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What are the pitfalls of running a child care centre?


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#1 Mozzie1

Posted 19 June 2013 - 04:50 PM

I have been struggling to find a child care centre place for my DD for next year. Talking to other parents in the area, this is a very common problem - I know of people who have ended up hiring a nanny, or resigning, because they just couldn't find child care at any price. A lot have said that they would happily have paid more than the current going rate (about $95 a day) just to get a place.

Which got me thinking that there must be a business opportunity to provide quality child care in the area, and I started seriously considering doing it. But THEN I thought - if there is such an opportunity, surely other people would have entered the market already?

So EB, I'm sure others must have looked into this before. Why is providing child care an unattractive profession? Is it the regulation? High set up costs? Something else?

#2 liveworkplay

Posted 19 June 2013 - 05:11 PM

I think the main issue is finding (and retaining) quality, qualified staff. Also, depending on location, property prices.

#3 Acidulous Osprey

Posted 19 June 2013 - 05:16 PM

Allthe bureaucracy and dealing with the govt regs.

#4 The Old Feral

Posted 19 June 2013 - 05:19 PM

Entitled, helicopter parents?

#5 Justaduck

Posted 19 June 2013 - 05:21 PM

My old boss drove BMWs & lived in a waterfront property, so yes there is money to be made, however it is not something I would want to take on. Far too much responsibility and stress as at the end of the day everything falls back onto you. Enormous upfront cost as well.

First you have to build a building (or renovate one completely) to comply with the regulations. X sqm/child inside and x/sqm per child outside. Once complying with all of this you need to fit out the centre.
Hire and retain qualified and decent staff. At the rate of pay (on par with Woolies) it is hard to hold on to staff who work long hours, take home work and have a fair bit of responsibility for next to nothing.
You then need to get a decent amount of children enrolled and be able to have a high enrolment level to cover outgoings.

Would you want to run the centre as a director? If so you would need to do a few years of study. If not, could you hand over control of your big company to someone else and trust them to do the job?

It is all well and good to say that parents would happily pay more than $95/day, but if you charge $110 a day and provide nothing better than the $95/day place you will possibly only have children attending until they can get into something cheaper.

What if you centre failed to meet the licencing laws, or didn't pass the "Meeting Quality Standard" at the least?  

Might be worth looking into the licencing laws, regulations for your state and the National Quality Framework.




#6 Mozzie1

Posted 19 June 2013 - 06:28 PM

Thanks for all your responses. It's just a hair brained idea at the moment, so I haven't put a lot of thought or research into it.

I wouldn't run it myself, I would hire someone more experienced than me to do it. So basically I would just be bank rolling it.

Good point about being more expensive than the other cents possible meaning higher turnover. I'm not sure that I would charge more, but the shortage gives me confidence that I could fill a centre at $95-$100 a day per child (a few centres around here have told me that they have 500 under 2 year olds on the waiting list - there are only about 120 spots available for under 2 year olds in the region).

It's probably all a bit hard, but I figured I can't complain about the child care shortage if I'm to willing to do something about it!

#7 Mozzie1

Posted 19 June 2013 - 06:34 PM

QUOTE (Justaduck @ 19/06/2013, 05:21 PM) <{POST_SNAPBACK}>
My old boss drove BMWs & lived in a waterfront property, so yes there is money to be made, however it is not something I would want to take on. Far too much responsibility and stress as at the end of the day everything falls back onto you. Enormous upfront cost as well.


Just wanted to add that my current job is high stress and high responsibility, so this doesn't scare me too much biggrin.gif

#8 SplashingRainbows

Posted 19 June 2013 - 06:47 PM

I honestly think you'll need a better part of $1million to find a building, fit it out, comply with the regs and obtain the licenses, advertise and have sufficient working capital to get through the first 18 months - the toughest of any business. Child care can be brutal.

You are also at the mercy of the government of the day. Any significant changes to ccr and or ccb could see your business in trouble within weeks.

I think you should work in a centre for a few months and see the issues at a grass roots level if you're seriously interested.

#9 Mozzie1

Posted 19 June 2013 - 06:51 PM

QUOTE (SplashingRainbows @ 19/06/2013, 06:47 PM) <{POST_SNAPBACK}>
I honestly think you'll need a better part of $1million to find a building, fit it out, comply with the regs and obtain the licenses, advertise and have sufficient working capital to get through the first 18 months - the toughest of any business. Child care can be brutal.

You are also at the mercy of the government of the day. Any significant changes to ccr and or ccb could see your business in trouble within weeks.

I think you should work in a centre for a few months and see the issues at a grass roots level if you're seriously interested.


I was thinking $500-$750k, but you are probably right about the $1m. It also occurs to me that if the government actually decided to do something about the shortage and open more centres, I could also be stuffed.

I guess this is why there aren't enough child care places!

#10 luke's mummu

Posted 19 June 2013 - 06:56 PM

Just a thought - maybe opening a private family-day care in your home could be a starting point? I know someone who advertises, she calls it "XXXX day care", it is registered by DOCS but charges $100 a day, so a lot more than family day care through the council.

Effectively being her own boss in a mini-childcare setting.

#11 Jeyamoo

Posted 19 June 2013 - 08:19 PM

The profit margin is VERY low. It is very hard to make a profitable business. That's why no one wants to do it despite the high demand.

#12 Not Escapin Xmas

Posted 19 June 2013 - 08:28 PM

To say nothing of dealing with parents, kids, snot and poo all day. For a pittance. Doesn't float my boat I have to say.

#13 F.E.B.E

Posted 19 June 2013 - 08:36 PM

Hand, foot and mouth disease?

#14 Mozzie1

Posted 19 June 2013 - 08:37 PM

QUOTE (Escapin @ 19/06/2013, 08:28 PM) <{POST_SNAPBACK}>
To say nothing of dealing with parents, kids, snot and poo all day. For a pittance. Doesn't float my boat I have to say.


I wasn't planning to run it. Although looking at child care centres that are up for sale, I disagree that they aren't profitable, most seem to be making a 20-25% return.

Half a day of research, and I have discovered that you need licences or approvals from all 3 tiers of government, and that banks will only lend 40-60% of the cost. No wonder there are no places!

Thanks for all your comments and suggestions. I think I'll put this idea to bed.


#15 Poussey

Posted 19 June 2013 - 08:48 PM

I don't know anything about running a centre, but in my limited experience thus far the day care centre that my daughter currently attends  is run by the owner and it poos all over the previous centre which was run by a hired director. I think it's mostly because she is motivated by profit but also a genuine desire to do a great job...

#16 _Alana_

Posted 19 June 2013 - 08:55 PM

QUOTE (Mozzie1 @ 19/06/2013, 06:51 PM) <{POST_SNAPBACK}>
I was thinking $500-$750k, but you are probably right about the $1m. It also occurs to me that if the government actually decided to do something about the shortage and open more centres, I could also be stuffed.

I guess this is why there aren't enough child care places!



At least a mil !!

#17 SplashingRainbows

Posted 19 June 2013 - 08:56 PM

QUOTE (Mozzie1 @ 19/06/2013, 08:37 PM) <{POST_SNAPBACK}>
I wasn't planning to run it. Although looking at child care centres that are up for sale, I disagree that they aren't profitable, most seem to be making a 20-25% return.

Half a day of research, and I have discovered that you need licences or approvals from all 3 tiers of government, and that banks will only lend 40-60% of the cost. No wonder there are no places!

Thanks for all your comments and suggestions. I think I'll put this idea to bed.


I would be extremely surprised to see a genuine return of 20% in a well run child centred centre.

There are ways to make figures show what you want them to. A good accountant can usually tear holes in financials prepared for a business sale.

If it was really 25% why would they sell?

#18 WinterIsComing

Posted 19 June 2013 - 08:59 PM

I wonder why people keep saying that childcare workers earn next to nothing.

I have seen a lot of job ads in our area and they offer at least 65-75K.

Is that peanuts, really?

It isn't massive amount of money, but seems to be a fair compensation for what is a feel good job. Spending a day with a bunch of beautiful children gotta be better than spending a day in a soulless office staffed with egomaniacs and control freaks...just saying!

#19 Mozzie1

Posted 19 June 2013 - 09:18 PM

QUOTE (SplashingRainbows @ 19/06/2013, 08:56 PM) <{POST_SNAPBACK}>
I would be extremely surprised to see a genuine return of 20% in a well run child centred centre.

There are ways to make figures show what you want them to. A good accountant can usually tear holes in financials prepared for a business sale.

If it was really 25% why would they sell?


Yeah, good point.

#20 *Finn*

Posted 19 June 2013 - 09:29 PM

QUOTE (WinterIsComing @ 19/06/2013, 08:59 PM) <{POST_SNAPBACK}>
I wonder why people keep saying that childcare workers earn next to nothing.

I have seen a lot of job ads in our area and they offer at least 65-75K.

Is that peanuts, really?

It isn't massive amount of money, but seems to be a fair compensation for what is a feel good job. Spending a day with a bunch of beautiful children gotta be better than spending a day in a soulless office staffed with egomaniacs and control freaks...just saying!


I could be wrong but I would say this wage would be for a university trained kindergarten teacher? A qualified group leader up here in qld would be more like 40k

#21 vrx_chick

Posted 19 June 2013 - 09:44 PM

QUOTE
I wonder why people keep saying that childcare workers earn next to nothing.

I have seen a lot of job ads in our area and they offer at least 65-75K.

Is that peanuts, really?

It isn't massive amount of money, but seems to be a fair compensation for what is a feel good job. Spending a day with a bunch of beautiful children gotta be better than spending a day in a soulless office staffed with egomaniacs and control freaks...just saying!


I am a 3 yr qualified ECT in QLD - working full time and earning nowhere near 65K!!! More like 40K,
and while we do appreciate being able to spend the day with a bunch of beautiful children, helping them to learn and grow , there are also a lot of downsides

- dealing with behavior issues in those "beautiful children", dealing with every parent's wants and needs, attempting to document each day to a standard that is acceptable by 3 different governing bodies, dealing with and cleaning up every type of bodily fluid..., working together with a staff team that is often changing due to all sorts of circumstances, taking work home nights and weekends to complete the scrapbooks that parents ooh and aah over at the end of the year, and not get paid overtime, coming to work in the dark to set up a centre in your own, unpaid time so that parents can drop their kids off the second that you open.... the list goes on, and on, and on...

I would not change my job / career for anything! BUT I am not, and never have been in the industry for the money, working conditions etc - only ever for the amazing moments that caring for children can, and do provide on a regular basis, that help us to deal with all of the above, and more -
especially when I could earn more money working at a supermarket....



#22 StartledFlamingo

Posted 19 June 2013 - 09:48 PM

Wages costs will be going up significantly shortly too, due to the incoming requirement for all centres to have higher-qualified staff - they'll need to have an Early Childhood Education qualified person, and the competition between centres and kindergartens for appropriately qualified staff may be fierce.

My Mum runs centres in SA, her staff are on really good childcare wages as they're paid through a Local Government Agreement rather than the usual child care Award wages - but they wouldn't be on $65K.  I agree with a PP that would be more likely a salary for an Early Childhood teacher or maybe a 2IC of a large centre.  Childcare Award wages even for Cert III qualified staff are under $20 per hour - so $40K a year.  Unfortunately, child care is a historically undervalued profession.

Licensing and standards and other regulations are a PITA too, from what I've heard.

#23 Justaduck

Posted 19 June 2013 - 09:49 PM

QUOTE (WinterIsComing @ 19/06/2013, 08:59 PM) <{POST_SNAPBACK}>
I wonder why people keep saying that childcare workers earn next to nothing.

I have seen a lot of job ads in our area and they offer at least 65-75K.

Is that peanuts, really?

It isn't massive amount of money, but seems to be a fair compensation for what is a feel good job. Spending a day with a bunch of beautiful children gotta be better than spending a day in a soulless office staffed with egomaniacs and control freaks...just saying!


Hahaha oh dear! In QLD the highest paid wage (unsure about kindy teacher) is a large centre director after 9yrs of service they get $1146/wk. Your average assistant, after 3yrs of service is on $769/wk before tax and starts on $650 when unqualified. No idea who is on $75k but it is nobody up here!

It is not all tea parties and singing and can get highly stressful at times. In addition to having to prepare a full program & write updates on individual children every day you get to intervene before fights, break them up if they do occur, get vomited or peed all over, shower #3s off other peoples children, deal with parents wanting incident reports because little Johnny skinned his knee when he fell over or Sally is missing an (unnamed) lid from her container and can you not come in from the playground and find it right now? Confront parents about possible developmental concerns (that is usually the hardest part of the job) and keep cool, calm and collected for 8 hours. You can't get away with slip-ups like you can at home, you let the f word slip at home and it is only your children you have to worry about, you do it at work and you can lose your job. You lose your temper at home and it is only your children who you feel guilty about doing it in front of, you do it at work & once again, can be grounds for dismissal.
You only have to read the many threads on EB about a child being yelled at, called silly/naughty, being hurt/pushed over to see that it isn't all easy.

Like VRX I was never in it for the money as my ex earned a fortune, but now that DP is an apprentice and not earning much, I need a job that pays cash and not love.
ETA: Here is where I got my current wage info from. Take home pay has gone up a bit since I left due to the taxable income not coming in til $18k.

http://www.qirc.qld.gov.au/resources/pdf/a.../c0600_ar10.pdf

Edited by Justaduck, 19 June 2013 - 09:53 PM.


#24 queen_grub

Posted 19 June 2013 - 09:54 PM

The only one that would be earning anywhere near 65k would be the centre director. Im in nsw 4 year trained teacher been in the industry 6 years now and still earning under $50k. And that is the highest paid position apart from the director. Consider the diplomas and cert 111 educators which make up the majority of staff earn way less.
And as for a feel good job - there is a hell of alot more Involved in this industry then just being with beautiful kids each day. Yes it has its rewards but you dont realise the amount of behind the scenes work that goes on - the time spent programming, setting up, designing, following regulations and national guidelines, managing challenging behaviours and parents expectations. Its by far not an easy job especially when dealing with people who have the attitude that it is an easy feel good job - spend a day working in childcare and maybe you might have a little more respect for the things we do every day

#25 ~flaxen~

Posted 19 June 2013 - 09:59 PM

QUOTE (WinterIsComing @ 19/06/2013, 08:59 PM) <{POST_SNAPBACK}>
Spending a day with a bunch of beautiful children gotta be better than spending a day in a soulless office staffed with egomaniacs and control freaks...just saying!


LOL. Try 16 2yr olds in a room. I love my job and I love working in the toddlers room, but I have to say they are also determined little egocentric beings wink.gif


As far as wages go, I am 4 yr B Ed (EC) trained and at the top of my pay scale which is about 20% less than what I would earn if I worked in the school system and nowhere near what you have mentioned. However, and correct me if I'm wrong, Cert III's would start around the $14 p/h mark. Peanuts.




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