ForumsStarting a Business

Please don't take this the wrong way as I honestly do not mean to discourage you. However, a few years ago I considered investing in a daycare facillity run by a business associate's family. So I did some research and found that daycares are notoriously low profit businesses. One of the main competitors for child care facilities is moms caring for kids, both legally and illegally, in their homes. They pocket the money they make and never report it, never pay taxes, never get insurance, permits, etc. It's hard to legally compete against something like that.

Also, my daughter helped put herself through college working at a daycare and they pay very poorly. One reason they pay so poorly is that most parent are extremely cheap when it comes to spending on daycare. My daughter saw parents move their kids to a different daycare to save $5.

Again, my point is not to discourage you from starting your own business but to suggest that your efforts might be more profitable in some other type of business. You seem to have determination and drive, you might consider putting those qualities to use in a different business or perhaps pursuing this one a different way.

If you are determined to go into this type of business, here's a few ideas:

If you're going to do traditional day care, aim for high-income families. You may find them more willing to spend. However, be prepared to offer more than the basic babysitting service for this market.
You might consider partnering with a big corporation to offer child care at thier corporate headquarters. With the slow economy you might find this a tough sell. Then again, you might not. A company might figure, hey we can't afford raises but we can offer child care. Perhaps they would provide space in thier building, you watch the kids and maybe split the profit?
Another interesting take on child care I saw recently was hourly child care. They leased out some space in an upscale strip shopping center and took in kids for short periods of time while the moms shopped or whatever. You might even consider doing that on an after hours thing for parents that want to have dinner out. A mall, or big shopping center might be willing to work with you some on a deal like that on the theory that it would attract more shoppers and diners.

I guess basically what I'm suggesting is that if you've hit roadblocks, maybe it's time to think outside the box?.

Congratulations for your entrepreneurial spirit and desire to start a small business. Small business is the back bone of the American economy and all start with an idea like yours.

I would encourage you to first complete your business plan and determine how much money you need to get started. Make sure you know the regulatory requirements for day care, any required special education or licensing required by state and local governments as you continue to develop your business plan. You may want to look into the zoning and legal requirements of starting a baby sitting service out of your home rather than a full fledged day care business to start out. This may solve your money and time problem without a large capital investment.

After the planning is done, determine how much money you will need to get started by making a list and putting down dollar amounts as below, though this list mya not be comprehensive:

Rent & Rent Deposits

Facility Build out

Utilities & Utility Deposits

Telephone & Internet connections

Licenses

Insurannce

Payroll & Payroll taxes

Advertising & Promotion

Franchise? If yes, you need to factor in these costs

Furnishings, Computers, Games, and other things needed to operate

Estimate monthly principal & interest payments to those who lend you money

Working capital to keep the doors open until you get enough children to pay the bills

Now you are ready to look for money, you have a plan, you have done your homework, and have a list of how much money you need to get started.

Typically the money at this stage of business development will come from family and friends. They know you and your work ethic, your determination, and trust you to pay them back. So start there and think about who may be able to help.

If you have a good credit score, your bank may be willing to give you a credit card with a high dollar amount and low % for cash advances. The sponsor of this website, Bank of America, has some programs that may meet these requirements.

Another avenue is to find a capitalized business partner who shares your vision for a day care center, loves children and wants to be a part of something. Colleagues, other students at school, parents & grand parents of potential day care students are all potential candidates to take part.

Need more money than family & Friends can provide?

Banks other than for credit cards will only loan if you have sufficient collateral and good personal credit and money is tight right now even in the best of those situations. And the business with no track record will be difficult to finance for at least the first couple of years. However, a home equity loan could be an option if you have a home with equity.

Good luck with your venture.