Texas AgriLife Extension Service, Texas A&M System.
Extension Online. Convenient, affordable, self-paced eLearning.

What will it cost to run a child care home or center?

Child care costs are on the rise. According to the USDA Center for Nutrition Policy and Promotion, Expenditures on Children by Families, a middle-income family with a child born in 2010 could expect to spend about $226,920 ($286,860 if projected inflation costs are factored in) for food, shelter, and other necessities to raise that child over the next 17 years. Expenses for transportation, child care, education, and health care saw the largest percentage increases related to child rearing from 2009-2010.

For middle-income families, housing costs were listed as the single largest expenditure on a child, averaging $69,660 or 31% of the total cost over 17 years, followed by child care costs, and education and food as the next two largest expenses, accounting for 17% and 16%, respectively, of their total expenditure. These estimates do not include costs associated with pregnancy or the cost of a college education or education beyond high school.

That means that families are spending a large portion of their money on child care and education.

As a child care provider, it is up to you to create a business plan that will make your care affordable for families, while being profitable for you and your employees. When preparing your business plan, you will need to consider expenses in your start-up and daily operating budget, as well as for insurance, and marketing to make your child care a viable operation.

Financing

According to Child Care Aware, a program of the National Association of Child Care Resource & Referral Agencies (NACCRRA), many excellent ideas that could develop into profitable business ventures never get underway or fail because of inadequate funding to start the business and cover the child care costs. Getting funding for your business can pose a problem, especially if you don't know where to go or whom to see. There are many sources for financing your center. However, that financing depends on whether you are beginning a nonprofit or for-profit organization.

While public funding is seldom available for start-up, there are several different sources of loans and grants for which you can apply. These sources of financing can be divided into six categories: private sources, venture capitalists, commercial banks, government agencies, grant programs and other sources.

Insurance

Starting and operating a child care business also 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. Insurance coverage varies from state to state, but there are several types of insurance available for child care providers. Liability and accident insurance are considered essential.

Marketing

Knowing your customer (parents) is the key to successfully marketing your center. The more you know about parents' expectations, the easier it will be to develop a program that meets their needs, as well as their children's. Begin by collecting some data to assess your community's needs. This may involve looking at census data, holding a focus group with parent volunteers (try churches or other community groups), and identifying services that already exist.

Whatever advertising media you use, be sure to include the following information:

  1. Name, address, and telephone number of the center.
  2. Ages of children who will be accepted.
  3. Hours the center will be open.
  4. Fees charged.
  5. A description of the program and the qualifications of the staff.
  6. Whom to contact for more information.
  7. Date you plan to open.

Start advertising your center at least three months before you open for business. Make sure your advertisements are consistent with the image you are trying to project. Remember, no matter what advertising media you use, you will have to spend money, so allow for advertising expenses in your budget. Starting with a solid financial plan that includes a planned budget, including expenses for insurance and marketing can help you be successful. For more ideas and training for the child care professional in your business, see Extension Online's child care courses.

Child Care Classes

« Back to Child Care Resources and Information