We offer business support and advice to childcare settings. We also help new providers that are looking to open a setting in the borough. We provide help and documents to support you in opening and growing your childcare business.
The Quality Improvement team also offer settings a premises visit. This is for new providers who have chosen somewhere they're planning to offer childcare places. It identifies any areas of action needed. It gives you the chance to speak to an officer about what may be needed to meet the early years foundation stage statutory framework. It also offers help with other legislation. It's also a chance to find out about what may or may not have worked in other settings. It can give you an idea of what your setting could offer.
What is a childcare business?
There are many types of childcare. Almost all children will receive a mix of informal care from parents and relatives, and more formal care in other settings.
Family centres and parent or carer toddler groups are aimed at meeting the needs of families and their children, whilst day nurseries, childminders and out-of-school clubs meet children's needs whilst their parent or carer is at work. Many offer the Early Education Funding, including the free childcare for eligible 2 year olds.
The Families Information Service (FIS) Directory provides information about childcare, family centres, activities and more. Families and professionals can contact the FIS team for 0-19 year olds (or up to 25 years old for young people who're disabled).
Family Centre childcare
Main family centres provide childcare sessions through the free childcare for eligible 2 year olds and early education funding for 3 and 4 year olds.
They also offer support with applying for free childcare.
Childminders offer a home-from-home setting to look after small groups of children. You must be registered as a childminder if you're paid to look after children under the age of 8 for more than two hours a day, in a domestic setting.
Childminders that are registered with Ofsted on the Early Years Register must meet the Early Years Foundation Stage (EYFS) requirements. This includes tracking and promoting children’s learning and development.
Childminders can register to be able to offer 2, 3 and 4 year old funding.
Day care, day nurseries and pre-schools
All nursery settings offer professional, registered childcare for children under 5. Nursery schools and pre-schools are usually for children aged between 3 and 5. Day nurseries are for children from six weeks to five years old.
Nursery schools and day nurseries can be run by local authorities, private businesses, community groups, schools or colleges. They can range in size from having just 15 or so children to up to 150.
Nurseries work within the EYFS statutory framework.
Out of school clubs
Out of school clubs offer childcare usually directly before and after school, but may also offer holiday care as well. They offer a variety of activities such as games, sport, crafts, art and reading.
Children will need to be registered with the group and collected by parents or carers.
Owning a childcare business
If you're thinking of starting a childcare business to make a profit you'll need to make sure the business is planned so you'll be able to do this.
If you're going to run the business not-for-profit you'll need to make sure you'll make enough money to re-invest.
To help you run a successful childcare business you'll need to have:
- vision - a clear idea of what you want to do and achieve
- resilience - the ability to cope with set backs
- imagination - to help you get through any problems which may arise
You'll also need to have business and childcare expertise, as well as skills in management, finance, marketing and when dealing with people.
Knowing the risks
There are always risks when setting up a new business. Some of the most common include:
- underestimating the time needed to set the business up and fill places
- underestimating the costs of starting up and continuing to provide childcare
- not having the funds to cover any losses in your first months until you're established
Completing a SWOT (strengths, weaknesses, opportunities, threats) analysis will help you whilst setting up and running your childcare business. Examples could be:
- strength - a qualification you have in childcare development
- weakness - a lack of experience setting up a business
- opportunity - attending a training course
- threat - the lack of time needed to set up the business due to other commitments
You can use our SWOT analysis template to complete your own SWOT analysis.
Choosing a structure
You can set up your childcare business as a sole trader, partnership, limited company, charitable trust, plus others. You can find out more about setting up different types of business on the GOV.UK website.
Regulation of childcare
All childcare service providers (for children under 8 years old) must meet the statutory requirements by law. The Early Years Foundation Stage (EYFS) statutory framework sets out the welfare requirements for all childcare settings that care for children from birth to the 31 August following their fifth birthday. Anyone caring for children in this age range must be registered on the Early Years Register and be inspected by Ofsted unless otherwise exempt from registration.
Settings that care for children from 1 September following their fifth birthday up to age eight must be registered with Ofsted on the Childcare Register, and anyone caring for children after their eighth birthday can be registered if they want to be.
There are many areas of a childcare business that must operate according to the law. These include the below:
|Registration||Ofsted is the regulator and you must meet the requirements of the relevant register to ensure that you remain compliant and registered.|
|Taxation||Responsibilities regarding Income Tax, Corporation Tax, Business Rates, VAT and Payroll Taxes.|
|Insurance||Public liability cover is essential and required through the EYFS. Employers Liability is also needed if you employ anyone, and if you are a commissioning service (you receive funding from the local authority to provide 2, 3 and 4 year old education) you also need professional indemnity insurance.|
|Health and Safety||The Health and Safety Executive provides information on the regulations you must meet to make sure you don't put yourself, children, visitors or staff at risk.|
|Employment||If you employ staff you need to be aware of the legislation around employing people.|
|Equality (including SEND)||The Equality Act protects people from discrimination. The EYFS states that all settings must have support in place for children with special education needs and disabilities (SEND). All settings that receive funding from local authorities to deliver early education places must follow the SEND Code of Practice, and group provisions are expected to have a SEND Coordinator.|
|Data protection||You need to comply with The Data Protection Act.|
|Licences||Regulations that apply to businesses when playing recorded music are set out in the Licensing Act 2003.|
|Building and fire regulations||Building control has the responsibility of regulating the health and safety of the occupants of the buildings in the borough. Building Regulations apply to new buildings, extensions and alterations to existing buildings and also any change of use of any buildings. Fire regulations are covered within building regulations.|
|Food regulations||Anyone setting up a new food business, including day care and childminders, must register with us at least 28 days before they intend to start trading. Registration is free and it can't be refused, but it is an offence not to register your food business.|
Market research is essential before you set up your childcare business. Without it you could start providing something that isn’t needed in one area and miss out somewhere else. You should think about:
- Who are your potential customers and how many of them are there?
- How much and how often will they use your services?
- How much are they willing to pay for quality childcare?
- Who else will be competing with you for their custom?
- Is there a gap in the services already available?
- How much will it cost to provide the services you are planning, and can you afford it?
- Where should you be based?
- What will your premises need?
- How much will it cost to employ someone?
- What do your sales need to be to meet you expenses and break even?
Early education and childcare statutory guidance for local authorities requires us to produce an annual sufficiency report on the availability and sufficiency of childcare in our area.
We hold information about areas which can be very useful to new childcare providers. This includes:
- the number of children in an area and their ages
- household incomes
- rates of unemployment
- types of schools in the area, their age range and location
You'll need to consult with a wide range of parents with children of various ages. You'll also need to gain the views of the schools in the area and speak with professionals that work in the community. This could be family support officers, health visitors, social workers and other community officers. You could also speak with larger employers in the area as they may know of a childcare need within their workforce.
Whether constructing a dedicated building or refurbishing an existing one you'll need to consider the location and cost. You'll also need to think about:
- Is the service accessible to customers?
- Will it be attractive to families and be visible in the community?
- Is it going to be affordable?
- Can it offer a variety of activities and have a flexible layout?
- Does it have good heating, lighting, ventilation and enough floor space for your intended size?
- Is it close to schools and have you considered session times to compliment these?
We can offer a premises visit as soon as you identify the premises you want to use, or support you to finalise your plans for a new build.
You'll need to consider the cost of each step you need to take to get you to opening day and beyond. Careful research of each aspect to identify and keep track of finances is essential in all new businesses and cash-flow projection is an ideal way of recording it.
Staffing and recruitment
After choosing the ages of children you will cater for and the number of places you wish to provide, you can then decide on your staffing structure. We'd suggest following the guidance in the Department for Education keeping children safe in education document. Also recommend that there is a recruitment panel including at least one person who has attended Safer Recruitment training. This training can be accessed through various providers including the NSPCC. We can provide you with support for your recruitment panel.
The EYFS statutory framework has very specific requirements for recruiting adults that come into contact with children. For childcare providers these include:
- having systems in place to make sure that practitioners and any other person who is likely to have regular contact with children are suitable.
- telling staff they're expected to disclose any of the following. Convictions, cautions, court orders, reprimands and warnings that may affect if their suitable to work with children.
- taking action to make sure the safety of children if you become aware of details that could lead to disqualification of an employee.
- find out any medication staff are taking that may affect their ability to care for children. Putting controls in place where staff may need to take medicines on site.
There must always be at least 2 staff on duty at all times. The minimum ratios for staff members working directly with children are:
- 1:3 for children from birth to their second birthday
- 1:4 for children aged 2
- 1:8 for children aged 3 to 7
Depending on the number of rooms you have. You'll need to think about whether you need a room leader in each room or multiple team leaders.
To help you to budget you'll need to set a wage structure that you can work to. Things you'll need to consider are:
- National minimum wage – current laws regarding pay and the age brackets for these
- local market – what others are paying in the area
- your financial projections and what you can afford
- additional benefits other than pay that you can provide to make the roles more appealing
- holiday pay and holiday cover costs
Volunteers, students and apprentices
Volunteers are valuable and can help with day to day activities, fundraise, admin or publicity. Students in colleges and uni may be asked to find a placement to support their learning in childcare. Apprentices can give you an extra person to support the setting. You can find out here about employing an apprentice in your business.
All volunteers, students and apprentices must be subject to the same checks as staff. The EYFS statutory framework must be followed.
You can use our example documents to help with the recruitment and staffing of your setting:
- shortlisting matrix for interviewing candidates
- recruitment checklist when you have selected your preferred candidate
- induction checklist when they start work
- domestic supervision template to record supervision meetings with staff in childcare on domestic premises, or with an element of domestic registration (such as 50:50 childcare)
- non-domestic supervision template to record supervision meetings with staff in childcare on non-domestic premises
Funding and finance
Most new businesses need some sort of funding when starting up, although sometimes they are self funded by the owner. The amount of funding and length of time you'll need funding support for will depend on your speed of growth and how well your business is managed. Where businesses need external funds it's necessary for them to plan well and develop a funding strategy.
Funding can be from private finance or public finance. Private finance is investment by the owner, friends, family, private investors and business loans. Public finance is government funds to meet new initiatives, or funding provided by charities.
There are many ways for not-for-profit organisations to get grants and funding from a range of sources. The South Yorkshire Funding Advice Bureau (SYFAB) is a useful place to start - providing help, advice and training for fundraisers.
For your childcare business to be successful you'll need to plan your finances. Knowing your costs will enable you to plan your fee structure.
You'll need to consider all of the costs below:
|Type of cost||Description|
Unless you're a sole trader, staffing is likely to be your biggest cost. You'll need to include things such as:
|Premises||These costs will include your rent or mortgage, business rates, utilities and security maintenance.|
|Insurance||If you employ staff you'll need to have employer's liability insurance. All registered childcare businesses must also have public liability insurance. You may also want to take out insurance for equipment, children's personal belongings, personal accidents for employees and children, plus others.|
|Administration||This includes things such as telephones, postage and website maintenance, but also Ofsted registration fees.|
|Activity and materials||Consumables should be included here but not large pieces of equipment and furniture. Include costs for visits and outings, entertainers and stationery.|
|Marketing||The advertising of your business, and the costs of designing and printing brochures and leaflets.|
Providers other than childminders must obtain an enhanced disclosure and barring service (DBS) check for volunteers if:
You need to include the cost of recruiting and checking suitability, as well as training, any volunteers.
|Transport||All transport costs need to be itemised, including any mileage payments to staff for training. Vehicle maintenance, tax, MOT, insurance and licences for transporting children also needs to be detailed here.|
|Capital costs||Capital purchases when you're starting-up can be large. These are normally for the purchase or refurbishment of premises and for the purchase of large equipment. You need to make sure you include the depreciation of equipment as part of financial planning. This is so that over the lifetime of the piece of equipment you've saved enough money to buy a new one. You can find out more about capital allowances and depreciation.|
Setting your fee structure
The fees you charge for childcare in your setting can have a big effect on take up of your service. If your prices are too high it can reduce sales, whilst if you don't charge enough it can affect how sustainable you are.
You'll need to know your break-even point - when your income from sales covers all the costs of the business. You can work this out as the number of places that your childcare business has to have filled in order to break even.
A break-point is when the number of children you can care for with your current number of staff has been reached, and to provide care for any more children you need to employ another member of staff and increase your outgoings to allow you to increase your income.
Childcare business income is generally from three sources: parental fees, funding or grants (2, 3 and 4 year old funding) and fund raising. You'll need to predict your income accurately, including when you expect customers to pay you. You'll need to decide if you will take payment in advance, and if you'll take payments weekly or monthly. You'll also need to identify grant funding income and when this will be received, such as Early Education Funding.
You can use our example resources to help you with finances:
Marketing your business
Childcare businesses must market their business well to make sure that as many places as possible are filled. You'll need to start by choosing a business name, logo and colour scheme.
You'll also need to think about your unique selling point (USP) - what you offer that others don't. You'll need to promote your USP to your potential customers to make the service you're providing the most attractive.
Most childcare businesses use traditional methods to promote their business. These include word of mouth, newsletters, advertising, leaflets and open days. Using the internet and social media should not be missed as this can reach more people.
Your business needs to be:
- visible - your customers need to know you exist
- understood - be clear about what you do
- attractive - inviting for everyone who visits
- relevant - targeted at the right audience
- friendly - all of the workforce should be welcoming
- modern - up to date with changes in childcare and staying fresh
You should always look at how many enquiries you receive that go on to become your customers. For those who don't, it's worth thinking about why they didn't.
We can provide support and guidance, including the Quality Improvement Programme, that helps settings do this.
A business plan provides an outline of your business, the market, and how it will be successful. It will help you get funding from investors, a bank or building society and keep you on track to make sure that you do become a sustainable business. A business plan should include the following areas:
- About you. Information about you and the business, including the organisation status.
- SWOT analysis. To show you know your strengths and what you may need to improve.
- Market. What the childcare market is like, and your competitors.
- Market research. Your research showing the need for your business and the demand you intend to meet.
- Consultation. Who you have spoken to and how you did this.
- Project proposal. What you are proposing to offer. Materials, resources (including staffing) as well as your fee structure need to be recorded here.
- Quality Assurance. Your knowledge of what good quality childcare is.
- Monitoring and evaluation. What you will monitor and evaluate.
- Equality. How you'll make sure your setting is accessible, non-discriminatory and meets the needs of everyone.
- Administration and equipment. What equipment, tools and materials you'll need to start up and keep going.
- Transport. Vehicle requirements and their costs.
- Promotion. How you will spread the word and advertise.
- Registration. The registration requirements including premises, and the costs of these.
- Costs and cash flow forecasts. Cost breakdowns of all of the areas including buildings, fixtures and fittings, insurances, recruitment, equipment.
- Skills audit. The number of staff you require for each job role and the qualifications, experience and skills they'll need to have.
- Staff operation. The hours staff will work and their pattern of working hours.
- Financial control. How you'll make and receive payments.
- The future. How you'll make sure that the setting will remain sustainable.