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How to Start a Childcare Business

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How to Start a Childcare Business Teo Filo

How many times while working in childcare, you may have thought of opening up your own childcare centre? Being a boss, implementing your own ideas and suggestions, running things how you see fit. It’s a great opportunity to make a difference within the community and to offer your own experiences and knowledge. It may sound like a good idea but the reality of it, it’s a hard task! There are a lot of regulations, government policies and requirements that needs to be followed. However if you are willing to put the hard work in then it can be very rewarding! This article will provide you with information on what you need to do in order to start your own childcare business.

When starting a childcare business it’s best to have some experience with working in different early childhood settings and be qualified to own a childcare centre. Having a degree isn’t essential to own a childcare centre however a Diploma qualification would enable you to understand the ins and outs of responsibilities within a centre. Along with a qualification you will also require:

  • a Police/Criminal check
  • Current First Aid Certificate
  • Current Working With Children’s Check
  • Current Anaphylaxis training

Being a qualified owner is beneficial as you will be aware of what is required and meet the needs of the educators and families. It also provides trust in staff knowing you are qualified to own a centre. There is nothing worse than working for an owner who has no idea on childcare itself. So, it’s best to spend a couple of years getting qualified and gaining experience… After all this is your business and a lot depends on the choices you make.

Types of Early Childhood Services

When starting a childcare business there are many different types of childcare services you can offer within the community. Before deciding on which service you would like to start it’s best to do some research in the locality you’re planning to run your service. Find out the community needs and see what type of service would suit the needs of the community best. For example: in the locality if there are 3 long day care centres offering care for 0 – 5 year olds, it may be beneficial to start up a preschool service which focuses primarily on school readiness.

Childcare services include some of the following:

  • Long Day Care – Long day care (LDC) is a centre-based form of childcare service. LDC services provide quality all-day or part-time care for children of working families and the general community.
  • Family Day Care – Family day care (FDC) services support and administer networks of FDC carers who provide flexible care and developmental activities in their own homes for other people’s children.
  • Preschool – Pre-schools are also referred to as kindergartens in some States. They essentially provide services to children in the year prior to attending primary school and involve structured, seasonal programs for two or three days a week.
  • Occasional Care – Occasional care (OCC) is a centre-based form of child care. OCC services provide flexible care which allows parents to meet their work related and non-work related commitments
  • OOSH - Outside school hours care (OSHC) services provide care before and/or after school and/or care during school vacation time.

If you want to start up a service that will be part of the competition in the locality, find a “niche” idea that you can advertise and sell your centre on in order to gain popularity and enrolments. Think of an idea that the other centres are not offering. Some ideas include: being an organic centre, offer after hour care, only target a specific age group (e.g. nursery care only), offer play groups with parents etc. Snoop out the competition and see what unique idea you can come up with!

Provider Approval & Service Approval

Provider Approval - Before operating an early childhood service you will need to obtain a “provider approval”. This is an application process conducted by the Regulatory Authority. This process will examine whether you are a fit and proper person to be involved in the provision of an early childhood service. This is national recognized. To be deemed as a fit and proper person assessed on your history of compliance with current education and care service law, criminal history check and whether you have had any bankruptcy issues. Once submitted you will receive a result in 60 days.

For more information on Provider Approvals:

Service Approvals – If you application is successful as an approved provider you may apply to the Regulatory Authority for service approval. Service approval is needed if you will be the operator of the service and will be responsible for the management of the service. This applications requires details on the type of service you will be managing, insurance, permits, policies and procedures etc.

For more information on Service Approvals:

Before obtaining any approval it’s best to contact your state or territory Regulatory Authority for further information on approvals.

Franchising, Building or Pre-Existing Centres

Now you what type of service you want to provide to the community and have been approved to offer care, next step is to think about whether you will be building a centre from scratch, buy a pre-existing centre from owners or buying a franchise?

It’s really hard to determine which one is more suitable because it really depends again on the locality and how much money you are willing to spend during this process.

  • Building a Centre - When building a centre from scratch it will probably cost more than buying a pre-existing centre. You need to gain council permits, building permits, landscape and interior designers for both indoors and outdoors and much more! The biggest benefit of building a centre from the beginning is you can basically design the centre of your dreams.
  • Pre- Existing Centres - There are many childcare centres that are available to buy that are already running. They have staff, children and families and everything within the centre has already been settled. Once you purchase the centre you will be the owner and take over responsibility. One of the benefits of purchasing a pre-existing centre is that all the work has already been done. All you really need to do is maintain it.
  • Franchising Centres - In the childcare business there is some stiff competition out there when it comes to running a childcare business. Instead of being a competitor you can purchase a franchise. A franchise is basically running a centre based on the main centre. Initially start-up costs will be involved however you will receive all that you need through support services based on the main centre. All documentation, policies, procedures etc. will be the same as the main centre itself. If you have been working at a particular centre and like the way it is run then this is a great opportunity for you to start a franchise rather than starting from scratch.

No matter which option you choose you will need to spend a bit of money and it varies depending on a number of factors. It’s probably best to start off with a budget on how much you are willing to spend on the centre. It can range anywhere from $200,000 and more. Locality is also a big factor. City areas and surroundings are going to be more costly than rural areas. Another factor to consider is the size of the centre. It will cost less to build or maintain a centre for a smaller amount of children (less than 60) than a larger centre (more than 60). However you need to consider the needs of the community before determining how big the centre will be.


When starting a childcare business and running a centre, it’s important that the centre is insured. Insurance protects against accidents, personal injury, legal action and property damage. Insurance types, how much you need and requirements depend on the type of service you are providing.

Under the Family Assistance Legislation of the Department Of Employment, Education and Workplace Relations for education and care service the following insurance must be provided:

  • Public Liability – not less than $10 million for each and every claim
  • Workers Compensation - required by law
  • Professional Indemnity – not less than $5 million per claim

Depending on the type of childcare service you are providing you can also consider purchasing the following types of insurance:

  • directors’ and officers’ liability (for community-owned services)
  • personal accident insurance for volunteers
  • property damage
  • fire and theft
  • glass
  • money insurance
  • car insurance (for damage resulting from work related activities)
  • fidelity guarantee
  • electronic equipment

It’s best to seek support from an Insurance company authorised by the Australian Prudential Regulatory Authority on the types of different insurance that your service may require.

Legislative Requirements and Responsibilities

It’s imperative that when starting up a childcare business that you are aware and are up to date with the current legislation and law that is implemented throughout Australia. Even if you are an existing educator wanting to start up a childcare business and are familiar with the legislation and law you should understand it completely.

Throughout Australia most services (LDC, OSHC, FDC), in most states, are regulated by the National Quality Framework. The NQF includes:

  • the National Law
  • the National Regulations – Education & Care Services National Regulations
  • a National Quality Standard – for assessing the quality of the service
  • The National Quality Framework provides early childhood settings support in improving the quality of education and care, improve program delivery that impact child’s learning and development and assist families to make informed choices about which services suit their child best.

Under the National Regulations services must meet specific operational requirements including:

  • Educational Programs & Practice
  • Building Standards & Physical Environments
  • Staffing Requirements
  • Policies, Procedures & Records

For more information on NQF:

The information and details provided here is just the beginning of the long road ahead of starting your own childcare business. It should be used as a starting point to make an informed decision about whether or not it is possible for you to own a childcare service. If you are willing to spend the money, go through all that’s necessary, you can create a fantastic service for children to learn and develop. Also, a childcare business is less likely to fail as the need for childcare centres are in high demand. So, good luck and take a chance to do something wonderful for the community…


Created On January 6, 2015 Last modified on Thursday, January 28, 2016
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