well as the opportunity to spend time with them during the course of the day, perhaps for lunch or special programs.

Some site suggestions to consider include:

• A facility within or adjacent to a residential neighborhood or near a school

• A facility in a shopping center where parents with children are likely to pass by

• Sharing a facility with other community organizations

• Office and planned light-industrial parks with a sizable work force

If you're going to open a child-care center at home, discuss your plans with family members and neighbors before you open. Younger children may resent other children coming into your home and changing their lifestyle. Older children--especially teenagers--will need to be told what's expected of them and what they can expect as your business gets off the ground. Spouses may not completely understand the time commitment involved in this business, so talk about things in detail well in advance of bringing the first client in. You may find that your extended family and friends don't really understand what's involved in a professional child-care business and may think that, since you're at home during the day, you're "not really working" or you're "just baby-sitting."

Talk to your neighbors about the impact your business will have on them in terms of traffic (as parents drop off and pick up their children) and noise (think about the decibel levels five or six children can generate when playing). Let them know what steps you'll take to keep any irritation or inconvenience to a minimum, and reassure them that they should feel free to contact you with any concerns or questions.

Some family child-care center operators have certain rooms of their homes designated for their business; others use their entire homes. Your decision will be based on your state guidelines and personal preferences. Brenda B. has a playroom for the children, but they are not restricted to that area; she says she pretty much uses her entire house and her large, fenced backyard for her business. Sherri A.'s house in Winter Park, Florida, has a formal living room that serves as the primary child-care area.