Small Business

A Lot More Than Just Child's Play


By Karen E. Klein Q: I am the mother of 9-month-old twins and have six years' experience providing day-care in my home. I would like to open a larger center and have located a building, but I'm wondering where to find funding. So many of the "grant programs" I've found on the Internet have checked out with the Better Business Bureau as negative.

-- A.B., West Bend, Wis.

A: Good on you for checking out those "grant programs" with the experts before falling for a scam. More entrepreneurs should follow your lead.

As you probably already have realized, for-profit daycare is a tough business, since staffing costs are high and pretax profit margins tend to be slim -- around 4% to 5%, experts say. The good news is that because you are providing a much-needed service for the working parents in your community, you may indeed be able to find government funds to help you get started.

The U.S. Health & Human Services Dept. sponsors an organization called The National Child Care Information Center, that provides good information both for daycare operators and for parents looking for quality childcare. The group maintains a Web page, that lists the state contacts

for offices that administer the Child Care & Development Fund, a federal government agency that funnels money the states use for childcare.

FOR THE CHILDREN. The latter site lists an office in Madison that you should investigate further. Ask about Wisconsin's "Early Planning Grants" for childcare operators, and contact your local government's business development department about getting funding as well. Many communities set aside federal Community Development Block Grant monies to promote licensed daycare businesses, particularly if they serve disadvantaged children or are located in low-income neighborhoods.

While you're doing your research, talk to some other childcare providers in your city and ask them how they got startup funding, and whether they qualified for federal, state, or local help. And if you haven't joined the industry associations for childcare operators, you should do so. The National Care Care Assn., is brimming with information about funding and business development, and is specifically aimed at private, licensed daycare operators. The National Assn. for the Education of Young Children would also be a good resource. Best of luck! 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, 46th Floor, 1221 Avenue of the Americas, New York, NY 10020. 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.


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