Childminders

Childminders offer a home-from-home setting to look after small groups of children. If you're paid to look after children under the age of 8 for more than two hours a day in a domestic setting, you must register as a childminder.

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.

Find out more about becoming a childminder.

Day care, day nurseries and pre-schools

Nursery settings offer professional, registered childcare for children under 5.

Nurseries are for children from 6 weeks to 5 years old, whereas nursery schools and pre-schools are usually for children aged between 3 and 5 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 early years foundation stage (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 out-of-school clubs and be collected by parents or carers.

Skills you'll need

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
• drive - to work hard and overcome problems

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 business structure

You can set up your childcare business as a sole trader, partnership, limited company, charitable trust, or in a different structure. Find out more about setting up a business and the different types of structure on GOV.UK.

Regulation and legislation

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. This covers all childcare settings that care for children from birth to 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 8 must be registered with Ofsted on the Childcare Register. Anyone caring for children after their 8th birthday can be registered if they prefer.

Other legislation 

There are many areas of a childcare business that must operate according to the law. These include the following:

Business plan

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.

Identifying demand 

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 the following:

• 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?

Childcare sufficiency report

The early education and childcare statutory guidance for local authorities requires us to produce an annual report on the availability of childcare in our area and how sufficient it is for the demand.

Visit our childcare sufficiency assessment page to view our latest report.

Who to speak to

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.

Premises

Whether you're constructing a dedicated building for your childcare setting or refurbishing an existing one, you'll need to consider the location and cost. You'll also need to think about if:

• the service will be accessible to customers
• it will be attractive to families and visible in the community
• it will be affordable
• it can offer a variety of activities and have a flexible layout
• it has good heating, lighting, ventilation and enough floor space for your intended size?
• it's close to schools and your session times will compliment this

We can offer a premises visit as soon as you identify the premises you want to use. We can also support you to finalise your plans for a new build.

Funding 

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 a couple of things. This includes 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.

Ongoing costs

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:

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. To provide care for any more children you need to employ another member of staff. You'll also need to increase your outgoings to allow you to increase your income.

Income projection

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.

Useful finance resource documents

You can use our example resources to help you with finances:

• financial records template for childminders
• template invoice

Recruiting staff

When you've decided the ages of children you'll cater for and the number of places you'll provide, you can then decide on your staffing structure. We suggest following the guidance in the Department for Education keeping children safe in education document.

We recommend on your recruitment panel that there's 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 if needed.

Statutory requirements

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 that may affect their suitability to work with children:
  • convictions
  • cautions
  • court orders
  • reprimands and warnings 
• taking action to make sure the safety of children if you become aware of details that could lead to exclusion of an employee
• finding out about any medication staff are taking that may affect their ability to care for children, and putting controls in place where staff may need to take medicines on site

Qualifications

The early years qualifications list provides guidance and a search tool to help those delivering the EYFS identify qualifications that are considered to be full and relevant at levels 2 and 3.

Staffing structure

There must always be at least two 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.

Wage structure

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, fundraising, administration or publicity.

Students in colleges and universities may be asked to find a placement to support their learning in childcare.

Apprentices can give you an extra person to support the setting. Find out about employing an apprentice in your business on GOV.UK.

All volunteers, students and apprentices must be subject to the same checks as staff and follow the EYFS statutory framework.

Useful staffing resource documents

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

Brand

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 - what you offer that others don't. You'll need to promote this to your potential customers to make the service you're providing the most attractive. 

Promotion

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 can also help you reach more people.

The marketing and promotion of your business needs to be:

• visible - so your customers know you exist
• understood - clear about what you do
• attractive - inviting for everyone
• relevant - targeted at the right audience
• friendly - showing all of the workforce are welcoming
• modern - up to date and fresh

Reflection

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 you with support and guidance around this.