How to start a childcare business
Wednesday, March 30, 2011/
According to IBISWorld, the household services sector represents a new frontier with regard to business opportunities, as time-poor, cashed-up consumers increasingly outsource household duties.
“Everything we traditionally did for ourselves – including cleaning, childcare and even beauty – will be increasingly outsourced [in the future],” IBISWorld says.
Parents in particular will find it difficult to juggle their many responsibilities, leading to an increased demand for quality childcare.
What is it and who is it suited to?
Childcare, or daycare, refers to the care of a child during the day by a person other than the child’s legal guardians. It is typically an ongoing service, particularly for working parents.
The service is provided in a specialised childcare facility or in the carer’s home, and can take on a more formal structure with education, child development, discipline and even preschool education.
You need to be extremely patient, energetic and enthusiastic to work in this industry. If you think you can cope with the tears and tantrums, you’re in the right place.
Rules and regulations
In order to work with children, some states require a Police Check while others require a Working with Children Check. You may also face criminal history screening or safety screening.
With regard to your business premises, ensure everything is safe and secure; any furniture and equipment must be well maintained and conform to safety standards.
You should also seek advice from your local council to ensure you comply with legal obligations relating to health and safety.
Research and competition
It’s important to note that by 2014, every childcare worker in Australia must have, at a minimum, a Certificate III in Children’s Services.
Also, half the staff must have at least a TAFE childcare diploma, and every single childcare centre must have a degree-qualified teacher onsite all day. So if you don’t have the right experience, make sure you appoint someone who does.
You then need to check out the competition, including other childcare centres, playgroups, mother’s groups and nannies.
You need to determine whether there is enough demand for another childcare service. Use your local library, council and the internet to research your area in order to gain a better understanding of the demographic.
You should also think about how many children you want to look after in your centre as this will affect the venue, staff numbers and pricing.
If this is your first venture, don’t try and compete with the chains that offer places for over 100 children. But to be viable, you will probably need to have at least 25 to 30 places.
Once you have looked at the competition and defined your ideal customer, you should start to get a feel for what to charge. Prices will vary depending on the demographic you’re catering to but also how old the children are. For example, it costs more to look after babies than toddlers.
Costs and earnings
You will obviously need to source suitable business premises. If you decide to rent, make sure you have a reasonable lease on the property. It will be very hard – and expensive – to move after only two or three years in a property.
If you are making structural alterations to a building that already exists, you will need to factor in the cost.
The building might also require some work to bring it up to fire safety standards. For example, ensuring you could evacuate all the children in an emergency.
You should also ensure that there is adequate security such as extra locks on doors and windows to keep strangers out and children in.
You should also budget for toys and equipment. And don’t forget that with 25 children playing all day long, the equipment will wear out more quickly than normal.
Setting aside a regular amount for replacement should help when the bills start rolling in. You can also save by buying secondhand, particularly in the beginning, providing everything is thoroughly disinfected before use.
Once you have established the venue and a reputation in the area, you should find that the places fill up fairly quickly.
With more parents either returning to work or ramping up their work commitments, good quality childcare is in short supply in many areas, which means parents are prepared to pay high prices.
To put a child in care for an entire day can cost between $55 and $125.
But even when your centre is full, you are likely to find that much of your fees from the children go on fixed costs. Staff and premises are likely to be the biggest costs but food, nappies and equipment all add up.
Your costs will inevitably rise and, when you try to put your prices up, you are likely to hear about it from parents. You should also remember that many of the costs are fixed, so expansion is the only way to grow the business.
Based on the competitive nature of the business, anything above breaking even could be considered a success.
Remember also that because of the relatively high start-up costs and low profit margins, it could take several years before you are close to making back what you originally invested.
An average day
According to the Aussie Childcare Network, your duties and responsibilities as a childcare worker could include the following:
- Work with staff members to manage the day-to-day running of the centre.
- Plan, supervise and engage in children’s activities and mealtimes.
- Maintain a clean and healthy environment for all children; allocate daily cleaning duties or outsource a cleaner.
- Communicate with parents including informing them of their child’s progress, and facilitate meetings with both parents and staff.
- Perform administrative duties, namely account-keeping.
National Childcare Accreditation Council
1300 136 554
Family Day Care Australia
1800 621 218
Aussie Childcare Network
Australian Government Small Business Support Line
1800 777 275