Opening a Quality Child Care Center

State of Utah, Department of Workforce Services, Office of Child Care ? 2012

Opening a Quality Child Care Center

A resource guide for starting a business and planning a child care center.

Table of Contents: Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 First Steps: Assessment, Market Analysis, Business Plan

and Child Care Licensing . . . . . . . . . . . . . . . . . . . . . . . . . 3 Finding Your Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Design Considerations and Process . . . . . . . . . . . . . . . . . 8 Program Administration and Curriculum . . . . . . . . . . 17 Appendix A: Timeline for Start-up . . . . . . . . . . . . . . . . . . . . . . . . . 19 Appendix B: Agencies and On-line Resources . . . . . . . . . . . . . . . . 20 Appendix C: Resources for Developing Polices/Procedures . . . . . 22 Appendix D: Classroom Equipment and Materials List . . . . . . . . 23 Appendix E: Care About Childcare Criteria . . . . . . . . . . . . . . . . . . . 24 Appendix F: Structural Rules from Licensing . . . . . . . . . . . . . . . . .27 Appendix G: Accreditation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Appendix H: Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Opening a Quality Child Care Center

Introduction

2

THE BUSINESS OF CHILD CARE

Welcome to the world and work of child care! The purpose of this manual is to provide a prospective child care center owner and/or manager with an overview of the tools needed to be successful in the business. It is organized from preliminary planning steps through the child care center licensing procedure and the actual opening of the center.

Contacting Child Care Licensing in the Utah Department of Health is your first step in this process (Appendix B). This guide will also provide you with information, websites and resources on quality standards in the industry to help make the planning of a high quality and developmentally appropriate program clear and complete. Your local Care About Childcare agency is an additional source of information and support (Appendix B).

Frequently a potential new child care center business owner is someone who enjoys children and may have a background in child development. It is a vibrant and exciting field for those dedicated to the growth and development of young children, but in the end, a child care center is a business. The success of the business will depend on the thoroughness of the plans and research done prior to the actual opening of the center. We strongly encourage you to complete your needs assessment and market analysis before

the acquisition of the physical property. The business plan can be written while you are in the process of locating the site on which to build or locating an existing facility you wish to remodel. Funding sources can then be pursued while you complete the negotiations to acquire your site.

There is a tremendous need in our society for quality child care as the number of working families with children under the age of 12 continues to grow. Research tells us that the negative effects of low quality child care can last into adolescence. The need for high quality child care is emphasized in this document, and we have provided resources that will aid you in locating curriculum and materials to create a center with a stellar reputation that meets the social, emotional, physical and developmental needs of the children whom you serve. This will contribute to your long-term success in this field, and will provide the families whom you serve with assurance and confidence that they have chosen the optimum place for their children to thrive. Most of the recommendations contained in this publication exceed licensing standards and are based on best practices as found in the most recent research; licensing typically only outlines the minimum acceptable standards for children's physical health and safety.

State of Utah, Department of Workforce Services, Office of Child Care ? 2012

Opening a Quality Child Care Center

First Steps: Assessment

3

First Steps: ASSESSMENT, MARKET ANALYSIS, BUSINESS PLAN and CHILD CARE LICENSING

A business can be successful when an entrepreneur fills a unique niche, having completed a needs assessment that has uncovered a market capable of supporting and growing a new business. Further, with a complete market analysis and thorough look at incometo-expense ratios and balance sheets, funding sources, start-up costs and the state of the overall economy, one can evaluate whether a potential business can survive and continue to grow. These are the critical first steps in starting a new child care center.

Personal Assessment

A good business plan begins with examining your own personal goals. Identifying the motivations you have for this type of business and your own personal experiences and skills can help you decide if this is the appropriate career choice for you. Operating a child care center consumes a great deal of time and energy and demands the ability to manage time wisely. Take some time to reflect on your own personal career goals and your reasons for choosing this field, keeping in mind both the long hours of commitment, as well as the benefits and rewards of helping children grow and develop to their full potential! The survey found on the following website can help you answer the question: Is this the right

time for you and your family to commit to a large and time-consuming endeavor? This selfassessment of your strengths and weaknesses as a potential child care center owner can be found at sites/lalc876e-617f-4aa3-9aa0-4f030b14bbf7// uploads/Start-up Self Assessment.pdf.

Although a love for children is a strong motivation, one must also have a strong background in other areas, such as business, communications, accounting, child development, and health and nutrition, or be willing to hire competent associates with the appropriate skills to complement your own. The ability to organize and plan is paramount to managing a child care center, since there are so many facets to its opening and ongoing operation. Depending on the size of the center, an owner might have occasion to review the program and curriculum, soothe a disgruntled parent, prepare meals, order developmentally appropriate equipment, unplug a toilet, or teach the two-year-old class, all in one day! It is a challenging and exciting opportunity for creative and gratifying work, but the ability to organize and plan cannot be understated. With that in mind, you are ready to begin a needs assessment for the facility you plan to open.

State of Utah, Department of Workforce Services, Office of Child Care ? 2012

Opening a Quality Child Care Center

First Steps: Market Analysis

4

MARKET ANALYSIS

Your market analysis should determine the need for additional child care services in the specific area in which you plan to open a center. Begin by calling your local CCR&R for information on the number of child care providers in the area, the number of calls they receive from parents, and the type of care those parents are looking for. In some areas parents prefer center-based care; in others they prefer family child care. You can also contact other centers to learn about their waiting lists and enrollment levels. Child Care Aware lists important questions to ask and answer in the"Getting Started"section of their web site at .

Census data can also be used to determine the number of families with young children in your target area. This data can be obtained by contacting the U.S. Census Bureau, local school districts and the city office of planning. A suggested list of data one might want to review follows:

? School census data ? Number of families in the area ? Income of families ? Families with children ? Number of working families with children zero to six years old ? Number of working families with children seven to fourteen years old ? Housing information ? Local businesses and sizes

Child care center businesses typically run on a very tight profit margin, so it is critical to complete the market analysis before taking any further steps towards opening a center. You will need a complete picture of the financial feasibility of opening a new center and sustaining the business over time. Some questions relevant to the analysis might be:

? What type of facility will you operate (day care, child development center, before and after school programs, extended day care)?

? Who are your potential customers (ages, ethnicity, educational level, income, etc.)?

? How will your center be unique from others in the area?

? What is the average cost of child care in the area for each of the age groups you plan to serve? Will your rates be competitive?

? What are the economic demographics of the families in the area you wish to serve? How much will the families be able to pay for child care?

? What are the trends in the child care industry (i.e. are centers or licensed family care used, or relative/friends)?

? Is the market seasonal (will the enrollment be higher during certain times of the year?)

? What are the assets of the location and facility?

? What are the liabilities of the location and facility?

? How will you market your facility and services?

Once you have completed the market analysis and have determined that a center in the area you have chosen is a viable business endeavor, you are ready for the next steps. You can utilize the Child Care Center Timeline (Appendix A) to stay on track with monthly goals and mileposts to see you through to the opening of your center.

State of Utah, Department of Workforce Services, Office of Child Care ? 2012

Opening a Quality Child Care Center

First Steps: Business Plan

5

BUSINESS PLAN

The United States Small Business Administration's publication "HOW TO START A QUALITY CHILD CARE BUSINESS" will provide you with essential information on the business aspects of operating a child care center. Along with a sample business plan and outline of how to begin, it covers taxes, legal structures, insurance and financing. You can find the publication at . The Small Business Administration has several local offices and will meet with you individually to discuss your business plans. Go to to find an office near you. The following are generally included in a business plan:

? Cover Sheet ? Business Description

> Needs Assessment, location and competition > Operating procedures > Business insurance > Personnel ? Financial Data > Market Analysis > Marketing Plan (see ) > Capital equipment and supply list > Balance Sheet > Break-even analysis > Income and cash flow projections ? Appendices

When preparing your financial data, here are a few critical items to keep in mind:

? Be aware that the approximate cost of furnishing an infant room at a minimal level is approximately $7000.00; the cost of a fully furnished and equipped infant room is about $10,000.00.

? A minimally equipped preschool classroom costs approximately $8000.00 while a fully equipped preschool room costs around $15,000.

? You will want to have your staff participate in an in-depth orientation before the center opens. Build wages for this time period into your budget. You may also want to include time to assemble furniture and set up the individual classrooms.

? Since enrollment will build slowly, base your income estimates on no more than 70% of your full capacity in the first few months. After your business has been running for awhile, you will realize that enrollment is never consistent. Base your income projections on a maximum of 85% of your licensed capacity.

? Before you can project your income, you will need to decide if:

> you are going to give decreased rates to families with more than one child (this will reduce your revenue but may attract more clients)

> you will charge a flat rate without discounts for missed days (many centers compromise and offer parents a set number of "free" days during the year),

> or you will charge a higher rate for part-time care (many centers do).

? The timing of your opening will strongly affect your initial enrollment. The best time to open is late summer, before school starts.

State of Utah, Department of Workforce Services, Office of Child Care ? 2012

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