15 Nov 2013
- Written by Carlee McCullough
Entrepreneurs with a passion for childcare and child development may become attracted to the idea of day-care business and what they consider a lucrative calling. The demand for services is increasing steadily and as the industry has evolved, so have the reimbursement formulas.
Parents in search of quality childcare typically will find their options fall into three categories: family care provided by a relative, in-home care provided by a nanny or babysitter, or day-care center.
Competition among day-care businesses is fierce. As more people move into the childcare business that equates to more options for parents and potentially diluted attendance at many centers. On the face of it, a move into childcare would appear a profitable business venture. However, state regulations have increased, funding formulas have caused decreased payments, and many centers are barely operating at break even.
A keen eye must be kept on the revenues and expenses, if an entrepreneur is going to have a profitable business in childcare. Additionally, the owner must also be adept at managing staff, marketing and promoting the business and, most importantly, provide quality service. Owners who are not personally adept in these areas must reach for someone who is.
Parents now have increased expectations of the services provided by daycare centers and those that are most profitable are seasoned learning institutions. Researchers have discovered that years one through six are the most important years in a child's development. The exposure, instruction, training and habits formed during this time affect the child's ability to learn in future years. Parents now are demanding more structured learning environments.
Prior to investing in a location for a childcare business, performing a brief survey around the area would be advisable. Also, consider the zoning laws and determine whether a childcare center is allowed in the area. It is imperative that the potential business owner consider where the children in the community are currently being served and the parents' opinions of centers in the area.
The number of eligible children in the area is extremely important. The children could be residents of the area or their parents could work in the area. If the children are not relatively close, then the owner of the center may need to provide transportation and an excellent reason for parents to send their children to an out-of-the-way center.
Licensing & insurance
The health, safety and well being of the child are of the utmost importance to the parents and the community. Proper licensing and insurance is required by the state, which also requires background checks on employees. Insurance is a major cost component of the childcare business model. General liability and workers compensation are the beginning of the insurances required.
Day-care centers provide notable community services. Today, families have to decide whether it is in the best interest of the family for a parent to remain home with the children or use the services of a childcare center so that the parent can join the work force.
With divorce and the increased numbers of single parents, the need for childcare is a constant. For single parents, remaining home to take care of the children is not typically an option. Parents must work to provide for their children. These centers provide a service to parents by delivering the care they need and freeing them up to work.
Businesses benefit because their employees have the appropriate childcare and a clear mind to focus on work. Additionally, day-care centers support the local economy by purchasing goods and services and paying salaries and taxes.
The government will provide funding for certain services and items for qualifying, low-income clientele. According to the state's website, Tennessee offers a Child Care Certificate Program, which is Tennessee's assistance program for low income and at risk children.
Funding for the Certificate Program comes from the federal Families First/TANF block grant and the Child Care Development Block Grant (CCDBG). This is often referred to as the subsidized child care program. Families must be determined eligible by Department of Human Services (DHS) staff before they can participate in the program.
Both licensed and unlicensed providers can participate in this program and receive reimbursement from DHS when caring for eligible children.