Posted in Business Practice

How Do I Start a Family Child Care Business? (Part 2: Business Plan – Budget)

In Part 1 of this series we looked at what is needed to become licensed and the basic policies you will need to have in place as a small business owner of a family child care. 

So let’s look at the budgeting – cost of doing business – now.

A sustainable small business meets the needs of their community with the services they provide. For family child care providers our challenge is to figure out how to run a quality program that parents in the community can afford to use and that provides the salary we need in supporting our family. 

A simple business plan will:

  • help you think through what you want in your program, rather than only what you can afford.
  • show that your business will generate enough revenue to cover your expenses and make a satisfactory return (your salary).
  • develop your marketing strategy
  • help set long-term goals. Having long-term goals will guide you in making some hard decisions moving forward, while supporting the type of program you establish.

Don’t let the idea of a business plan scare you. It’s really just looking at questions that pertain to what you hope your business to be and honestly answering them.

Here are some questions to consider as part of your business plan:

  • What does your salary need to look like? minimum income, benefits
  • What age group(s) do you want to serve?
  • What is the greatest unmet need in the community?
  • What is the maximum capacity of your space?
  • What is your desired capacity?
  • Do you need staff? This will mean looking at their wages, taxes, benefits, trainings… as well as, policies just for staff.
  • What is the current market rate for your community?
  • Do you want a particular curriculum or to present a specific educational philosophy? This will have implications on your training and what kind of equipment and other materials will be needed.
  • What hours will the program be open? Many parents work nontraditional hours and may need a program that opens earlier and/or closes later.  
  • Will breakfast, lunch and/or snacks be provided, or will children bring bag lunches? Providing food at the program can ensure that the children receive nutritious food and that all children have equal access to adequate food. Providing food will be an expense vs having children bring lunch. CACFP (Child and Adult Care Food Program) can cover some of the cost. CACFP reimbursement is considered income. Food purchased is a tax deduction/business expense.
  • Who is your target audience and how best to reach or market to them?
  • What level of parent involvement do you want in the program?

Budget Time!

Include a pre-opening budget in your plan. This includes your set start-up costs, any capital expenses related to meeting licensing requirements and financial coverage for the period before you reach your minimum capacity of children attending the program. Wait, minimum capacity?

Tip: Work your operating budget without a need to be at full capacity. Best practice for a sustainable child care business is to budget for 85% full capacity. That relieves you from ongoing financial stress, as well as, providing a built in contingency fund when you are at full capacity.

Being your own boss means remembering to pay yourself first!

What is the minimum capacity, at your community’s current market rate, that will provide you a living wage? Your salary is your #1 expense line. To often providers just take what is left. No, you are working to support your family. Pay yourself first!

Then think about the additional food costs if you are providing snacks and meals. The increase you might see in utilities because of operating a business full-time within your home. The cost range you can handle for additional equipment/supplies that are only about the child care program (art supplies, extra blocks, puzzles).

Tip: equipment/supply costs can be kept low by thinking outside the box – books from the local library, used toys from yard sales/thrift stores, DIY toys and equipment from recycled/repurposed materials, and natural materials. Everything does not need to be new.

As part of your business plan figure in how you will build your contingency fund. Remember that 85% full capacity? This fund ensures the continued operation of your small business despite the problems that do arise (ie. late receipt of payments, unexpected equipment problems, under-enrollment, year-end taxes). Every dollar counts in this. Even $5 a week adds up: 5 x 52 = $260 in a year. Or maybe $1 per child per week – 8 children means $8 per week = $416 a year. Better is 1 full-time care slot: example: 125 x 52 = $6500 a year. Best is 2 full-time care slots: $13000 a year at $125 per slot.

Let’s look at an example: capacity of 8 children full-time. You charge $125 per full-time slot (6 slots) and $80 for 2 school-age slots. Total weekly: $910. If you remove 2 full-time slots to use for a contingency fund – $660 remains. Working off a sixty hour work week to figure your hourly wage you are getting $11 an hour. Now remember you have supplies and utilities that also need to come out of the $910 total. So, taking a third off for the business share of supplies, utilities, taxes, etc ($220) you are paying yourself $440 a week, plus the contingency savings of $250 a week. Remember when you worked out of your home your salary used to pay to support your home. Now many of those items come under business costs and are tax deductible.

Monthly: salary – $1760  / contingency – $1000  / business share supplies – $880

Add your salary with business share = $2640 per month / $31,680 per year (52 week) (for 8 children at $125 per week)

A big area to consider while building your budget is that adequate furnishings and equipment are essential components of any quality child care program. As a family child care program you have both the pluses and minuses of working in an established environment. You already have a working kitchen and bathroom. As you move forward 2 questions to consider:

  • Are you working within your family living space or do you have a dedicated child care space?
  • What equipment do you really need to effectively run your program supporting children’s development in all areas? Furnishings and equipment in any type of child care program need to stimulate all aspects of children’s development in a variety of ways. Set-up of the space influences how children respond directly to the environment and the kinds of activities they will engage in. For example, a climbing structure encourages use of their large muscles. If the platform holds multiple children, it encourages socialization.

Many family child care providers learn to be frugal. That does not mean doing without, but being mindful, creative and resourceful. Before you rush out to buy any expensive piece of equipment or a set of supplies, consider these possibilities:

  • Are there parents/friends/family members who might have what you want, and would be able to give or lend it to you?
  • Can you buy a “nearly new” version of the item by advertising in your community newspaper or checking out second hand stores and garage sales? 
  • Can it be borrowed? Is there is a toy or equipment lending library in your community.
  • Make your own (or get a friend or parent to help). Items like musical instruments, puppets, games, felt board and figures, puppet theatres or playhouses can be built from many different materials with very little skill.  Online is a wealthy of inspiration. Be sure to check out the DIY Boards FCCAM has on Pinterest.
  • Recycle. Parents and friends are usually delighted to collect supplies such as collage materials, dress-ups, and props. Tip: this can also save on storage space needs. Ask a week or two before you will need the supplies, or as you use up what you always have on hand for the unexpected usage.
  • What about an “equipment swap”? Think of arranging a toy, book, or tape swap with friends, neighbours or other care providers.

Your Business Plan is being built.

You can access the yearly market rate to help settle on what your community can handle for child care costs. You might also want to read this previous FCCAM post on Setting Your Rate.

The next big cost is equipment for the program.

Part 3 explores Equipment

Posted in Business Practice

How Do I Start a Family Child Care Business? (Part 1)

Becoming a small business owner as a family child care provider is not for everyone. When you welcome children into your home providing a nurturing, safe environment supporting their development, you are not “babysitting”. Not really sure what being a family child care provider really entails? Check out this FCCAM post: What’s It Mean to be a Family Child Care Provider?

Providing child care in your home is an important job that many find to be a good fit for themselves and their family, a sustainable small business and a fulfilling career choice.

Here are some questions to consider about family child care as a career choice:

  • Do you enjoy spending extended time with children?
  • Is there an age group that you prefer engaging with, have more experience with, or knowledge about?
  • Are you comfortable working with families, having open communication on their child’s emotional, physical, and mental growth?
  • Are you comfortable working by yourself or do you prefer to work with other adults?
  • Are you comfortable being within your home as your work environment?
  • What skills do you have that will help you care for children and run a small business (for example, patience, energy, organizational skills, musical talent, etc.)?
  • Have you had personal experiences with child care? What are your feelings about those experiences?
  • Does your immediate family support the proposed usage of their home?

Notice there is no question about your level of education or if you own your own home….

To be a licensed family child care provider in Maine higher education is not required. You need to be at least 18 years of age with a high school diploma or equivalent degree. To maintain your license you will need to participate in a minimum of 12 hours of professional training each year. There are many options available to secure these hours of training in areas that will support your professional growth and the ability to provide quality care to children served in your program.

I don’t own my own home…..

You do not need to own your own home. You do however need to reside in the home that will hold the program. If renting you will need written permission from your landlord.

You will also need to provide documentation of zoning/code approval from the municipality where the program is physically located. Some towns are very tight in regards to zoning. You need to check with your town office on whether a family child care program is allowed where you live. Do this at the very start of looking at the possibility of setting up a family child care business.

Still thinking operating your own small business as a family child care provider is what you want to do for a profession?


First, understand that operating a family child care business is like operating any other small business.

You need a business plan, an understanding of the regulations you need to meet on the state and local level, and an awareness of the support services available to you. As a potential family child care provider, you must apply for a license to operate your family child care. Meaning you have to comply with the Licensing Rule currently governing family child care programs.

Let’s start with the first information you need to know:

  • How many children you want to care for (capacity)

Your license fee covers a 2 yr license no matter how many children you care for. Your capacity will be determined by your space, ages of children in care and even your personal physical health. You also want to consider what your homeowner insurance will cover and liability insurance. Maine does not require liability insurance, but without it you are putting your family at risk. Any cost of insurance is considered a business expense and thus a tax deduction.

  • Your water source

If on public water, you only need a one time first draw water test for lead. If you have private water, you will need to get an annual general water safety test, as well as, a more extensive test every five years. You will also need to get a one time first draw test for lead.

  • Year your house was built

Homes built prior to 1978 will need to be checked for lead. Licensing specialists perform lead hazard surveys.

DHHS will not review an incomplete application, so submit all your materials at once.

The Family Child Care Checklist for Initial License will help you navigate the process of obtaining a family child care license. This checklist is for your use only and should not be submitted.

What are those materials?

  • Documentation of current certification in adult, child and infant cardiopulmonary resuscitation (CPR) and first aid. Both American Red Cross and American Heart are accepted.
  • A site plan of your premises that includes: indication of all areas where children will be served (floor plan) and the location of any businesses co-located on the premises. This does not need to be a professional scaled plan, but you do need measurements of areas children will be in.
  • water test from a designated lab
  • Pre-licensing training offered through Maine Roads to Quality Professional Development Network (MRTQ PDN)
    • Getting Started in Family Child Care (for new family child care providers)(6 hours) – Required by Child Care Licensing in Maine for new family child care providers. Covers the basic aspects of operating an in-home child care program.  Training is offered online.
  • You will need to clear a background check. Any adult living within your residence will also need to clear a background check. (done by the State of Maine through Licensing)
  • Fire Marshall inspection of premises. They can place restrictions on the ages of children or limitations on the use of basements, specific rooms within the property, or floors above the ground level. There is no cost for this inspection.

Here are the application materials that you must submit to the Department of Health and Human Services.

Here is the current Family Child Care Licensing Rule adopted May 27, 2021. Providers are able to decide how their program will meet or work within the requirements of the Rule.

So you’ve submitted your application……

It’s time to think of what you need to operate a sustainable family child care business, while complying with the Family Child Care Provider Licensing Rule.

You need a business contract for clients and a handbook of policies.

Licensing requires some policies, but many providers include additional policies that are specific to the operation of their small business. Let’s look at the required policies in place. When additional requirements are added by Licensing they can be found under “Licensing Rule“, but this post is the place to start.


Parents/Legal Guardians need to sign off that they are aware of these policies:

  • Child guidance practices
  • Parental visitation at the child care site
  • Expulsion and suspension practices
  • Management of child illness
  • Emergency preparedness for natural disasters and human-caused events, including but not limited to, fire drills
  • Release of children to non-custodial caregivers
  • Mandated reporting/Abuse and Neglect
  • Serious injury and child death reporting.

FCCAM has examples and templates for all these required policies/forms available for members.

As part of your contract and registration to attend your program you will need to maintain information on the children in care, their legal guardians, and any staff or volunteers in your program.

  • Child’s name, birth date, street address and mailing address
  • Name, street address, mailing address and telephone number of the child’s legal guardian(s)
  • Places of employment, telephone number, and street address of the child’s guardian’s employers
  • Method of contacting the guardians while the child is in care
  • Name, street address and telephone number of an emergency contact other than the guardians, for use in the event of an emergency, if the guardians cannot be reached
  • Dates of enrollment and termination
  • Immunization records;
  • Names, addresses and telephone numbers of the child’s physician (Many providers also include dentist and hospital preference.)
  • Written authorization to obtain emergency medical care for the child
  • Records of all serious injuries and reportable incidents sustained by the child while in care. These need to be recorded on the same day of the injury and include the date and time of the notification of a guardian, and signed by the guardian within 48 hours of the incident.
  • Names of individuals who are permitted by the guardians to remove the child from the premises
  • Notation of any known significant changes in the child’s appearance, hygiene, health or behavior including, but not limited to, aggression, withdrawal, sexual acting out and prolonged tantrums
  • Child’s known allergies and other health conditions, including any related health plans
  • Written permission or denial for use or distribution of images or personal information of the child on any publications, social media or promotional materials
  • A complete record if suspected child abuse or neglect is reported to the Department’s child protective intake
  • Any professional developmental assessments of the child provided by the parent, if available
  • Any relevant documentation of medical necessity
  • Written permission from the child’s guardians before allowing the child to participate in any high-risk activity.
  • If any information is missing from the child’s record, licensees must include a written explanation in the child’s record that states why the information is missing

Personnel records must include:

  • Name, street and mailing address, birth date and telephone number of the individual
  • Documentation of training, as required by Licensing rule
  • Dates of employment and termination of employees. (Documentation regarding the reasons for termination must be kept in the personnel record for at least one year.)
  • A comprehensive background check report initiated prior to the date of hire
  • Documentation of any disciplinary action.

Provider records:

  • Records of hours worked by providers (including self), including the arrival and departure time for each provider
  • Record of any volunteer hours.
  • Immunizations

General Records:

  • Daily attendance list that includes all children served, including the arrival and departure time(s) for each child.
  • Record of monthly fire drills, available for inspection by the Maine Department of Public Safety, Office of the State Fire Marshal and local fire inspectors.

This might look like a long list, but it’s all important in the operation of your business.

FCCAM has examples and templates for all this material available for members. In these examples you will also see additional areas other providers have felt were important to have in their handbooks to support their businesses.

Now, you’re a licensed provider, where do you go for support?

You’re here so you’ve heard of FCCAM, a statewide professional association that is all about supporting family child care providers. We have members willing to mentor, public and member only resources, professional network and ece training links. FCCAM is also the state affiliate for the National Association of Family Child Care (NAFCC).

In Maine, you are lucky to have Maine Roads to Quality PDN. You have access to trainings, technical assistance/on-site consult and regional peer networks. Many of the services they offer are free.

There are small, local networking groups throughout the state, as well as, an online statewide Community of Practice just for family child care providers that meets by zoom on the second Monday each month.

Your Licensing Specialist is also there to answer questions and provide resources materials or sources.

Quality for ME (Maine’s QRIS) where licensees can work on advancing the quality of their program.

MaineAEYC is the state affiliate for the National Association for the Education of Young Children (NAEYC). Family Child Care providers are welcome to join this national early education association.

The CACFP food program has local sponsors throughout the state. A national program to check out if you are going to be providing snacks and meals.

A local tax specialist or accountant that works with family child care providers. Many are happy to provide information on what is and isn’t a valid business expense.

What about your Cost to start up?

(2021 expenses)

  • Licensing: $160
  • Pre-licensing course: $30
  • water test (maximum cost is for private water source): $300 range
  • CPR training: $75 range
  • liability insurance: 8 children – $500 range
  • homeowners insurance: does not usually change much from current cost
  • **membership in FCCAM $25

Remember all these costs of doing business are deductible.

You probably have most of the general equipment and if not can repurpose free or low cost materials for much of it. You do not need all new or even a large quantity.


This series is being written to inform and inspire those who are considering opening family child care programs. Material for this series has been pulled together from a variety of resources by members of FCCAM. We have done our best to have quality sources and valid links. Please feel free to contact us at any time with specific questions. 

Next ~ Part 2: Business Plan – Budget