Small Business

It's a Jungle Gym Out There


By Karen E. Klein Q: I started a day-care business two years ago, and I want to expand. The problem is that the outdoor equipment I want to buy is very expensive, and I do not see where I can make enough profit to buy it. Do you have any suggestions?

---- J.D.B., Newport News, Va.

A: Providing quality child-care is extremely costly, with industrywide staffing costs running at about 60% of a typical operating budget, experts say, and slim pretax profit margins of just 4% to 5%. For-profit operators, particularly those with independent centers, are typically hard-pressed to provide quality care and still make ends meet. The good news is that many states recognize the need to help day-care operators offset their tremendous costs and have adopted initiatives that allow them to funnel federal grant money to day-care providers for specific uses.

You should investigate the funding opportunities available through state and local agencies in your area, network with other child-care providers to learn what kind of funding they have accessed, and perhaps even consider scaling back your play-equipment purchases or involving parent volunteers and donors in your plans.

Start by checking out the Web site of the Vienna (Va.)-based National Child Care Information Center www.nccic.org, a project of the Health & Human Services Dept. Click on "directories" from its home page to find several helpful contact lists, including one for the state representatives that administer the Child Care & Development Fund, federal money that is provided to the states specifically for child care. In Virginia, your contact is the Social Services Dept. Child Day Care office in Richmond, at 804 692-1298.

IT'S CHILD'S PLAY. Another possibility is the Virginia Small Business Financing Authority, www.vsbfa.state.va.us, which makes low-interest installment loans to both for-profit and nonprofit licensed day-care operators. For information about the loans -- which may be used for playground equipment -- go to the group's Web site and click on "programs."

To get information about additional local contacts, call Child Care Aware at 800 424-2246 and ask for names and numbers of child-care resources in your area. You may find additional county or city funding is available -- and that all you need to do is apply for it. Even though yours is a for-profit center, you may qualify for restricted funding if a certain percentage of the children are disadvantaged and/or your center is located in a low-income neighborhood, experts say.

For general industry information, training, credential programs, and support, there are several agencies you should know about and may even wish to join. These include the National Child Care Assn., which is based in Atlanta and can be found on the Web at www.nccanet.org, and the National Association for the Education of Young Children (NAEYC) in Washington, D.C., at www.naeyc.org.

LABOR OF LOVE. The NAEYC has a 70-page book designed for early childhood program directors: Fundraising for Early Childhood Programs: Getting Started and Getting Results by Matia Stevenson. The book, published in 1995, can be ordered through the group's online catalog for $4.

If you are unsuccessful in coming up with enough money to purchase the equipment you want, think about scaling back your plans or buying a starter set of modular pieces that you can add to in the future. Many companies will allow parent volunteers to assemble and install equipment without putting safety and insurance coverage in jeopardy, says Francis Wardle, a Denver-based playground-and-safety consultant.

Another idea: Think about approaching a university school of architecture in your area and asking them to take on your playground as a student project, he suggests, adding that large, static playground equipment is tremendously expensive and not always the best choice for a day-care center where the children spend many hours every day and quickly become bored.

"A more European, horizontal approach to playgrounds that emphasizes constructive, fluid play may be a better choice," Wardle says. "When kids can manipulate materials like sand or blocks, or work in a garden, their interest level stays higher and there's far more instructive value involved." Have a question about running your business? Ask our small-business experts. Send us an e-mail at smartanswers@businessweek.com, or write to Smart Answers, BW Online, 6th Floor, 2 Penn Plaza, New York, NY 10121. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally.


Later, Baby
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