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Starting an Early Childhood Centre

Last Verified: 2006-05-03

TABLE OF CONTENTS

T he following is intended to provide an understanding of potential license, permit or registration requirements when considering the establishment of an early childhood centre in Canada. This document was prepared by Canada Business and contains a series of possible steps and issues to consider in carrying out your project. The extent to which the information will apply to you will depend on the circumstances related to your situation.

For further information on individual topics identified herein, contact your local Canada Business service centre. Because this document is only meant as a guide, the Canada Business service centres will not accept responsibility for business decisions made based on the information provided.

A customized guide on starting an early childhood centre is available for the following provinces or territories. Provincial/territorial government, municipal and non-government information may be included, depending on the subject and the region.

BASICS TO GETTING STARTED
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Before proceeding, reference should be made to the Business Start-up Info-Guide for your region for complete information applicable to all types of business.

Starting a business can be a rewarding undertaking, but it comes with its challenges. Before starting a business in Canada, it is wise to do your research. You should also make sure you are suited for entrepreneurship, and understand that significant effort may be required. As such, you should thoroughly enjoy the field you are getting into, and you must believe in your product or service as it may consume much of your time, especially during the start-up phase. There are many issues to consider such as regulations, financing, taxation, managing your business, advertising, and much more. For more information, see the Checklists for Going Into Business.

INDUSTRY OVERVIEW
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According to Human Resources and Skills Development Canada's research on the childcare industry, 330 000 individuals, mainly women, provide childcare for a living in Canada. Most caregivers are relatively young (45% are under 30 years of age) and are well educated (55% have completed post-secondary education).

In contrast to other services in the health, education, and social and human services fields, childcare is not provided as an essential public service. Only a few childcare services are operated as commercial enterprises or by incorporated non-profit* organizations.

Over half of Canadian children were in some form of childcare by 2000/01 and a quarter of them were in a daycare centre, according to a new analysis. The proportion of children aged six months to five years who were in childcare increased significantly between 1994/95 and 2000/01. In addition, during this six-year period, a shift occurred in the type of main childcare arrangement used.

Social/Demographic
Trends in birth rates, immigration patterns, ethnic composition of the labour force, and the labour force participation rates of women all play a role in determining who will need and be likely to use childcare.

While the rate of population growth is slowing (primarily due to constant fertility rates), immigration levels have been rising and now account a significant proportion of Canada's population growth.

Much of the increase in demand for childcare over the last 25 years has been driven by the rising participation of women with young children, in the workforce. This trend, however, is not expected to continue at the same rate, and thus demand for childcare is expected to grow steadily but more slowly than in the past three decades. There also appears to be increasing demand for more flexible, part-time childcare, but few services are available to meet this need.

Types of Operation
North American Industrial Classification System (NAICS) codes: 6244, 62441 and 624410 - NAICS for Child Day-Care Services

This industry group is made up of establishments primarily engaged in providing daycare services for infants or children. These establishments may care for older children when they are not in school and may also offer pre-kindergarten educational programs.

Examples:

  • baby-sitting (self-employed caregivers)
  • nanny service (live-in or out, work in home of employer)
  • daycare centres
  • pre-kindergarten (except when part of elementary school system)
  • preschool centres (except when part of elementary school system)

Home-based caregivers comprise the bulk of the childcare workforce, representing about 85% of all providers. The remaining 15% of the workforce provides care in early childhood centres and nursery schools, including school-aged care.

A childcare business can easily be started in your home with just a few weeks of planning and a modest amount of start-up cash. A commercially-located center takes a greater investment of time, energy and money. The size and type of business you choose will depend on your start-up resources and goals for the future. Many childcare providers are satisfied with a one-person operation in their home that generates a comfortable income while allowing them to do work they enjoy (and possibly even care for their own children). Others may start at home and eventually move to a commercial site as the business grows. Still others begin in commercial locations and are either content with one site or have plans to expand.

Specialty Operations

  • Aboriginal Head Start
    Aboriginal Head Start provides comprehensive experiences for First Nations, Métis and Inuit children up to 6 years of age and their families, with primary emphasis on preschoolers, 3-5 years of age. The program is based on caring, creativity and pride following from the knowledge of their traditional community beliefs, within a holistic and safe environment.

  • Children with Special Needs
    An additional assistance may be required because the child has a physical, visual or auditory disability, or if the child has developmental, communication, behaviour or a chronic medical problems.

  • Promoting Breastfeeding
    Some mothers may want to benefit from childcare services while still providing their baby with breastmilk. A specialized daycare may have private, quiet sitting rooms where a mother can breastfeed the child. Such a centre could also promote breastfeeding and pumping techniques or simply establish an open attitude that will ease mothers. Information about breastfeeding is readily available, for example, you might wish to start by visiting the Breastfeeding Committee for Canada or the INFACT Canada Web sites.

Whatever type of early childhood centre you choose to operate, keep in mind that the basics of your work will be caring for someone else's children. This involves a lot of responsibility and a serious commitment. When the children are in your custody, you are responsible for their safety and well-being. What more, you'll play a key role in their overall development and may well be someone they'll remember their whole lives.

Choosing Your Location
Choosing the right location for your business is important. Considerations include the needs of your business, the location of your customers and competitors, and such things as taxes, zoning restrictions, noise and the environment. For most businesses, an appropriate location is critical.

LICENSES, PERMITS AND REGULATIONS
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One area of rules and regulations that all new businesses must comply with is that of licenses, permits and regulations. When creating a business, you must contact the municipality involved, along with the provincial/territorial and federal governments.

Each municipal government has the authority to issue its own business licenses within its jurisdiction. Since there is no uniformity throughout the country regarding municipal licenses for businesses, you should consult with the appropriate local officials to determine whether your business will be affected by local regulations and licensing requirements. Businesses (including home-based businesses) must also meet the zoning by-laws that control property uses in their municipalities.

Provincial/territorial governments are responsible for:

  • determining what childcare services are regulated;
  • monitoring those regulations; and
  • determining the type and amount of funding for childcare services.

In keeping with the broader public policy moving towards privatization and targeting of public funds, provincial/territorial governments, with the exception of Quebec, have generally been moving away from co-ordinated early childhood policies and programs, making childcare more of a private responsibility.

Examples of licenses, permits and regulations that could apply when starting an early childcare centre may include, but are not limited to:

Licenses

  • municipal business license

Permits

  • building permit

Regulations

You can get permit, license and regulation information by contacting your province/territory, local city hall, town or village office or rural municipal office. Contacts for local,  Provincial/Territorial  and federal governments can be found in the government listings of your telephone directory or on the Canada.ca Web site.

BizPaL - Business Permits & Licences  provides Canadian businesses with one-stop access to permit and licence information from all levels of government. This online service is offered by Industry Canada in partnership with provincial, territorial, and municipal governments.

MANAGING YOUR OPERATION
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Market Research
Successful businesses have extensive knowledge about their customers and their competitors. Acquiring accurate and specific information about your customers and competitors is a critical first step in market investigation and development of a marketing plan.

In developing a marketing plan, your primary functions are to understand the needs and desires of your customer, select or develop a product or service that will meet customer needs, develop promotional material that will make the customer aware and ensure product or service delivery.

Training and Development
Around 117 post-secondary institutions deliver early childhood education (ECE) programs in Canada. In addition to certificate, diploma, and degree programs, some institutions offer related credit and non-credit programs for those already offering childcare. It is important to note that childcare centres often hire caregivers with qualifications beyond provincial/territorial minimum requirements.

Selecting Professional Services
The use of professional services is essential to the success of a small business. Professionals provide knowledge and expertise in the areas where you may have little. They round out your management team to ensure your business is operating efficiently.

As an entrepreneur, there are four main areas of professional services with which you may consult:

Accounting/Bookkeeping
A good record keeping system should be simple to use, easy to understand, reliable, accurate, consistent and designed to provide information on a timely basis.

The legal requirements concerning financial records specify only that they be a permanent, accurate and complete record of your daily income and expenses.

Examples of types of record books and bookkeeping systems:

  • double entry bookkeeping;
  • commercial bookkeeping systems;
  • one-write systems;
  • computerized systems; and
  • single entry bookkeeping.

Benefits and Income Tax Return
If you run a daycare in your home, you may be able to deduct business expenses from the income reported on your income tax return. Canada Revenue Agency's easy to understand guide to  Using Your Home for Day Care  explains whether you can claim expenses, what expenses you can claim, your responsibilities as an employer, and the importance of keeping good records.

Setting Up a Pay System
Pay administration is a management function that helps you control personnel cost, increase employee morale, and reduce workforce turnover.

Insurance
Insurance needs for businesses vary greatly. It is best to choose an insurance agent or broker familiar with your size of business and, in particular, an agent familiar with your type of operation. If you don't have an insurance agent, it could be a wise decision to ask other business owners in your area to recommend one.

The following list will remind you not to overlook the complex areas of business insurance. It is best, however, to discuss your specific requirements with your insurance agent.

Basic insurance:

  • fire insurance (extended coverage on buildings and contents);
  • liability insurance;
  • burglary protection (theft coverage).

Furnishings and Equipment
Before you open your early childcare centre, you need rest mats; kids tables and chairs; adult chairs; shelves; storage units and book cases. You need to have a variety of outdoor toys; indoor toys and games; toys for large motor development; toys for small motor development and educational toys. You must also have unbreakable dishes of a suitable size; colourful and stimulating environment, but also a calm environment area for nap time or for more relaxing activities.

The fee you receive, the size, specialization and kind of service will determine the type of equipment you require. For assistance in this area, you may get the advice of a sales representative or consult trade publications and manufacturers' Web sites.

Used Equipment - Consider buying used equipment as a cost-saving measure. Sources of used equipment include an early childcare centre that is closing or dealers in second-hand equipment. The drawback to this approach is that, often, there are no guarantees with the purchase.

Marketing/Advertising
Word-of-mouth advertising and good public relations are often the best ways of promoting an early childcare centre. Depending on your market and its size, also consider flyers, newspapers, radio, TV, the business pages of the telephone book and the Internet. Also bear in mind that a satisfied customer is good advertising. Participating in community events is another way of advertising your early childcare centre -- the more people know you and appreciate you, the more they'll be sending business your way. However, this should be the by-product of genuine interest in the community.

A Web site should have details to describe the location (business address, telephone and fax numbers, and directions on how to get to your centre), hours of operation, and anything else that may be of interest to potential customers. However, once you launch a Web site, you must update it on a regular basis. You may want to consider registering with Internet childcare services directories.

The  Online Small Business Workshop - Marketing Basics covers the basics from developing your customer profile to promoting your business.

The federal Competition Act governs misleading advertising and deceptive marketing practices for all businesses in Canada. The Act defines which marketing practices are illegal and the process of a complaint investigation.

For more information, consult the Competition Act - Misleading Advertising and Deceptive Marketing Practices, administered by Industry Canada or visit the  Competition Bureau  Web site.

For more information regarding advertising and marketing, see the following documents:

You can find additional information on managing your operations, by viewing the Canada Business index of  Popular Business Topics .

START-UP CHECKLIST FOR YOUR CHILDCARE CENTRE
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This checklist will help you ensure you've covered everything.

  • Type of centre:  Where will you operate? Home, Commercial Location or Home of client?
  • Location:  Does the location have parking? A park nearby? A school?
  • Market:  Is there a need for your service in the area?
  • Legal requirements:  Have you checked on zoning, fire safety and other legal requirements?
  • Health and safety issues:  Have you written down your action plan for emergencies? Have you read-up on health and safety issues (toys, food, stairs etc.)?
  • Licensing:  Do you have your licenses and permits yet? From what organisation must you get them?
  • Training and certification:  What types of training/certification do you need/want/have?
  • Staffing: Know the required staff-to-child ratios. If you plan to hire people, you should have human resources policies.
  • Financial issues:  How much money must you invest? Can you borrow money?
  • Insurance:  What coverage do you need to adequately protect yourself, the children in your care, the centre and its contents?
  • Programs:  Have you prepared your program for games, activities, outings, discipline, meals, etc.
  • Equipment:  What equipment, toys, articles and food do you need? Where will you get it, and how much will it cost?
  • Links:  What community and professional resources are available to you?

ASSOCIATIONS
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Although only 20% of caregivers in centre-based programs are members of unions, unions have played a large role in advocating for increased public investment in childcare.

In Canada, caregivers are not required to affiliate with professional organizations, although about 5% do. Several national and provincial childcare associations are taking steps to increase the level of professionalism in the field, although the issue is a contentious one as some see it as placing too much emphasis on knowledge, rather than valuing the caring and nurturing practices in the sector.

Examples of associations include, but are not limited to:

RESOURCES
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Additional resources which may help early childcare business owners include, but are not limited to:

Publications
You may find books, magazines and other relevant print material at any Canada Business service centre and/or business service organizations in your community that provide Canada Business information. Contact the Canada Business service centre in your region for the location nearest you.

  • Contracts/Forms—ready to go and customizable contracts and other forms are available for a fee from the private industry

Statistics

Related Web Sites

ADDITIONAL INFORMATION
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When seeking business information, feel free to visit the Web sites for the  Business Start-Up Assistant  and the Online Small Business Workshop . You may also want to check with your local library, the major chartered banks, your local Chamber of Commerce, educational institutions and business development organizations— some of which offer courses, seminars and workshops.

BIBLIOGRAPHY
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How to Offer childcare Services http://www.entrepreneur.com/article/0,4621,290241,00.html
Licences, Permits and Regulations  http://www.hrsdc.gc.ca/en/home.shtml
Training and Development  http://www.hrsdc.gc.ca/en/home.shtml
Furnishings and Equipment - information gathered from various private sector Web sites and associations

*Note: "non-profit" also known as nonprofit organizations, non profit organizations, not-for-profit organizations, voluntary organizations and volunteer organizations.

DISCLAIMER
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

Links Policy
Some of the hypertext links lead to non-federal government sites which are not subject to the Official Languages Act and the material is available in one language only.



Last Modified: 2006-05-09

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