Financing Your Daycare Business

by Fiona Lohrenz


Opening a day care is a dream nurtured by many people for many reasons. Some of these individuals may work in a daycare center and believe they could do a better job with the added benefit of becoming self-employed. Many stay-at-home parents figure that since they are already doing childcare, what difference would a few extra kids make except an increase in income. And lots of people are just straight tired of nine to five working for a boss who doesn't care about them. So they dream. But, most of these people that want to establish a childcare business never succeed in doing so due to a lack of funding. However, there is hope and this article will introduce you to ideas on how to obtain the financing required to start a daycare business.

The first method that is involved in obtaining financing when you want to open a day care center at home is to develop an effective business plan. Every business has to have a plan, even if it is a business that will be operated from home. A business plan is basically the methodology behind your daycare business. It may include the general purpose of your daycare, how you plan to separate your home life from your business life, how you will use your home effectively to operate the childcare services that you will provide, as well as how much money you expect to gain from your daycare at home.

The second method involved in order to obtain financing when you want to open a daycare at home is to structure your business appropriately. It is important to detail how much it will cost to prepare for the daycare center, how much the supplies for the center will cost, and how much it will cost to open the doors for the first time. Many people also include the expected continual expenses that are associated with operating a daycare in the home on a consistent basis. This may include utility costs, food costs, and costs related to games and activities that may be provided in your daycare.

The third method involved when it comes to obtaining finances when you want to open a daycare in the home is to invest as much as you possibly can first. If you want to start your own business, it is important to be able to provide at least a certain percentage of the costs out of your own pocket. This will make lenders more likely to provide you with the money that you are requesting for your new home business. Many lenders find home businesses a high risk because each year millions of them fail. However, if you are willing to front some of the costs associated with the daycare, they are more likely to find lending to you appealing.

The fourth method in obtaining financing in opening a daycare center at home is to offer some sort of collateral. This is a huge and risky step and requires a lot of consideration and professional advice. This is a very important, yet risky step. You must be certain that you are confident in your ability to own and operate a daycare at home prior to handing out items for collateral. This is critical as many of these items are extremely valuable, such as property and vehicles. However, many lenders are comfortable in financing a business if they have a promise of something in return if the home business fails.


Fiona Lohrenz has 10 years experience running a daycare and has launched a childcare website directed at providers and parents. She has also produced a 'Start a ChildCare Business' DVD guide. Visit www.startchildcare.com.

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