6.3: Funding a New Early Childhood Program
- Page ID
- 57542
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\(\newcommand{\avec}{\mathbf a}\) \(\newcommand{\bvec}{\mathbf b}\) \(\newcommand{\cvec}{\mathbf c}\) \(\newcommand{\dvec}{\mathbf d}\) \(\newcommand{\dtil}{\widetilde{\mathbf d}}\) \(\newcommand{\evec}{\mathbf e}\) \(\newcommand{\fvec}{\mathbf f}\) \(\newcommand{\nvec}{\mathbf n}\) \(\newcommand{\pvec}{\mathbf p}\) \(\newcommand{\qvec}{\mathbf q}\) \(\newcommand{\svec}{\mathbf s}\) \(\newcommand{\tvec}{\mathbf t}\) \(\newcommand{\uvec}{\mathbf u}\) \(\newcommand{\vvec}{\mathbf v}\) \(\newcommand{\wvec}{\mathbf w}\) \(\newcommand{\xvec}{\mathbf x}\) \(\newcommand{\yvec}{\mathbf y}\) \(\newcommand{\zvec}{\mathbf z}\) \(\newcommand{\rvec}{\mathbf r}\) \(\newcommand{\mvec}{\mathbf m}\) \(\newcommand{\zerovec}{\mathbf 0}\) \(\newcommand{\onevec}{\mathbf 1}\) \(\newcommand{\real}{\mathbb R}\) \(\newcommand{\twovec}[2]{\left[\begin{array}{r}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\ctwovec}[2]{\left[\begin{array}{c}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\threevec}[3]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\cthreevec}[3]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\fourvec}[4]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\cfourvec}[4]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\fivevec}[5]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\cfivevec}[5]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\mattwo}[4]{\left[\begin{array}{rr}#1 \amp #2 \\ #3 \amp #4 \\ \end{array}\right]}\) \(\newcommand{\laspan}[1]{\text{Span}\{#1\}}\) \(\newcommand{\bcal}{\cal B}\) \(\newcommand{\ccal}{\cal C}\) \(\newcommand{\scal}{\cal S}\) \(\newcommand{\wcal}{\cal W}\) \(\newcommand{\ecal}{\cal E}\) \(\newcommand{\coords}[2]{\left\{#1\right\}_{#2}}\) \(\newcommand{\gray}[1]{\color{gray}{#1}}\) \(\newcommand{\lgray}[1]{\color{lightgray}{#1}}\) \(\newcommand{\rank}{\operatorname{rank}}\) \(\newcommand{\row}{\text{Row}}\) \(\newcommand{\col}{\text{Col}}\) \(\renewcommand{\row}{\text{Row}}\) \(\newcommand{\nul}{\text{Nul}}\) \(\newcommand{\var}{\text{Var}}\) \(\newcommand{\corr}{\text{corr}}\) \(\newcommand{\len}[1]{\left|#1\right|}\) \(\newcommand{\bbar}{\overline{\bvec}}\) \(\newcommand{\bhat}{\widehat{\bvec}}\) \(\newcommand{\bperp}{\bvec^\perp}\) \(\newcommand{\xhat}{\widehat{\xvec}}\) \(\newcommand{\vhat}{\widehat{\vvec}}\) \(\newcommand{\uhat}{\widehat{\uvec}}\) \(\newcommand{\what}{\widehat{\wvec}}\) \(\newcommand{\Sighat}{\widehat{\Sigma}}\) \(\newcommand{\lt}{<}\) \(\newcommand{\gt}{>}\) \(\newcommand{\amp}{&}\) \(\definecolor{fillinmathshade}{gray}{0.9}\)Funding a new early childhood program can be one of the most challenging parts of becoming an administrator. Unlike established programs, new programs must secure funding before they begin generating consistent income. This means that administrators must plan ahead and often rely on multiple funding sources to cover initial costs.
It is important to recognize that starting a program from the ground up, without any existing equipment, materials, or facilities, is very expensive. Costs begin long before enrollment starts and may include securing a location, making renovations to meet licensing requirements, purchasing classroom furniture and materials, installing playground equipment, obtaining insurance, and covering licensing and application fees. In addition, there are costs associated with marketing, hiring staff, and preparing the program for opening.
Before investing personal assets or seeking a loan, administrators should explore available business support resources. Organizations such as the U.S. Small Business Administration and the Service Corps of Retired Executives provide guidance, tools, and mentoring for individuals starting a business. These resources can help with writing business plans, understanding financial projections, and preparing for funding applications.
Because opening a program is both an educational and business decision, it is critical to ask yourself important questions before moving forward, especially if you do not have a strong background in business. The following questions are commonly recommended when planning a new business:
- What niche or need will my program fill in the community?
- What services will I provide (full-day care, part-day preschool, infant care, etc.)?
- Is my idea practical, and does it meet a real community need?
- Who is my competition, and what are they already offering?
- What is my program’s advantage over existing programs?
- Can I provide a higher-quality or more unique service?
- What skills and experience do I bring to this work?
- What legal structure will I choose (sole proprietorship, partnership, nonprofit, etc.)?
- How will I maintain accurate business and financial records?
- What types of insurance coverage will I need?
- What equipment, materials, and supplies are required to open?
- How will I compensate myself as the owner or administrator?
- What resources do I already have, and what do I still need?
- How much financing will I need, and when will I need it?
- Where will my program be located?
- What will I name my business?
Another major decision is whether to start a brand-new program or purchase an existing one. Purchasing an existing program may include acquiring the facility, equipment, and even the program’s name. While this can reduce some start-up work, it also comes with risks. It is important to research the program’s history carefully. A program with a negative reputation, licensing issues, or unresolved problems can create additional challenges for a new owner.
If you are in the process of purchasing a program, maintaining confidentiality is also important. Premature information about ownership changes can create uncertainty for staff and families.
Administrators must also ensure they are meeting all legal and regulatory requirements. This may include registering a business name, obtaining appropriate licenses, applying for a tax identification number, and opening a separate business bank account. It is also important to understand federal and state laws related to employees, including wages, benefits, and workplace regulations. Checking with your state Department of Labor and staying informed through local business resources is essential.
Understanding your local market is another key step. Gathering data on whether the need for child care is growing or declining in your area helps determine if your program is viable. Resources such as local Chambers of Commerce or Child Care Resource and Referral (CCR&R) agencies can provide valuable information about community needs and trends.
When seeking funding, it is not enough to know that you need money; you must clearly understand how much you need, why you need it, and when you will need it. Lenders and funding agencies will also want to know how you plan to repay any borrowed funds. This requires realistic financial projections and a well-developed plan.
In some cases, starting a program may require a significant personal financial commitment. This could include using personal savings, taking out loans, or even leveraging assets such as a second mortgage on a home. Lenders may require background checks, credit checks, and detailed financial documentation before approving a loan. This reinforces the importance of careful planning and realistic expectations.
Starting an early childhood program is a meaningful and rewarding goal, but it is also a serious financial and professional commitment. Taking the time to ask the right questions, gather information, and plan thoroughly will help set the foundation for long-term success.