child care centre business plan australia

How to Build a Childcare Business Plan

A step-by-step guide for childcare with tips and a detailed outline to help entrepreneurs start their childcare business.

Table of contents

• What Is Childcare and Why Should I Start One
• Types of Childcare Providers
• Essential Steps Before Starting Your Childcare Business
• Develop Your Buyer Personas
• Decision Journey Map Definitions
• Determine Your Competitors  
• How to Start Your Childcare Business
• Conduct an Opportunity Analysis

Problem and Solution

• Execution Plan

Strategic Alliances

• Financial Forecasts
• Consider Various Funding Sources

Form Your Childcare Business

• How to Gain Enrolment at Your Childcare
• Find the Right Childcare CRM Software to Manage Enrolment with Less Work

Check Out the Tips and Tricks

Changing parent expectations have created an environment where the old way of managing the parent experience from initial enquiry through family retention doesn’t work anymore. It’s inconvenient, time-consuming, and full of obstacles that cause families to choose another childcare centre altogether.

Childcare organisations that make the parent experience digital and convenient will grow enrolment, increase retention, and remain competitive in the childcare market. In this guide, you'll view the key takeaways from our research and provided recommendations to help you grow your business by optimising the parent experience .

What is childcare and why should I start one?

According to Forbes , childcare businesses were projected to have some of the fastest employment growth of all industries through 2020. Starting a childcare is a great opportunity for aspiring business owners who have a passion for early childhood education and child development.  

‘Childcare’ is an umbrella term for various options (such as Montessori, preschool, and many more) where parents and guardians drop their children off and leave them in your care to...  

• Socialise with other children in their age group  
• Learn basic fundamentals for future academic success  
• Reach important developmental milestones

Is starting a childcare business worth it?

Starting a childcare business or franchise is profitable, emotionally rewarding, and sustainable – the need for committed childcare entrepreneurs has never been greater.  

As of 2021, there were 13,370 childcare centres in Australia. The growing popularity of childcare centres comes from the demand. Parents will always need a form of care for their kids. Plus, there’s a necessity, especially beyond COVID-19, to socialise children in an environment that fosters development.  

Types of Childcare Providers 

• Family Daycare  
• Relative care  
• Preschool (only)
• Independently-owned daycare
• Childcare Groups  
• Before & After School/Vacation Care

The difference between individual centres and childcare groups.

An independently-owned daycare often has an individual owner, a centre director, and possibly a few other administrative staff members – along with teachers, cooks, bus drivers, etc. The owner is typically an individual who puts their own money and savings into opening the centre, so all business rights (name, branding, etc.) belong to them.  

Alternatively, a childcare group falls under a corporate brand who has acquired centres in multiple locations and either re-branding or keeping the current brand (to grow their portfolio). This type of business is usually controlled by a group of employees in a head office or headquarters facility. 

The centre directors, cooks, educators and teachers are then recruited by the childcare group itself and distributed to different locations to maintain similar or exactly the same policies, values and learning program. Ultimately each location is owned and operated by the larger corporate group.

Essential steps before starting your childcare business

1) conduct market research.

When it comes to starting your childcare centre, relying on assumptions about your customers and competitors leads to wasted time, money, and effort. In contrast, businesses that conduct regular market research improve customer retention and are 76% more likely to see an increase in revenue.  

Market research is a data collection process that evaluates both consumer behaviour, competitor habits, and industry trends to determine the viability of your centre and build a foundation for future business operations.  

Prepare for success upfront by conducting thorough market research to understand your competition, improve communication with your target audience, and identify new market opportunities. This research should result in actual data that you can use to drive your business and marketing strategies as you launch your centre.  

There are a variety of tools available to help you conduct market research - all from the comfort of your own office. Gone are the days of hiring team members with clipboards to approach consumers face-to-face. Survey Monkey, Typeform, Google Forms all offer digital market research tools to help guide you through the process of understanding your audience, your competitors, and your industry.  

 2) Determine Your Target Market

A market segment is a group of consumers that could potentially enrol at your childcare centre. First, identify your market segments and determine how big each segment is.  

Be careful not to fall into the trap of defining your market as “everyone in your community.” This often leads to a ‘spray and pray’ approach to your marketing and as we know, a message for everyone really speaks to no one. When you generalise your advertising in favour of not isolating a potential consumer, you aren’t able to effectively communicate with your ideal customers – forgetting to recognise how your family entertainment centre can appeal to them and their needs.  

A classic example is a shoe manufacturer. While it would be tempting for a shoe company to say that their target market is anyone who has feet, realistically they need to target a specific segment of the market in order to be successful. If they sell adult athletic shoes, they should be building their message to target athletes or individuals who enjoy staying active and exercising. Likewise, if you offer programs for children aged 6 months to 4 years old, you should prioritise advertising towards young adults in their 20’s and 30’s.  

A common strategy when identifying target markets is to use the TAM, SAM, and SOM approach to look at market sizes from a top-down approach as well as a bottom-up approach.  

Target Market Terms

• TAM: Your Total Available or Addressable Market  

This should include everyone you wish to reach.  

Example: Your entire local community.  

• SAM: Your Segmented Addressable Market or Served Available Market  

This is a portion of the TAM you will specifically target because they align with your offerings.  

Example: Families with young children.  

• SOM: Your Share of the Market  

This is the group of your SAM that you will realistically reach—particularly in the first few years of your centre’s opening, as you may expand and grow your service over time.  

Example: Families with young children who make at least $65,000 each year in household income.  

For childcare organisations with multiple brands, schools, or programs - increasing revenue and keeping families happy is vital for growth. Your Millennial parents need a uniform, high-quality experience, regardless of location.

Standardising business processes has a significant impact on time savings, costs, and most notably on quality. In fact, standardisation improves quality by   61.9%,  on average. Create consistent  enrolment processes across all your locations to ensure every family has a great experience and a positive association with your brand – leading to higher conversion success and profitability.  

To achieve consistency, your marketing approach and advertising material must follow all your corporate brand guidelines. Your organisation should have a lead management system that supports your childcare staff as they  guide families through   the decision-making journey  while also ensuring each location is delivering a consistent parent experience.  

3) Develop Your Buyer Personas

Before you begin writing your marketing plan, make sure you’ve defined your market and buyer personas. Without a deep understanding of who you’re speaking to, a marketing plan will have little value.    

Audience personas allow you to dive even deeper into your target market and help you understand more than just who your customer is. These identities inform you how to communicate with your customers in a way that relates to their pain points and needs.  

When you understand your customer’s motivations, you can uniquely address their concerns and questions in your marketing materials - leading to increased tours, enrolments, and revenue.  

Start by listing out the various kinds of programs and classes you’d like to offer at your centre.  

Then, determine who the primary decision-maker and who the primary influencers might be in each scenario.   

Primary decision-maker : typically the individual(s) taking financial responsibility and remitting payment at your centre.  

Primary influencer : also crucial in the purchasing process as they often have the ability to sway decision-makers.  

For example, imagine you’re promoting availability for Holiday program at your centre. In this instance, the primary decision-maker might be the parent(s) or guardian(s) whereas the primary influencer would likely be the child who’s deciding what kind of activities they want to do this Summer.  

Audience Overview

List the audiences, personas, or segments that you want your centre’s marketing and messaging efforts to reach.  

Select one audience from above and describe it to the best of your knowledge. Go beyond the traditional persona to consider motivations & behaviour.  

Identify the key stages in your audience’s enrolment journey from beginning to end, knowing there may be multi-dimensional steps within a stage. Complete the table for each journey at the individual stages from the specific audience’s point of view.  

Decision Journey Map Definitions 

Stage : This refers to each stage of the enrolment journey - awareness, consideration, action, and advocacy.  

Awareness : This is when a family is first learning of your centre and your brand. They are researching multiple childcare centres and eventually send an inquiry to tour your facility or learn more.  

Consideration : During this stage, a family is touring your centre and may be deciding between you and 1-2 other providers. Tip: Proactively equip your staff with key talking points so they can highlight your unique centre features.  

Action : This is when a parent decides to enrol their child for care, pay fees, and is either placed on your waitlist or already enrolled.  

Advocacy : After a successful, happy experience, this parent or guardian has become an advocate for your business. They’re telling friends and family about your centre. This is vital for your word-of-mouth marketing strategy.  

Emotion : Identify what the persona is feeling at each stage of the customer’s journey. They may be anxious, curious, excited, or satisfied at various points. Put yourself in their shoes.  

Key Actions : What actions would a consumer take at each stage? For example, during the awareness stage, they may see your ad on Facebook, look you up on Google, or visit your website. In a consideration stage, they may call your centre to get more information, look at your services online, or read reviews.  

Questions : What questions is the consumer asking in each stage? These are the questions you need to be answering for them in your advertising and marketing efforts.  

Determine your competitors.

Competitive research helps you understand why customers choose your centre over other alternative care options. This information provides you with insight about how your competition is marketing their services and over time, this can help you improve your own marketing campaigns and business offerings.  

Look up similar childcare centres in your area, see what programs they offer, the type of facilities, their capacity, and curriculum. Then, highlight the features that make your centre stand out. Showcase your selling points in all marketing and advertising efforts.  Get started with these key questions...

Who are my direct competitors and what services do they offer?

For example, other childcare centres, family daycare or school pre-schools.

Who are my indirect competitors?

For example, other childcare offerings that may lure potential families away such as relative care and babysitters, at home programs, etc.

What does my competitions pricing look like?

Do they offer promotional pricing or cheaper daily rates, what do they do best, what areas do they lack in, how to start your childcare business., construct a business plan.

A good business plan will guide you through each stage of starting and managing your childcare organisation- including how to structure, run, and grow your new business.  

There’s no correct or incorrect way to write your business plan. What’s most important is that you identify your business objectives and use this document as a roadmap for how to achieve these goals.  

A strong business plan can help you recruit business investors, gain funding, or find new partners. Prospective investors want to feel confident they’ll see a return on their investment and your centre’s business plan is the perfect tool to assure potentials that working with you — or investing in your business— is a smart and profitable decision.  

Write an Executive Summary

Although this section is the first thing people will read, it’s advised that you write it last, once you know the details of your business inside and out. At this stage, you will be able to articulate your business more clearly and summarise all the information in a succinct, concise manner.  

Ideally, your executive summary will be able to act as a stand-alone document that covers the key highlights of your detailed business plan. In fact, it’s common for investors or loan providers to ask for just the executive summary when they start evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation, and more in-depth financials.  

As your executive summary is such a critical component of your business plan, you’ll want to make sure that it’s as clear and concise as possible. Cover only the essential components of your daycare, ensuring your executive summary is one to two pages maximum. This section is intended to be a quick read that hooks your potential investors’ interest and excites them to learn more.  

The executive summary is a tell-all first paragraph that details...  

• The city and state of your centre (you can decide on the exact location later)  
• A potential open date  
• A projected enrolment count (number of children you can enrol)  
• Programs you plan to offer  
• Ages you hope to serve  
• A quick financial summary (based on grants, funding, and potential revenue from projected enrolments)  

This may seem like a lot of information upfront, but it’s simply a high-level overview of your plan.   

Conduct an Opportunity Analysis 

The opportunity section of your business plan includes information about:  

• The problem that you’re solving within your community  
• Your programs and classrooms  
• Who you plan to market your centre(s) to  
• hHw your daycare facility fits into the existing competitive landscape  

This portion of your business plan is also important for outlining what distinguishes your childcare centre from your direct and indirect competitors as well as how you may continue to expand and grow your centre in the future.  

Use your previous competitive research to determine your daycare business’s competitive advantage and position. Analyse potential strengths, weaknesses, opportunities, and threats. 

Describe the problem that you are solving for your customers. Childcare centres are need-oriented, meaning your consumers have tangible pain points that you must resolve to be successful.  

So, what is the primary pain point for them? Maybe it’s that busy, working parents need a caring, safe place for their child during the day, or perhaps families are seeking after-school care options for their elementary-aged children, or maybe parents need 24-hour childcare options when they’re traveling or working odd hours.   

Now, assess how they are solving their problems currently and where there’s room for improvement. If there's only one childcare centre in your community and it has no open seats, you could be the solution. Or maybe there are lots of existing care providers in your city but they’re expensive or have rigid pickup and drop-off times that working parents have trouble meeting. Or perhaps there aren’t any existing childcare businesses within a reasonable driving distance of where you’d like to place yours.  

Defining the problem you are solving for your customers is by far the most critical element of your business plan and is crucial for your daycare business’ success. If you can’t pinpoint a problem that your potential customers have, then you might not have a viable business concept.  

To ensure that you are solving a real problem, try conducting your own survey with potential customers to get a better understanding of their needs and validate that they have the problem you assume they have. Then, take the next step and pitch your potential solution to their problem.

Do they agree that it’s a good fit or does it seem to fall flat?  See how to come up with a strategic plan for your business.

Write an Execution Plan

The importance of an execution plan.

The execution chapter outlines how you’re actually going to make your childcare centre work . You’l l address your marketing and enrolment plans, operations, success metrics, and any key milestones that you expect to achieve.  

Execution Plan: Marketing and Sales  

The marketing and sales plan section of your business plan details how you propose to reach your target market segments, how you plan on converting those target markets, what your pricing model looks like, and what partnerships you may need to make your centre a success.  

Your Positioning Statement

Once you understand your audience, the first part of your marketing and sales plan is your positioning statement. Refer back to your value proposition to create a simple, straightforward sentiment, explaining where your company sits within the competitive landscape and what differentiates your venue from the alternatives that a customer might consider. This statement should be written for an investor or loan provider, rather than for your customer.  

For example, a positioning statement for a 24-hour childcare centre in Sydney, New South Wales may look like this:  

“For the Sydney-based family who is seeking childcare around the clock, Jenny’s 24-Hour Childcare Centre is a safe option for young children with nutritional meals, best-in-industry sleeping arrangements, a clean outdoor play area, and highly trained care teachers and educators. Jenny’s 24-Hour Childcare Centre is the first centre of its kind within 10 km of the Sydney city centre and offers competitive pricing and competitive daily rates.”  

Use this formula to develop a positioning statement for your centre:  

Your Mission Statement

Your mission statement is a scaled-down version of your positioning statement. This should be just one-two sentences that are geared toward your target consumer and describe what your business plans to accomplish. This statement usually includes company core values that explain your childcare’s purpose and how you serve your audience.  

For example, Busy Bees is a leading early childhood education provider with the mission of “ high quality childcare and exciting learning opportunities that give every child the best start in life .”  

Pricing 

Your positioning strategy will typically determine how you price your memberships and packages. There are some basic rules that you should follow when deciding on your price point:  

Cost-plus pricing: For the most part, you should be charging your customers more than it costs you to host them at your centre to ensure your venue is profitable and is appealing to investors.  

Market-based pricing: Look at what your competitors are charging and then price based on what your audience is expecting.  

As part of your marketing plan, you may wish to collaborate with other organisations such as local camps, after-school programs, pediatricians, or even other childcare centres that don’t offer the same activities that you do.  

This partnership should benefit both of you – it may help provide access to a target market segment for your venue while allowing your partner to offer a helpful recommendation to their customers. If you’ve already established an alliance, it’s important to detail that in your business plan.  

The operations section is all about how your business works. This portion details the essential logistics such as staffing and sourcing and fulfilment. But remember, your goal is to keep your business plan as short as possible, so too much detail here could easily make your plan much too long.  

Milestones and Metrics

It’s critical that you take the time to look forward and schedule the next critical steps for your business. Investors will want to see that you understand what needs to happen to make your plans a reality and that you are working on a realistic schedule.

Then, determine how you will measure the success of each milestone by listing out the key performance indicators and metrics needed to see progress. These will be the numbers you monitor on a regular basis to evaluate the trajectory of your business. For example, you may look at how many families tour your centre each week, how many children you enrol each month, or the amount of revenue you bring in per quarter.  

Company and Management Summary

The structure of your staff and teams sets your daycare up for success. In a new childcare centre, there’s typically an owner, a centre director, staff members, an enrolment or marketing team, accounting/administration, teachers, assistants, cooks, bus drivers, and janitorial staff. For example, the average small daycare business has 8-10 fully licensed and/or certified early education teachers.  

Financial Forecasts  

A typical financial plan will have monthly sales and revenue forecasts for the first 12 months, and then annual projections for the remaining three to five years. Break your sales forecast down into several rows, focusing on just high-level buckets at this point.   

Knowing how much your childcare will cost to open ahead of time can save you money, stress, and time. Childcare start-up expenses vary by size, enrolment capacity, and miscellaneous needs.  

Keep in mind that you can save on staffing costs and cut down on overhead with technology that helps to streamline your centre’s operations. After all, 40% of Millennials prefer self-service over human contact when interacting with businesses.   

It’s essential that you find ways to enable families to book tours and enrol online without ever having to make a phone call to the centre- reducing time spent on necessary-but-manual tasks for both your staff and inquiring families.  

Finally, articulate your profits and losses based on the data from your sales forecast and your personnel plan plus a list of all your other ongoing expenses associated with running your childcare centre.  

Step 1 : Average daily rate per child x your expected enrolments x 12 (annual revenue – assuming each family is still enrolled during the holiday periods).  

Step 2 : Childcare businesses make around 16% profit from their overall revenue, after Childcare expenses. Multiply your number from step 1 by .16 to get your predicted profit.  

Example : Let’s say you plan to charge families an average of $110 per day for childcare. With that, your goal is to enrol 60 students by the time your childcare centre opens. Multiply ($110 x5) 60 x 12 (annual revenue). This should come out to $396,000. Lastly, multiply your revenue of $396,000 by .16, which equals a net profit of $63,360 per year.  

Consider various funding sources.

Depending on your situation, there’s both loan and grant funding in childcare. Between state tax credits, loans, and grants – there are financing options for a variety of situations.  

Collect childcare grants for your business.

Often, startup costs for opening a childcare are high. Certain states and councils offer grants for new childcare businesses. There are several grant options, depending on your child and family details.  

For example, companies and associations such as Australian Grants or Early Childhood Association Australia can help you with more information or support towards applying for these grants and funding.

All legitimate businesses, including childcare will need to apply for an ABN (Australian Business Number) that identifies your business to the government and the community. 

Find the Right Vendors

Choosing the right suppliers for your business is essential. If your vendors aren’t reliable or don’t deliver quality products, your new centre will struggle to attract families. As a childcare provider, you will likely need the following vendors at one point or another:  

Electrician 

Plumber 

Food and Beverage Supplier 

Educational Materials Supplier 

Substitute Staffing Provider 

Accountant 

Cleaning & Maintenance 

Childcare Management System (CMS) 

Customer Relationship Management (CRM) Software 

Digital Payments Provider 

Online Forms Software 

Research Your Vendors

Check their most current reviews and current list of clients.

Review Your Options

Don't settle for the first vendor you see, research and receive quotes from at least 3 vendors.

How to gain enrolment at your childcare.

The next step after successfully starting your daycare business is to grow your centre and gain enrolments.  

Begin by building a string company culture, actively marketing your childcare centre, and finding the right childcare technology to optimise your enrolment process and save time.  

Create a culture where staff want to work.

A childcare centre that stands out from the rest has happy staff members that want to work hard. Create a diverse employee culture that feels comfortable openly talking about situations. Provide support, patience, and room for growth.  

Market your centre.

A childcare marketing strategy starts with an achievable goal. Do you want to fill your enrolment spots? Do you want to build a waitlist? Should you focus on scheduling more tours?  

Choose an objective and measurable results – so you can track and analyse your marketing performance.  

Market, promote, and advertise your childcare centre with...  

Social media (especially Facebook – 83% of Millennials have a Facebook account).  

Landing pages and contact forms on your website  

Listing directories  

Email and text marketing campaigns  

Referrals  

Digital advertisements  

Flyers  

Word of mouth marketing  

Tip: Childcare software that automates the reports you need helps you to saves time and improve your return on investment (ROI).  

For example, with a Source of Families report, you can see where your leads are coming from. It helps you enhance your marketing efforts and refine your spending. Invest in the channels that are popular and spend less on the ones that aren’t working to generate more high-quality leads.  

Find the right childcare CRM software to manage enrolment with less work.

ChildcareCRM is revolutionary childcare software that automates lead capture, follow-up, scheduling tours, and reports. With digital enrolment forms  – you and your staff will save hours of time. Plus, craft beautiful, personalised marketing campaigns to continually grow your business.  

Further, marketing is the growth engine for every new childcare centre. But missed leads, slow response times, a complex parent experience, and lack of reporting make marketing difficult. Busy and overworked staff often don’t have time to complete every manual-but-necessary marketing activity, so opportunities are lost.   

Get more from your marketing while saving educators and centre directors 10 hours every week with ChildcareCRM. Automate everything from lead capture to reporting—all from one place.

For Current Users

Visit our website to learn more.

For Interested Users

Schedule a demo to take the next step and effortlessly increase occupancy and gain enrolments from the get-go.  

Get started With LineLeader.

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• Child Care Business Plan

$ 825.00

What does your Child Care business plan include?

Seven sections

• Executive Summary (5) pages
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• Market Research and analysis (up to 8 pages)
• Human Resources (8 pages)
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• Sales / Revenue Forecast, 1 year
• Profit & Loss Statement by month, 1 year
• Balance Sheet by month, 1 year
• Break Even, Cash Flow Forecast by month, 1 year
• Marketing Strategy and Top Line Budget (4 pages)
• Appendices (9 pages)

Also includes: (up to another 4 pages)

• Profit & Loss Statement by month, 3 years
• Balance Sheet by month, 3 years
• Break Even, Cash Flow Forecast by month, 3 years
• Alternative “What if” Scenario Modelling
• A 45-60 minute chat after you get your first of the two versions we will provide included in our fee

Two out of every 15 Plans we do are for either family day care, or a child care centre.

My childcare industry clients use their Business Plans to open and operate a childcare service and get approvals from State and local government under the National Quality Framework (NQF). Whether they want to be a local coordinator and manage a range of in-home childcare providers, or run a child care centre themselves, their Business Plan will help them with compliance, licensing, permits and regulations, effective cost controls, and making sure that their marketing plan makes sense. Local research into competing childcare centres and providers is key in these Business Plans.

All of these and more are in our Childcare Business Plans.

One more thing

If you were wondering how to start a family day care business , our business plan will focus on that part of the industry.

If your business plan is for a child care centre, we have lots of benchmarks and metrics to help you understand your likely costs. Costs in childcare centres can very quickly get out of control. When we create our Business Plans for specific types of businesses such as childcare, we undertake research to ensure that every aspect of accreditation and certification is covered in our Plan – both for State and National accreditation bodies.

How to Start a Childcare Business

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How to Start a Childcare Business

• Written by  Lorina
• January 12, 2015

How many times while working in childcare, you may have thought of opening up your own childcare centre? Being a boss, implementing your own ideas and suggestions, running things how you see fit. It’s a great opportunity to make a difference within the community and to offer your own experiences and knowledge. It may sound like a good idea but the reality of it, it’s a hard task! There are a lot of regulations, government policies and requirements that needs to be followed. However if you are willing to put the hard work in then it can be very rewarding! This article will provide you with information on what you need to do in order to start your own childcare business.

When starting a childcare business it’s best to have some experience with working in different early childhood settings and be qualified to own a childcare centre. Having a degree isn’t essential to own a childcare centre however a Diploma qualification would enable you to understand the ins and outs of responsibilities within a centre. Along with a qualification you will also require:

• a Police/Criminal check
• Current First Aid Certificate
• Current Working With Children’s Check
• Current Anaphylaxis training

Being a qualified owner is beneficial as you will be aware of what is required and meet the needs of the educators and families. It also provides trust in staff knowing you are qualified to own a centre. There is nothing worse than working for an owner who has no idea on childcare itself. So, it’s best to spend a couple of years getting qualified and gaining experience… After all this is your business and a lot depends on the choices you make.

Types of Early Childhood Services

When starting a childcare business there are many different types of childcare services you can offer within the community. Before deciding on which service you would like to start it’s best to do some research in the locality you’re planning to run your service. Find out the community needs and see what type of service would suit the needs of the community best. For example: in the locality if there are 3 long day care centres offering care for 0 – 5 year olds, it may be beneficial to start up a preschool service which focuses primarily on school readiness.

Childcare services include some of the following:

• Long Day Care – Long day care (LDC) is a centre-based form of childcare service. LDC services provide quality all-day or part-time care for children of working families and the general community.
• Family Day Care – Family day care (FDC) services support and administer networks of FDC carers who provide flexible care and developmental activities in their own homes for other people’s children.
• Preschool – Pre-schools are also referred to as kindergartens in some States. They essentially provide services to children in the year prior to attending primary school and involve structured, seasonal programs for two or three days a week.
• Occasional Care – Occasional care (OCC) is a centre-based form of child care. OCC services provide flexible care which allows parents to meet their work related and non-work related commitments
• OOSH - Outside school hours care (OSHC) services provide care before and/or after school and/or care during school vacation time.

If you want to start up a service that will be part of the competition in the locality, find a “niche” idea that you can advertise and sell your centre on in order to gain popularity and enrolments. Think of an idea that the other centres are not offering. Some ideas include: being an organic centre, offer after hour care, only target a specific age group (e.g. nursery care only), offer play groups with parents etc. Snoop out the competition and see what unique idea you can come up with!

Provider Approval & Service Approval

Provider Approval - Before operating an early childhood service you will need to obtain a “provider approval”. This is an application process conducted by the Regulatory Authority. This process will examine whether you are a fit and proper person to be involved in the provision of an early childhood service. This is national recognized. To be deemed as a fit and proper person assessed on your history of compliance with current education and care service law, criminal history check and whether you have had any bankruptcy issues. Once submitted you will receive a result in 60 days.

For more information on Provider Approvals: http://www.acecqa.gov.au/provider-approvals

Service Approvals – If you application is successful as an approved provider you may apply to the Regulatory Authority for service approval. Service approval is needed if you will be the operator of the service and will be responsible for the management of the service. This applications requires details on the type of service you will be managing, insurance, permits, policies and procedures etc.

For more information on Service Approvals: http://www.acecqa.gov.au/service-approvals

Before obtaining any approval it’s best to contact your state or territory Regulatory Authority for further information on approvals.

Franchising, Building or Pre-Existing Centres

Now you what type of service you want to provide to the community and have been approved to offer care, next step is to think about whether you will be building a centre from scratch, buy a pre-existing centre from owners or buying a franchise?

It’s really hard to determine which one is more suitable because it really depends again on the locality and how much money you are willing to spend during this process.

• Building a Centre - When building a centre from scratch it will probably cost more than buying a pre-existing centre. You need to gain council permits, building permits, landscape and interior designers for both indoors and outdoors and much more! The biggest benefit of building a centre from the beginning is you can basically design the centre of your dreams.
• Pre- Existing Centres - There are many childcare centres that are available to buy that are already running. They have staff, children and families and everything within the centre has already been settled. Once you purchase the centre you will be the owner and take over responsibility. One of the benefits of purchasing a pre-existing centre is that all the work has already been done. All you really need to do is maintain it.
• Franchising Centres - In the childcare business there is some stiff competition out there when it comes to running a childcare business. Instead of being a competitor you can purchase a franchise. A franchise is basically running a centre based on the main centre. Initially start-up costs will be involved however you will receive all that you need through support services based on the main centre. All documentation, policies, procedures etc. will be the same as the main centre itself. If you have been working at a particular centre and like the way it is run then this is a great opportunity for you to start a franchise rather than starting from scratch.

No matter which option you choose you will need to spend a bit of money and it varies depending on a number of factors. It’s probably best to start off with a budget on how much you are willing to spend on the centre. It can range anywhere from $200,000 and more. Locality is also a big factor. City areas and surroundings are going to be more costly than rural areas. Another factor to consider is the size of the centre. It will cost less to build or maintain a centre for a smaller amount of children (less than 60) than a larger centre (more than 60). However you need to consider the needs of the community before determining how big the centre will be.

When starting a childcare business and running a centre, it’s important that the centre is insured. Insurance protects against accidents, personal injury, legal action and property damage. Insurance types, how much you need and requirements depend on the type of service you are providing.

Under the Family Assistance Legislation of the Department Of Employment, Education and Workplace Relations for education and care service the following insurance must be provided:

• Public Liability – not less than $10 million for each and every claim
• Workers Compensation - required by law
• Professional Indemnity – not less than $5 million per claim

Depending on the type of childcare service you are providing you can also consider purchasing the following types of insurance:

• directors’ and officers’ liability (for community-owned services)
• personal accident insurance for volunteers
• property damage
• fire and theft
• money insurance
• car insurance (for damage resulting from work related activities)
• fidelity guarantee
• electronic equipment

It’s best to seek support from an Insurance company authorised by the Australian Prudential Regulatory Authority on the types of different insurance that your service may require.

Legislative Requirements and Responsibilities

It’s imperative that when starting up a childcare business that you are aware and are up to date with the current legislation and law that is implemented throughout Australia. Even if you are an existing educator wanting to start up a childcare business and are familiar with the legislation and law you should understand it completely.

Throughout Australia most services (LDC, OSHC, FDC), in most states, are regulated by the National Quality Framework. The NQF includes:

• the National Law
• the National Regulations – Education & Care Services National Regulations
• a National Quality Standard – for assessing the quality of the service
• The National Quality Framework provides early childhood settings support in improving the quality of education and care, improve program delivery that impact child’s learning and development and assist families to make informed choices about which services suit their child best.

Under the National Regulations services must meet specific operational requirements including:

• Educational Programs & Practice
• Building Standards & Physical Environments
• Staffing Requirements
• Policies, Procedures & Records

For more information on NQF: http://www.qld.gov.au/education/childcare/providers/pages/legislation.html

The information and details provided here is just the beginning of the long road ahead of starting your own childcare business. It should be used as a starting point to make an informed decision about whether or not it is possible for you to own a childcare service. If you are willing to spend the money, go through all that’s necessary, you can create a fantastic service for children to learn and develop. Also, a childcare business is less likely to fail as the need for childcare centres are in high demand. So, good luck and take a chance to do something wonderful for the community…

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How to start your own daycare center: A step-by-step guide

Are you wondering how to start your own daycare center? You have arrived at the right place!

With more and more parents working outside the home, the need for daycare centers is at an all-time high. Children, particularly those who are pre-school aged needs to be taken care of. This could be in the form of nannies, babysitters, daycare facilities, etc. However, most Aussie parents with kids under the age of 5 prefer an organized daycare center for their kids.

This is why starting your own daycare center is a lucrative opportunity. But starting a new business can be a tricky task so we’ll guide you on how to open your daycare center. This article will tell you all you need to know about how to create your own daycare all by yourself. Also, starting a daycare center can be very fulfilling both emotionally as well as financially.

So if you want to know how to start your own daycare center in Australia, read on!

Why Should I Start a Daycare?

Before you learn how to open your own daycare center, you may think about why should you do so and if it’s the right career path for you. Here is why you should start your own daycare.

Building a daycare can be daunting, but it can also be very fulfilling. While success is immeasurable and subjective, many daycare business owners find joy in their startup journey. So it could be your passion for kids or to help out parents, there can be several reasons to open a daycare.

What’s crucial is that you also need to take into account your unique personal objectives for wanting to open a daycare. These motives will then drive you to go after your dreams. Even though it may not be a simple task and will require effort on your part, the payoff is definitely worth all of it.

The advantages of starting a daycare

If you are unsure if starting a daycare is the right decision for you, here are some advantages for you to consider:

• Emotionally fulfilling: Working with kids requires patience and can eventually be very emotionally rewarding.
• Financial independence: Learning how to create your own daycare center allows you to be in control of your income rather than depending on a paycheck.
• Personal child care: If you have a child of your own, you can take care of them while running your childcare. This will not only save you money but also give your child a chance to interact with other kids.
• Continual education:  Knowing how to create your own daycare center can also provide you with new opportunities in the childcare sector . You may be offered job positions and you can even pursue additional relevant education.

What are the costs of opening a daycare center?

These are the costs that you must consider before opening a daycare center

The average startup cost for a daycare facility is $10,000 to $30,000. This cost varies largely based on if you’re opening a home-based daycare or leasing a separate place for your daycare center.

If you don’t have that much money in your bank account, don’t freak out. There are several grants and loans that you can avail of to start your child care center. Plus, many local businesses will extend financial assistance to help out new child daycare centers. This is why you can consider reaching out to your locality for financial help.

Now, let’s see how to start your own daycare center from scratch!

16 Steps to Starting a Daycare Center

Starting any small business, in general, requires time, effort, and patience. We have highlighted the steps that’ll guide you on how to open your own daycare center. But as you already know— there is no one “perfect” way to ensure success. We can only map out the journey, but it’s you who’ll have to learn and unlearn the ways leading up to the success of your daycare center.

Here is a comprehensive step-by-step on how to open a daycare center in Australia:

1. Learn About Daycare Licensing Requirements

In order to start your own daycare center, you have to duly qualify the licensing requirements to conduct your business legally. Licensing is a must to legitimize your small business and avoid getting into any legal trouble.

2. Consider Taking Early Childhood Education Classes

As the next step, you can consider getting a certificate in early childhood education . You can easily find in-person classes at any local community college or opt for an online course. With the help of this degree, you’ll acquire a better understanding of how kids think and need, and the useful ways in which you can care for them.

3. Create a Daycare Business Plan

To open any kind of small business, having a business plan surely helps. Creating a proper business plan will help you establish realistic goals for your startup, build a business structure, decide on your services, etc. I

n the case of a daycare business, you’ll set your daycare’s mission statement, mode of operations, staffing requirements, and financial budget. This business plan tracks your progress as a daycare owner and continually strives for success.

4. Find a Location for Your Daycare

If you plan to run your daycare at your home, this step is easy to figure out. If that’s not the case, you’ll need to search for a location to open your daycare facility.

5. Get Insurance for your daycare business

Most daycare centers require different kinds of insurance to keep children and businesses guarded. These insurance policies mostly include workers’ compensation, property, liability coverage, business insurance, etc.

6. Seek Out Grants and Funding

As we previously mentioned, there are many kinds of costs related to building a daycare facility. If you don’t have the funds required to cover the initial costs of your startup, you’ll need to explore funding options.

(6.1) Costs Associated with Starting a Daycare

There are many things you’ll need to purchase or rent to get your business started. These costs typically include:

•  Daycare space rent
•  Play equipment for both indoor and outdoor
• Cleaning supplies
• Art supplies
• Care supplies for kids (diapers/wipes etc)
• Business PC
• Licensing cost
• cups, bottles, plates, etc.

7. Prepare Your Daycare Center

Once you have decided on a location and secured the required materials and equipment, you need to plan out your daycare facility. Start with cleaning your facility and sanitize with a good disinfectant. Then, follow the necessary steps to childproof the space as per the ages of the children your center will be tending to.

8. Draft up a Contract

For any small business owner, it is crucial to have a contract in place. In the case of daycare centers, the parents that visit your facility are your clients, and you will want to have a proper contract in place to guard yourself against any legal troubles.

9. Develop policies and procedures

You will also need to set policies and procedures for the parents that visit your daycare and your assistance staff. These policies include an emergency plan, safety protocols, privacy settings, and a code of conduct for your facility.

10. Research Possible Tax Credits

If you open an in-home daycare, you may qualify for certain tax reductions as you’re making use of your home for business purposes. This may allow you to write off your housing cost partly. This is also applicable when your daycare center is used as a family room after hours.

11. Hire staff to help you run your daycare

When you first open your daycare center, you may just be a one-man army, so you can easily avoid the cost of hiring unnecessary help. But as your center starts running efficiently over time, you’ll need to hire people to care for the kids throughout the day.

12. Market your daycare business and seek applicants

There are several methods to popularise your daycare. One way is by creating flyers and posting these around your local area—at businesses, schools, convenience shops, and cafes. You can also consider running paid ads on Google or Facebook to attract families from your local community.

13. Invest in child care software

One of the most effective ways to start a daycare is to take make use of the modern daycare technologies that can be easily purchased. With the help of childcare software, you can streamline your managerial tasks. This gives you more time to provide parents with quality childcare facilities.

14. Promote Your Daycare on Social Media

Make a business Facebook page to share more info about your daycare center, post client testimonials, and keep your clients updated with new events at your center. You can also make use of Instagram and LinkedIn profiles by using targeted hashtags and inviting families in your locality.

15. Provide Top-Quality Care

The success of any daycare center depends on its ability to offer top-notch care to your client’s children. If the little ones at your center are efficiently cared for and look forward to coming to your daycare, you’ll surely generate more referral business. Child care must have all the top skills to provide top-notch quality care.

16. Manage Your Business Finances

You also need to properly manage your business finances. Doing that takes more than just tracking revenue and expenses. You also have to plan for taxes and make well-thought decisions when it comes to the proper allocation of your funds.

Start the daycare center opening process today

Now that you know all about how to start your own daycare center, don’t waste more time being on the fence. Start the process today!

Opening your own daycare business can be tough but also highly rewarding. The process can be made easier by having a general understanding of how and where to start. We hope this guide has offered some insight on how to get going and launch a daycare center of your own!

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The essential components of a successful childcare centre business plan

Childcare or Daycare Centre Business Plan

As any business owner knows, a solid business plan is essential for success. But when it comes to a childcare centre business plan, there are specific components that must be included in order to ensure the success of the business. In this blog, we will discuss the most important components that should be present in your childcare centre business plan.

• Executive Summary
• Marketing Plan
• Operational Plan
• Financial Projections
• Competitive Analysis
• Risk Assessment

1. Executive Summary

The executive summary is a brief overview of your day care centre business plan. It should include your mission statement, business objectives, the target market you are serving, and a summary of your financial projections. It is important to make this section concise and to the point as it is the first thing a potential lender or investor will read.

Contact Information Ensure you provide comprehensive contact information. Include your name, phone number, physical address, email address, and any other pertinent details. This information makes it easy for potential partners and investors to reach out to you.

Business Concept Detail the specifics of your childcare business, whether it’s a one-person babysitting service or a 24/7 child care facility. Describe your staff size, the services you offer, provide an overview of daily operations, and outline the necessary operating licenses you possess or intend to obtain.

Business Structure Clearly list the owners, partners, managers, and employees involved in your venture. Explain the organizational structure and how your business will function. This section should also encompass your target demographic and basic marketing strategies.

Mission Statement Define the core purpose driving the establishment of your childcare business. This statement encapsulates the fundamental values and goals that guide your venture, emphasizing its commitment to providing exceptional care and support to children and families.

2. Marketing Plan

A successful childcare centre relies heavily on its marketing efforts. In this section, outline how you plan to market your business to potential families and the community. This could include local advertisements, promotional events, or partnerships with other businesses in the area. As you craft your marketing plan, consider the following elements:

Market Analysis Begin by providing a concise overview of the childcare landscape in your area. Determine whether your business will be one of many daycares in close proximity or if you are addressing a childcare deficit within the community. Dive into neighborhood trends, assess your competition, and examine the average cost of childcare services in your locality. Additionally, detail information about your target clientele and elaborate on how your childcare services will cater to their specific needs, thereby demonstrating the immense potential of your business.

Business Niche Define your unique position within the childcare industry. Whether you specialize in a particular age group or offer evening care services, articulate how your business carves out a distinctive niche and sets itself apart from the competition. Highlight the specialized services you provide that will resonate with your target audience.

Price, Product, Promotion, Place, and People To succeed, you must ensure that your childcare business aligns the right pricing and product offerings with the right people in the most effective manner. Analyze market data and demographic insights to formulate marketing and advertising strategies that resonate with your target clients. Address the five key elements – price, product, promotion, place, and people – to optimize your approach and ensure your childcare business reaches the right audience effectively.

3. Operational Plan

The operational plan describes how your business will operate on a day-to-day basis. This section should include information on staffing, scheduling, and the services that you will offer. It is important to be detailed in this section as it will help you identify potential challenges and give you a plan of action for dealing with them. Staffing Outline your staffing requirements, including the number of employees, their roles, and qualifications. Clarify the hiring process and your approach to training and development.

Scheduling Define your operating hours, including weekdays and weekends, if applicable. Discuss any seasonal or special schedule adjustments. Ensure a smooth workflow by detailing staff shifts and responsibilities.

Service Offerings Provide a comprehensive list of the childcare services you intend to offer. Specify age groups, programs, and any specialized offerings. Explain how these services align with local demand and regulations.

4. Financial Projections

Your financial projections will be based on your operational plan, so it is important to have a clear understanding of your business operations before development . This section should include a balance sheet, income statement, and cash flow statement. You will also want to include specifics on how much capital you will need to start the business and how you plan to use it.

Tax Clearly outline your childcare business’s legal structure, such as whether it’s a company, partnership, sole trader, or trust, ensuring compliance with Australian taxation regulations. A well-defined tax plan is essential for navigating the Australian tax landscape effectively.

Insurance Compliance Thoroughly assess the insurance requirements specific to the Australian childcare industry, including risk assessment, liability coverage, and legal obligations. Ensure that your business is adequately insured to meet local regulatory standards.

Budget Develop a comprehensive budget that accounts for all financial aspects of your childcare business, including personnel costs, equipment procurement, supply expenses, professional fees, and other relevant expenditures. Craft both monthly and annual budgets, accompanied by a cash-flow forecast tailored to the Australian market to maintain financial stability.

Managing Market Fluctuations: Address the unique market dynamics and fluctuations that childcare businesses in Australia may encounter. Create contingency plans to effectively navigate unexpected changes and fluctuations in demand, while adhering to local regulations and standards.

5. Competitive Analysis

A competitive analysis will help you identify other childcare centres in your area and the services that they offer. This will allow you to identify gaps in the market and give you an idea of how to differentiate yourself from your competitors. You should also be aware of potential threats to your business, such as increased competition in your area.

Identifying Market Gaps Research the daycare centers in your area to pinpoint the gaps and unmet needs within the market. Use this insight to strategically position your childcare business to meet these demands effectively.

Setting Yourself Apart Understanding your competitors allows you to carve out a unique identity for your childcare center. Craft a compelling value proposition that highlights what sets you apart from others in the field.

6. Risk Assessment

A risk assessment is essential for any business plan. Identify potential risks to your business, such as changes in the economy or an increase in competition. Develop a plan for handling these risks and include this plan in your business plan.

Anticipating Threats Be vigilant about potential threats, including the emergence of new competitors in your locality. Prepare contingency plans to safeguard your market share and reputation.

Staying Informed Continually monitor the competitive landscape to adapt and refine your business strategy.Stay attuned to evolving trends and emerging childcare services in Australia.

In conclusion, a successful daycare centre business plan should include a combination of operational, financial, and marketing strategies. It is important to be detailed, concise, and realistic in developing your plan. Remember that your business plan is a living document that should be updated regularly to reflect changes in the market and your business operations.

By following these steps, you can create a comprehensive childcare or daycare centre business plan that will help you launch and grow your childcare centre.

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Child Care Business Plan Template

Written by Dave Lavinsky

Download our Ultimate Child Care Business Plan Template here >

What Is a Business Plan?

Why You Need a Business Plan

If you’re looking to start a child care business or grow your existing one you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your child care in order to improve your chances of success. Your child care center business plan is a living document that should be updated annually as your company grows and changes.

Source of Funding for Child Care Businesses

With regards to funding, the main sources of funding for a child care business are bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

The second most common form of funding for a child care is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan. Venture capitalists will not fund a child care business.

Finish Your Business Plan Today!

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of child care business you are operating and the status; for example, are you a startup, do you have a child care that you would like to grow, or are you operating a chain of child care businesses.

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the child care industry. Discuss the type of child care you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.  

Company Analysis

In your company analysis, you will detail the type of child care business you are operating.

For example, you might operate one of the following types:

• Home-Based Child Care: this type of child care business operates out of your home and typically has one or two caregivers on staff.
• Child Care Center: a child care center operates out of a commercial building. It typically has multiple staff and caregivers and can serve many, many children.
• Pre-School Child Care: a child care business that primarily serves preschoolers
• School-Age Child Care: a child care business that primarily serves school-age children.

  In addition to explaining the type of child care you operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new program offerings, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the child care business.

While this may seem unnecessary, it serves multiple purposes.

First, researching the child care industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards child care that includes transportation, it would be helpful to ensure your plan calls for such a service.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your child care center business plan:

• How big is the child care business (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the local or national market?
• What trends are affecting the child care industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your child care. You can extrapolate such as figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your child care center business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: soccer moms, young families, baby boomers caring for grandchildren, etc.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most child care businesses primarily serve customers living in their same city or town, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other child care businesses.

Indirect competitors are other options that customers have that aren’t direct competitors. This includes keeping children at home and/or after school programs among others.

With regards to direct competition, you want to detail the other child care businesses with which you compete. Most likely, your direct competitors will be child care businesses located very close to your location.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• What child care services do they offer?
• What times are they open?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

  With regards to the last two questions, think about your answers from the customers’ perspective.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide superior child care services?
• Will you provide child care services that your competitors don’t offer?
• Will you offer better pricing?

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a child care business plan, your marketing plan should include the following:

Product : in the product section you should reiterate the type of child care that you documented in your Company Analysis. Then, detail the specific services you will be offering. For example, will you over technology or exercise classes to the children?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the menu items you offer and their prices.

Place : Place refers to the location of your child care. Document your location and mention how the location will impact your success. For example, is your child care located next to a heavily populated office building, or gym, etc. Discuss how your location might provide a steady stream of customers.

Promotions : the final part of your child care marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Social media marketing
• Reaching out to local bloggers (particularly “mommy” bloggers) and websites
• Local radio advertising
• Banner ads at local venues

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your child care such as discussions with prospective new customers, procuring supplies, keeping the child care center, etc.

Management Team

To demonstrate your child care’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in the child care business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in child care businesses and/or successfully running retail and small businesses.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you serve 10 children per day or 50? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a company approached you with a massive $100,000 child care contract, that would cost you $50,000 to fulfill. Well, in most cases, you would have to pay that $50,000 now for employee salaries, etc. But let’s say the company didn’t pay you for 180 days. During that 180 day period, you could run out of money.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a child care center:

• Child care center build-out including design fees, construction, etc.
• Cost of fixtures like tables, chairs, couches, etc.
• Cost of equipment used like computers and televisions
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your child care center design blueprint or location lease.  

Putting together a business plan for your child care is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the child care business, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful child care.

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How to start a childcare business

According to IBISWorld, the household services sector represents a new frontier with regard to business opportunities, as time-poor, cashed-up consumers increasingly outsource household duties.

“Everything we traditionally did for ourselves – including cleaning, childcare and even beauty – will be increasingly outsourced [in the future],” IBISWorld says.

Parents in particular will find it difficult to juggle their many responsibilities, leading to an increased demand for quality childcare.

What is it and who is it suited to?

Childcare, or daycare, refers to the care of a child during the day by a person other than the child’s legal guardians. It is typically an ongoing service, particularly for working parents.

The service is provided in a specialised childcare facility or in the carer’s home, and can take on a more formal structure with education, child development, discipline and even preschool education.

You need to be extremely patient, energetic and enthusiastic to work in this industry. If you think you can cope with the tears and tantrums, you’re in the right place.

Rules and regulations

In order to work with children, some states require a Police Check while others require a Working with Children Check. You may also face criminal history screening or safety screening.

With regard to your business premises, ensure everything is safe and secure; any furniture and equipment must be well maintained and conform to safety standards.

You should also seek advice from your local council to ensure you comply with legal obligations relating to health and safety.

Research and competition

It’s important to note that by 2014, every childcare worker in Australia must have, at a minimum, a Certificate III in Children’s Services.

Also, half the staff must have at least a TAFE childcare diploma, and every single childcare centre must have a degree-qualified teacher onsite all day. So if you don’t have the right experience, make sure you appoint someone who does.

You then need to check out the competition, including other childcare centres, playgroups, mother’s groups and nannies.

You need to determine whether there is enough demand for another childcare service. Use your local library, council and the internet to research your area in order to gain a better understanding of the demographic.

You should also think about how many children you want to look after in your centre as this will affect the venue, staff numbers and pricing.

If this is your first venture, don’t try and compete with the chains that offer places for over 100 children. But to be viable, you will probably need to have at least 25 to 30 places.

Once you have looked at the competition and defined your ideal customer, you should start to get a feel for what to charge. Prices will vary depending on the demographic you’re catering to but also how old the children are. For example, it costs more to look after babies than toddlers.

Costs and earnings

You will obviously need to source suitable business premises. If you decide to rent, make sure you have a reasonable lease on the property. It will be very hard – and expensive – to move after only two or three years in a property.

If you are making structural alterations to a building that already exists, you will need to factor in the cost.

The building might also require some work to bring it up to fire safety standards. For example, ensuring you could evacuate all the children in an emergency.

You should also ensure that there is adequate security such as extra locks on doors and windows to keep strangers out and children in.

You should also budget for toys and equipment. And don’t forget that with 25 children playing all day long, the equipment will wear out more quickly than normal.

Setting aside a regular amount for replacement should help when the bills start rolling in. You can also save by buying secondhand, particularly in the beginning, providing everything is thoroughly disinfected before use.

Once you have established the venue and a reputation in the area, you should find that the places fill up fairly quickly.

With more parents either returning to work or ramping up their work commitments, good quality childcare is in short supply in many areas, which means parents are prepared to pay high prices.

To put a child in care for an entire day can cost between $55 and $125.

But even when your centre is full, you are likely to find that much of your fees from the children go on fixed costs. Staff and premises are likely to be the biggest costs but food, nappies and equipment all add up.

Your costs will inevitably rise and, when you try to put your prices up, you are likely to hear about it from parents. You should also remember that many of the costs are fixed, so expansion is the only way to grow the business.

Based on the competitive nature of the business, anything above breaking even could be considered a success.

Remember also that because of the relatively high start-up costs and low profit margins, it could take several years before you are close to making back what you originally invested.

An average day

According to the Aussie Childcare Network, your duties and responsibilities as a childcare worker could include the following:

• Work with staff members to manage the day-to-day running of the centre.
• Plan, supervise and engage in children’s activities and mealtimes.
• Maintain a clean and healthy environment for all children; allocate daily cleaning duties or outsource a cleaner.
• Communicate with parents including informing them of their child’s progress, and facilitate meetings with both parents and staff.
• Perform administrative duties, namely account-keeping.

Useful contacts

National Childcare Accreditation Council

1300 136 554

[email protected]

Family Day Care Australia

1800 621 218

[email protected]

Aussie Childcare Network

www.aussiechildcarenetwork.com

Australian Government Small Business Support Line

1800 777 275

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Key Considerations When Running a Childcare Business

By Meryem Aydogan Law Graduate

Updated on March 15, 2023 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

Applicable Laws and Regulations

Type of service, licences and approvals, find qualified staff, local government and council approvals, food hygiene and preparation, illnesses and health concerns, necessary legal documents, key takeaways, frequently asked questions.

Running a childcare business is equal parts exciting and daunting. You need to consider how you will market your business, find qualified and motivated staff, set up a valuable learning environment and meet parental expectations. You should also be aware of your legal obligations. Specifically, you may need a licence or approval to operate your childcare business. This article explores how you can fulfil your obligations and licence requirements when running a childcare business.

The National Quality Framework (NQF) provides a national approach to regulation, assessment and quality improvement for early childhood education and care services across Australia. It applies to childcare services that are predominantly offered outside the child’s home. The NQF includes:

• the establishment of a national body to regulate, guide and implement the reforms, called the Australian Children’s Education and Care Quality Authority (ACECQA);
• a set of standards for each service in Australia known as the National Quality Standard (NQS); and
• the enforcement of the NQS through the overarching national framework governing each state and territory. An exception is Western Australia, which consists of the Education and Care Services National Law Act 2010 (National Law) and the Education and Care Services National Regulations.

Most states and territories have adopted the National Law through further legislation, such as:

• Children (Education and Care Services National Law Application) Act 2010 (NSW); and
• Education and Care Services National Law (Queensland) Act 2011. 

Victoria has adopted the National Law without further legislation.

As a childcare business owner , the laws and regulations applying to you will depend on the type of service you are providing. There are a number of services classified as early childhood education and care options, including:

• centre-based childcare or long daycare – provided in a more formal centre setting;
• private home or family day care  – a more flexible type of care provided in a carer’s home;
• after school care or outside school hours care  – provided in a more formal centre setting before and after school hours; and
• in-home care  – provided by educators, generally in the child’s own home.

To operate a childcare business in Australia, you need:

• provider approval;
• service approval; and
• supervisor certificates.

There are strict regulations in place when operating a childcare business in Australia. Before starting your business, you must ensure you have applied for the proper approvals. 

A provider approval will determine whether you are fit to run a childcare business. Once you have provider approval, you can then apply for service approval.

Each state and territory has its own regulatory authority which will assess you against a set of standards. Generally, you will be evaluated based on the following:

• your compliance history before your current application, if you are an existing or previous approval holder;
• relevant results from Working With Children Checks and national criminal history checks; and
• the documentation you have provided to support your application.

Following the assessment, you may be required to:

• attend information and training sessions;
• perform knowledge assessments; and
• attend department interviews.

You will then need to prove to the relevant regulatory authority that you are a fit and proper person. Additionally, you must satisfy that you understand your obligation to ensure the health, safety and well-being of the children in your care.

If your application is rejected and you believe an error has been made, you may be allowed to appeal the decision.

Once you have the appropriate licences, the next step is finding qualified childcare workers . They need to have completed their Working With Children Check and mandatory notification training.

You and your staff need to be vigilant and aware of your obligations under child protection laws, especially in the states and territories. For example, the Children and Young Persons (Care and Protection) Act 1998 in NSW, Children, Youth and Families Act 2005 in Victoria and Child Protection Act 1999 in Queensland. 

It is not necessary for all of your staff to have childcare qualifications, although it is best practice to employ people who are suitably qualified in all aspects of childcare. The NQF states that 50% of the educators in a childcare business must have an approved diploma-level qualification. The minimum qualification to run a childcare business is a Certificate III in Early Childhood Education and Care. You should also be equipped to administer CPR and first aid.

As a business owner, you are responsible for checking each staff member’s qualifications and maintaining records of ongoing training and renewal periods.

As an employer, understand your essential employment obligations with this free LegalVision factsheet.

Operating a childcare business requires approvals from local governments and councils. Depending on the service you provide, you may need planning permits from the council before you can start operating. 

Furthermore, areas within your council are ‘zoned’ to allow for certain types of infrastructure, so you may need to seek approval to run a childcare business in your proposed site.

When developing a menu for your childcare business, you must meet food hygiene and preparation standards . Food Standards Australia and New Zealand (FSANZ) is a government body that develops food standards across both countries.

FSANZ issues the Food Standards Code and provides extensive resources to childcare businesses about:

• risk management;
• allergy advice; and
• food recalls.

Additionally, local governments and councils may inspect the premises of the childcare business. This is to ensure the food storage, preparation and service processes meet hygiene standards and food safety guidelines.

In addition, you should be aware of federal and state-based health department rules regulating what childcare businesses should do in the event of illnesses or health concerns. The Australian Department of Health (ADH) provides statements regarding health advice for childcare businesses. For example:

• strategies your childcare business should implement; and 
• reporting requirements you should comply with if a child becomes ill in your care. 

Before starting any business, it is essential that you have the required legal documents in place. Depending on the type of childcare service you provide, you may have different legal requirements. However, the following documents are a good place to start:

• employment contracts/independent contractor agreements;
• code of conduct and team handbook;
• service terms and conditions;
• non-disclosure/confidentiality agreements;
• privacy policy;
• vendor agreements; and
• intellectual property protection.

When running a childcare business, your primary responsibility is to the children in your care. You must ensure that you:

• hold the appropriate approvals;
• hire qualified staff; and
• keep updated with government health advice and standards.

You should also abide by your obligations under the legislative regimes governing the operation of childcare businesses. If you need help getting your approvals or setting up your service, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page . 

A Working with Children Check (WWCC) is a requirement for anyone who works or volunteers in child-related work in NSW. It involves a National Police Check (criminal history record check) and a review of reportable workplace misconduct. The check lasts five years and undergoes continuous monitoring, even if the check holder moves jobs.

There are two main approvals required to operate a childcare business in Australia:

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How much does it cost to open a childcare centre?

Childcare centres are big business in Australia, with our growing population fuelling huge and ever-increasing demand for new centres in every state and capital city.

So for those who want to get in on the action, what does it cost to open a childcare centre?

Experts estimate the average cost to build and open a childcare centre ranges between $700,000 to $800,000, and can be as high as $1 million – and that’s not including buying the land to build it on.

Here’s a starter guide to how much money you’ll need to get your childcare centre off the ground.

When purchasing land in order to build your childcare centre, the location of your proposed property will greatly impact what your final costs are.

If you’re opening a childcare facility in a capital city, it’s highly likely that the land will be the single biggest expense in the entire process.

Burgess Rawson childcare specialist Adam Thomas says a development site with zoning to allow a childcare centre will generally range “between $1 million and $4 million” on the commercial property market.

Location is a huge factor in the cost of opening a childcare centre.

Construction costs

The cost of building a childcare centre can vary greatly based on its size and scope.

But Thomas says constructing the building itself generally costs around $600,000 to $650,000 for an average-sized property.

And while converting or retro-fitting an existing commercial property as a childcare centre might seem like a cheaper way to do it, Thomas says that’s not always the case

“It’s almost more expensive to retrofit a building for childcare use – retrofitting isn’t really cost saving,” he says.

“If you’ve got a complementary use, like an office building where you’ve effectively just got your four walls and plenty of car parking, then you’re probably OK. But it’s very hard to retrofit a childcare centre from a medical centre or aged care, because it just doesn’t work with the outdoor floor space ratio that you require.”

Operational equipment

With dozens or even hundreds of children to manage, childcare centres are major logistical operations that require significant equipment to keep them running.

With food preparation equipment, playgrounds, other equipment and even technology playing an increasing role, there are major costs involved in the fitout.

“You can spend as much as $100,000 to $150,000 on operational equipment,” Thomas says.

Leasing a childcare centre doesn’t require the same initial financial outlay as building one.

Rental shortfall

Childcare developers and operators borrow money all the time in order to build childcare centres.

But if construction times blow out, every week that the property remains unopened represents a rental or income shortfall that needs to be factored into your cost.

With some centres leased for between $5000 and $10,000 per week, that lack of income can start to add up.

The cost of leasing

Of course, you can open a childcare centre without building one.

Leasing a property as a childcare centre won’t require anywhere near the same financial outlay.

For a smaller childcare centre with around 80 places in a regional area, operators can expect to pay an average of around $200,000 in annual rent.

At the upper end of the regional market, rents can reach upwards of $300,000, while for larger metropolitan childcare centres, some operators are paying more than $500,000 in annual rental costs alone.

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A Brief Guide to Plan Your Childcare Operations

A Brief Guide to Plan Your Childcare Operations starts with drawing up a business plan for your childcare business is essential, irrespective of what size or scale your business is off. A smart business plan takes operational needs of your childcare service into account, ensuring a smooth growth throughout. Policies & procedures are two fundamental decision-making tools to help set goals & hopes for your childcare venture. Most of your policies & procedures might lead to financial targets, including your annual turnover & viability of the business. Early Learning Management will help you prepare & operate your business. Early Learning Management will walk you through the step-by-step process of starting the business, from assessing the need for child care services to selecting the service, setting up your business & preparing for opening day. Early Learning Management (Early Learning Management) specialises in optimal childcare operations.

Exacting operational procedures do require in-depth knowledge from diverse disciplines including human resource management, finance, marketing & sales, operations management & many more. This might sound like a mammoth of tasks to you, but for the seasoned professionals of Early Learning Management, it is what they do best! Followings are the essential elements that get into your planning for the childcare operations –

Regulatory Obligations Impacting Childcare Operations

An expert on the field knows the ins & outs of the sector. It’s indispensable for you to learn about local authority legalities for operating a childcare service, including safety regulations & licensing. In specific instances, there are regulations on numbers of children one should provide care to, as well as necessary training & certifications that you need to possess including Diploma/Degree in CPR or early childhood development . A person or an entity operating a childcare service must hold a provider approval & a service approval issued by the regulatory authority. A service approval is granted subject to conditions—the service must, for example:

• ensure the safety, health & wellbeing of the children,
• meet the educational & developmental needs of the children &
• comply with any conditions prescribed by the National Law or in the Regulations, or by the regulatory authority.

Managing Human Resource Concerns for Your Childcare Service

There are human resource concerns to be considered, like staff qualification & creating the payroll. Managing the human resource element in any childcare service business can be complex & challenging. Each of us is unique – we have our own personality, approach to life & of course, work ethic. The HR factor in a childcare service must encompass the educator to child ration at all times. The National Quality Framework (NQF) sets out the minimum qualification & educator to child ratio requirements for children’s education & care services.

Day-To-Day Operations Management

Next thing to be taken into account is how you propose to operate your childcare facility. You will want to work out difference operational concerns including – services to put on offer, operating hours, course materials, contracts/agreements, children’s meal etc. If it’s a home-based facility, you will need to determine if you would require any sort of modification in your existing set of the property including remolding of sharp edges, fire extinguisher, fences, bathroom tiles & the like. Alongside, you better consider buying liability insurance to secure your property against calamities.

Each of the points above has different terms of duration. Developing them efficiently will not only guide you through but also motivate as you’ll learn about where your business will be in the next 5-10 years.

HAPPY PLANNING!

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Childcare Centre Start-ups

If you’re scratching your head over the tricky details of starting up a new childcare centre, you need help.

Are you lost on where to start with setting up your new childcare centre?

There’s so much to think about before you even begin your new build. Once started, project management demands your fulltime attention.

Where do you build your childcare centre? How do you know there is a demand in that area? How will you know you’re meeting all the requirements a centre ( and a new build) must meet?

If you’re feeling like you have more questions than answers, you need our help.

We help you stay on track with your childcare centre start-up.

We can handle the project management for you. We take care of every aspect, from site suitability inspections through to centre openings.

Where to start

We can manage finance, funding, and employee recruitment and contracts. We can provide you with written policy and procedures guides and monitor compliance across the range of legislative requirements. We work with you to create your marketing and branding strategies. We’ll even start right at the beginning if you need us to, from site assessment to analysis of your business plan and design of your centre layout.

Whether you just need help in one area, or full childcare project management, we can tailor our service to meet your individual needs.

The first step is for you to meet with our consultant either face-to-face, via Zoom or by phone. Together we’ll go over your areas of need, look at the most cost-effective way to achieve your goals and then we’ll tailor a proposal and quote for you.

Save yourself time, effort, and worry. The Giggletree experts will ensure that all aspects of establishing a childcare centre are covered.

For help with your childcare centre start-up or project management of your builds and centre improvements, call on the experts.

Don't bother with copy and paste.

Get this complete sample business plan as a free text document.

Day Care Business Plan

Start your own day care business plan

Safe Kids Child Care

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">, opportunity.

There are an increasing amount of families who have become dependent on two incomes, which has created the necessity of the child care industry. Increasing need means that there are more children that are in need of a safe enriching place to go. 

Safe Kids Child Care will succeed by offering its clients’ children a safe and secure care environment, and close personal attention. The goals of the center are dual-sided: to help parents feel good about the care of their children, and to make it a safe, educational, and fun experience for the child. 

Safe Kids Child Care has a focus on meeting the local need for child care services within the 10-mile radius of Lynn. Children are taken in flexibly on either a full-time or part-time basis.

Competition

There are over 300 child care providers in the local area. The larger commercial chain child care centers, such as KinderCare, have a majority of the market share. These larger chains compete well because of a good reputation among the consumer market. Safe Kids Child Care offers a lower staff to child ratio, which is appealing to most parents. Additionally, the company maintains child care fee levels that are 5-10% below the average of that of the large commercial chain child care fees.

 Safe Kids Child Care offers a lower staff to child ratio, which is appealing to most parents. Additionally, the company maintains child care fee levels that are 5-10% below the average of that of the large commercial chain child care fees.

Expectations

Safe Kids is an exciting opportunity that provides safe and secure child care to the Lynn, MA neighborhood. Safe Kids will reach sustainable profitability over the next three years. Through a combination of well-priced services, outstanding customer service, and a well seasoned management team, Safe Kids will quickly gain market share and a reputation as a premier child care provider.

Financial Highlights by Year

Financing needed.

We plan on having $40,000 to start our business. Each owner will contribute $20,000 to our opening costs. 

Problem & Solution

Problem worth solving.

The child care market is quite competitive in the Boston area. There are over 300 different facilities. There are two general types of facilities. The larger style is commercially run, typically a corporate franchise center. These facilities are both regional and national. Currently, the four largest child care facilities in the USA account for 29% of the market. There are also many different smaller locally run and owned faculties. While the largest facilities can host between 20-100 children, the locally run centers typically have a maximum capacity of 20 children.

Target Market

Market size & segments.

Full-Time Working Couples

The company wants to establish a significantly large full-time regular client base in order to establish a healthy, consistent revenue base to ensure stability of the business. Customer relations are extremely important, as it is imperative to keep the parents pleased in order to keep their children in the daycare center.

Part-Time Workers / Drop-Ins

Part-time workers and drop-ins comprise approximately 20% of revenues. While this market is not the primary focus, sufficient flexibility to handle this secondary market is important to producing supplemental revenues.

Current Alternatives

Our advantages.

Child care competitive edge is the facility’s efforts in obtaining all appropriate licensing and certifications. Additionally, thorough pre-hire background screenings are performed on all individuals before hired for employment.

Keys to Success

Keys to success for the company will include:

• Maintaining a reputable and untarnished reputation in the community. 
• Quality care. 
• Competitive pricing. 
• Flexible hours.

Marketing & Sales

Marketing plan.

The differentiating effort will be benchmarked customer service. A customer-centric philosophy will be infused within the entire organization. Safe Kids will spend extra money to attract and train the best employees. This is especially important because it is the employees that interact with both the children and parents and will have the best chance to impress them enough to turn them into a loyal customer as well as to be vocal in telling their friends about their positive child care experience. 

We will have a Social Media Campaign which uses Facebook and Linked in. We will have experts answer child care questions if the public wants. This gives the public confidence that we know what we doing. We will have customer reviews and allow our customers to talk to us. 

Safe Kids Child Care will make a significant profit through the excellent care of children. Even though Safe Kids charges less, the company will see profit within the first year due to beneficial word-of-mouth advertising. The company expects to double its’ clientele every six months, for the first 18 months.

Locations & Facilities

The facility will originally consist of a 1,300 sq. ft. house in a quiet, residential neighborhood. The yard will be fully fenced in, to ensure no one can either come in or wander away. The yard will be furnished with safe, entertaining toys, as well as a sandbox.

Milestones & Metrics

Key metrics.

Our Key Metrics are: 

• Facebook page views, Twitter re-tweets, and new potential clients calling saying that a current client referred them. 
• The number of children we take care of daily 
• The number of children that are signed up for the monthly care 
• The amount of training our staff has to take care of children and keep incidents down to zero. 

Ownership & Structure

This business will start out as a simple proprietorship, owned by its founders. As the operation grows, the owners will consider re-registering as a limited liability company or as a corporation, whichever will better suit the future business needs.

Management Team

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Personnel Table

Financial plan investor-ready personnel plan .">, key assumptions.

Our key assumptions are: 

• There are children from families where both parents work or need to work. The children need somewhere safe and enriching where they can grow and make friends while their parents get a chance to get back to him.
• Adults sometimes have emergencies and they need to have a place to leave their children when they can’t be with them 
• The community appreciates the it takes a village mentality. They appreciate we have resources and experts that will answer their questions. We assume they will come to us if they need help, we won’t go out of our way to advise. 

Revenue by Month

Expenses by month, net profit (or loss) by year, use of funds.

Our Start-up Expenses are $3000 including: 

Legal $1,000

Brochures $350

Stationery etc. $100

Activity Supplies $250

Food Preparation Supplies $300

First Aid Supplies $200

Cleaning Supplies $150

Nap Time Bedding $250

Sources of Funds

Our two owners will put up 20,000 dollars each, totaling 40,000. 

Projected Profit & Loss

Projected balance sheet, projected cash flow statement.

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Accounting for Child Care Centres

One of W. C. Fields most famous quotes is, "Never work with animals or children." While he secretly admired children we all know that running a child care centre or early learning centre presents a number of challenges. Temper tantrums and difficult parents aside, the industry is heavily regulated and you need to satisfy specific operational requirements around educational programs, building standards, physical environments, staffing plus policies, procedures and record keeping. The government regulations are stringent and apply equally to long day care centres, outside school care and occasional day care establishments. You need to have appropriate and adequate public liability, professional indemnity and workers compensation insurance in place and you also need to satisfy the Regulatory Authorities that you are a fit and proper person to be involved in the provision of early childhood services. This requires a history of compliance with current education (every childcare worker in Australia must have a Certificate III in Children’s Services) and care service law, a criminal history check and be clear of bankruptcy issues.

The childcare services industry is expected to post strong growth over 2016/17 with revenue projected to rise by 12% to reach an estimated $12.4 billion. Enrolment numbers are expected to rise with the industry benefiting from rising maternal workforce participation rates as government subsidies for formal childcare services encourage mothers to return to the workforce. The changing needs of working parents with a growing number working on a part-time or shift work basis will also continue to drive industry demand.

FINANCIAL ASPECTS OF CHILD CARE and EARLY LEARNING CENTRES

Over the years we have developed some benchmarks and key performance indicators for the child care sector which allow us to work with centre owners in setting and achieving realistic financial goals.

• Staff Costs are critical to success and generally in the region of 60-70% of Gross Revenue (with strong occupancy), although this figure can be lower with the owner working in the business. In a competitive environment it is often necessary for the owner to be on the staff to deliver a decent return on investment.
• Break even occupancy level varies based on the size of the centre, but can range as high as 95%.
• Government Carer to Children Ratios:
• - Age 0-2 Government regulations require 1 adult to 4 children
• - Age 2-3 Government regulations require 1 adult to 5 children
• - Age 3+ Government regulations require 1 adult to 10 children
• Staff must be in a mix and include Diploma, Cert III, & Bachelor Degrees.
• Centres need to follow the Australian mandated National Department of Education curriculum and need an Educational Leader Program person to cover for those in training – responsible for Portfolios, Observations, School reports, curriculum development.

• - Children aged 0-2  $110 - $140
• - Children aged  2-3 $100- $130
• -  Children aged  3+ $90 - $120
• There is no GST on child care fees.
• Centres should insist on a minimum attendance of 2 days per week
• Centres need 1-2 'floaters' (casual staff) available to cover for staff sick days and annual leave
• Child care grants are paid weekly/fortnightly directly to the child care centre by the Government up to 50% of the cost up to $7,500 per child (2017), per year. Grants can be paid directly to the child care centre each week or paid at end of year/ month/quarter to the parents. Not means tested, but parents must meet the Work, Training, Study test.
• When it's time to sell, centres generally sell in a range 3 to 5 times EBITDA Adjusted earnings (after normalising rent and owner salary to approx. $75k p.a.). Multiples of 5 are uncommon and are in most instances paid by larger groups rolling up centres in a consolidation play.
• A worked example of child care centre economics. A 50 child centre can invoice approximately $24,000 per week (with an occupancy at 90%). 20% Gross Profit (after salaries & rent) = $250k p.a and anticipated overheads/expenses are 7.5% ($94k), leaving a net profit before tax of $156,000. EBIT per annum. (12.5% Net Profit Ratio).

We work with child care centre owners to assist them in maximising net income through combined higher fees, higher occupancy, and managed staff costs, so that when it's time to sell, their centres value is at the top of the range.

As accountants, we operate in a very competitive industry just like the child care industry. We recognise the fact that your marketing could be the difference between gloom and boom and while we have a small firm personality, we have big firm capabilities. One feature that distinguishes us from other  accounting firms is our marketing expertise.

Most child care centres rely on their reputation and referrals to grow their business. While these ingredients certainly remain important, in the digital age you need to shift your marketing focus online. Increasingly local searches like ‘child care centre Manly’ are driving traffic to your website which is often the first touch point with a potential new family. As you know, in business, you only get one chance to make a good first impression and your website is your 'online shopfront' and silent sales person working 24/7 to promote your business.

Your brand should resonate with your target market and we can assist you with the development of your business name, logo and slogan, your corporate brochure plus we can guide you in writing blogs and newsletters plus help you harness the power of social media to win more referrals. If you aren’t using some of these marketing techniques your business probably won't reach its full profit potential.

Most importantly, we understand that business owners like you want more sales, more customers and more profit so we also give you access to one of the world’s most successful marketing programs, the ‘Business Growth System’. It contains more than 80 breakthrough marketing strategies supported by videos, templates, checklists and 2,500 pages of instructions. Access to this ‘vault’ of resources would normally cost you $500 per month, however, as a client of the firm you get unlimited FREE access. In addition, you also get access to the ‘Grow Your Business in 5 Days’ video training course that could have a massive impact on your future business growth. That's over $7,000 of valuable marketing tools you receive when you come on board as a client with us.

Child Care Centres are one of our specialist client groups and having mentored numerous business owners through the start-up phase of their business we have built a reputation as business start-up specialists.

Before you decide if you plan to start your child care centre from 'scratch', buy an existing centre or buy into a franchise operation there is some homework you need to complete:

• Check out the local competition and their pricing including other child care centres, outside school care, occasional day care establishments and nanny services
• You need to determine whether there is enough demand for another child care service in the area which includes researching the demographics of the local population
• Consider the size of the centre and how many children you want to look after as this will impact on the venue, staff numbers and pricing
• Once you have looked at the competition and identified your ideal customer, you should look at some price modelling which will vary depending on the location and the age of the children (for example it costs more to look after babies than toddlers).

Each of the options below have various pro's and con's and we can help you assess the risks and prepare cash flow budgets and profit forecasts together with a business and marketing plan for your centre.

• Building a Centre - presents a new range of new challenges because you also have to contend with building regulations and council permits, landscape designers, architects and interior designers (for both the indoor and outdoor areas) plus much more! You have to source and train staff and establish systems and procedures for a new centre.
• Buy an Existing Centre - There are many pre-existing childcare centres that come on the market for sale. They have staff and systems in place plus a database of children and families ready to market to but you have to take over management responsibility which means staff retention, administration and marketing become part of your role.
• Franchise Centres - It's a very competitive industry and there are a number of franchises in the child care centre industry who offer you a systemised approach that means you are buying into all their systems, training, resources, policies and procedures etc.

Our team of accountants have experience in helping child and day care centre owners get their business off to a flying start. We offer you experience, technical tax knowledge, marketing expertise and most importantly, an intimate understanding of the child care industry.

Starting a business is a bit like building a house that requires solid foundations. In a business sense these foundations include the right tax structure and accounting software, adequate and appropriate insurances together with a marketing plan and a lead generation website. Your choice of business structure is absolutely critical and there are a number of different options including sole trader, partnership, company and trust. When selecting the most appropriate structure for your business we always recommend you ‘start with the end in mind’ because Australian tax laws are complex and changing your business structure at some point in the future can trigger a capital gains tax event that could prove very costly.

Whenever we provide advice on business structures we always consider:

• Maximize Asset Protection
• Allow for the Admission of New Business Partners or Investors
• Comply with all Legal Requirements in your Industry
• The Risk Profile of Your Industry
• Consider Future Entitlement to Discount Capital Gains Tax Concessions

As a consequence, we often find the business structure is a compromise based on the relative importance of each of these issues.

Another brick in your business foundations is your choice of accounting software. Poor record keeping is one of the biggest causes of business failure in this country and up to date, accurate financial records let you to make informed business decisions. The wrong choice of software can be catastrophic and too often we find business owners produce what we describe as ‘computerised shoebox’ records that cause frustration, waste time and create additional fees. This conflicts with our mission of helping you slash the time and cost associated with bookkeeping and GST compliance.

You’ll find we support a range of different software options but we do have a preference for cloud based solutions like Xero , Saasu, Sage One and Quickbooks Online because of their flexibility and the fact that you can access your financial data via the internet and invite your accountant or bookkeeper to view your accounts at the same time. This means you can get bookkeeping support and valuable advice in real-time. You can also log-in anytime, anywhere on your Mac, PC, tablet or smart phone to get a real-time view of your cash flow. Your data is automatically backed up and users have access to the latest version of your financial data plus you never need to worry about installing software or program updates.

This checklist will help you identify all your potential establishment costs and these figures then feed through to our cash flow budget template and allow us to produce a projected profit and loss statement for your first year of trading. These reports can also tuck neatly into our business plan template that is designed to help you secure funding from external sources like a bank. Another useful tool is our business start-up checklist that walks you through key business registrations you might require, insurance options, legal requirements, branding and domain name registrations for your website.

For a child care centre, your vehicle is one of your most important business tools. To learn more about the alternative methods of claiming your vehicle expenses and the distinction between a business and private trip, you can read our Motor Vehicle Tax Guide . In addition, through our affiliate partners we can also assist you with vehicle finance (chattel mortgage, CHP or lease) and get you fleet pricing on your new car or light commercial van that could save you thousands of dollars. Through another affiliate  we can also help you source funds to finance your business purchase, equipment or where applicable, your franchise fee.

If you're looking to fast track your business success the team at the Business Ignition Group offer you a range of accounting, taxation, marketing and business coaching services including:

• Start-Up Business Advice for Child Care Centres
• Advice regarding the Purchase or Sale of your Child or Day Care Business
• Tools including the Start-Up Expense Checklist and Templates for a Business Plan, Cash Flow Budget, Letterhead and Business Card
• Advice and Assistance with the Establishment of Your Business Structure - Company, Trust, Partnership etc.
• Tax Registrations including ABN, TFN, GST, WorkCover etc.
• Preparation of Business Plans, Cash Flow Budgets and Profit Projections
• Accounting Software Selection and Training – Bookkeeping, Invoicing, Quotes, Payroll, and Practice Management (Xero, Saasu, Sage One and Quickbooks Online)
• Preparation and Analysis of Financial Statements
• Preparation of Finance Applications - Loans to Buy a Business, Expand, Franchise Fees
• Bookkeeping and Payroll Services - By Referral
• Tax Planning Strategies
• Assistance with your Marketing including your Branding, Corporate Brochure, Videos etc.
• Advice and Assistance with your Website Development, Content, Blog Posts and SEO
• Wealth Creation and Retirement Planning Services including Transition to Retirement & SMSF's
• Industry Benchmarking and Management of Key Performance Indicators (KPI's)
• Vehicle & Equipment Finance (Chattel Mortgage & Lease) - By Referral
• Monitoring and Controlling Labour and Sub-Contractor Costs
• Advice & Assistance with Pricing your Services
• Claiming Motor Vehicle Expenses
• Advice regarding Employee Relations and Workplace Laws
• Business and Risk Insurances (Income Protection, Life Insurance etc.) By Referral
• Business Succession Planning

Our range of practical skills distinguish us from other accounting firms and if you're a committed and ambitious business owner looking to accelerate your success we invite you to book a FREE , one hour introductory consultation to discuss your child care business needs. You can expect an hour of practical business, tax, marketing and financial advice that could have a profound effect on your future business profits. To book a time, contact us today and let's get to work on your business so it's more profitable, valuable and saleable.

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Opening a childcare service

Information about how to start a childcare centre or family day care in Victoria.

On this page

Childcare services are regulated, types of early childhood services, things to consider before you start, first steps – provider approval, being a suitable person to operate a childcare service, next steps - operating a service, regulatory fees, more information, child care funding.

Childcare services (early childhood services) are regulated by each state and territory in Australia:

• to protect the safety and wellbeing of children who attend the services, and
• to ensure they have access to quality learning experiences.

Before opening a service, providers and their services must be approved by the Regulatory Authority. It is illegal to operate a child care service without this approval.

In Victoria the Department of Education is the Regulatory Authority for early childhood services.

The following childcare services are regulated in Victoria:

• long day care services (LDC)
• preschools (kindergartens)
• family day care services (FDC) (where care is provided in the carer’s own home or an approved venue)
• outside school hours care (OSHC) services
• school holiday care programs
• limited hours services (where children attend for a short period of time)
• occasional care services.

Some services and activities for young children do not need to be approved by the Regulatory Authority to operate.

Read more about the different types of early childhood services, how they're regulated, which activities don't need to be approved or regulated, and the role of the Regulatory Authority .

Contact us to confirm if your proposed service or activity will require approval:

• 1300 307 415 between 9am to 5pm (Monday to Friday)
• email [email protected] .

Operating a service is a significant commitment.

As the approved provider you have the legal responsibility to ensure that the service and each educator engaged complies with the relevant laws and regulations .

Before you open a service, you need to consider:

• the financial investment required to establish a service
• how many staff you will need to offer a quality service and what qualifications they need
• how you will organise and govern your operations
• what role you will have in administering Australian government childcare funding ( Child Care Subsidy )
• and many other issues.

You will also need to consider whether the proposed location of your service is suitable and meets all the regulatory requirements for the service premises and operations.

Services must have natural light, ventilation, access to genuine outdoor space and a natural environment, as well as meeting detailed safety requirements. These requirements are important considerations if you are intending to retrofit or re-purpose an existing building.

To start a childcare service in Victoria you must first apply to the Regulatory Authority:

• initially, to apply to be an approved provider
• then to apply for approval to operate a service .

You can apply as:

• an individual
• an incorporated association
• partenership.

To apply for a new provider approval you must ordinarily reside in Victoria or have a principal office in Victoria if the applicant is not an individual.

You should get your own legal advice on the implications of the entity type.

To become an approved provider of an early childhood service, you must satisfy the Regulatory Authority that you are a ‘fit and proper person’, that is:

• you are a person* of good character and
• you have the capability to operate a service.

*If the applicant is a company or other entity this applies to all individual persons who comprise that entity, i.e. the directors of a company, the members of the executive committee of an incorporated association, and the partners in a partnership.

To assess if you are ‘fit and proper’ the Regulatory Authority will:

• conduct background checks - including your criminal history and record of compliance with relevant laws as well as whether you hold a Working With Children Check.
• the laws that regulate early childhood services
• the Victorian Child Safe Standards.
• check your past management experience and ability to operate a service.
• check your financial capability.
• it may also check you do not have medical condition that makes you incapable of being responsible for providing a service.

The Regulatory Authority will also assess whether other people in your organisation are ‘fit and proper’.

This applies to any other people:

• who will have responsibility for managing the delivery of the service(s) or
• who have significant influence over the activities or delivery of the service.

There are no limits to what the Regulatory Authority may assess to consider if you are a fit and proper person to be involved with providing a service.

After you become an approved provider, you may apply to the Regulatory Authority for approval to operate a service.

Next you need to decide what type of service you will operate:

• Services that provide education and care to children on a regular basis must meet the requirements and standards specified in the National Quality Framework (NQF).
• Similar requirements apply to occasional care and limited hours services that provide care to children on an irregular or ad hoc basis under the Children’s Services Act .

The National Quality Standard (NQS) applies to services that provide regular education and care to children. It sets a high national quality benchmark for early childhood education and care services in Australia. The NQS has 7 quality areas that are important for ensuring quality outcomes for children.

Services regulated under the NQF are:

• assessed and rated by their Regulatory Authority against the NQS, and
• given a rating for each of the 7 quality areas and an overall rating based on these results.

While they are a small part of the overall cost of running a childcare service, you should also consider the regulatory fees that will apply.

Fees are payable under both regulatory schemes that operate in Victoria and fall into two categories:

• the annual service fee, which applies to all approved services and is payable by 1 July each year
• transaction fees, which are individual fees that apply to specific applications and are payable when the application is made, for example, an application for provider approval.

All fees are indexed annually. Some fees vary according to the size of the approved service.

For the current fees under the NQF (for long day care services, family day care services and outside school hours care services), refer to ACECQA indexed fees .

For the current fees for occasional care and limited hours services, refer to: Children’s services regulated under State law .

• eLearning modules for approved providers
• Education and Care Services National Law Act 2010
• Education and Care Services National Regulations
• Children’s Services Act 1996
• Children’s Services Regulations 2020 .

The Australian Government operates the Child Care Subsidy (CCS) scheme . For more information please read the Child Care Provider Handbook .

For more information and assistance about starting a service, contact our Enquiries and Support Team on:

Updated 5 January 2024

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About child care and early childhood education in Australia

There are 5 main options for child care and early education in Australia:

• home-based care
• centre-based care
• family day care
• business-related creches
• outside school hours care.

Child care is also known as early childhood education and care . It’s mainly designed for children aged up to 5 years, but it also includes care for primary school-age children in outside school hours care.

All children living in Australia have the right to use child care services. Children can’t be excluded from child care on the basis of their cultural background, citizenship, family circumstances or ability.

Home-based care

Home-based care is when a friend, relative, babysitter or nanny cares for your child in your own home .

You might choose to organise home-based child care because other child care options aren’t available when you need them or they don’t meet your needs.

Many families use informal home-based care. For example, this is when grandparents or other relatives look after children , either regularly or occasionally.

Other families make more formal arrangements. For example, they use babysitters or nannies .

Babysitters are handy for occasional care – for example, when you’re going out for an appointment or social event. For longer and more regular hours of care, you might choose to employ a nanny . Nannies are generally more experienced and better qualified than babysitters.

You might be able to use the Australian Government’s In Home Care program to help with the cost of home-based child care by an educator who meets minimum qualification requirements. You have to be working non-standard or variable hours, be geographically isolated, or have complex or challenging family needs to be eligible.

Centre-based day care: long day care and occasional care

Centre-based care includes long day care, occasional care, preschools and kindergartens.

Long day care at a child care centre suits many families who work regular weekdays.

Some child care centres offer occasional care for families who need someone to look after their children every now and then. This is a good option if you work irregular or unpredictable hours or you need to go to appointments or catch up on household tasks. You can express your interest in occasional care days and go on a waiting list for when other children are away.

Preschools or kindergartens operating from stand-alone centres offer education and care programs for children aged 3-5 years. Some preschools also offer occasional care days if other children are away.

Centre-based care:

• is reliable
• has qualified early childhood educators
• offers a learning and development program with structure and routine
• gives children opportunities to play and socialise with many other children.

Family day care

Family day care is when your child is looked after by an approved educator in the educator’s home .

Family day care:

• is a home-based environment
• offers a learning and development program and opportunities for children to play and socialise with other children
• might be a quieter environment, which some children prefer or need
• can be flexible – for example, if you just need care for part of the day
• might be less reliable than centre-based care – for example, you might have to find back-up care if your carer gets sick.

If you’re interested in family day care or centre-based child care, it’s a good idea to visit family day care homes or child care centres so you can get a feel for different services. Our child care checklist can help you work out whether a particular service is right for your family.

Business-related creches

Some businesses, like gyms or shopping centres , offer informal child care in creches. These businesses might charge a fee or build a fee into the overall cost of membership or the price of their products or services.

These creches can be convenient if you need care for a brief period . They’re a good way for children to play and socialise with other children. They can also prepare children for more formalised child care in the future.

These creches don’t have to meet the same requirements as centre-based care or family day care – for example, requirements for educator-child ratios or education quality. So they won’t help your child learn and develop in the same way as a quality early childhood education and care service .

Outside school hours care

Outside school hours care is centre-based child care for families who need care before or after school, on student-free days and during the school holidays. It’s only for primary school-age children.

Educators in centre-based child care services, family day care and outside school hours care must be qualified in early childhood education. They have the skills and training to support your child’s learning, which is a key part of the child care experience.

Which type of child care is right for your family?

When you’re trying to decide which type of child care is right for your family, you might want to consider the following questions:

• How many hours of child care do you need each week?
• What are the child care options in your area, and how much do they cost?
• Do you want your child educated and cared for at home or at a child care centre?
• Are you looking for child care that matches your family’s interests, lifestyle or values – for example, food choices, musical interests and so on?
• Do you want your child to experience different styles of learning and mix with children from a wide range of social and family backgrounds?
• Are you looking for child care that’s similar to or different from learning and care at home?
• What are the quality ratings of the options you’re interested in? You can check quality ratings of child care services at Starting Blocks .

You might be able to get Australian Government assistance to help with child care costs . You need to meet certain criteria to be eligible. For example, you must use an approved child care service.

Registering early for child care

When you’ve decided or even while you’re still deciding, it’s a good idea to register with any services that you’re interested in .

It’s OK to put your child on more than one waiting list. This is because you might not get all the days you need from one service alone, or a service might not have a vacancy when you need it.

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Rising fees and staff shortages: why Australian childcare is in crisis – and how to fix it

The sector fails both parents and staff because it relies on a mix of providers and is poorly subsidised, say experts. Here are their solutions

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Childcare fees are rising faster than inflation, staff shortages are stretching centres to capacity, and a third of Australians live in a childcare “desert ” where children outnumber available places by a ratio of at least three to one.

According to experts, the sector’s business model is to blame.

Like primary education, early childcare is an essential service. But unlike schooling, early childcare doesn’t get funding directly from the government. Instead, it relies on subsidies that come via eligible enrolled families.

The sector is also made up of a mix of providers, many of which need to make a profit.

According to Peter Hurley, director at Victoria University’s Mitchell Institute and an education policy expert, a partly privatised and poorly subsidised essential service is one that “is prone to collapse”.

How does the sector operate?

Australia’s childcare sector is made up mainly of centres run by small-scale operators catering for more than 1 million households across the country.

More than half of the centres are run by private, for-profit providers, according to the Australian Children’s Education and Care Quality Authority quarterly report, which provides a snapshot of the sector . A third are private not-for-profits and 15% are run by state, territory or local governments, state or territory government schools, independent schools and Catholic schools.

While primary and high schools get funding directly from state and federal governments, childcare centres in Australia operate under what is known as a demand-side subsidy model.

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“This means the government subsidises … parents’ need for early childhood education and care,” Hurley says.

The childcare subsidy is paid directly to early childhood services, and is then passed on to families as a fee reduction. Families are eligible for different levels of subsidy depending on their household income and the number of their children in care.

The highest level of subsidy is 95% – but the government sets an hourly rate cap, limiting the amount at which childcare will be subsidised.

About 22% of childcare services charge above this hourly maximum , according to the Australian Competition and Consumer Commission’s (ACCC’s) childcare interim report, released this month. And that additional cost gets passed on to parents, who have complained fees are rising faster than inflation and wage growth.

According to the competition regulator, on average, government subsidies offset more than half of childcare fees.

But Australia’s spend is still below the OECD average, with the country spending 0.6% of its GDP on early childhood education and care for children aged five and under in 2019, compared with the OECD average of 0.8%.

What’s the problem with the current model?

Childcare subsidies for parents have increased under Labor – but fees are rising , meaning out-of-pocket costs are also rising.

The ACCC interim report paints a picture of for-profit providers seeking to maintain profitability while balancing operational costs and inflation and offering higher wages to retain qualified staff amid high rates of staff turnover.

Centre-based daycare fees increased by 20% between 2018 and 2022 – or about 4% when adjusted for inflation, the ACCC says. The biggest cost for childcare providers is labour, with staffing costs increasing by 28% between 2018 and 2022. But wages remain low when compared with other service-based industries.

Staff turnover is a big problem in the sector, which the United Workers Union says is mostly because of poor pay.

The other problem is childcare deserts – areas without sufficient childcare providers.

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Childcare providers tend to group together in areas where they expect there is significant demand, and where families are likely willing to pay more. For-profit services in particular tend to concentrate in places where they can make money.

“All providers must determine whether the reward for operating in a certain location outweighs the risk – not enough children, not enough staff,” Hurley says.

“If the risk is too great for a provider to operate in an area, with the risk being they will not receive a return on their investment, then providers will not be able to operate in a location.”

As a result, metropolitan areas with a high socio-economic advantage tend to have more childcare centres operating, while childcare centres are often few and far between in regional and remote areas.

The ACCC report warns market forces alone are unlikely to create equal education outcomes or allow more women to participate in the workforce.

“It is a system that puts price, risk and reward at the centre of its design,” Hurley says. Providers try to ensure that “an hour of care is produced in the most ‘efficient’ way possible”.

How do we fix the system?

We might be better off looking at different models for childcare – including overseas models, according to Hurley.

For example, Quebec’s universal childcare system operates on a flat fee payment system where parents pay C$8.85 a day ($10.19). Funding is provided to for-profit and not-for-profit providers by the government in a supply-side model that covers operation costs.

Hurley says the system has led to an increase in both the number of children in early childhood education and care, and in women’s labour force participation. Some research shows the latter has had positive flow-on effects for Quebec’s economy that exceeded the cost of the program.

Shaun Weick, a senior investment analyst at Wilson Asset Management, also wants the Australian government to introduce subsidies for providers, rather than for parents.

If the government does not fund these sectors “on the balance sheet”, they must incentivise private operators to further invest in the sector, and allow them to generate a reasonable return, he says.

“Otherwise, the private operators will just exit the space and the government will be left trying to plug the holes.”

Early childhood care and education is often thought of as a labour market support program – a way to keep parents in work, Hurley says.

“It does have that aspect of helping parents go to work,” he says. “But I think early childhood [education] should be seen as much, much more than that.

“Children start school behind [when they don’t have quality early education] and they stay behind. Interventions at a younger age are the ones that are really important.”

• Childcare Australia
• Childcare in crisis

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