Establishing a Licensed Care Center
Assessing the Need
- Before you invest money in a child care business, you need to spend time to find out if your community needs another child care center or family child care home. Complete this Child Care Center Needs Assessment to help you determine if the community needs your services.
- Estimate the number of families demanding services in your area at the rate to be charged (note: this is not an estimate of those who just need services, but of those who demand the services and can pay your rates or use vouchers). Contact the Child Resource and Referral Site (CR&R) in your community to find out about the existing supply and the highest need for care in your area.
- Survey potential client families regarding their needs relative to child care facilities in the area.
Finding a Location
There are many factors to consider before you decide on a location for your child care business. Before you decide to use your home for a family child care business or commit to a building for a child care center, you will need to look at indoor and outdoor space for health and safety issues. You will also need to check zoning and homeowner association covenants.
The cost of the center itself, especially for a location outside your home, will be one of your major start-up expenses. Many child care providers operate from their homes, but you may want to build, buy or rent space for your center.
Complete the Finding a Location checklist (PDF) from Child Care Aware.
Licensing Your Child Care Business
A license from the Mississippi Department of Health is required if you care for six or more children less than 13 years of age, for any part of the 24 hour day, who are not related (children, grandchildren, great-grandchildren, brothers/sisters, nieces/nephews) to you. This includes day care centers, day nurseries, and any other facilities that fall within the scope of the above description.
Child Care licensing standards set the minimum acceptable health, safety, and program standards for the legal operation of programs required to be licensed.
- Read the Mississippi State Department of Health’s comprehensive guide to “How to Get a Child Care License.“
- Child Care licensing standards set the minimum acceptable health, safety and program standards for the legal operation of programs required to be licensed. Licensing, or in some states, regulated care, is a baseline below which it is illegal to operate.
- Review the Regulations Governing Licensure of Child Care Facilities (PDF). The purpose of these regulations is to protect and promote the health and safety of children in this state by providing for the licensing of child care facilities as defined herein to assure that certain minimum standards are maintained in such facilities.
Lending & Financing
- Before starting your child care center, know the many regulatory systems that will affect your program. Read Preparing a Budget from Child Care Aware.
- The need for capital is common to all businesses, both large and small. However, small businesses often have a more difficult time attracting investment capital. A major cause of business failure is inadequate financing. It is important that the business owner look carefully at the needs of his/her business and develop the documents necessary to convey these needs to investors or a commercial lender.
- The Mississippi Development Authority’s Minority and Small Business loan program provides loans to socially and economically disadvantaged minority and women owned businesses as designated by the Minority and Small Business Development Division of MDA.
- The most active and expert lenders qualify for the SBA’s Certified and Preferred Lenders program. Certified lenders receive a partial delegation of authority to approve loans. Preferred lenders enjoy full delegation of lending authority.
Business Planning & Budgeting
- Your Business Plan is the most important document you will ever put together. It provides a road map to help guide your business as it grows. In it you establish benchmarks and a set of checks and balances to keep your business under control. It will safely guide you through the turbulent waters of constant change.
- Preparing a budget helps you define where you expect the money to come from and how you expect to spend it. It gives you a picture of whether your projected income will meet your expected expenses.If your operation is to succeed, you’ll need a sound budget, i.e., a plan that provides a realistic projection of actual estimated expenses and income. Preparing both a start-up budget and an operating budget will tell you what you will spend, now and in the future, and where the money will come from for starting and operating your center. Visit the Small Business Administration for more information.
- Read the SBA’s “How to Start a Quality Child Care Business” (PDF)
- A budget estimates the expected income and expenses of a child care center for a specified period of time. Read the Child Care Center Financial Planning and Facilities Development Manual.
- Different types of insurance are required for different types of child care businesses. Requirements vary by state. It is important to consider all insurance options, even if they are not required by your state. Complete this Insurance and Legal Considerations checklist (PDF) from Child Care Aware.
- It is important to consult with a professional insurance agent when choosing a carrier for general liability and accident insurance. Some agents specialize in locating policies for child care centers.
- Starting and operating a business involves a degree of risk. It is important to have adequate insurance protection for your business. If you aren’t exactly sure what type of insurance is best, discuss coverage and rates with several insurance agents before making a final decision.
- A marketing plan is an important part of your business plan. Marketing informs families about your program and why they should choose your program for their children. It includes advertising and creates a sense of identity, or “branding”, of your program.
- Developing a marketing plan requires an investment in dollars, time, and effort. However, particularly when expanding a business, a good marketing plan can make the difference between success and failure. Learn how to make and execute a marketing plan using the Child Care Center Financial Planning and Facilities Development Manual.
- How you market your center may make the difference between its success or failure. Like any other business, a child care center provides a service that consumers want and are willing to purchase. Therefore, you will have to sell your service to the consumers (parents). Your marketing plan can help you achieve this goal.
Licensed child care providers, like all business owners, are required to meet certain tax obligations, such as paying federal and state taxes. The legal structure of the business will determine the amount of taxes you will pay and the forms you will use.
Preparing Your Center
Equipment and Materials
- Plan to equip the center with adequate amounts of play equipment for both indoor and outdoor play. This equipment should meet the developmental needs of the children in your care.
- The equipment and materials you will need depend on the ages of the children you care for. The following guide provides a list of ideal equipment and materials for a center serving a wide age range of children: How to Start a Quality Child Care Business (PDF).
Safety and Setup
- Download and complete the Safety and Supervision checklist from Child Care Aware.
- Your center should be arranged so children can play happily with each other and by themselves, participate in a structured curriculum (if provided) and experience their growing independence by hanging up their own coats, putting dishes in the dishwasher or putting away art materials. Refer again to the guide How to Start a Quality Child Care Business (PDF).
Managing Your Center
- Research has shown that provider training is related to the quality of child care. Trained providers are more in demand by parents, who are becoming increasingly sophisticated about selecting care for their children.
- Provider training is essential to offer a quality program and for professional development.
Internet access is crucial in starting a new business.