How to Start a Quali

Child Care Business
How to Start a Quality Child Care Business

replaces Quality Child Care Makes Good Business Sense.

Portions of this publication were reprinted with permission of the authors: Kathy Modigliani, Marianne Reiff and Sylvia Jones, authors of Opening 

Your Door to Children: How to Start A Family Day Care Program, Copyright 1987. All rights reserved. The material in this publication may not be 

reproduced or transmitted in any form or by any means--electronic, mechanical, photocopying, recording or other-without the prior written permission 

of the U.S. Small Business Administration.
While we consider the contents of this publication to be of general merit, its sponsorship by the U.S. Small Business Administration does not 

necessarily constitute an endorsement of the views and opinions of the authors or the products and services of the companies with which they are 

affiliated.

All of SBA's progrwns and services are extended to the public on a nondiscriminatory basis.
TABLE OF CONTENTS

INTRODUCTION .......................................................................................................................................................................................I

TYPES OF CHILD CARE PROGRAMS

ASSESSING THE NEED FOR CHILD CARE PROGRAMS

National Need ...............................................................................................................................................................................................I

Community Need ............................................................................................................................................................................................2

IDENTIFYING YOUR REASONS FOR GOING INTO BUSINESS

Motivations ......................................................................................................................................................................................................3

Personality~lf -Assessment Questonnaire ........................................................................................................................................................3

Skills and Experience

Time Management 

PREPARING FOR BUSINESS

Name and Legal Structure ..............................................................................................................................................................................4

License Requirements .....................................................................................................................................................................................5

e .....................................................................................................................................................................................................................6

. .......................................................................................................................................................................................................................7

. .......................................................................................................................................................................................................................7

. .......................................................................................................................................................................................................................8

. .......................................................................................................................................................................................................................8

.

...........................................................................................................................................................................8

FINDING A LOCATION

TAX LAWS

Operafing a Center Outside Your Hom 

Operating a Center from Your Home .

Sole Proprietorship

Corporation .....

Partnership .....

S-Corporation . .

Tax-exempt Center

.......................................................................................................................................................................9

Liability ...........................................................................................................................................................................................9

Accident .........................................................................................................................................................................................10

FINANCING YOUR BUSINESS

Private Sources .............................................................................................................................................................................10

Commercial Banks .........................................................................................................................................................................10

Government Agencies ...................................................................................................................................................................11

11

. 11

Grant Programs ....................... Other Sources 

..

..............................................................

DEVELOPING A FINANCIAL MANAGEMENT PLAN

Start-up Budget .......

Operafing Budget ...............

Monthly Operating Expenses .....

Balancing Income and Expenses

Fiscal PolVies

Audits .......

DEVELOPING A MARKETING PLAN

Know Your Customers ........

The Markefing Program .......

Marketing Your Center .........

Know the Competition ..........

Sources of Market Information . . .

. 12

.............................................................................................................................12

. 12

15

15

16

..................................................... ................................................... 17

. 17

......................................................................

...............
INSURANCE

U.S. Small Business Administration
PLANNING THE PROGRAM

APPENDIXES

DEVELOPING A MANAGEMENT PLAN

Finding and Hiring Staff ...........................................................................................................................................................18

Determining Staff Size ...............................................................................................................................................................jg

Setting Worldng Hours

Deciding on Staff Responsibilities

Establishing Salaries and Fringe Benefits

Personnel Policies ............................

Volunteer Staff . .

PREPARING THE CENTER

Safety .............. 

Equipment and Materials 

Setup ......... Storage .

... 20

.....................20

... 21

.... 21

.... 22

........... 22

.... 22

...............................................................................

Communicating Policies to Parents

Structuring the Program ...........

Nutrition .........................................................................

Parent Involvement

TRAINING

................. 23

..................23

.................... .................25

... 25

... 27

.

................................................................. ................................................................27

...............................................................................

The Child Development Associate Program .............................................................. Other Degree Programs ..............

A. Business Plan Outline for Child Care Centers .......................................................... B. Sample Survey for Parents 

......................................................................... C. Curriculum and Instruction in Early Childhood Education .......................... D. 

National Organizations ............................................... E. Information Resources .........................................

... 29

..45

.......................... ...................................47

................................ .............................49

...................................... ...................................51

U.S. Small Business Administration
ii
Owning and opemting a child cam busnim can be a very business. It explains the step-by-step process of starting

challenging and rewarding career. Success in this field the business, from assessing the need for child care

requu= dedication, love and patience. The work day is services to selecting the service, setting up your business

longer dm a normal eight-hour day, but the satisfaction and preparing for opening day. A swnple business plan

of watching children grow and develop will be worth the outline for child care busirwma is included, in addition to

extra efforl a swnple parent survey, a typical undergraduate

curriculum in early childhood instruction, geneml

If you are interested in starting a child care business, this resources and a list of related national organizations.

publication will help you plan, prepare and opemte your

According to the 1984 U.S. Census Bureau report, 0 Infant care center-A child development center

"Who's Minding the Kids?," parents generally select one that cares for infants and toddlers (children two

of three types of child care facilities: family care, home years old or younger).

care or day-care center. 'Mere are, however, other child 0 Before- and after-school care-A program

care programs available, including the following: providing care for school-age children before and

• Family care-A program designed to provide after the regular school day in a child

care for toddlers in the homes of other mothers. development center or home.

• Home care-A nanny or sitter cares for and 0 Satellite child development program-A private

supervises a child in the child's home. residence linked with a child development center

or an agency that receives technical assistance

• Day-care and child development and support, training, recruiting and placement.

centers-Programs designed to respond to the

stages of physical, emotional, social and Nursery school-Usually a part-time preschool

intellectual growth and behavior of infants and child development center operating during the

children. school year.

• Child care development honw-A private For more information on child care programs in your

residence for up to five children, with no more community, contact the local child care refen-al agency or

than two infants in the group. local or state licensing departments.

National Need children grew from 42 percent in 1970 to over 60 percent,

while the percentage of mothers with preschool-age

The demand for child care services steadily increases as children increased from 32 percent to 52 percent in the

more and more women enter the work force, giving up same time period. Further substantiating this increasing
the traditional role of full-time mother and homemaker. need for child care services, the U.S. Congressional

To date, working mothers-in both single- and Budget Office reported that, by 1990, an additional 2.5

two-parent households-constitute the fastest growing million children will require some form of child care. The

segment of the paid work force. According to a 1994 U.S. Internal Revenue Service (IRS) reported that, in 1983, 6.4

Census Bureau report, the percentage of the work force million families received a $2.6 billion reduction in their

made up of married working women with school-age federal income taxes from the Dependent Cue Tax CrediL

U.,& Smli BusineSs A dmlnlstratlon 1
Communfly Need

The easiest and most efficient way to determine the child care 

need in your community is to go directly to the source, that 

is, parents. The information they give you will be invaluable.

Perhaps the best way to gather information is to arrange an 

interview with several families (a focus group) or conduct a 

mail or telephone survey. You can find participants for your 

survey through local churches or community groups. A 

smple survey is included in Appendix B.

Census data for your community are another source for the 

following demographic information:

• Number of families in your community.

• Number of working families with children zero to

six years old.

• Number of working families with children seven

to fourteen years old.

Number of recdnt marriages.

Number of new housing starts.

Geographic concentration of families with

children.

Income distribution of families.

You can obtain these data by contacting the

• Municipal center or city planning office.

• United Way planning office.

• U.S. Census Bureau.

• Information office of your local school system.

Use this information to predict future needs for child care 

services. For example, if the ages of a substantial number of

children range from infancy to six years, you can expect an 

increased demand for school-age care in future years. If, 

however, you find that a substantial number of children range 

from twelve to fourteen years old, it may not make sense to 

open a child care center in your immediate community. 

However, the data may indicate that nearby communities do 

need new or additional child care services.

Identffylng E)(Istng Services

To capture a niche in the market, you may have to offer 

services that your competitors aren't offering or services

they've overlooked. For example, if several child care centers 

in your community provide care for children from ages three 

to five only, you may want to consider providing care for 

newborns, infants and one- and two-year-old toddlers. Or, in 

addition to your daily day-care services, you may want to 

provide after-school care for children ages six to twelve.

When assessing what child cam services are already available 

in your community, ask the following questions:

• What type of care exists in the community?

• What age groups are being served-infants, toddlers, 

preschool, school-age or combinations of the above?

Are there age groups that need more care than others?

• What hours do the centers open and close?

• What qWs of services do they offer?

- Day care?

- Night care?

- Evening care?

- After school care?

9 How many centers are there?

o Where are the centers located?

o Is there a waiting list for child care services?

o Are more centers needed in the same area?

What service can you provide that other centers aren't 

c~fferine.

To obtain information on the child care programs in your 

community,

Contact the licensing office at the local municipal center.

• Contact the local day-care and referva agency.

• Look through the Yellow Pages.

• Contact the planning office for United Way or

your local government.

Whatever service you provide, make sure it responds to 

the community's needs, is based on the children's interests 

and pnxnotes their intellectual, social, emotional and physical 

development. Remember, review all the options before 

deciding on the service(s) you plan to provide.

2

Number of small and large businesses.

School census data.
U.a S=ll Businesg AdminiMtion
Planning and operating a child care center will consume 

much of your time and energy. So it is important that you 

assess your motivations, personality, skills and experience and 

ability to manage time to determine ff you are the right person 

for the job.

NotivatiolLs

As a first and often overlooked step, ask yourself why you 

want to go into business. Check the reasons that apply to you.

1. You desire hwA= from the 9-5 daily

routine.

You want to be your own boss.

You want to improve your standard of

living.

4. You are bored with your present job.

5. You can't find a job you like.

6. There is a demand for your service.

7. Owning your own business would be the

culmination of your hopes and plans.

8. Owning your own business is s(xnething

you've always wanted to do.

YES

Some reasons are better than others, however, none are 

wrong. Just remember, there are a-adwffs. For example, you 

can escape the 9-5 routine, but you may replace it with a 6:00 

Am to 8:00 Pm routine or a schedule with little, if any, free 

time.

Personali"lf-assessment Questionnaire

Ilmn are ceruun pemnal characteristics you win need to 

go into business. This self-assemnent questionnaire will help 

you identify your strengths and weaknesses; it will either 

eliminate or justify any doubts you may have about becoming 

a child care provider. Try to be objectiveyour future depends 

on the decision you make. Circle your choice in each 

statemenl

1. My health is excellent/good/poor.

2. 1 am/= not a leader.

3. As a problem solver, I am good/average/poor.

4. 1 do/do not get along well with others.

S.

I take directions very well/weIVreluctandy

6. 1 take the initiative always/usually/sometimes/

seldom/never.

7. 1 work better alone/under supervision/with a

OUR.

8. My ability to handle emergencies is

excellent/good/average/poor

9. My financial assets are limite4/fair/sufficient

for a year.

10. My organizational and record-keeping skills are above 

average/average/margmalftlow average

My business experience has been limited to 

selling/manageriia/primarily bgpi*pving and secreawwvaried 

and long

12. 1 am/am not generally warm and affectionate.

13. 1 enjoy working with children all of the

time/most of time/occasionaUy/never.

14. 1 am/am not able to guide and discipline

children kindly and effectively.

15. 1 do/do not accept children as they are and feel a deep 

commianent to them and to thek parents.

If you are in excellent physical health, are a good problem 

solver, usually take the initiative, are a risk taker and feel 

confident in making decisions, then you probably will be 

comfortable managing a business. If you have sufficient cash 

to operate through the critical first year (or feel confident you 

can raise the money), are willing to work long hours at 

relatively low pay and believe you possess the necessary skills, 

you have a chance to succeed.

Skills and Experience

It is unlikely that you possess all the skills and experience to 

succeed in a child care business. You can hire people to 

provide the skiffs you lack. But there are some basic skills 

you'll need. The following questions will help you identify the 

skills you do possess.

U.a SMOII BuSineSs AdminiSgation
YES NO YES NO

1. Do you know what basic 9. Are immediate profits or

skills you'll need to operate covering costs important to

a successful child care YOU?

program? 10. When hiring personnel will

2. Do you possess these sldlls? you be able to determine if

the applicant's skills meet

3. Do you have any business the requirements for the

experience? position you are filling?

4. Have you ever worked as a

director or manager? 77me Management

5. Have you reared children of Since operating a child care center will consume much of

your own? your time, you may discover that you don't have enough

6. Do you have any child care time to puform your usual daily tasks. Even in an office

experience? setting, it is very difficult for some people to make and

keep work schedules. As your own boss, the problem can

7. Is responsibility new to you? be much greater. To determine the amount of time you

will need to devote to your business, draft a weekly

8, Are you willing to work timetable listing all current and potential responsibilities

long hours if necessary? and the time required for each.

Preparing for opening your business is a critical step. Sole proprietorship-lbe owner is the business.

Appendix A provides an oudine for forming your You must file business and personal tax returns at

business plan. In addition, the following sections describe the same time.

certain aspects of your preparation in detail. - Advantages-Simple and inexpensive.

- Disadvantages--Pemnal legal liability.

Name and Legal Structure Incorporation--A likely choice for businesses

with employees or bank financing. Attmwy's and

Choosing a name and legal structure for your center is other fees range from $500 to $ 1,000.

important, especially if you plan to borrow money to start - Advantagey--Credibility and personal assets

your business. Many entrepreneurs don't consider these we protected ff the business faus or is sued.

points until the questions appear on the loan or licensing

applications. - Disadvantages--Taxes are potentially higher

than for a sole proprietorship.

Select a name that's catchy and easy to rememb er. Partnership-A legal mechanism that divides

Consider your family's and friends' ideas as well as your profits and losses between participants.

own. Partnerships are goven" by the law of the

Think carefully before deciding on the legal structure for jurisdiction in which they are formeAL

your center. Most child care centers are operated by sole Advantages---To protect each pamier and

proprietors. However, you may find that incorporating or ensure effective management of the business,

forming a partnership offers more advantages. Consider partners should enter into an agreement that

the following points when choosing the legal structure for sets forth their resWUve rights and

your center responsibffities.

4 U.% Smit Bu$hma AdmlnlsftvUon
• Allows some businesses greater financial 9 Record keeping

resources. 9 Discipline

• Allows individuals with complementary 0 Buil&ng safety-Type of construction, number of

skills to participate in numaging the exits, fut doors.

business.

Disadvantages-Each imaua is personally 0 Sanitation (health) requirements

liable for the partmers*'s debts. - Plumbing.

- Food preparation and equipment.

LketiSe Rioquiromonts - Adequate ventilation in badux)om(s) and

classroom(s).

Before starting your child care center, know the many Fire regulations (life safety code)

regulatory systems that will affect your program. Most

states require that child cam centers be licensed. Some - Posted fire drill procedures.

cities and counties may have additional licensing - Fencing requirements.

requirements, such as health regulations, safety codes, fire

inspections and zoning laws. Violating these codes can - Type of neighborhood in which small

result in a fm and/or suspension of your license. businesses may be located.

Licensing requirements vary from state to state, but most Zoning regulations---Check with the local

include the following: government and with any property owners' or

homeowners' associations to find out if the type

• Physical space of child care services you are planning to provide

- Number of square feet needed per child both is permitted or if there are restrictions. There may

indoors and outdoors, depending on the be a local child care advocacy group or

children's ages. professional association that can answer your

questions and help you with zoning problems.

- Lighting, heatingtair-conditioning,

ventilation and plumbing requirements. Ile following outline briefly identifies the steps involved

in obtaining an operating license. More details are

• Health requirements contained in the licensing regulations.

- Possible annual medical examinations for I . Obtain a copy of the licensing regulations

staff and for children. from the state licensing office. Read them

- Immunization records. (Even if they aren't carefully.

required, it's an important safeguard to 2. Arrange a meeting with licensing specialists.

consider.) Go over the regulations and procedures for

• Stco~child ratios-Mm minimwn number of obtaining your license. Also arrange for them

adults required for a given numb er of children, to visit your center.

depending on their ages. Some states also regulate

the maximwn size of groups of children, in 3. Contact inspectors for building, sanitation,

addition to specifying minimum qualifications for fire and zoning codes and arrange for them to

staff. visit your center. Remember, even if your

center is in your home, you will have to meet

• Foodpreparation and nutrition certain requirements.

• Emergency procedures 4. Once you have fulfilled all the requirements,

• Educational program requirements fill out and submit your licensing application.

UA Small Business Administration 5
The cost of the center itself, especially for a location 5. Is public transportation available?

outside your home, will be one of your major start-up

expenses. Many child care providers operate from their 6. Is there adequate- fire and police protection?

homes, but you may want to build, buy or rent space for

your center. 7. Is crime insurance necessary and available at

a reasonable rate?

Operating a Center Outside Your Home 8. Is the area safe?

Finding adequate space and the right location requires

money, time and thoughl Look for space that is 9. Can the space provide separate areas for

accessible and will require few, if any, repairs. Sources of different activities?

information on possible locations include

• Classified real estate advertise#wnts 10. Does it have outdoor space or is a playground

nearby?

- Homes for rent or sale.

- Apartments for rent or sale. 11. Does it have kitchen and adequate bathroom

facilities for both children and adults?

- Condominiums for rent or &,de.

- "Boarded-up" space. 12. If you will be sharing the space (with a

church or school, for example), will you have

• Local churcheslsynagogues to move equipment before others can use the

- Ask ministmv~rkbisffifiests if they have space?

space they would donate or offer at a reduced 13. Can you afford it?

rate.

- Ask superintendents if there are any empty 14. What were the utility bills last year?

school buildings.

- Ask hospital administrators if they have If you are not building your own center, in most cases

space to rent or donate. some changes will be needed. Renovation can involve

• Local industry Projects ranging from painting to rewiring or major

plumbing, which often become very expensive.

Ask Public relations offices if they have Sometimes you can negotiate with your landlord that he or

space to rent or donate. she perform major renovations in return for a

Approach c(xnmercial contractors about new corresponding increase in your rent.

commercial and residential space. When you think you've found the right location, ask your

Ask local government officials about space licensing specialist to inspect it. If renovation is needed,

in their buildings for donation or rent. the specialist will often be able to give a cost estimate or

direct you to someone who can. Be sure you do this

• Property management companies-Find out if before signing a lease or purchase agreement.

there is any space in office buildings.

As you look at possible locations, consider the following Whether you draw up your own lease or are given a lease

questions: to sign, responsibility for the building must be clear to

both you and the landlord. This is also true if you are

1 - Does it meet licensing requirements? purchasing a building. Your lawyer should review and

explain all the conditions of the lease or contract to you

2. Does it meet building, sanitation and fm before you sign.

codes for day-care centers? If not, what has to Remember, a lease should include

be done and how much will it cost?

3. Is the area zoned for day care? * Specifications for the space tD be used and

exactly when it will be used.

4. Is the location convenient for parents? * How and when rent is to be paid.

6 U-S S=ii Business AdminiMtlon
• Who is responsible for mamwxwm, repair, Operating a Center from Your Honm

insurance, extermination and garbage and snow

removal, if required. Operating a child care center outside your home is very

• Who will pay increases in real estate taxes. costly, and may not be financially feasible for most child

care providers. As a matter of fact, many very successful

• Who will be responsible for obtaining official child cam centers are located in the homes of the

permits, if required. providers. The advantages of operating a center from your

home are

• Whether an option to renew is available. o Fewer expenses.

Occupancy (space) costs include utilities, maintenance and 0 Convenience for the provider and generally for

repair expenses and insurance. To help estimate these the parents.

expenses, do some prelimiiim research.

• Utilities-Project utility costs based on last year's * Lower overhead.

costs plus inflation. If a deposit is required for o More flexible hours.

opening a utility account, how much will it be? * Proximity for provider to his or her family.

Will your account be based on commercial

(business) rates or private home rates? There are, however, certain safety regulations that may

• Maintenance and repair-Such expenses can require changes to the rooms you will be using. Before you

include renovate and after you finish, have the licensing specialist

and building inspector visit your home. Their suggestions

- Plumbing, wiring, roofing and outside and and recommendations can save you money.

inside walls. You also are required to have adequate insurance

- Cleaning supplies and equipment. protection for the center. If you don't have them already,

- Snow removal, if required. you will need fire and theft insurance for your home. If

you have insurance, make sure your policy covers the

- Trash removal. supplies and equipment that you purchase. You will also

have to purchase liability insurance to protect your center,

- Lawn mowing. staff and children. More detailed information on

- Insect control. insurance is provided in the insurance section.

Insurance-Do you need liability or fire and dieft 

insurance? A fidelity bond?

These are a few of the items you will need to consider. As you 

think of other items, write them down on a checklist.

Licensed child care providers, like all business owners,

are required to meet certain tax obligations, such as

paying federal and state taxes. The legal structure of 

the Each year, you will use Schedule C of the basic

business will determine the amount of taxes you will pay Form 1040 Individual Tax Return for reporting your

and the forms you will use. business income and expenses. Good record keeping is

Reporting business taxes can be a very complicated, essential for filling out these forms.

tricky matter. This section is not intended as a substitute

for advice by a tax specialist, nor does it list all the forms Income

that must be filed by each entity. For additional

information on these and other forms, and to avoid costly Keep a ledger of all money you are paid for child care,

errors, contact a tax specialist or the IRS. whether in cash or by check. Record each payment,

U.S. Smli Business Administration 7
especially cash, immediately to avoid overlooking a payment 

and causing a bookkeeping error. Your ledger should include

* Clients' names.

o Date of each paymenl

• Period covered by the paymenl

• Amount paid.

9 Receipt number.

Payments should be deposited in your bank account and 

funds for daily operations should be withdrawn by check 

only. It may be a good idea to open a separate bank account 

for your business. This makes it easier to monitor business 

income and expenditures and will certainly make reporting 

your business taxes easier.

Expenses

All payments that you make for the center, whether by

cash or by check, are business expenses. To maintain

adequate records of these expenses, always save your

. receipts. The better your records, the easier it will be to

complete your tax forms at the end of the year.

Certain items may qualify as a tax deduction if these 

purchases are made solely for your center.

Toys and activity supplies.

Food for the children in your care.

Playground equipment.

Wages for assistants or substitutes.

Advertising.

Legal and professional services for your 

business.

Office and record-keeping supplies.

Insurance for your business.

Child care-related travel (a set rate per mile; the 

allowable amount will vary according to your 

location).

Typewriter and/or computer.

Utilities.

9 Depreciation.

Expenses that benefit both your center and your family will 

not ordinarily qualify as a tax deduction. But tax regulations 

do permit you to write off any specific area of your home 

used strictly for business purposes.

Other forms that you may need to comply with federal 

regulations are

1. Schedule SE--Social Security or

Self-Employment Tax.

2. Form 4562-Depreciation.

3. Form W-2-Wage StatemenL

4. Form 1040ES-Fedend Estimated Tax

Payments and State Estimated Tax Payments.

5. Schedule C, Forin 1040-Individual Tax

Return.

Corporation

A corpomtion's taxable incom reflects deductions for costs 

of doing businm. Corporations are taxed on a graduated 

scale, with the n-dnimum rate being 34 pm=L Form 1120 is 

used to report the annual income of the corporation.

Items deductible under proprietorships are also deductible 

for corporations. However, if you operate a child.cam center 

in your home, certain items are deductible only to the extent

that such costs relate to the operation of the center. These 

items include

- Heat, water and electricity.

• Costs of staff salaries unless they are

unreasonably high.

• Depreciation, which is deducted in computing

taxable income.

Distribution of profits to shareholders, made dmmgh 

dividends, is not deductible by the corporation. However, 

these dividends are subject to double twmtion in that they 

are riot deductible by ft corporation (i.e., they are paid with 

after-tax dollars) and shareholders are taxed on receipt of 

dividend distributions.

Partnership

A partnership is a "pass-through" entity because the 

partnership itself pays no tax but the income is passed on to 

each individual partner. Each year the partnership must file 

an annual information return, Form 1065, Section 603 l(a), 

with the IRS. In addition it must prepare Form K-1, Section 

6031(b), which spells out each paraier's share of profits, 

gains, losses, deductions and credit& These amounts are 

reported on each paum's tax return.

S-Corporation

S-corporations are hybrid entities with characteristics of 

both corporations and partnerships. They do not pay taxes 

but must file annual information returns and prepare
a

U.S. S=li BUSINOSS AdminiMUM
statements showing income, gain, km, deduction or Grants are easier to obtain from both private and

credit allocated to each shareholder for the taxable year. public sources.

These amounts are reported on the shareholder's tax

return O;Dnn 1040 Schedule C for an individual). To qualify for tax-exempt status, incorporation is

necessary. The process for incorporation varies widely in

each state, but generally requires that bylaws be written

and a board of directors elected. Information on

Tax-exempt Center incorporation can usually be obtained from the secretary of

To qualify for certain federally funded programs, you will state's office or the department of corporation. A small fee

have to establish a nonprofit center, which will make you is usually required.

eligible for tax-exempt status. In a nonprofit organization, Once you have filed your articles of mcorporauon and

any money left after expenses is returned to the operation fulfilled all other state requirements, you can file for

of the center (e.g., salaries, remodeling, etc.). You must, tax-exempt status. Remember, even with federal tax

however, file an application and meet IRS eligibility exemption, you are still required to pay state taxes. To

requirements to claim this status. receive state exemption, you must file with the

Some of the advantages of tax-exempt status are appropriate state agency. The state, however, will not

give an exemption until the federal exemption has been

• State sales taxes do not have to be paid. granted.

• Contributions to the center am tax deductible for Before deciding to operate as a nonprofit organization,

any donor, whether made by an individual or a contact a lawyer. Sound legal advice will help you make

foundation. the right decision.

Starting and operating a business involves a degree of Several states require that providers carry liability

risk. It is important to have adequate insurance protection insurance, at least in some situations, and many others

for your business. If you aren't exactly sure what type of strongly advise it. To find out about your state's

insurance is best, discuss coverage and rates with several regulations, contact the local office that licenses or

insurance agents before making a final decision. registers family day care or call a providers' organization.

Insurance coverage vwies from state to state, but there are Most general liability policies cover four basic types of

several types of insurance available for child cam costs:

providers. Liability and accident insurance are considered o Bodily or personal injury.

essential.

o Damage to others' property.

* Immediate medical relief at the time of an

Liability accident.

A provider is liable and can be sued in court for any 0 Ilie legal costs to defend you in a lawsuit.

accident occurring because of alleged negligence or Other areas for possible coverage are

failure to exercise reasonable care. You, your 9 Transporting children.

employee(s), your home or your property can be found

negligent. * Accidents in which no one is at fault.

Liability insurance for a child care program generally 0 Defense costs in the event of physical/sexual

covers most injuries that may occur. Under such a policy, abuse.

the insurance company will defend you if you are sued. If' 0 Damage to your property.

the court decides Ow you are liable (meaning your

negligence caused the child's injury and, therefore, you Liability coverage is offered on one of two bases: (1),

should pay compensation), the company will pay the cost claims made and (2) occurrence. With cliims-made

of the judgment up to the limits of the policy. policies, you are covered only for incidents that are

U.S. S=li BUSineSs Adminishition 9
reported during the time your policy is in force. o Choose responsible assistants and substitutes.

Occwmce mmrance covers you for incidents that occur

during the time your policy is in force. * Develop clear health and safety policies.

Liability insurance is expensive, but there m several * Encourage parents to visit any time and give them

precautions you can take to reduce the chance of your written policies.

accidents occurring. You will find that these and other policies will make your

• Child proof every room where the children will center safer. For additional information on the different

be-, imagine any possible accident and prevent iL rfins of liability insurance, contact your insurance agent.

• Take first aid and CPR (cardiopulmonary

resuscitation) courses (call your local Red Cross

for information). Accident

• Learn to keep an eye on all the children. For a small cost, you can buy accident insurance to

• Keep waucways, stairs and sidewalks clean. supplement your family's medical insurance if a child or

employee is injured. Talk to an agent or broker before

• Avoid fur. hazards. deciding on the coverage.

. 1

Many excellent ideas that could 

develop into profitable the 

interest you could be earning on 

your money and

business ventures never get underway or fail because of (2) you lose the use of your savings as a cushion for any

inadequate funding to start the business. Getting funding future emergencies.

for your business can pose a problem, especially if you

don't know where to go or whom to see. There are many Ile advantages of borrowing from friends and relatives

sources for financing your center. However, that are (1) they are less likely to make demands on your style

financing depends on whether you are beginning a of management, (2) there is no legal limit on how much

nonprofit or for-profit organization. you can borrow and (3) the terms of borrowing can be

While public funding is seldom available for start-up, negotiated and usually are more flexible than those of

there are several different sources of loans and grants for commercial sources. The disadvantage centers on the

which you can apply. These sources of fniancing can be problems that may arise if the money isn't paid back on

divided into six categories: private sources, venture time.

capitalists, commercial banks, government agencies,

grant programs and other sources. CommorcialBanks

Of these sources, venture capitalists are the most unlikely

to finance your center, they tend to invest in growth firms All banks have a connnercial division. Since the bmiking

rather than start-up businesses because of the significant industry was deregulated, many savings and loan

long-term capital appreciation and the high yields associations also engage in commercial banking. All

generated on investment returns. commercial banks offer business loans--.both short-term

and long-term-at prevailing interest rates.

Private Sources When applying for money from a bank or individual

investor, show a willingness to invest your own money.

Private sources include your own savings or funds from You must be willing to risk your assets if you expect

friends or relatives, and are among the most common others to risk theirs. Banks will require collateral to

methods of fumcing. secure their loan against total loss in the event of defauil

In other words, to obtain funding, the amount of cash or

The advantages of using your own money are (1) there other assets that you will need will depend on the

are no finance charges and (2) your search for additional potential success and the level of risk of your business as

funds is minimized. The disadvantages are (1) you lose evaluated by the lender.

10 U.9 S=ii Business AdniniMtlon
If you need a listing of commerical banks in your area, o Call or visit their off!=.

consult the Yellow Pages or request a refemd from a

ua& association, management consultant~ attorney, 0 Ask if they have special forms or guidelines for

accountant, friend or relative. submitting a proposal.

0 Ask if there are any special requirements for

Govemment Agencies applying, to be sure that you are eligible.

0 Find out what dirar funding cycle is (some only

Federal, state and local government agencies offer special give money at certain times of the year).

financial assistance to small businesses. Many loan

programs, administered under govenunent guidelines and * Find out when applications are accepted and

funded by the government, are available. Each program is decisions made.

designed to assist a special qW of business. Your proposal should describe

States provide financing through a variety of instruments,

often with restrictions imposed. Many instruments are 9 Purpose (why you want to start a day-care center).

similar to those used by private sector sources, but they o Goals (what kind of center you are proposing).

may incorporate public policy objectives, such as job

creation or tax revenue enhancement. Such instruments 0 Procedure (how you will start your business).

are usually designed to ensure that state funds are

protected and that the proceeds are used for productive, 0 Budget (how much it will cost to start and operate

targeted purposes. your center).

Loans can be "tended directly by a state, through a 0 Evaluation (how you will determine if your

state-chartered corporation, or indirectly, through business is meeting your purpose and objectives).

guaranteed loans from commercial lenders. Typically,

loans are used for long-term capital needs, such as plant Once you have completed the proposal, review it to make

and equipment. Most states require collateral, so that in sure you have met the requirements, then submit it to the

the event of loan default the state doesn't lose its entire appropriate office or officer. If your proposal is rejected,

investmenl Interest rates may be at the market rate or find out why. Ask if there are changes that can be made in

may be subsidized by the state. Most loans require the

borrower to satisfy certain criteria before a loan is order for you to resubn-dt the proposal. Sometimes sources

granted, such as showing qualified management~ market are willing to fund only a portion of your original requesl

potential for the fmn's product(s), sufficient collateral to Find out which parts they can fund and resubmit for those

secure the loan and adequate cash flow from operations to parts.

service debl

For an up-to-date list of loan programs and their

requirements, contact your local Small Business Other Sourm

Administration (SBA) office (for information on federal

loan program) or your state economic development Cre4k unions and life insurance companies also can be a

office (for information on state loans and grant programs). source of funds. Credit unions offer personal loans to

members, usually at interest rates lower than dxw of

commercial banks. Insurance companies will often loan

Grant Programs money against a life insurance policy for up to 95 percent

of the policy value. Their interest rates also me generally

Grants are sums of money provided to businesses without lower dm those charged by commercial banks. Interest

a repayment obligation. They can be funded by federal or payments may be deferred as long as your premium

state government agencies or by private foundations. payments are made. But until the loan is repaid, your

Grants are generally reserved for research and coverage will be reduced by the amount of the loan.

development and nonprofit organizations; few for-profit Whatever financial institution you approach, show a

businesses qualify for grant programs. willingness to risk your own money and have a business

You will have to submit a written proposal to the agency, plan or proposal that is well written, facaw and well

organization or foundation where you am applying for a organized.

grant. It is a good idea when applying for a grant from

private funding sources to

U.S. S=ii Business Adrnlnis&vtlon 11
Having a sound financial management plan is paramount

to the success of any business. Each year, many small Table 1 - StW-up Budget

businesses, including child care centers, fail because of

poor financial managemenl Expenses Anmunt

If your operation is to succeed, you'll need a sound Personnel (costs prior to opening)

budget, i.e., a plan that provides a realistic projection of Occupancy

actual estimated expenses and income. Preparing both a Down payment or purchase

start-up budget and an operating budet will tell you what of building

you will spend, now and in the future, and where the Remodeling costs

money will come from for starting and operating your Rent deposit

center. Most important, these budgets win indicate Utilities deposit

whether your projected income will meet your expenses. Equipment

Office

Program

Start-Up Budget Installation fee

The first step to building a sound financial plan is a Supplies

start-up budget. Ibis will usually include such one-time Program

costs as major equipment, renovation, utility deposits and Office

do~n payments. Additionally, your start-up budget Housekeeping (toilet paper,

should include at least 60 to 90 days of operating costs. clearang, supplies)

Food service

In estimating your costs, find out what it has cost other

child care centers (i.e., planned and unplanned expenses) NfisceUaneous

to open over the past two years and figure in the current Advertising

inflation rate. Table 1 will help you identify the items to Food (fimt month)

include in your start-up budget.

Legal and professional fees

Operating cash

Operating Budget Insurance

Depreciation

Prepare an operating budget when your center actually Expenses Total

opens. This budget reflects your spending priorities, the

expenses you will incur and how you will meet those

expenses. From the moment the door to your new Income Total

business opens, you will undoubtedly receive a certain

amount of income. Do not count on this income,

however, to cover operating expenses for the first 90 days.

As you estimate your expenses, the operators of other

centers can help you project your actual costs,

particularly for such items as telephone and supplies. projection. such as the one in Table 3, win help you make

Table 2 includes a sample operating budget to help you this determination. In this smnple, all income is generated

project your annual operating expenses. by monthly tuition fees.

Also, be sure, to complete a cash flow sheet for each 

month. This will enable you to maintain an accurate

Monthly Operating Expenses record of business income and expenditures for

projection and tax purposes. If you are operating your

The primary source of income for your center will be center from home, such a record is especially important

fees. It is important to detemine if this income will be to keep track of in-home deductions (see page 8 under

enough to pay each month's bills. An estimated cash flow Tax Laws).

12 U.% Small Bu$iness A dmlni$VaUon
Table 2 - Armal Operating Budget

A

n

n

u

a

l

F

r

i

n

g

e

b

e

n

e

r

i

t

s

Expenses salary (lS% of salary) Total

Persoimnd

Fun-fim (100%)

DimtorAieW teacher

Teachers

Aide (1)*

CookAnaintenance

Part-time (50%)

Aides (2)*

Secretary/bookkeeper

Substitutes (minimum wage/hour x no. 

of weeks)

Occupancy

Monthy rent x 12 months (number of 

square feet @ x $ amt/sq.ft.)

HeaVair-conditioning

Electricity

Telephone

Insurance

Equipment

Educational

Kitchen

Housekeeping

Office

Depreciation

Supplies

Educational
Housekeeping

Office

Food

2 meals and I snack (cost x no. of children x no. of days in the center/year)

Other expenses

Advertising

Licensing fees

Liability insurance (cost/chfld/year)

Publication subscription/association membership

Audit

Annual payment on start-up loan Total expenses

Income

Fees

(Assess 90% enrollment**; no. of children x enrollment % x cost/week x no. of weeks)

Fund-raising/donations Total income

*To cut operating expenses, you may be able to find volunteer aides through local community youth employment programs.

**Since enrollment is rarely a consistent 100 percent, it is safer to start estimating at 70 percent and work up to 85-90 percent.

U.9 SMII Bt&ih#88 AftiniSbation 11
Table 3 - Estimated Cash Flow Forecast

Cash

in bank

(first

month) 1 2 3 4 5 6 7 8 9 (etc.)

ToW cash (first month)

Expected tuition fees

ToW receipts

ToW cash and receipts

Disbursements for month (rent, loan paymenl utilities, wages, etc.)

Cash balance (end of month)

Balancing Income and Expenses

Add your first-year operating costs and start-up costs to 

determine how much money you will need from the time you 

decide to open the center through the center's first year of 

operation. When including parent fees as income, remember 

that most centers do not have total enrollment until at least 

three months after they have opened for operation, and some 

take several years.

After completing your projected expenses and revenues, 

determine whether the expenses match the income. If not, 

you will need to lower the costs or reevaluate your markel If 

you cannot raise additional monies, decide where you can cut 

costs. For example, can you reduce your program's supply 

costs by relying more on recycled materials? Would such cuts 

help? You may be tempted to cut salaries or fringe benefits 

since they consume a large part of your costs. However, these 

are important in attracting and maintaining a well-qualified 

staff. Also, reducing staff may place you out of compliance 

with state licensing requirements and your own standards of 

quality.

You may want to consider increasing fees or tuition in 

addition to looking for other sources of revenue. Check your 

nee& assessment and determine what parents can afford to 

pay and what seems to be the going rate at

centers similar to yours. Be aware of tax 

credits available to parents for day care, and 

contact your local IRS office for the latest 

information on child care tax credits. Some 

centers have a sliding fee scale, which means 

that parents are charged different scales 

depending on their income level and number 

of children. Remember, if you lower a fee 

you have to make it up in other fees.

Flscal Policies

Your budget should include fiscal policies. For example, 

det=ine when the staff is to be paid (weekly, biweekly, 

monthly), late fee payment policies for parents and tax 

reporting. Bill parents on a weekly or monthly basis. Don't let 

payments fall behind because the longer they are overdue, the 

harder they are to cohect. Decide whether to charge parents 

for the days when a child is ill or on vacation or for holidays. 

There may be other policies that you will think of, so write 

them down and include them as part of the child care 

contract.

Audfts

Audits play an important role in ensuring the sound finaTwW 

management of a business. A review of

14

UA Smil Businm Adminigmtlon
appropriate financial records by an independent public condition of future gmnts or contracts. You should,

accountant will determine whether you have spent money therefore. budget for an audit or look for an accountant

according to your budget and have met any requirements who will do it for little or no charge. Contact your local

mandated by various funding sources as well as state and accounting association for accountants who can help you.

federal regulations. An audit also provides you with an Also, to ensure sound fiscal management of your center,

accurate financial statement and recommendations to contact an accountant or an accounting firm to help you

improve your financial management. Many funding set up your books. This help will be invaluable.

sources require a financial statement or audit as a

How you market your center may make the difference 10. Have you or will you devise an activities

between its success or failure. Like any other business, a schedule?

child care center provides a service that consumers want

and are willing to purchase. Therefore, you will have to 11. How will the center be operated? Hours?

sell your service to the consumers (parents). Your Staffmg? Activities? Fees?

marketing plan can help you achieve this goal.

12. Have medicallfu-st aid policies been

Know Your Customers developed?

13. What will the sleeping arrangements be?

Knowing your customer is the key to successfully

marketing your center. The more you know about the Once you have answered these questions, you will have a

parents' expectations, the easier it will be to develop a base from which to develop your marketing plan.

program that meets their needs, as well as the children's.

The data collected in assessing your community's needs

will help you do this. Also, develop a list of questions to The Marketing Program

help you identify what the parents will likely need, want

and expect of your center. Use the data collected in your Many first-time business owners think that simply placing

initial assessment and the survey to help answer those an advertisement in the local newspaper or a commercial

questions. The questions may include on a local radio or television station will make customers

1. What eAx of service will be provided? flock to purchase their product or service. This is tr~ to a

certain extent, but hundreds, even thousands, of other

2. What are the operating hours? possible customers may never learn of your business. Just

think of the money you'll lose, simply because you didn't

3. Do the operating hours match the parents' develop an adequate marketing program.

work schedule? There are certain factors you should consider when

4. Is extended evening care available? developing your marketing strategy. These are called the

five "Ps" of marketing:

5. Where is the center located? * Productlservicf,--Tte description of the product

6. Is the location convenient and easily or service.

accessible? 0 Price-An amount competitive within the market

area.

7. How many staff members have degrees or 0 Place-'Ilie description of the location, including

training in early childhood education or a

related field? its advantages, such as adequate parking, good

street lighting, easy access.

8. What is the teacher-to-child ratio (e.g., one * Promotion-The method of advertising or

adult to seven children)? highlighting the business.

9. Will there be a curriculum? Will it be 0 Persuasion--lbe ability to sell your services and

structured? the business to the surrounding community.

U.S. Smit Business Admlnistmtlon 15
Each factor requires an investment in dollars, time and Inexpensive Advertising Techniques

effort, but the reward will be worth it. Devise a plan that ,

uses advertising and networking (word-of-mouth If you do not have the money to'advertise by radio,

advertising) to promote your center. Develop short, television or newspaper, don't be discouraged. There are

descriptive copy that clearly identifies the services other inexpensive yet effective alternatives. A brief

provided by your center, gie price of those services and the description of each follows.

center's location. Use catchy phrases to arouse the interest

of your readers, listeners or viewers. Remember, the more Fliers and brochures-.One inexpensive way to

care and attention you devote to your marketing program, advertise is to post Mers in public buildings, such

the more successful your center will be. as shopping centers, markets, laundromats,

restaurants and community centers. Get

permission from the owner(s) or governing body

(e.g., managers, board of direcw) of these

Marketing Your Center facilities before posting your fliers--sme public

buildings prohibit solicitation.

No matter what advertising media you use, you will have

to spend money, so allow for advertising expenses in your Distributing brochures is another good way to

budgel There are many ways to advertise your center, but advertise. Take brochures or fliers to employment

keep in mind that advertising costs vary with the medium offices, libraries, schools, personnel offices of

used. Newspaper advertisements and radio and television businesses and industries, government agencies,

commercials are the most expensive means of hospitals, union headquarters or shops, women's

advertising. If you can afford to use one of these media, groups, colleges and universities, church groups

talk to an advertising agency before making a final and the parent-teacher associations (PTAs).

decision. Once you've decided on the medium, get the To develop effective brochures and fliers, study

agency to help you design your advertisement or create a written adverdseinents in the newspapers and

commercial. magazines; ask yourself which advertisements

Whatever advertising media you use, be sure to include appeal to you and why and try to develop similar

the following information: ones. If you know people in advertising or public

relations, ask them to help you design your

1. Name, address and telephone number of the brochures and fliers, to avoid the cost of

center. professional help.

Business cards-Business cards are an excellent,

2. Ages of children who will be accepted. inexpensive way to advertise. Have business

cards printed in lots of 1,000. Include your name,

address and telephone number, the hours of your

3. Hours the center will be open. center and the ages of the children youu care for.

Ask parents, friends and relatives to pass them out

to interested people at work. Take them along to

4. Fees charged. pass out when you take the children on a field trip

or a walk in the neighborhood. Anyone who

5. A description of the program and the works with families may be able to make referrals

qualifications of the staff. to you-ministers or rabbis, school staff,

pediatricians, parent groups and business or civic

organizations. Provide them with business cards,

6. Whom to contact for more information. fliers or brochures on your center so they can

knowledgeably talk to prospective clients.

7. Date you plan to open. Referral agencies-Me number of child care

referral agencies is growing. If you are licensed or

Start advertising your center at least three months before registered, you may be eligible to be listed for

you open for business. Make sure your advertisements are referrals by the licensing office and other refmtal

consistent with the image you are trying to project. agencies in your community. Check the National

Directory of Child Care Information and Rejrerrat

To ensure the success of an advertising program, try to Agencies for the agency nearest you. (For this

meet your competition head on. Look at your information, write to the California Child Cm

competitors. In what sections do they advertise? What Resource and Refm-al Network, 809 Lincoln

size advertisements do they use? Way, San Francisco, CA 94122.)

16 U.SL SMII Business Aftintsbation
NetworkiW-Pahaps one of the best ways to Your estimaw of c(xnpetitm should include all those

market your center is dwmgh networking Suice who offer related services. They may be in the same

most parents choose their child's caregiver fr(xn geographic area or another area,diat is accessible to your

word-of-niouth reconuwndatbu, talk about clients. To determine the competitiveness of your market,

yourself and your program to people who might find out

have the opporamity to recomniend you.

Volunteer to speak to local civic and church I. What businesses offer child care service.

groups and to the PTA.

2. Who your major competitors are, both direct

Netwoddng adds a credibility to your service that and indirect (e.g., child care centers

advertising can'L This is primarily because accessible to your clientele).

advertisements are designed to convince people to

purchase a certain product or service at any cost 3. How long your competitors have been in

while word-of-mouth referrals are based on an business.

individual's satisfaction with a product or service. 4. How your center will benefit the clients more

Since most people value their family's and than your competitors' centers.

friends'judgment more than an advertisement,

they will more likely choose your center if it is so 5. If there is a need for additional centers in your

recommended. area or in an area that is easily accessible?

Remember, word-of-mouth advertising depends 6. How competitors' centers are similar to or

on the quality of your program. If parents are different from yours.

pleased with the way their diildren are duiving at

your center, they will tell their friends. Good 7. What your competitors' strengths and

providers in clean, safe and appealing centers are weaknesses are.

in high demand almost everywhere.

* Yellow Pages-Directory advertising is 8. How competitors' businesses am faring.

completely different fiun other forms of 9. How competitors will act when you enter the

advertising. It is for people who are ready to buy. market.

Other nwdia deliver readers, viewers or listeners;

directories deliver buyers. Include as much 10. What competitors' managerial abilities,

information as possible in your directory financial situations, facilities, reputations, etc.

advertisinent as people frequently make decisions are.

bwed on the information in directories.

As with any print media, be sure your entire Financial institutions and investors often place heavy

market is covered by the intended directory with emphasis on potential competition when deciding to fund a

minimal waste. new business. Whether or not you apply for a loan to

0 Class#kd ads-Place an advertisement in the finance your center, it is good to know as much as possible

classified section of your local newspaper. about your competitors.

Announce your opening in the business section as

well as other feature sections. Many people read Sources of Market Information

the business and classified sections of the

newspaper during their commute to and Ercxn There are several sources of market information. They

work. Placing an advertisement in these sections include

increases your clientele base. * Market research consultants and advertising firms.

Know the Competition * Colleges and universities.

* Your own research.

A codinal rule of effective marketing is to know your 0 Other sources, such as the Yellow Pages or

competitors. Assess their operations and find a way to iridusUW directories.

beat them. Many enbvpremurs mistakenly believe that

their competitors consist solely of firms that offer similar Market Research Consultants and AdverUsing Firm

wz%ices or products in the same geographic area.

However, they may also include any business vying for Market research consultants are professionals who

the same clients. complete market survey reports. They can also help you

U.S. SMII BUSineSs AdMiniMflon 17
develop a marketing plan. Most advertising fmns also Your Own Research

have a market research department that can help you

develop survey questionnaires and analyze and interpret You may choose to conduct your own market analysis.

the data. The drawback to using a professional consulting Most market research is time consuming, and the

and advertising firm is the cosl techniques can sometimes be quite sophisticated. Even if

Try to find a consultant or advertiser who will analyze you do not have the time or the skills needed, you can

and interpret the data and help you develop a marketing still conduct simple =search that can yield a tremendous

plan for a nominal fee. amount of information. This technique is calledfocused

group interviews.

Colleges and Universities First, from your personal knowledge, put down some

facts about your niukel Then assemble a small group of

Business schools in local colleges and universities often acquaintances, friends or relatives who represent a good

have professional and student groups that offer consulting cross section of the client group you are hoping to serve.

services. They can help you with a market survey and a Describe your center and the service you plan to provide.

marketing plan, as well as with problem areas. Student Ask for feedback. Use dds information to determine if

services, however, may be available only during the your idea is feasible and if your center will be accepted.

academic year. It is important that you approach these A nlaftting or advertising specialist can help you set up

services with well-defined needs and be prepared to these groups.

actively participate as the project progresses. Contact

local colleges or universities for additional information. Other Sources

Many colleges and universities are involved with an

SBALafffliated program called the Small Business Your local library is usually a gold mine of information.

Institute (SBI). SBIs provide many services, including Many publications, such as govennnent reports, contain

market analysis. If you need help analyzing the market valuable up-to-date information. If you have any

and interpreting survey data, contact the local SBA office questions, the reference librarian is trained to find the

for information on the nearest SBI program. information. Do not hesitate to ask for help.

Like the marketing program, your 

management system

will help set ft foundation and ultimate plan 

for your

business. Planning and developing a program that ratios and group size.

adequately manages your center is very important. There

are many factors that you must consider, such as finding 0 Needs assessment surveys that assisted you in

and hiring qualified staff, determining staff size, setting determining the age group of the children to be

worldng hours, deciding on staff responsibilities, cared for and what kinds of experience parents

establishing salaries and Ednge benefits and developing wish for their children.

personnel policies. Hiring Pmeedures

Since it is unlikely that you will have all the skills needed

to effectively manage your center, you will have to hire It is important to establish hiring procedures. If you used

personnel who have the skills you lack. a parent group to assist you with your needs assessment,

you might want to include them when you hire. They can

offer invaluable advice on hiring qualified staff who will

Finding and Hiring Staff satisfy your and their needs.

Your staff is a reflection of your program philosophy and Some steps in the hiring process include

goals. The members' quality and performance are critical 1. Establish criteria for selecting your staff.

to the success of your center. Many factors will influence Working with chikiren involves enhancing

your hiring decisions. Some of these points have been their social, intellectual, emotional and

discussed in earlier sections. They include physical development. Major considerations

18 U.9 SMII Business AdmintMOM
in a candidate am his or her personal 8. Contact references.

qualitie.r, attitude toward child care, children

and parents; previous applicable employment 9. Review and make your decision.

and education or other special training.

Having the necessary qualifies and ddus to 10. Notify candidates of your decision, even

fulfill the job description is, of course, also those you do not hire.

important.

To give you an idea of what to look for when Recruldng Staff

selecting teachers for your center, sample

curriculums for the Associate's. Bachelor's Table 4 lists several places where you might begin to

and Master's programs in early childhood recruit staff.

education are included in Appendix C. Each advertisement should include a job title, brief job

2. Establish a time frame. Remember, you willdescription, qualifications, 

deadline for applications,

need time to advertise, interview and make request for resume, telephone number or address and

selections, and some individuals may have to whom to contact.

give notice to present employers, so it is wise Remember, the more qualified your staff, the more

to begin the hiring process at least 60 days in effective your program will be at meeting the needs of the

advance. parents and children.

3. Advertise for employees.

4. Review resumes based on your criteria. Determining Staff Size

5. Telephone any promising applicants for anMx sm of your staff will 

depend on how many children

interview. Screen to be sure they meet your you plan to care for, state licensing regulations and the

criteria. quality of the program you plan to provide.

6. Have candidates fill out application forms. States establish minimum guidelines for the number of

7. Conduct interviews (if possible, observe staff needed in a child em center, depending on the age

of the children. You may choose to exceed these

candidate with children).

minimum requirements.

Table 4 - Sources for Recrufting Day-cam Staff

Secretary/

Source Director Teachers Cook Bookkeeper

College placement

ofrice x x x

Vocational high school x x x

State licensing office x x

Information and

referral agency x x

Local employment

agency x x x x

Newspaper

advertisements

(nearest city paper) x x x x

Local business school x

Notices in markets and

laundromats x x x x

U.S S=Ii Business AdminiMtion 19
Research has shown that for three to five year olds, Establishing Salaries and Fringe Benefits

groups of 14-18 children work well. Infants should be in

much smaller groups than that, and school-age children To maintain a consistent~ qualified staff, you must offer

may be in slightly Larger groups. competitive salaries and Ednge benefits. Some fringe

In addition to your regular staff (those caring for the benefits to consider are

children), you will need to make decisions regarding o Payment of social security (optional for nonprofit

other personnel who, although not working directly with organizations).

the children, are necessary to maintain a smoothly

operating center (e.g., a cook ff you are preparing food at 0 Health insurance.

the center, a secretary, a bookkeeper and a custodian). 0 Workers' compensation (mandatory).

Substitute staff will be necessary for days when regular

staff and volunteers are ill, on vacation or in training. 0 Vacation leave.

0 Sick leave.

Setting Working Hours * Personal leave.

As you decide on the number of staff you will need, also * Paid maternity/paw4mity leave.

plan the hours they will work at the center. Most centers

are open 10 to 12 hours daily. However, the ldnd of 0 Paid training at workshops, conferences or

service you plan to provide will determine your center's colleges.

hours.

0 Retirement plan.

Working with children is emotionally and physically

demanding. Staff tend to be less effective after six hours. 0 Professional days.

If you require eight hour shifts, staff are entitled by law to The same people available to help you with job

lunch breaks and coffee breaks, the latter usually once in descriptions can also help you make decisions concerning

the morning and once in the afternoon. salaries and fringe benefits.

Developing a staff schedule depends on how many

children are present at different times of the day. Children

do not all come or leave at the same time. Personnel Policies

A written personnel policy is your outline of operating

Deciding on Staff Responsibilities procedures for staff members. It details what they can

expect and what is available to them as employees of

Job responsibilities depend on job descriptions, the your center. Clearly stated, policies help avoid

authority each person has in line with his or her misunderstandings and misinterpretations.

responsibilities, how it will be determined whether those

responsibilities have been met and who will supervise Personnel policies generally include

whom. Job descriptions must be written for all staff o Job descriptions.

members, including you.

To help you develop job descriptions, contact 0 Salary ranges fr(xn lowest to highest level for any

one position.

• Your licensing agent. o Benefits.

• Agencies that assist people in determining their

skills (e.g., Displaced Homemakers, Urban 0 Hiring and terminating procedures.

League, YWCA. etc.). 0 Evaluation procedures.

• Child care resource and information referral

centers. * Grievance procedures.

• Child care associations. 0 Sick and vacation leave.

20 U.S. Small Business A dndidsnuon
Legal ASpeft

You must become familiar with many laws when others are 

working for you. These laws regulate

Withholding tax (federal income tax)-~k with the IRS.

State or municipal income tax-Ask your bank whom to 

contact.

Workers' coinpensation--Contact your state agency or an 

insurance ecunpany.

Social security (FICA)--Contact your local social security 

office.

Unenwloynwnt insurance--Contact your state anploymnt 

security agency.

Thew laws and regulations constantly change so it is 

important to keep abmut of them. For more information, 

contact the IRS or a lawyer.

Volunteer Staff

In addition to some paid staff, many centers use volunteers to 

meet licensing requirements. Volunteers can offer special 

activities that centers could not otherwise afford to give 

children and their families. They can serve

as teachers, teacher aides, secretaries and bookkeepers. Many 

volunteers are skilled in story telling, dance, art and music. 

Parents may have skills in nursing, accounting or law and may 

want to serve as volunteers as a way to reduce tuition fees.

if you decide to use volunteers, be very specific about when 

they will work. Describe their duties, so they know to whom 

they are to report and ft person to notify if they will be 

abSenL There are risks in using volunteers to maintain your 

staff-child ratio. If a volunteer does not show up, you could 

be in violation of state regulations.

You may find volunteers at

Colleges and universities (student teachers, students in art, 

music, athletics).

e Fraternities and/or sororities.

9 Girl Scouts and/or Boy Scouts.

9 Junior League.

9 Foster grandparent programs.

9 Senior citizen groups.

o Armed forces bases.

Training programs such as early childhood development 

classes.

Before you start caring for children, it is wise to U=dorin your 

center (ie., your home or location outside your home) into a 

place that is safe, clean, comfortable and inviting to parents 

and children aMm. There are a number of measures that you 

can take; each is described below.

safety

You must be confident that all areas the children will 

use-indoors and ouWoors---are safe. To check, you might 

want to crawl around on your hands and knees, asking, "What 

could a child possibly get into here? How might a child be 

hurt here? What other problems could be caused here?" Make 

sure

All items children should not use are safely locked away or on 

high, inaccessible shelves.

* Precious breakables are put away.

o Poisonous plants are out of reach.

o Stairs are well lighted and secure underfoot.

Chemicals, medicines and other dangerous iteins are behind 

safety locks.

Toys m stored on shelves to avoid injury from falling lids on 

toy boxes.

AU play materials, funiiture, shelving, outdoor 

equipment--everything with which children will come into 

contact-should be checked every few days for loose parts or 

any safety hazard. Broken toys and missing pieces discourage 

play and should be fixed, put away or discarded. A doll with a 

missing limb could be tenderly cared for, and perhaps 

bandaged or fitted with a "pretend" artificial limb during 

hospital play. If beyond repair, some broken equipment can 

be dissected by the children to see what is inside before it is 

thrown away.

Sometimes parents are willing to build and repair equipment 

to keep costs down. Or a parent can be given a discount for 

helping with these UL,;ks. Occasionally one or more parents 

may be willing to build shelves, a backyard climber or a 

child-size picnic table.

U.S. Small Business AdmirdsWation

21
Be aware that, while garage sales are often a source of 0 A fabric carrier for young babies and a backpack

fim-rate toys and equipment at bargain prices, older carrier for babies who can sit up. Many babies

model cribs and other items may not meet current safety love swings and bouncing chairs.

standards. 0 For older children, a private place with props and

equipment that children can rearrange as they

Equipment and Materials choose. School-age children will also need a

place to keep their things from school and

The equipment and materials you will need depend on the perhaps a place to do their homework.

ages of the children you care for. Here is a list of ideal For suggestions on specific toys for different age groups,

equipment and materials for a center serving a wide age call the National Association for the Education of Young

range of children: Children (NAEYC) at 202-232-8777 or 800-424-2460 or

• Child-size tables and chairs, booster seats, high write to NAEYC, 1834 Connecticut Avenue, NW,

chairs and infant seats. Tables can be used for Washington, DC 20009-5786.

eating and for a variety of children's activities.

You do not need to spend a lot of money on toys and

• Cribs, beds, cots, all with protective matmw pads equipr(ient if you set up your center creatively. Your

covered with plastic that can be stored under the warmth and enthusiasm will be your best assel

beds; blankets and sheets for each child. If you

use your family's beds, lay the children's bedding

on top of the made-up bed. setup

• Diapering area (preferably near a faucet) that can

be easily sanitized after each use; nearby Your center should be arranged so children can play

childproof, sanitary storage for used diapers-, step happily with each other and by themselves, participate in

stools for sink and toilet. a structured curriculum (if provided) and experience their

Spaco--to crawl, toddle, run, climb and to be growing independence by hanging up their own coats,

alone (but still in view). putting dishes in the dishwasher or putting away art

materials. Allow the children to suggest ways to make

Outdoor play space (sand, hard surface for leaming and playing fun and safe. While you will always

wheeled toys, swings, climber, garden) or a closely supervise their activities, you can't be widi all the

nearby park. A covered porch or carport is ideal children every minute. If there are interesting things for

for rainy days. children of different ages to do, you will be able to feed a

Art materials, such as meat trays, egg cartons, baby or prepare lunch knowing that the children are safe,

computer paper, washable surfaces for messy busy and happy. If you provide strucaired activities for

activities. the older children, have your center arranged so the

younger children can play quietly without interrupting the

Water and sand to scoop and pour into plastic sessions, and so you can monitor their activities.

disbpans or a larger trough or water table-, old Your job will be easier if you arrange your center to

throw rugs or other absorbent floor covering. simplify everyday routines. Some problems can be

• Large and small, simple and complicated toys, prevented by having selected things where the children

including building materials such as wooden and can reach them (e.g., toys, spare clothes and water cups),

plastic blocks. and others where they can't (e.g., house plants, TV,

• Good children's books and a quiet, cuddly place crayons and children's projects). If children can take care

to read them. Paperback books can be covered of some of their own needs, it makes them feel

with clean adhesive plastic to protect and independent and competent and fiees you to do other

strengthen them. things. Encourage the older children to help the younger

chiklren with simple tasks such as tying shoes and

• Games, puzzles, dolls, vehicles (child powered buttoning or zipping coats; it reinforces their

rather than battery powered). independence, sluwpens their skills and fosters friendship

• Make-believe props, clothes and costumes for and leaming among peers.

&essing up and pretending.

• Record player, tape recorder and radio, number, storage

alphabet and color charts or cards; canister for

crayons, pencils and other miscellaneous art Adequate storage is especially important for child care

materials. providers with limited space. Well-designed storage

22 U.& S=li Businm A&nlnisftffon
reduces clutter and increases play space. Boards and the child a feeling of belonging and dw security of

cement blocks make stwdy, inexpensive shelves for knowing special things can be kept safely.

preschool and older children. Heavy cardboard cartons As a busitiesslxmn, you will need office space. Efficient

and wooden crates from grocery stores can also be used to storage of adtnhdsmdve and financial records will save

build storage units. hbke sure shelves am stable enough you fim. you may not have the money to purchase a file

that children won't tip them over when they use the cabinet or desk when you open your center. However,

furniture to pull themselves up to stand or walk. you can use drawers and cabinet space dw you usually

it is a good idea to rotate toys and materials: put away keep junk in as a file cabinet for the children's emergency

items the children are fired of for a few weeks; bring them cards, expense receipts and business papers. Empty

out later and the children will enjoy rediscovering them. shelves can also be used for storing business records.

You may want to assemble theme boxes containing all the

materials you need for a specific activity. It is a good idea to find a secure place to keep your

business records because dwm records will be used to file

Every child should have a personal storage area, even if it your federal and state taxes at the end of the year. If you

is only a shoe box or an ice cream tub. Label it with the misplace any of your records, filing accurate taxes will be

child's name and a special symbol. Each child's special virtually impossible.

area should be off limits to the other children. This gives

Communicating Policies to Parents program-.the children just play all day. The same toys

we always available but never presented in any way.

Once parents begin to respond to your advertisements, Planning is essential to avoid boredom and to increase

you will need to make appointments with them to discuss learning opportunities.

enrolling their children at the center. At that time, in

addition to the enrollment form, you will need policies Your prograin-what you and the children do

that address: day-by-day-will be the key to your professional

success and pleasure. If children are bored, they not

• Illness. only are missing developmental opportunities, but also

• Vacation. may have more discipline problems and be more difficult

• Holidays. to get along with. All will be happier if you have

interesting activities that you and they can look forwkd

• Field trips. to daily.

• The center's hours.

• Who is authorized to pick up the child or children. SchodLding

• What extra clothes, if any, will be required. Some providers like to follow a daily schedule, doing the

• Activities taking place at the center. same activities at approximately the same time every day.

Others like to be more spontaneous, responding to

It may be a good idea to develop a child care contract that everyone's moods and the opporumities that come along.

explains the policies of your center. If you have a contract, If you like tight schedules, you may need to be more

have parents enrolling their children sip it and provide flexible, because young children are spontaneous; they

them with a copy. That way, if any problems or have their best moments without any waniing.

emergencies arise, the parents know, up front, what your A good provider obsex~es the children for activity ideas.

policies are. Sometimes these activities require phuming and

sometimes they don't. Put your planning energy into

Structuring the Program setting up a rich environment--wt the stage for children

to come up with their own ideas. Everyday living will

How you structure the program for your center is another provide many of the activities. Leaming to put on a

very important aspect to consider. Ntany child care jacket, spreading peanut butter on a cracker, playing

centers, especially those set up in the home, have no real peek-a-boo with a baby--these are important activities
UA S=il Business AdiWnls&ation 23
for young children. IdmUy you should have a variety of 

activities on hand. Keep a list of possibilities to choose from 

when something is needed.

Watch the children's natural tendencies to help you plan an 

effective sequence for the day. If they are creative during the 

morning, that is a good time for leaming (e.g., alphabet, 

numbers, art activities). If they tend to get rowdy after a snack, 

that is the time to go outside. If they are sleepy and cuddly 

after waking from their naps, reading stories might be a 

successful activity. If school-age children resist structured 

activities when they arrive, they should be allowed free-play 

time.

You will need to adjust your routines as new children bring 

different needs and personalities to the group. Each group of 

children is different. You can plan activities, but make sure you 

flow with children's natural tendencies rather dm oppose them. 

A good policy for planning is to alternate between active and 

quiet times, structured and unstructured activities and together 

and private times.

Be sure to inform parents what has happened during the dpy. 

If you follow a schedule, post it on the bulletin board or 

include it in your parents' handbook. If you don't follow a 

schedule, you can list the day's activities. Parents are usually 

eager to find out what their children have been doing. 

Informing them builds communication and helps parents 

recognize your efforts and respect your perceptions.

AcOvIfles

Your choice of activities will be influenced by the 

developmental levels of the children in your center. The idea 

behind the concept that children learn and play in different 

ways depends on their experience and interest, ages and special 

needs. For example, one two-year-old child might climb better 

than another four-year-old child, or a younger child who has 

played with a material frequently will use it in more complex 

ways than an older child who has not had any experience with 

that material.

Provide many chances for children to make real choices and 

explore ideas or objects on their own. Young children learn by 

handling real-life materials. Allow enough time for each 

activity, so children don't feel pressured, but have time to see 

each activity to completion.

Help children do what they are interested in, and offer 

materials and assistance in a way that helps them learn to help 

themselves, others and the world, and to feel good about what 

they can do and who they are in this world. Curious, confident 

children will continue to be eager learners and cooperative 

children.

Present leaming activities and toys in a way that stimulates the 

children's interest and play. Children need structured and 

unsuwtin-ed time for leaming and experimenting activities. 

How you present an activity will vary by the children's 

development levels and the mood of the moment. Suppose 

you want to set up an art activity with discarded magazines, 

scissors, paste and paper. Older children may be able to select 

ft pictures they want to use, cut them out and paste them on 

their paper without any help. You may be needed only to set 

up the materials. A younger child may need a lot of help 

leaming how to use scissors and, in fact, the cutting may turn 

out to be the whole activity. An example of both structured 

and unstructured activities for preschool-age children 

developed by the Sha-Za Early Leaming Center is shown in 

Table S.

Table 5 - Preschool Activities Developed by the 

Sha-Za Early Learning Center*

Gather children into a group for mil can. Sing a good morning 

song together. Discuss the weather (cold, hot, warm, raining). 

Hand coordination activity-Break up into individual 

groups according to age (group Aage two; group B-age 

three) for painting. Distribute water paint and paper to 

both groups. Let group A fmger paint and group B 

paint using brushes. Practice nursery rhymes using 

hand instruments. Snack. Introduce the numbers 1-5 

and the letters A-C to class. Practice as a group and 

individually. Hand coordination and motor sldlls 

activity-lnbdduce buttoning, zippmg up clothes and 

typing. Lunch/free time. Nap. Gather for story time. 

Snack. Free time.

Depending on the ages of the ch ildren, you may want 

to do an activity all together, with a small group or 

individually. Let the children know you value their 

work. Avoid activities to imprm parents; keep your 

program centered on the children at all times. Explain to 

parents why it is important for children to invest pan of 

themselves in their work. Watch how proud and confident 

children are when they say, "I did it myselfl"

*Inclusion of the activity developed by the Sha-7A Early Lexming 

Center does not imply SBA's erdcmmnent of the center's progrwn. It 

is merely presented as a model.

24

U.a S=li Business AdMiniMtion
Cuniwwn anything special in your nutrition program, such as the

fact dW you do not serve sweets.'Most parents will be

In order to provide quality educadonal programs for happy to find a camgiver who is concerned about

cWW= fnxn preschool duough high school, many states children's nutrition. Sometimes parents may request

require that diild care providm offer structured special nutritional considerations for their children, such

educational cuniculums to their children as a condition as no sugar or no milk products. If you cannot

for cerfificatkm or registration. Even if your state does accommodate the request (for example, a vegetarian diet),

not so stipulm. it is a good idea to devft an adequate the parents may need to supply special meals.

educational program for your center. Parents will be more

likely to view you as a caring professional dedicated to If you are licensed or registered, you are eligible for a

the total growth and development of their child=, and substantial reimbursement for your child cue food

you will attract more families to your center expenses. For more information on the Child Care Food

Program (CCFP), write the U.S. Department of

If you do not have the expertise to develop an educational Agriculture, Washington, DC 20250.

program for your center, contact an early childhood

education specialist at a local college or university or the

National Association for the Education of Young Parent Involvement

Children for assistance. Explain the type of service you

are planning to provide and the age groups you . will serve. Children's development depends not only on you as the

There are several concepts you can use to develop a caregiver, but also on the parents' involvement. Children

curriculum. However, many child care professionals feel more secure and develop into confident,

recommend that you use the Developnwntally well-rounded individuals when they know their loved

Appropriate Practices or the Montessori Method. These ones support them. Get the parents involved in the

curriculums are designed to aid a child's intellectual children's educational and recreational activities. For

social, emotional and physical developmenl To give you instance, plan a field trip to a local museum and, if

an idea of what should be included in the curriculum for possible, have some parents accompany you. The children

your center, a swnple is provided in Table 6. will be pleased that their parents are going with them. Of

course all parents cannot attend every activity.

Nutrftion Arrange conferences with parents to discuss the skills that

you plan to cover and to give them brief reports of their

W parents know the tunes and kinds of meals and snacks children's progress. Parents will be delighted to know you

you plan to provide for the children-for example, by are as concerned and committed to the total development

posting weeldy or daily menus-.and infonn them of of their children as they are.

11

Providers often begin with no trunmg other than that of school diploma, you are required to have a minimum of

being a parent or a baby-sitter. Since caring for a group of 15 hours of biwng in early childhood education to

children often can present more challenges than your quaw for certification or licensing. For additional

experience has prepared you to meet, you may find that information on these requirements, contact your, state or

bubting in early childhood education and child local child care licensing office.

deve!opment is very useful. There is much to be learned Training series and individual workshops are offered by

about positive ways to discipline or guide children and resource and referral agencies, NAEYC affiliate groups,

about activities for different developmental levels. adult education programs and school districts.

Research has shown that provider training is related to the 

quality of child care. Trained providers are more in demand by 

parents, who are becoming increasingly sophisticated about 

selecting care for their children. Whe4xr or not you have a 

college degree or a high

U.S. SMII BuSineSS AdMinIStNtion 25
Table 6 - Sa.mple Curriculum for Child Care Center

Educational

skills Activities

Pre-reading 0 Learn names of objects and how to categorize them (e.g., food, aninws, clothing, toys,

furniture).

0 Lem parts of objects (e.g., a pencil has a point, lead, shaft, eraser).

0 Learn opposites (big-little, fat-sldnny, hard-soft, hot-cold).

Reading 0 Learn to recognize L*ds on objects.

0 Recognize community signs (e.g., stop signs, McDonald's, Safeway).

0 Use language experience stories, dictated stories and tmher-made materials.

Handwriting 0 Learn to write name, date and numerals.

0 Learn to write upper and lower case manuscript letters.

0 Write dictation of words and simple sentences.

Math 9 Learn sequences (forward and backward).

0 Explore with unit blocks.

0 Count using familiar objects.

0 Use blocks to learn sets, likeness, differences and intersection of sets.

0 Learn to make things equal.

0 Learn calendar and clock skills.

Science * Learn about precipitation (rain, snow, sleet, hail).

9 Learn about lightning and thunder.

0 Learn about water (solids, liquids, gases).

0 Learn about air (evaporation, movement).

0 Learn to name and identify the seasons.

Social Studies o Learn one's own name, names of other children, teachers and staff.

0 Learn members of immediate family.

0 Learn members of extended family.

Art Use different media-clay, easel paint, fmger pain~ crayon.

Visit museums

Converse and work with artists in the community.

Music Learn and sing different songs.

Learn to play and listen to records.

Name and identify instrument classes.

Participate in rhythm and body movements.

0 Listen to and identify musical styles (classical, jazz, pop, rhythm and blues).

Other important skills your center should focus on include

Perception motor skills Dramatic play Self-help skills Health and safety procedures, services 

for the handicapped, social services and eligibility determination

26 U.& &Mil Bt&non AdMkd~Uon
The Child Development Associate Program lie following degrees m offered in early childhood

education:

The Child Development Associate (CDA) Program is one 1. Associate ofarts in Child Developmental and

form of training available to child care providers. It offers Nursery School Education--two-year degree,

a national credential based on performance with children total hours required for graduation: 72.

and families. By participating in this program, you can

learn more about your work and be recognized for your 2. Bachelor ofarts in Early Childhood

skills. The competency standards for the credential can Education--four-year degree; total hours

help you identify your strengths and weaiaw-qm, even if required for graduation- 125.

you do not apply for the program. For more information

about this voluntary program, or a copy of the book 3. Master ofarts in Early Childhood

containing all the competencies identified for family child Education--gmduate degree; total hours

care providers, call the Council for Early Childhood required for graduation depends on degree

Professional Recognition at 202-265-9090 or requirements.

800-424-4310. 4. PhD in Early Childhood Education*-toW

hours required for graduation depends on

Other Degree Programs degree requirements.

Many two- and four-year colleges and universities offer Remember, the criteria for graduation depend on the

degrees in early childhood education. Although you may requirements set by individual institutions. For information

not have training in this field, if you are planning on specific to the degree program you are interested in,

eventually making this your lifetime vocation, you may contact the admissions office of the college or university

want to consider getting a degree. There is no doubt that nearest you.

the quality of a child's education depends not only on the

parent's involvement but also on the education of the *Sorne universities offer a doctorate in Early O~ldhood

teacher and child care provider. Education.

il
U.S. Smit B~siness Adminisntion 27
I
APPENDIX A: BUSINESS PLAN OUTLINE FOR CHILD CARE CENTERS

Cover sheet E. Income projection statement:

I. Name, address and phone number of business. -Tbree-year summary.

11. Names of principals. -Detail by month, first year.

Statement of purpose -Detail by quarter, second and third yews.

Table of contents

-Assumptions upon which projections

I. The business were based.

A. Description of the business. F. Monthly cash flow projection.

B. Location of the business. III. Supporting documents

C. Competition and feasibility study. A. Tax returns of principals for last three years.

D. Operating procedures and policies. B. Personal financial statement (all banks

have these forms).

E. Personnel.

C. Proposed lease agreement.

F. Business insurance.

D. Contractors' renovation estimates.

II. Financial data

E. Licenses or other legal documents.

A. Application for loan.

F. Resumes of all principals.

B. Capital equipment and supply list.

G. Reference letters and/or letters of intent

C. Balance sheet. (from suppliers, etc.).

D. Break-even analysis. H. Copy of curriculum.

1. The Business 6. What management and other personnel are

required and 

available for the operation.

A. DescripUon of the business

7. Why your investment or someone else's

Generally explain money (debt/equity) will make your business

profitable.

1. What qWs of child care services will be

offered. Address the following areas for each section listed:

2. What your curriculum is (or will be). 1 . Status of child care center start-up: expansion

3. What market you intend to serve, the size of the of a going concern or takeover of an existing

child care center?

market and your expected share of the market.

4. Why you can serve that market better than 2. Business form: sole proprietorship,

your competitors. partnership or corporation?

5. Why you have chosen your particular location. 3. Who are the customers?

U.S. Small Business Administration 29
4. Why is your child care center going to be 8. What are the state and kxW taxes, state and

profitable? local laws, utilities and zoning variables that

may affect the location of your center?

5. When will or did your center open?

9. Does the surrounding commu nity show

6. VA~a hours and days will you be or are you in enthusiasm for you and I your business?

operation?

For a new child care center, address the following areas: C. Compedgon and feasulity study

7. Why will you be successful in the child care I . Who are your five nearest competitors?

business? 2. How will your center be better than theirs?

8. What is your experience in the child care 3. How is their business-Steady? Increasing?

business? Decreasing?

9. Have you spoken with other people in the 4. How am their operations similar and

business about their experiences, challenges dissimilar to yours?

and rewards? What was their response?

10. What will be special about your center? 5. What are their strengths and weaknesses?

11. Have you spoken with prospective trade D. Operalng procedures and policies

suppliers (i.e., educational materials, toys,

food distributors) to find out what managerial 1. What is or will be the payment policy9

and/or technical help they will provide? 2. How are rates determined?

12. Have you asked about trade credit? 3. How will legal matters be addressed?

13. If you will be doing any contract work, what 4. How will volunteer assistance be managed?

are the terms of the agreements? (Reference

any firm contract and include it as a 5. What will the parents' handbook contain

supporting document.) regarding the center's rules and regulations?

14. Do you have letters of intent for prospective 6. What are the procedures for handling

suppliers or purchases? emergencies?

B. Location of the business E Personnel

1. What are the attributes of your business I . What are your personnel needs now? In the

location? near future? In five years?

2. Will you buy or lease the space? 2. What skills must personnel have?

3. What is the cost of the space? Is it 3. Are the people you need available?

competitive with comparable space in the

general area? 4. Will your employees be full- or part-time?

4. What are the advantages and disadvantages of 5. Will you pay salaries or hourly wages or both?

the site with reference to wage rates, labor

unions and labor availability? 6. Will you provide fringe benefits? If so, what?

Have you calculated the cost of these fringe

5. How much space do you need? benefits?

6. What is the building's proximity to clients or 7. Will employees be required to work ;vertime

suppliers? occasimmfly?

7. What is the building's access to public 8. Will you have to train people? If so, at what

transportation and parldng? cost to the business?

30 U.a SMBII BUSbess AdminiMtion
F. Businm lmumnes It. Financial Data

1. State the anmnt of your fimmme policy and See outline on page 29; sample forms follow.

give a brief summary of what is covered:

a) Property. Ill. Suppoiling Documents

b) Personal injury.

c) IA)ss of key person. See outline on page 29.

2. You may also want to state that the policy is

available for mspecuon upon requesl

11
U.S. SMII BuSiness AdmintSUation 31
A. Application for Loan

OMS Approval No. 3245-0016 

Expiration Date: 10-3"7

U.& Small Busirw Administration

Application for Business Loan

Applicant Full Address

Name of Busi no= Tax I. D. No.

Full Street Address T*L Nck (Inc. A/C)

City County State Zip Number of Employees (I ricludi no

subsidiaries and offnlntes)

Type of Businan Date Business Established At Time of Application

Bank of Business Account and Address If Loan is Appr(yved

Subsidiaries or Affiliates

(Separate from above)

Use of Proceeds:

(Enter Gross Dollar Amounts Loan Requested SOA USE ONLY Collateral

Rounded to Nearest Hundreds)

If your collateral consists of (A) Land and Building, (D) Accounts

Land Acquisition Receivable and/or (E) I rwentory, fill in the appropriate blanim. If you

are pledging (8) Machinery and Equipment, (C) Furniture and Fixtures,

New Construction/ and/or IF) Other, please p~rovide an itemized list liabeled Exhibit A)

Expansion/Repair that contains serial and identification numbers for all articles that

had an original value greater than $BW. I ndude a legal description of

Acquisition and/or Repair of Real Estate offered as collateral.

Machinery and Equipment

Inventory Purchase

SBA Use Only

.....................................Present Market Present Loan

Working Capital (including ..............................................Value Balance Collateral

.....................

Accounts Payable)

.... .......................................................................................Valuation

Acquisition of Existing A. Land and $ $

Business Building

S. Machinery

Payoff SBA Loan & Equipment

Payoff Bank Loan (Non SBA C. Furniture&

Associated) Fixtures

Other Debt Payment (Non SBA D. Accounts

Associated) Receivable

All Other E. I rwentory

Total Loan Requested F. Other

Term of Loan Totals

PREVIOUS SBAOR OTHER GOVERNMENT FINANCING: If you or any principals or affiliates have ever requested Gcwemment Financing, complete the follovving:

Original Amount Onto of Approved

Name of Agency or Balance Current or Post Due

of Loan Request Declined

I SA Form 4 (2-86) Previous Editions Obsolete

GPO : 1985 0 - 471-600

32 U.% Smil Business Administration
INDEBTEDNESS: Furnish the following information on all Installment debts. contractk notes. and mortgages payame. Indicate by an asterisk (*) iterto to be paid by loan 

proceeds and nmon for paying some (present balance should agree with latest balance sheet submitted).

To VYhom Pav able Original Original Present Rate of Maturity Monthly Security 1 Current or

Amount Date Balance Interest Date Payment Past Due

MANAGEMENT (Proprietor, partrws, officers. directors and all holders Of outstanding'stack - 100% of ownwohip ~ust be shown). Use separa'te sheet if necessary.

Name and Social Security Number Complete Address % *Military Service *Race.

*Sex

Owned From To

'This data Is collected for statistical purposes only. It has no bearing on the credit decision to approve or decline this application.

ASSISTANCE List the neffie(s) and occupation(s) of any who assisted in preparation of this form, other than applicant.

Name and Occupation Address Total Fees Paid Fees Due

Nwn* and Occupation Address Total Fees Paid Fees Due

Signature of Preparers If Other Than Applicant

THE FOLLOWING EXHIBITS MUST BE COMPLETED WHERE APPLICABLE. ALL QUESTIONS ANSWERED ARE MADE A PART

OF THE APPLICATION.

3. Include the statements listed below: 1, 2, 3 for the last three

For Guaranty Loans plane provide an original and one copy years; also 1, 2, 3, 4 dated within 90 days of filing the application;

(Photocopy Is Acceptable) of the Application Form, and all Exhibft to and statement 5, if applicable. This is Exhibit C (SBA has Manage

the participating lender. For Direct Loans submit one original copy of ment Aids that holp in the preparation of financial statements.) All in

application and Exhibits to SBA. formation must be signed and dated.

Submit SBA Form 1261 (Statements Required by Laws and Ex- i. Balance Sheet 2. Profit and Loss Statement

ocutlve Orders). This form must be signed and daW by each Pro- 3. Reconciliation of Net Worth

prietor, Partner, Principal or Guarantor. 4. Aging of Accounts Receivable and Payable

1. Submit SBA Form 912 (Personal History StatemonQ for each per- S. Earnings projections for at least one year where financial

son e.g. owms, partners, officers, directors. major stockholders, statements for the last three years are unavailable or where re

etc.; the Instructions are on BSA Form 912. quested by District Office.

(if Profit and Loss Statement is not available, explain why and

2. Fumish a signed current personal bakr" sheet (SBA Form 413 substitute Federal Income Tax Forms.)

may be used for this purpose) for each stockholder (YAth 20% or

greater ownomhlp), partner, ofter, and owner. Social Security 4. Provide a brief history of your company and a paragraph describ

number should be included on personal financial statement. Label ing the expected benefits It will receive from the loan. Label It Ex

this Exhibit B. hibft D.

ALL EXHIBITS MUST BE SIGNED AND D ATED BY PERSON SIGNING THIS FORM.

SOA Fcwm 4 12-85) Previous Editions Obsolete

U.S. SMII BUSineSs AdMiniStrOtiOn 33
5 ' Provide a brief description of the educational, technical and

business background for all the people listed under Management. EXPORT LOANS

Please mark it Exhibit E.

18. Does your business presently engage in Export Trade?

6. Do you have any co-signers and/or guarantors for this loan? If so, Check here [:] Yes No

please submit their names, addresses and personal balance sheet(s)

as Exhibit F. 19. Do you plan to begin exporting as a result of this loan?

Check here n Yes El No

7. Are you buying machinery or equipment with your loan money? If

so, you must include a list of the equipment and cost as quoted by 20. Would you like information on Exporting?

the seller and his name and address. This is Exhibit G. Check here [:) Yes No

8. Have you or any officers of your company ever been involved in AGREEMENTS AND CERTIFICATIONS

bankruptcy or insolvency proceedings? If so, please provide the

details as Exhibit H. If none, check here: 0 Yes 1-1 No Agreements of Nonemployment of SBA Personnel: I/We agree that if

SBA approves this loan application I/We will not, for at least two

9. Are you or your business involved in any pending lawsuits? If yes, years, hire as an employee or consultant anyone that was employed

provide the details as Exhibit 1. It none, check here: 0 Yes El No by the SBA during the one year period prior to the disbursement of

the loan.

10. Do you or your spouse or any member of your household, or

anyone who owns, manages, or directs your business or their Certification: [/We certify: (a) I/We have not paid anyone connected

spouses or members of their households work for the Small Business with the Federal Government for help in getting this loan. [/We also

Administration, Small Business Advisory Council, SCORE or ACE, agree to report to the SBA office of the Inspector General, 1441 L

any Federal Agency, or the participating lender? If so, please provide Street N.W., Washington, D.C. 20416 any Federal Government

the name and address of the person and the office where employed. employee who offers, in return for any type of compensation, to help

label this Exhibit J. It none, check here: El Yes El No get this loan approved.

11. Does your business, its owners or majority stockholders own or (b) All information in this application and the Exhibits are true and

have a controlling interest in other businesses? If yes, please provide complete to the best of my/our knowledge and are submitted to SBA

their names and the relationship with your company along with a cur- so SBA can decide whether to grant a loan or participate with a lend

rent balance sheet and operating statement for each. This should be ing institution in a loan to me/us. I/We agree to pay for or reimburse

Exhibit K. SBA for the cost of any surveys, title or mortgage examinations, ap

praisals etc., performed by non-SBA personnel provided I/We have

12. Do you buy from, sell to, or use the services of any concern in given my/our consent.

which someone in your company has a significant financial interest?

If yes, provide details on a separate sheet of paper labeled Exhibit L. I/We understand that I/We need not pay anybody to deal with SBA.

I/We have read and understand Form 394 which explains SBA policy

on representatives and their fees.

13. If your business is a franchise, include a copy of the franchise

agreement and a copy of the FTC disclosure statement supplied to

you by the Franchisor. Please include it as Exhibit M. If you make a statement that you know to be false or it you over

value a security in order to help obtain a loan under the provisions of

the Small Business Act, you can be fined up to $5,000 or be put in

CONSTRUCTION LOANS ONLY jail for up to two years, or both,

It Applicant is a proprietor or general partner, sign below:

14. Include a separate exhibit (Exhibit N) the estimated cost of the

project and a statement of the source of any additional funds. By:

Date

15. File the necessary compliance document (SBA Form 601). If Applicant is a Corporation, sign below:

16. Provide copies of preliminary construction plans and specifica

tions. Include them as Exhibit 0. Final plans will be required prior to

disbursement. Corporate Name and Sea[ Date

DIRECT LOANS ONLY

17. Include two bank declination letters with your application. These By: Signature of President

letters should include the name and telephone number of the per

sons contacted at the banks, the amount and terms of the loan, the

reason for decline and whether or not the bank will participate with

SBA. In cities with 200,000 people or less, one letter will be Attested by:

sufficient. Signature of Corporate Secretary

ALL EXHIBITS MUST BE SIGNED AND DATED BY PERSON SIGNING THIS FORM.

SBA Form 4 (2-85) Previous Editions Obsolete

34 U.S. Small Business Administration
B. Capital Equipment and Supply List

Cost or

Model

Major equipment and accessories

Total $

Minor equipment

Total $

Other equipment and supplies
Total $

Grand Total $

U.S. Smit Business Adminlsfttion
C. Balance Sheet

COMPANY NAME

As of 19

. ..... .. .

..... .. ...............

Assets Liabilities

Current liabilities

Current assets

Cash Accounts payable

Petty cash Notes payable $

Accounts receivable Interest payable $

Inventory Taxes payable

Federal income tax $

Short-term invesunents State income tax $

Self-employment tax $

Prepaid expenses Sales tax (SBE) $

Property tax $

Long-term investments Payroll accrual $

Long-term liabilities

Fixed assets

Land Notes payable

Buildings Total liabilities $

Improvements

Equipment Net worth (owner equity)

Furniture Proprietorship $

or

Automobiles/vehicles Pamersh'

l~ equ~ty $

name:s

s

s

~name s equity

Other assets or

Corporation

1 Capital stock .$

Surplus paid in .$

2. Retained earnings .$

3. $

4. Total net worth

. . ........ .

l.k

................

(Total assets will ahvays equal total liabilities and total net worth.)

LLS. Smil Busin;ss AdMltdsWtioli
Instructions for Balance Sheet

Figures used to compile the balance sheet are taken from Long-term Investments

the previous and current balance sheet as well as the

current income statemenl The income statement is Also called long-term assets, these are holdings the

usually attached to the balwice sheel ne following text business intends to keep for at least a year and that

covers the essential elements of the balance sheet. typically yield interest or dividends. Included are stocks,

bonds and savings accounts earmarked for special

At the top of the page fill in the legal name of the purposes.

business, the type of statement and the day, month and

year.

Fixed Assets

Assets Also called plant and equipmenl Includes all resources a

business owns or acquires for use in operations and not

List anything of value that is owned or legally due the intended for resale. Fixed assets, except for land, are

business. Total assets include all net values. These are the listed at cost less depreciation. Fixed assets may be

amounts derived when you subtract depreciation and leased. Depending on the leasing arrangement, both the

amortization from the original costs of.acquiring the value and the liability of the leased property may need to

assets. be listed on the balance sheel

o Land--List original purchase price without

Current Assets allowances for market value.

0 Buil4*ngs

Cas ' h-List cash and resources that can be 0 InWrovenwnts

converted into cash within 12 months of the date

of the balance sheet (or during one established * Equipment

cycle of operations). Include money on hand and

demand deposits in the bank, e.g., checking * Furniture

accounts and regular savings accounts. 0 Automobileslvehicles

Petty cash-If your business has a fund for small

miscellaneous expenditures, include the total here. LiabilitiieS,

Accounts receivable-lbe amounts due from

customers in payment for merchandise or services. Current Uabilifles

Inventorl)~--Includes raw materials on hand, work List all debts, monetary obligations and claims payable

in progress and all finished goods, either within 12 months or within one cycle of operations.

manufactured or purchased for rewe.

Typically they include the following:

Short-term investments-Also called temporary 0 Accountspayable-Amounts owed to suppliers

investments or marketable securities, these for goods and services purchased in 

connection

include interest- or dividend-yielding holdings with business operations.

expected to be converted into cash within a year.

List stocks and bonds, certificates of deposit and 9 Notes payable-The balance of principal due to

time-deposit savings accounts at either their cost pay off short-term debt for borrowed funds. 

Also

or market value, whichever is less. include the current amount due of total 

balance on

Prepaid expenses-Goods, benefits or services a notes whose terms exceed 12 months.

business buys or rents in advance. Examples are Interest payable-Any accrued fees due for use

office supplies, insurance protection and floor of both short- and long-term borrowed 

capital and

space. credit extended to the business.

U.S. Small Business Administration 37
• Taxes payable-Amounts estimated by an Net Worth

accountant to have been incurred during the

accounting period. Also called owner's equity, net worth is the claim of the

• Payroll accrual-Salaries and wages currently owner(s) on the assets of the business. In a proprietorship

owed. or partnership, equity is each owner's original investment

plus any earnings after withdrawals.

Long-term Llabilities

Total LiabilitieS and Net Worth

Notes payable-List notes, contract payments or

mortgage payments due over a period exceeding The sum of these two amounts must always match that

12 months or one cycle of opemtions.'Ibey are listed by for total assets.

outstanding balance less the current portion due.
38 U.9 Smil Business AdminiMtion
D. Break-o"n Analysis

Sales $

Cost of gwds/services sold $

Gross profit $

Fixed expenses $

Net profit (loss) $

Step 1: Divide gross profit by sales to show percentage relationship:

Gross profit = Gross profit as % of sales

Sales

Step 2: Divide fixed expenses by gross profit as percent of sales expressed as a 

decimal (gross profit percent -+- 100).

Step 3: Fixed expenses. = Break-even point

Gross profit
U.S. Smafl Business Administration 39
Industry %

iFmAmiiAs0N

Total net sales (revenws)

Cost of sales

Gross profit

Gross profit !~wgin

ontrollable 

expenses 

SaMestwages 

Payroll expenses 

LegaVaccounting 

Adverusing 

Automnhile

Office supphes 

Dup;Vsubscripti

ons utilities 

MisceHaneous

Total controuable 

expenses

Fixed expenses

Rent

Depreciation

Utflities

Insurance

License&4)mmiit

Loan payments

Miscellaneous

otal fixed exmses

oW expems

et pmfit (low) 

before taxes 

Taxes

et profit (loss) 

after taxes

Annual Annual

D total
Instructions for Income Projection Statement

The income projection (profit and loss) statement is 

valuable as both a planning tool and a key management tool 

to help control business operations. It enables the 

owner-manager to develop a preview of the amount of 

income generated each month and for the business year, 

based on reasonable predictions of monthly levels of 

sales, costs and expenses.

As monthly projections are developed and entered into the 

income projection statement, they can serve as definite goals 

for controlling the business operation. As acuw operating 

results become known each month, they should be recorded 

for comparison with the monthly projections. A completed 

income statement allows the owner-manager to compare 

actual figures with monthly projections and to take steps to 

correct any problems.

lndustty Percentage

In the industry percentage column, enter the percentages of 

total sales (revenues) that are standard for your industry, 

which are derived by dividing

cost/expense items x 100% total net sales

"lbese percentages can be obtained from various sources, 

such as trade associations, accountants or bmiks. The 

reference librarian in your nearest public library can refer 

you to documents that contain the percentage figures, for 

example, Robert Morris Associates' Annual Statement Studies 

(One Liberty Place, Philadelphia, PA 19103).

Industry figures serve as a useful benchmark against which 

to compare cost and expense estimates that you develop for 

your firm. Compare the figures in the industry percentage 

column to those in the annual percentage column.

Total Net Sales (Revenues)

Determine the total number of units of products or services 

you realistically expect to sell each month in each 

department at the prices you expect to get Use this step to 

create the projection to review your pricing practices.

What returns, allowances and markdowns can be expected?

Exclude any revenue that is not strictly related to the 

business.

Cost of Sales

The key to calculating your cost of sales is that you do not 

overlook any co sts that you have incurred. Calculate cost of 

sales for all products and services used to determine total net 

sales. Where inventory is involved, do not overlook 

transportation costs. Also include any direct labor.

Gross Profit

Subtract the total cost of sales from the total net sales to 

obtain gross profit.

Gross Profit Margin

The gross profit is expressed as a percentage of total sales 

(revenues). It is calculated by dividing gross profits total net 

sales

Controllable Expenses

Salary expenses-Base pay plus overtime.

Payroll expenses-Include paid vacations, sick leave, health 

insurance, unemployment insurance and social security taxes.

Outside services-Include costs of subcontracts, 

overflow work and special or one-time servic&.

Supplies-Services and items purchased for use in the 

business.

Repairs and maintenance-Regular maintenance and 

repair, including periodic large expenditures such as 

painting.

Advertising-Include desired sales volume and 

classified directory advertising expenses.

Car, delivery and travel-Include charges if -personal car is 

used in business, including parking, tors, buying trips, etc.

Accounting and legal-Outside professional services.

Fixed Expenses

o Rent-List only real estate used in the business.

9 Depreciation-Amortization of capital assets.

U.S. Small Business AdminisUation

41
, 9 Utilities-Water, heat, light, etc.

Insurance-Fire or liability on property or 

products. Include workers' compensation.

9 Loan repayments-Interest on outstanding loans.

Miscellaneous-Unspecified; small expenditures 

without separate 

accounts.

Net Profit Ooss)

(before taxes)

Taxes

Net Profit Ooss)

(after taxes)

Annual Total 0

Annual Percentage 4o

Subtract total expenses from 

gross profit.

Include inventory and sales 

taxes, excise tax, real estate tax, 

etc.

Subtract taxes from net profit 

(before taxes).

For each of the sales and 

expense items in your income 

projection statement, add all the 

monthly figures across the table 

and put the result in the annual 

total column.

Calculate the annual 

percentage by dividing 

annual total x I ocqo total net 

sales

Compare this figure to the 

industry percentage in the first 

column.

U.9 Smit Business Admlnlsftadon
42
e of business Ad&cu OW= Tylw. of business Pfcpared by Daw

pf"--up pogw 2 3 4 5 6 Total

month coh~

Estimate Actual Egtitmte Actual Estimate Actual Emunate Actual Estimate Actual Estimate AcuW Estimate Actual

Act=l

sh on hand (beimina of month)

h receipts (a) Cash sales (b) Collections from cmdit accounts (c) IA)an or other cash injectlan

ify)

al cub receipts

+ 2b + 2c - 31

tal cmb available

(1 + 3) 1

uh paid ooit (a) Ai-h- Lm~) (b) Omm waga (excludes

withdm,mds) cc) I%Ywu em- (Meg, ac.) (d) Outside xavices (e) Lopp~ff (offke and cpmdrgg) M gepain and mahnatarm (g) Advertising

Car, delivery and travel i -

Accounting and kgal

I

Telephone

 uwities

immum

 (red -te,

 cqmm (specify -ch)

uellancout (unspedfied)

Subtaul

Loan princapd payment

Capital purch- (4-ffy)

mn up costs

Resem andamr cwww (spmffy)

 owneeg wwxkawai

al cash paid out

 tinouith Sw)

h position

d of month) (4 niinus 6)

sential operating data

CM6 now infomudm)

Sales vobxme (doll=)

Accounts receivable

(gmd of month)

Bad debt (end ofm(ndi)

Invenu)ry an hand (end of;;~th)

Accounts payable of mondi)
Cash on hand

(begiming of month) Cash on hand same as (7), Cash position, previous month

Cash receipts

(a) Cash sales All cash sales. Omit credit sales unless cash is acutauy received.

(b) Q)Hections fr(xn credit accounts Amotmt to be expected fr(sn all credit accounts.

(c) Loan or other cash injection Indicate here all cash injections not shown in 2(a) or 2(b) above.

ToW cash receipts

(2a + 2b + 2c = 3)

ToW cash available

More cash out) (I + 3)

C4sh paid out

Purchases (mercbumfise) Merchandise for resale or for use in product (paid for in current month)

Grm wages (excludes widwmwals) Base pay plus overtime (if any)

PaymB e4-ses (taxes, etc.) Include paid vacations, paid sick leave, health insurance, unemployment insurance, etc. (this might be 10 to 45% of 5(b))

Outside services This could include outside labor and/or material for specialized or overflow work, including subcontracting

&Whes (office uw 9p~fa6 9) Items 13urchased for use in the business (not for resale)

Repair% and maintenance Include periodic large expenditures such as p#*4qg or decorating

Advertising This amount should be adequate to maintain sales volume

Car. delivery and travel If personal car is used, charge in this column, include parking

Accounting and legal Outside services, including, for example, bookkeeping

Real estate only (See 5(p) for other rentals)

Rent

(k) Telephone

(1) utilities Water, heat, light and/or power

(m) Insurance Coverages on business property and products (fire, liability); also worker's compensation, fidelity, etc. Exclude executive life

(include in 5(w))

Taxes (real estate, etc.) Plus inventory tax, sales tax, excise tax, if applicable

Interest Remember to add interest on loan as it is injected (See 2(c) above)

Other expenses (specify each) Unexpected expenditures may be included hem as a safety factor

Equipment expensed during the month should be included hem (non-capital equipment)

When equitxnent is rented or leased, record payments hem

AfisceUanecus (unspecified) Small expenditures for which separate accotmts would not be practical

Subtotal This subtotal indicates cash out for operating costs

Lou j!~ payment

Include payment on all loans, including vehicle and equilxnent purchases on time payment

(t) Capital purchases (specify) Nonexpensed (depmciable) expenditures such as equipment, building, vehicle purchases and leasehold unprovemenu

(u) Other ma-up costs Expenses mcunrd pnor to first month projecttca and paid for after start-up

Reserve and/or escrow (specify) Example: insurance, tax or equipment escrow to reduce impact of large periodic payments

(w) Ownees withdrawal Should include payment for such things as ownees income tax, social security, health insurance, executive life insurance premiums, etc.

Toud cash paid out

(5& d-mgh 5w)

Cash position

(end of month) (4 minus 6) Enter this sun(mnt in (1) Cash on hand following montil

Essential operating data

-cash flow information) lliis is basic information necessary for proper planning and for proper cash flow projection. In conjunction with this data, the cash flow can be

evolved and shown in the above form.

A. Sales volume (doll=) lliis is a very important figure and should be estimated carefully, taking into account aim of facility and employee output as well as realistic

anticipated sales (actual sales, not orders received).

B. Acootmts receivable (end of mouth) previous unpaid credit sides plus current month's credit sales, less amounts received current month (deduct "C" below)

C. Bad debt (and of month) Bad debts should be subtracted from (B) in the month anticipated

D. Inventory on hand (end of mouth) IAst month's inventory plus merchandise received and/or manufacmred current month minus amount sold current mouth

 Accounts payable (end of month) Previous month's payable plus curinmt month's payable minus amount paid during month

F. Depreciation Established by your accountant, or value of all your equqxnent divided by useful life Cm months) as allowed by Internal Revenue Service
I am considering opening a child care center. I want to be able to provide 

care that best meets the needs of you and your children.

Please answer the following questions:

1. How many of your cbildren need day care?

2. What are their ages?

3. Which is more convenient for you:

a. A center near your workplace

(address)? Optional:

b. A center near your home Name

(address)? Address

Telephone

c. Other location

4. What hours and days will children need care?

5. How much are you willing to pay a week for

care?

6. Will transportation need to be provided9

7. Are you willing to pay extra for

awsportation?

8. What experience and activities do you wish

your children to have at the center?

45
U.S. Smll Business Administration

APPEND_IX C: CURRICULUM AND INSTRUCTION 

IN EARLY CHILDHOOD EDUCATION

Department of Curriculum and Instruction College and 

Education and Human Ecology Universfty of District of 

Columbia (UDC)

The Deparunent of Curriculum and Instruction at the University 

of the District of Columbia offers undergraduate programs in early 

childhood education, elementary education, reading, industrial arts 

education and vocational education. The undergraduate program in 

early childhood education is designed to prepare students for 

careers as teachers and professional service personnel in the 

schools of the District of Columbia and to work as directors, 

teachers or staff members in child care centers. Students are also 

prepared for further study at an advanced level. This sample 

curriculum is typical of such programs.

Associate of Arts in Child Development and

Nursery School Education

Total hours required for graduation: 72

Required courses:

Course No.

Core courses ...............................

0335 105 Family Life Science and Career

Orientation ..............................................................................(2)

0327 205 Principles of Child Development ...........................(3)

0333204 Introduction to the Study of Foods ........................(3)

Concentration: .......................................................................(30)

0327215 Developing Social Behavior in

Young Children ....................................................(3)

0327 224 Planning the Day Care and Nursery

School Facility ........................................................................(3)

0327304 Nursery School and Parent Education ...................(3)

0327 306 Advanced Child Development ..............................(3)

0327325 Administration and Supervision of the

Nursery School Facility ...... 0331224 Family 

Health and Home Safety 0331345 The Child in the Family 

...... 0331318 Child Health and Nutrition . 0335615 

Consumer Education .................. 0319211 Child Study 

......................... 0319 206 Infant Education ......... 0319 304 

Play Activities ........... 0351305 Children's Literature 

.................. 0345 104 Introduction to Media, Computerized

Methods and Techniques ............

Ham

... (8)

... .. .....

............

............

............

... (3)

0207 104 Introduction to Business .............

Elective in Child Development ...

Bachelor of Arts In Early Childhood Education

Total hours required for graduation: 125

Required courses:

(3)

(3)

0319 104 Early Childhood in Perspective ............................ (3)

0319 204 Young Child Growth and Development .... (3)

0319 206 Infant Education ................................................... (3)

0319211 Child Study ............................................................. (3)

0319301 Curriculum Content for Early

Childhood Education I .....

0319 302 Curriculum Content for Early

Childhood Education Il .....

0319304 Play Activities and Materials .......

0319307 Home-School Discipline for

.......................... (3)

(3)

(3)

Young Children .....................

0319311 Methods and Materials for

Early Childhood I ................................................ (3)

0319312 Methods and Materials for Early

Childhood II ........................................................ (3)

0319 314 Teacher, Child, School and Community

Interactions in Early Childhood

Education .................

0319405 The Role of the Teacher in Early

Childhood Education

0319406 Student Teaching and Seminar in

Early Childhood Education ............................... (12)

0319408 The Young Child in a Multicultural

Society .................................................................................... (3)

0217203 Data Processing Algorithms .................................. (3)

0351314 The Teaching of Reading in the

Elementary School ................................................................ (3)

0353304 Survey of Exceptional Children ............................. (3)

0535393 Theory and Applications of Mathematics ... (3)

.(3)

........... .......... (3)

Recomniended elecdves:

(3)

(3)

(3)

(3)

(3) 0319307 Home-School Discipline for

(3) Young Children .......................................................................(3)

(3) 0319404 Philosophy of Education of the

(3) Young Child ............................................................................(3)

(3) 0319407 Understanding Self and Relationships ....................(3)

0319414 Cognitive Skills and the Preschool

Child

................................................................................(3)

47
U.S. Smag Business Administration
0323 475 Measurement and Evaluation in Specializatlon courses:

Teaching and Learning .............................................................(3)

0345 487 Multi-Media Workshop .........................................(3) *Language Development in Early Childhood Education

0351305 Children's Literature .................................................(3) *Curricula for Mathematics and Science in Early

Childhood Education

Master of Arts In Early Childhood Education **Cufficula for Activifies (AM Drama, Music, Movement

The Master of Arts in Early Childhood Education will and Literature)

prepare you for a career as a master teacher, specialist or **Play as an Integral Curricula Component (Play

administrator in programs for young children in private Activities, Social Studies, Physical Education, Health

and public education settings. and Safety)

Total hours required for graduation: 33 *Strategies for Teaching Young Children

Core courses: **Practicum Experiences in Early Childhood Education

Child Development Theories in Early Childhood

Education

Assessing the Development of the Young Child *Required of all students

Current Problems and Issues in Early Childhood **Required of students without undergraduate training in early

Education childhood education.

R esearch courses: AR curriculums were provided by UDC's Early Childhood

Education Department. Their inclusion does not imply SBA's

endorsement of the university's educational programs. They are

Research Techniques in Early Childhood Education merely provided as guidelines for skills to look for when hiring

Thesis teachers for your center.

48 U.9 Simit Business Adminisntim
Child Care Action Campaign Information and materials on home-based child cam

330 7th Ave., 18th Floor issues. Publishes the Family Day Care Bulletin and the

New York, NY 10001 Directory offamily Day Care Associations. Sponsors the

212-239-0138 National Family Child Care Advocacy Project and a

A coalition of leaders from diverse organizations resource clearinghouse. Sample newsletter and

advocating high quality child care. Activities include publications list available upon request.

education, information services, proposing possible

solutions and technical assistance to government offices. Cooperative Extension Services

Bimonthly newsletter with membership. Located in local county government offices. Free or

inexpensive materials on home child care, child

The Child Care Employee Project development and other topics of interest to providers.

6536 Telegraph Ave., Suite A201 Look in the government listings of your telephone book

Oakland, CA 94609 under your county's name.

415-653-9889

A clearinghouse on child care employee issues including

salaries, status and working conditions. Publications on Council for Early Childhood Professional Recognition

such topics as research on child care, personnel policies, 1718 Connecticut Ave., NW, Suite 500

legislative issues affecting salaries. Quarterly newsletter Washington, DC 20009

with membership. 202-265-9090; 800-424-4310

Purpose is to train, assess the competence of and certify

The Child Care Food Program (CCFP) caregivers. Awards credentials to home-based child care

U.S. Department of Agriculture providers, preschool and infant/toddler caregivers and

Washington, DC 20250 home visitors. Bilingual specialization also available. The

Sponsors nutrition education and partially reimburses food competencies for home-based child care providers are

costs to family day care and child care center programs (a listed on page 27. They are useful for self-evaluation and

specific amount for each child per meal or snack). If your to identify areas for further development.

state licenses programs, contact your local licensing office

to find sponsors for your area. Otherwise, contact your ERIC Clearinghouse on Elementary and Early

state department of agriculture or education. Childhood Education (ERIC/EECE)

College of Education

The Child Care Law Center University of Illinois

22 Second St., 5th Floor 805 W. Pennsylvania Ave.

San Francisco, CA 94105 Urbana, IL 61801-4877

415-495-5498 217-333-1386

Call or write for a free listing of publications. Publishes newsletters periodically on educational

materials, publications and events.

The Children's Defense Fund

122 C St., NW, Suite 400 Mothers at Home

Washington, DC 20001 83 10 Old Court House Rd.

202-628-8787 Vienna, VA 22182

Education about and advocacy for the needs of children, 703-827-5903

especially low-income, miniority and handicapped Supports mothers who choose to work at home. Publishes

children. Publications include a monthly newsletter on monthly newsletter, Welcome Home.

federal legislation and an annual analysis of the federal

budget. Call for a free publications catalog. National Association for the Education of Young

Children (NAEYC)

The Children's Foundation 1834 Connecticut Ave., NW

725 15th St., NW, #505 Washington, DC 20009-5786

Washington, DC 20005 202-232-8777; 800-424-2460

202-347-3300 Call or write for a Wting of publications.

U.S. Small Business Administration 49
National Black Child Development Institute Save the Children Child Care Support Center

1463 Rhode Island Ave., NW 1340 Spring St., NW, #200

Washington, DC 20005 Atlanta, GA 30309

202-387-1281 404-885-1578

Publishes a newsletter and calendar featuring issues and Sponsors yearly conference for home-based child care

important dates in history relevant to the development of providers. Publications include a guide to home-based

black children. child care audiovisual training resources.

National Center for Clinical Infant Programs (NCCIP) School-Age Child Care Project

2000 14th St. North, Suite 380 Wellesley College

Arlington, VA 22201 Center for Research on Women

703-528-4300 Wellesley, MA 02181

Publishes information and sponsors conferences on infant 617-431-1453

health, mental health and development. Provides information and assistance in understanding the

"latchkey" problem and developing options for services

National Commission on Working Women and policies. Write for general information and a list of

1325 G St., NW, lower level publications.

Washington, DC 20005

202-273-5764 Work and Family Information Center

Focuses on the needs and concerns of the approximately The Conference Board

80 percent of women in the work force who are 845 Third Ave.

concentrated in low-paying, low-status jobs. Excellent New York, NY 10022

work on child care employees. 212-759-0900

Clearinghouse for information concerning

Resources for Child Caring interrelationship between work and family, and

450 North Syndicate Ave., Suite 5 ernployer-supported child care, including resource and

St. Paul, MN 55104 referral services, family day care satellites and parent fee

612-641-0305 subsidies.

Publishes books, training guides and audiovisual

materials. Includes Toys 'n Things Press. Write for free

catalog. Also publishes bimonthly magazine, Family Day *Inclusion of these organizations does not imply SBA's

Caring. endorsement.

50 U.S. Smil Buslness Admlnlstration
U.S. Smafl Business Administration (SBA) Many federal agencies offer publications of interest to

small businesses. There is a nominal fee for some, but

The SBA offers an extensive selection of information on most are free. Below is a selected list of government

most business management topics, from how to start a agencies that provide publications and other services

business to exporting your products. targeted to small businesses. To get their publications,

contact the regional offices listed in the telephone

This information is listed in The Small Business directory or write to the addresses below:

Directory. For a free copy write to: SBA Publications, Consumer Information Center (CIC)

P.O. Box 1000, Fort Worth, TX 76119. P.O. Box 100

Pueblo, CO 81002

SBA has offices throughout the country. Consult the U.S. The CIC offers a consumer information catalog of

Government section in your telephone directory for the federal publications.

office nearest you. SBA offers a number of programs and

services, including training and educational programs, Consumer Product Safety Commission (CPSC)

counseling services, financial programs and contract Publications Request

assistance. Ask about Washington, DC 20207

• Service Corps of Retired Executives (SCORE), The CPSC offers guidelines for product safety

a national organization sponsored by SBA of requirements.

over 13,000 volunteer business executives U.S. Department of Agriculture (USDA)

who provide free counseling, workshops and 12th Street and Independence Avenue, SW

seminars to prospective and existing small Washington, DC 20250

business people. The USDA offers publications on selling to the USDA.

• Small Business Development Centers (SBDCs), Publications and programs on entrepreneurship are also

sponsored by the SBA in partnership with available through county extension offices nationwide.

state and local governments, the educational

community and the private sector. They U.S. Department of Commerce (DOC)

provide assistance, counseling and training Office of Business Liaison

to prospective and existing business people. 14di Street and Constitution Avenue, NW

Room 5898C

• Small Business Institutes (SBIs), Washington, DC 20230

organized through SBA on more than DOC's Business Assistance Center provides listings of

500 college campuses nationwide. The business opportunities available in the federal government.

institutes provide counseling by students This service also will refer businesses to different

and faculty to small business clients. programs and services in the DOC and other federal

For more information about SBA business development agencies.

programs and services call the SBA Small Business U.S. Department of Health and Human Services (HHS)

Answer Desk at 1-800-U-ASK-SBA (827-5722). Public Health Service

Alcohol, Drug Abuse and Mental Health

Other U.S. Government Resources Administration

5600 Fishers Lane

Rockville, MD 20857

Many publications on business management and other Drug Free Workplace Helpline: 1-800-843-4971. Provides

related topics are available from the Government Printing information on Employee Assistance Programs.

Office (GPO). GPO bookstores are located in 24 major National Institute for Drug Abuse Hotline:

cities and are listed in the Yellow Pages under the 1-800-662-4357. Provides infofmation on preventing

"bookstore" heading. You can request a Subject substance abuse in the workplace.

Bibliography by writing to Government Printing Office, The National Clearinghouse for Alcohol and Drug

Superintendent of Documents, Washington, DC Information: 1-800-729-6686 tou-free. Provides pamphlets

20402-9328. and resource materials on substance abuse.
U.S. Small Business Admini$Vation 51
U.S. Department of Labor (DOL) For More Information

Employment Standards Administration

200 Constitution Avenue, NW

Washington, DC 20210 A librarian can help you locate the specific information

71be DOL offers publications on compliance with you need in reference books. Most libraries have a variety

labor laws. of directories, indexes and encyclopedias that cover many

business topics. They also have other resources, such as

U.S. Department of Treasury

Internal Revenue Service (IRS) Trade association informatioiii

P.O. Box 25866 Ask the librarian to show you a directory of trade

Richmond, VA 23260 associations. Associations provide a valuable

1-800-424-3676 network of resources to their members through

The IRS offers information on tax requirements for small publications and services such as newsletters,

businesses. conferences and seminars.

Books

U.S. Environmental Protection Agency (EPA) Many guidebooks, textbooks and manuals on

Small Business Ombudsman small business are published annually. To find the

401 M Suw~ SW (A-149C) names of books not in your local library check

Washington, DC 20460 Books In Print, a directory of books currently

1-800-368-5888 except DC and VA available from publishers.

703-557-1938 in DC and VA Magazine and newspaper articles

The EPA offers more than 100 publications designed to Business and professional magazines provide

help small businesses understand how they can comply information that is more current than that found in

with EPA regulations. books and textbooks. There are a number of

indexes to help you find specific articles in

U.S. Food and Drug Administration (FDA) periodicals.

FDA Center for Food Safety and Applied Nutrition

200 Charles Street, SW In addition to books and magazines, many libraries offer

Washington, DC 20402 free workshops, lend skih-building tapes and have

The FDA offers information on packaging and labeling catalogues and brochures describing continuing education

requirements for food and food-related products. opportunities.
52 U.S. Sinall BUSINM AdminiStiati6n