Opening a childcare centre as a business

Opening a childcare centre as a business

We talked to private childcare owners about how to open a childcare from scratch, even if you have no experience in business: whether it is necessary to obtain a licence and what this entails, where to look for the requirements of state inspections and what the investments in the start-up depend on.

“I opened a childcare almost 10 years ago. At that time, parents did not yet have a high level of trust in private childcares. They were wary: they would come and carefully check the premises, ask for sanitary books. They could literally start the fridge and see what kind of food we were buying for the children.

Until six or nine years ago, we mostly brought babies to us who had to wait until they got a ticket to a state-run school. These were children under the age of three. Then the parents were given a voucher and the children left.

Now, by 2022, the situation is completely different. The level of trust parents have developed. Largely thanks to good childcares. More and more often I see parents who have a voucher for a state childcare, but they are willing to pay many times more.

Business owners cite several reasons why parents increasingly prefer private childcares to municipal ones. The main ones are practically individual tuition and personal care.

“I notice that parents bring their children to a private childcare for two reasons – personalised care and an approach to teaching. This is especially important when a child, for example, is on a special diet and an adult needs to keep track of what and in what quantities the child eats.

Another point is that in state schools, there is only one teacher for thirty children, and it is clear that it is almost impossible to give enough attention to each child. But in private childcares, as a rule, there are groups of 10-15 children and two or three educators are always with them. They can give more time to each child: during games, study sessions, walks.

It is not necessary to obtain an educational licence for a childcare. But with it, the business has several advantages.

A tax deduction for parents. It is more advantageous for parents to send their children to a childcare with a licence, because once a year they can apply for a tax deduction and get back the percentage of the childcaren fee that goes towards education. You cannot get a deduction for fees for meals and other services.

Freedom for advertising and promotion. The childcare can openly say in all advertising channels that it runs an educational programme, hires teachers, prepares children for school and provides services for the general development of children.

They can operate without a licence, which is normal practice. But there are important details here.

You cannot be called a pre-school.
This is a concept from the Education Act and applies to licensed childcares.

You cannot engage in educational activities.
For example, use in promotional materials or make promises to clients that the centre develops skills, prepares for school and has a curriculum.

No teachers should be hired as staff.
This includes staff members with a university degree or secondary vocational teacher training. You may not employ them in a position with a pedagogical component in their work. In addition, employees themselves will not be able to count the period of employment in an unlicensed childcare as pedagogical experience.

The restrictions relate to the definition of educational activities in the law. There are many subtleties here, what can be considered an educational activity and what cannot. But if a business has its signs, it must obtain a licence. We have written about this in more detail in the article on educational licensing.

In practice, there are many unlicensed childcares that do not comply with these restrictions.

This is a risk. For example, if a complaint is received from parents or competitors and an inspection is carried out, the business may be closed and the manager or entrepreneur fined. We also talked about this in our article on licensing.

However, if the business calls itself a child development centre, recruits groups of children, employs staff to look after and play during the day, organises lunch and daytime activities and does not teach children, it is OK. It is possible to work without a licence.

For convenience, in this article, we will call both business formats a childcare. It is more familiar that way.

What are the mistakes to avoid at the start

Leaders of private childcares have identified three mistakes that hinder the development of business in this area.

Make a large investment. You don’t need to buy a lot of gardening equipment at the start of the business. The obligatory minimum is enough.

“I would not advise investing large sums at the start-up stage. It is worth identifying some minimum equipment and adding on as required.

I know of an example where an entrepreneur opened a childcare for 45 children. He immediately bought sets of linen and furniture for that number. As a result, a maximum of 20 children went to his childcare. Later, the garden and had to close and the entrepreneur sold brand new and unused sets, although he could initially did not even spend money on them.

How to start a childcare business just for profit. Those entrepreneurs who started their business out of a love for children, for pedagogy and a desire to contribute to the future generation remain and work long in the pre-school education and childcare business.

“If an entrepreneur doesn’t like to spend time with children and isn’t interested in working with them, he or she can hand this function over to staff. But the staff are not dependent on profits, they get a salary. They have no personal interest in the business. If for some reason the business doesn’t go, they’ll just pick up the paperwork and leave to work in the next childcare.

The owner should be burning with the idea of giving children quality education and care, figuring out how to make the garden better and more comfortable for them. Here, as in any other business, it is not possible to chase only profit without loving what you do.

Start a childcare without the help of experts. An entrepreneur can get help with starting a childcare when buying a franchise from a franchisor. Another option is through a childcare consultancy service.

“I came into this business from the state, I worked as a child psychologist. I was not immersed in the subject of financial models, business plans and that huge number of requirements for premises and equipment. So at the start we turned to consultancy services. We found those who are involved in preparing and running childcares. We knew that there was a one-stop shop for any technical and legal questions, where you could come for help.

I recommend that first-time entrepreneurs turn to consultancy services so that they can avoid making mistakes and not waste time and money”.

Consultants and franchise owners can help with the legal formalities and the start-up of a private childcare business. In addition, a budding entrepreneur can get help from a small business support centre. Such centres can be found in every region. They offer free events and advice on marketing, legal and financial topics.

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