Child care providers are often more concerned with nurturing children than thinking about business policies. Being in business, however, should not only be a rewarding experience with children, but a profitable experience as well. Before beginning a child care service, analyze the financials carefully by: estimating all expenses, figuring potential income, setting fees, and learning to handle financial records and taxes.

Income for a child care operation will be determined by the type of program, student fees, and outside funding. Several factors should be taken into consideration, such as the age and number of children,facilities, location, and competition. Possible income sources include the following: fees and tuition (paid daily, weekly, or monthly); enrollment or application fee; supply fee; government support (example: USDA Child Care Food Program); in-kind contributions (space, equipment, and supplemental financial support from churches, community organizations, and industry); and other (cash contributions, fund-raising activities, and grants).

Estimating expenses and analyzing potential income provides the background information needed to set fees. As a general rule, the fee in a service business is based on three things: salaries, cost of operation, and a profit margin. The goal should be to cover expenses, pay decent wages and still make a profit.

The "going rate" in the area is one place to start as fees are determined. Charges will vary considerably according to the following factors:

• Region of the state or area of town - In rural locations the fee may be $45 a week per child, while in affluent urban neighborhoods the rate may be $150 a week or more;
• Ages of children - Charge more for infants because they take more care;
• Children in the same family - Offer a lower rate for the second or third child because there is slightly less paperwork;
• Hours of care - Charge more for night and weekend care, and for early arrival or late departure;
• Special services - Charge for extras, such as washing diapers, giving physical therapy, offering field trip experiences, consultations, or feeding extra meals; and
• Special needs children - Most providers charge more for caring for children with special needs.

Experiment with figures above the minimum to achieve expectations, yet be realistic for the situation. It is essential to ask above the "going rate" if the "going rate" is too low to meet financial obligations. A business, no matter what kind it is, won't be in business long if it cannot pay the bills.

Competent child care businesses provide a much needed and valuable service. This should be the primary motivation for this type of business, not huge profits. If money is the motivation, try something other than a child care business.

In summary, running a profitable child care business is not easy, in addition to expertise in working with children, it takes good business sense and skills. Establish a reputation for providing high quality child care; most people are willing to pay more for quality services. Pay close attention to the business, marketing, and management aspects of the business.

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