Child Care as a Business

GETTING STARTED

The decision to start a child care business should be made after carefully looking at all of the issues associated with this type of business. If you think you are going to make a lot of money in child care --- think again! According to the Center for the Child Care Workforce, the average hourly wages in Mississippi for preschool teachers is $7.98 and for child care workers is $6.19. Your primary motivation for going into a child care business should be a love of children.

"Being a family child care provider requires the wisdom of a parent, the knowledge of a social worker, the skill of a pediatrician, the tact of a mediator, the patience of a saint, and the savvy of an entrepreneur running a small business." --- Roberta Malavenda

Some important questions you need to ask yourself . . . . .

  • Are you warm and friendly?

  • Are you calm and gentle?

  • Do you have a sense of humor?

  • Do you treat children as individuals?

  • Do you really like children?

  • Do you have the proper training/experience?

  • Are you proud to be in the business of caring for children?

  • Do you have pride in yourself?

  • Do you understand children and their needs?

  • Do you take time with children?

  • Do you practice good health habits?

  • Do you accept and respect family values?

  • Do you listen to the children and their parents?

  • Do you nurture and encourage children?

  • Do you provide a stable and safe environment?

  • Are you dependable and consistent?

  • Do you talk openly and honestly with parents?
As someone in the business of caring for children, you should be able to answer all of these questions in a positive manner --- because these are the questions that parents are asking when they are looking for a child care facility for their children.

The business side of child care . . . . .

All business ventures should start out with a plan --- the more planning you do on the front end, the higher the chance of success. Your business plan begins in your head and as you work through all the issues that need to be addressed, start writing your plan down on paper. Planning a business is an evolving process --- and your business plan will continue to change and evolve as you go along.

In Mississippi, setting up a child care business that cares for five or fewer children is not required to be licensed by the state. However, it is strongly recommended that you voluntarily register with the Mississippi State Department of Health. All child care businesses (including home-based facilities) that care for six or more children must comply with the Mississippi Regulations Governing Licensure of Child Care.

The regulations are designed to provide an adequate and safe environment for the children. The regulations include requirements for facility policy and procedures; personnel requirements; records; reports; staffing; program of activities; equipment, toys, and materials; building and grounds; health, hygiene, and safety; nutrition and meals; discipline and guidance, transportation, diapering and toileting; rest periods; feeding of infants and toddlers; swimming and water activities; children with special needs; night care; school age care; summer day camp; and hourly child care. A document containing complete information regarding Child Care Licensure may be obtained from the Mississippi State Department of Health, P.O. Box 1700, Jackson, MS 39215 (telephone: 601/576-7613).

Once you have made the decision to go into a child care business, the following checklist will help you through the business start-up process in Mississippi:

  • Request a copy of Mississippi Reporting Requirements for Small Businesses from the Mississippi Development Authority (601/359-3593).

  • Once you decide on a possible location, check with city/county officials on local zoning regulations for businesses. When necessary, also check neighborhood covenants.

  • Choose a name and a logo, if desired, for the business. To protect your name and logo in Mississippi, complete an Application To Register a Trade Mark, which may be obtained from the Mississippi Secretary of State (601/359-1633).

  • Decide on the form of business ownership (sole proprietorship, partnership, corporation, or tax exempt/non-profit). To be incorporated, articles of incorporation must be filed with the Mississippi Secretary of State (601/359-1633). Register with the Secretary of State if the business is a limited liability company (LLC).

  • Contact the IRS to obtain a federal employer identification number (EIN) (800/829-3676). An EIN is required for all partnerships and corporations, as well as for sole proprietorships if wages are paid for one or more employees.

  • Complete a Mississippi Business Registration Application, Form 70-001-00-1, available from the Mississippi State Tax Commission (601/923-7000).

  • Obtain a local business permit or privilege licenses from city/county officials.

  • If needed, secure financing (your business plan will need to be in professional looking format for funding sources).

  • Open a DBA (doing business as) bank account for the business.

  • Check on needed insurance for business --- liability, vehicle, workers' compensation, etc. (in Mississippi, workers' compensation insurance is required if you have five or more employees).

  • Check tax laws --- obtain copies of relevant IRS publications (at www.irs.ustreas.gov or 800/829-3676):

    • Publication 587 (Business Use of Your Home)
    • Publication 334 (Tax Guide for Small Business)
    • Publication 533 (Self-Employment Tax)
    • Publication 535 (Business Expenses)
    • Publication 557 (Tax Exempt Status for Your Organization)

  • Determine record keeping requirements and set up a bookkeeping system.

  • Establish prices and fees.

  • Determine and set policies regarding hours, discipline, field trips, payment, vacation schedules, multiple children families, waiting lists, etc.

  • Obtain business cards, stationery, forms, etc.

  • Recruit children/parents through advertising and publicity.

  • Meets parents/children. Sign agreements. Begin!

  • Continue your professional development by attending educational workshops and other professional opportunities to learn more about children, child care, and running a business.

  • Continue to work on and refine your business plan on a yearly basis.

FINANCIALS - $$$

A fundamental element in making the decision to start a child care business is having a clear and accurate understanding of the financial situation. It is very important to create a projected operating statement BEFORE you start your business. An operating statement consists of two sections --- income and expenses.

Begin by calculating potential income. In a child care business potential income may include:

  • Enrollment fees (annual fee or deposit parents pay when they register or enroll their children)

  • Tuition (weekly or monthly amount paid by parents on a per child basis)

  • Supply fees (amount assessed per child on a monthly, semester, or annual basis)

  • Food/meal fees (amount assessed per child on a monthly basis to cover food costs)

  • Government support (amount reimbursed from government programs, for example, the Child and Adult Care Food Program)

  • In-kind contributions (financial contributions from churches, community groups, businesses, etc.)

  • Other (any other source(s) of revenue)

Some child care businesses may choose to include supply and food fees in with the tuition fee. However, itemizing or breaking down costs to parents sometimes helps them to realize why they have to pay what they are paying.

After determining potential income, the next step is to estimate all the expenses that the business will incur. In a child care business expenses may include:

  • Salaries/wages of all employees (including taxes and benefits)

  • Rent or mortgage payment

  • Licenses/permits

  • Advertising/promotion

  • Utilities/telephone

  • Professional services (accountant/attorney)

  • Supplies/equipment

  • Insurance (liability, auto, building, etc.)

  • Maintenance

  • Food costs

  • Transportation costs

  • Miscellaneous

  • Other (any other expenses, for example, loan payment for initial start-up money capital)

To help you understand how to put these figures together into an operating statement, the following are examples of real statements put together for child care businesses in Mississippi:

Remember, the operating statement will only be as accurate as the information you put into it. And later, after you start the business, the operating budget should be updated and refined on a regular basis.

GOVERNMENT PROGRAMS

Child and Adult Care Food Program The Child and Adult Care Food Program (CACFP) is a Federal program that provides healthy meals and snacks in child and adult day care facilities. CACFP reimburses participating day care operators for their meal costs and provides them with USDA commodity food and nutrition education materials. The program generally operates in child care centers, outside-school-hours care centers, family and group day care homes, and some adult day care centers. Day care providers in the CACFP must serve meals that meet federal guidelines, and must offer free or reduced-price meals to eligible people.

This program is of potential interest to child care businesses because it includes child care centers and family day care homes.

Child Care Centers. Includes licensed or approved non-residential, public or private non-profit child care centers; and Head Start centers, settlement houses, and neighborhood centers. For-profit child care centers may also participate if they meet certain criteria for serving low-income children.

Family Day Care Homes. Generally, family day care homes provide care in a licensed or approved private home for a small group of children. Family or group day care homes must be administered by a sponsoring organization that maintains Federal and State regulations, and prepares a monthly food reimbursement claim. The sponsor also receives Federal reimbursement for administrative expenses, based on the number of homes it sponsors.

For information about the Child and Adult Care Food Program in Mississippi, contact:

Mississippi Bureau of Child Nutrition
State Department of Education
500 Greymont Avenue, Suite F
Post Office Box 771
Jackson, MS 39205-0771
tel 601-354-7015
fax 601-354-7595

CONTRACTS AND POLICIES

Parent Provider Contracts

Many family child care providers balk at the idea of using a contract because it seems too cold and business-like. However, the primary purpose of a contract is communication. When providers and parents put their expectations in writing, misunderstandings are easily avoided. A contract is an agreement that defines the terms of actual care and payment between a caregiver and parents. If necessary, a contract can be used in court to seek payment of damages if the contract is broken.

Include the following in any contract:

- name, address, phone of child and parents or guardians
- payment rates, fees, deposits
- time of care - days or dates
- termination procedures
- signatures of parents/guardians
- signature of provider
- date of signature

Ask yourself the following questions before you create a contract:

- What hours/days/months will I provide care?

- How much will I charge for basic child care for infants or toddlers or for a second or third child in the family?

- When will I collect?

- Will there be a fee for late pickups?

- Will I charge for days when children are ill or on vacation? Will I charge for days when I am ill or on vacation?

- Will there be an extra charge for meals or diapers, or other supplies?

Once you have decided your response to these questions, you are ready to prepare a basic contract.

It is best to review contracts verbally with parents and have them sign two copies, one for each of you. You are then assured that parents were made aware of your contract expectations and had an opportunity to ask questions.

Child Care Provider Policies

Many child care professionals find it helpful to share a policy statement with parents. Such a statement lays some ground rules and helps parents understand the provider's views and practices concerning child care. (Refer to the sample Child Care Policy Statement below.)

The following are items you may want to consider when developing a policystatement.

Activities: What will your daily schedule be? What types of activities will you do with children?

Food: Will you provide snacks and meals, or should parents take care of that? If you register with the Department of Human Services, you may be eligible to participate in the Child and Adult Care Food Program, which partially reimburses you for the meals and snacks that you serve to the children in your care.

Administering medications: Medications can be given only with the parent's or doctor's direct written authority. This should include the name of the medication, amount to be given, and time to be administered.

Emergency policy: You need permission to seek emergency medical care for a child in the event that a parent cannot be reached. You should write an emergency form that parents need to fill out. You should have a backup person to care for the other children in case you have to take a child to the hospital. Local hospitals may have their own emergency forms and may not accept any others. Check with them first.

Illness policy: How will you handle children who become sick during the day or who arrive sick? Under what conditions will a sick child need to be taken home? Are you able to isolate contagious children (chicken pox, measles, etc.)?

Nap and rest time: Where will children rest? What and how long is rest time? What alternate activities will be available for short nappers?

Discipline: How will problematic behavior be handled? What rules will you have? It is important to discuss discipline with parents.

Appropriate dress: What spare clothes will be needed? Ask parents to dress children appropriately for weather and play.

SAMPLE -- CHILD CARE POLICY STATEMENT

I respect and appreciate the trust you have placed in me in caring for your child. I believe that parents are the most important people in a child's world, and I will make every effort to support you as a family.

I will try to offer the very best care that I can for your child. You can help me by keeping me informed about health concerns, favorite foods, fears, or special interests. I will try to share information about your child's growth and activities during the time spent in my program.

My philosophy about children and child care is reflected in the following policies.

PLAY ACTIVITIES: Children learn a great deal from our daily play activities. Playing with play dough, finger painting, drawing on the sidewalk with chalk, singing, reading books, planting flowers in the garden, pretending to be fire fighters, or making snow angels are typical activities that we might do. I strongly believe that children learn by doing and try to provide activities that are appropriate for children of different ages and interests. As these activities can be a bit messy, I encourage you to dress your children in comfortable, washable play clothes every day.

OUTDOOR ACTIVITIES: I try to take the children outside every day for fresh air and exercise. Often we will bundle up and go outside on cold days for at least a few minutes. On warm, sunny days we may spend a lot of time outdoors. If you have special requests regarding outdoor play (such as using sunscreen, insect repellant, etc.) please let me know.

MEALS/SNACKS: I participate in the Adult and Child Care Food Program. This means that I plan nutritionally balanced, wholesome foods, meals, and snacks. Children are encouraged (but never forced) to eat a variety of foods. On occasion, the children may help me prepare special snacks or meals.

NAPS/REST TIME: Children in my care usually take regular naps. Infants nap as needed, and older children generally sleep in the afternoons after lunch. Even if children do not go to sleep, I still insist that they lay down for a rest time and look at books quietly.

GUIDANCE AND DISCIPLINE: I try to create an environment for children that is supportive and respectful of their needs. I use different methods of discipline for different situations. When children are arguing or out of control, I will insist on a "time out" or cooling off period. When children are doing something that is not appropriate, I will redirect them to a more suitable activity. At times, I also may choose to ignore misbehavior. I will not physically punish your child by spanking, slapping, or hitting. My goal is to help each child develop a strong sense of self-discipline and self-esteem.

ILLNESS: Children cannot attend if they have a temperature of more than 101 degrees Farenheit or if they have a communicable disease, are vomiting, or have diarrhea. Parents will be notified if children become ill while in my care. Children must be picked up as soon as possible. Medications will be given only with the parent's or doctor's direct written consent. Please bring all medications in their original bottle, with written instructions on the amount to be given and the time to be administered.

EMERGENCIES: In the event of a medical emergency, fire, or natural disaster, I will take immediate steps to ensure your child's safety and will contact you as quickly as possible. Please make sure that you keep me informed regarding your whereabouts.

As a professional family child care provider, I am committed to providing high quality care in a home environment. I believe that family child care offers children the opportunity to learn and grow with siblings and children of different ages in a supportive, family-like atmosphere.

I value the opportunity to work closely with each child for several years. I sincerely believe that this practice provides continuity and stability for each child and allows me to better nurture and support each child as they grow and develop.

I take pride in my profession. My career in family child care has provided me with meaningful work and an income to support my family. Parents sometimes forget that my services are much like any other business because I work in my home. If you fail to pick up your child on time, I have less time to spend with my own family. If you fail to pay your fees, I may find it impossible to pay my own bills on time. If your family experiences an emergency or unforeseen difficulty, I am very willing to work with you. However, I do ask that you be respectful of my needs so that I can continue to offer your child quality care.

CHILD CARE ORGANIZATIONS AND LINKS

The Contracts and Policies section was reprinted with permission from the National Network for Child Care - NNCC. Oesterreich, L. (1993). Parent-provider contracts and policies. In L. Oesterreich, B. Holt, & S. Karas, *Iowa family child care handbook* [Pm 1541] (pp.17-21). Ames, IA: Iowa State University Extension.

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