Child Care Center
Facility Development Checklists

(Checklists are also available in document format in Publications)

Planning

1. Market Demand 2. Financial Feasibility 3. Organizational Capacity Note: The planning stage is the most essential in any facilities development process, because the more time and attention that goes into planning the project, the less likely it is that you'll face costly mistakes in the later stages. Additionally, careful attention to the steps in the planning stage allows you to learn early on if you or your business are not ready to take on the financial risk of a facilities development project.

1. Market Demand

1. Estimate the number of families demanding services in your area at the rate to be charged (note: this is not an estimate of those who just need services, but of those who demand the services and can pay your rates or use vouchers). Contact the Resource and Referral Agency (R&R) and the Local Child Care Planning Council (LPC) in your community to find out about the existing supply and the highest need for care in your area.
   
   
2. Decide whether your services will target low-income, middle-income, and/or affluent families. This decision will affect both the rates you charge and your eligibility for subsidy programs.
   
   
3. Decide what age group(s) your services will cater to. This will affect your assessment of local supply and demand. Keep in mind that different age groups have different requirements for both staff and room size, which will impact your operational budget and site selection.
   
   
4. Assess whether or not the rates you intend to charge will generate enough revenues to meet the costs of operating expenses and the debt incurred by the facilities development project.
   
   
5. Begin to write a business plan that addresses these issues. For assistance with business planning contact the Small Business Administration to find out what local resources are available to you. If you are developing a nonprofit center then other resources may be available through local nonprofit management assistance programs as well.

2. Financial Feasibility

1. Estimate the overall start-up or capital cost of the facility development process and divide this into
   1. Soft costs (design, permits, legal, and financing),
   2. Hard costs (acquisition, construction, equipment - a contractor can help you estimate these), and
   3. Hidden costs (staff and board time, attention, lost income if an existing program has to close during construction).
   4. Contingency costs (a portion of construction costs set aside to cover unexpected expenses).
      
      
2. Design an operating budget for your child care business. In identifying your expected revenues (incoming money from parent fees and vouchers, state subsidies, etc.) you shouldn't project that your program will ever be more than 90% full because it usually takes at minimum six months to reach capacity, and even then it is quite common for enrollments to fluctuate throughout the year.
   
   
3. Identify the financing you will need to cover your start-up and operational budgets. You may need to adjust your budget projections as you figure out more specific details about your incoming revenues.
   
   
4. Analyze your capability to apply for financing (i.e. loans) by determining debt capacity, or debt service coverage (for definitions see the Glossary of Loan Terms).
   
   
5. Ensure that you will have enough working capital at the end of the facility development process to cover at minimum three months of operating expenses because revenues take time to come in as enrollment builds. It is best to have an even larger cash reserve if possible in order to prepare for any cash flow problems that may occur, especially for new programs.
   
   
6. Identify donor relationships and look into new ones for development grants and especially for donations of toys, equipment, furniture, dress-up clothes, building supplies, etc. You should also try to identify potential partnerships with other community organizations like churches, hospitals, and schools who might be able to collaborate with you to provide certain services and share some expenses.
   
   
7. Determine your legal status as a nonprofit or for-profit child care program. This will directly affect your approach to obtaining financing. To become a nonprofit you will need to establish a Board of Directors, form a nonprofit corporation (501c(3)), and file for your tax-exempt status with the IRS. To become a for-profit you will need to decide if you want to be a sole proprietor, a corporation, or a partnership.

3. Organizational Capacity

1. Establish a development team of individuals to lead the facilities development project. Explore volunteer, pro bono, or in-kind assistance options before seeking paid consultants.
   
   
2. Ensure that the staff, the board, and the leader(s) share a commitment to take this process in the same direction. Also, assess whether you have the staff/skills needed for the long term process of facilities development.
   
   
3. Evaluate your financial readiness as an organization by identifying red and green flags:
   
   
   1. Red Flags - difficulty paying bills, deficits in recent years, large amounts of uncollected receivables such as parent fees, and a lack of any cushion or cash reserve.
   2. Green Flags - services are contrained by a lack of space, you are in a financially strong a growing position, and there is a clear demand for your services.
      
      
4. Identify local support - know the community and the demand for services; have relationships beyond just the Early Care and Education (ECE) field; and make sure the community understands what you have to offer.

MONEY NEEDED DURING THIS STAGE: Equity (planning grants, internal resources) and limited Debt (soft loans)

Predevelopment

1. Site Selection 2. Site Control and Approval 3. Project Design 4. Securing a Contractor 5. Obtaining Financing for the Development Process

 

1. Site Selection

1. Expanding or Renovating an existing facility: Evaluate the site and neighborhood in relation to the project concept, the size of the lot, zoning and licensing requirements, health and safety issues, the quality of the existing structure, and design, engineering, repair and renovation costs.
   
   
2. Finding a new site: Evaluate the site in relation to the project concept, site costs (direct and indirect), quality of the neighborhood, licensing requirements, zoning and land use restrictions, size, plans for new developments in the area, health and safety issues, infrastructure (utilities, roads, easements), traffic patterns, transportation, parking and access to the building.

2. Site Control and Approval

1. Explore different site control alternatives and determine which method fits best with your project needs, such as using an option, using a conditional lease or purchase contract, using a joint venture agreement, etc.
   
   
2. Contact Community Care Licensing to review the site plans and to advise you on licensing requirements.
   
   
3. Seek information about required public approvals (e.g. land use/zoning; building code, health, safety; community care licensing requirements; fire clearance, insurance) and find out if your identified site will have any problems obtaining these approvals once the facility development process is complete.

3. Project Design

1. Discuss project design with an architect to translate the project concept into a physical design that meets the organization's program goals, budget constraints and satisfies public approval requirements. Include input from parents, children and your staff when designing the project.
   
   
2. Review required vs. recommended elements of design.
   
   
3. Visit other similar facilities in and around your community and talk with other child care providers to identify successful designs and mistakes to avoid.
   
   
4. Research cost-effective design options, taking into account both the intitial costs and the long-term quality and maintenance consequences of using certain materials and equipment.

4. Securing a Contractor

1. Solicit and review at least three bids from qualified contractors.*
   
   
2. Check license, references, qualifications and insurance.
   
   
3. Negotiate a contract* that includes a scope of work, a work schedule, a payment schedule, a cancellation policy, and agreement about what happens if there are cost overruns or delays. Also, specify a payment type, either lump sum or guaranteed maximum price.

*Note, funders may have requirements

5. Obtaining Financing for the Development Process

1. Finalize the business plan with the following components:
   
   an executive summary of the plan,
   organizational capacity information,
   a description of the proposed project,
   a market analysis,
   a marketing plan,
   an operations plan,
   a financial management plan, and
   supporting documents.
   
   (For more information about child care business plans, see the Child Care Center Financial Planning and Facilities Development Manual, Chapter 3: Developing a Business Plan available for order in Publications).
   
   
2. Determine the start up/capital budget for the project including:
   
   facility related costs and deposits,
   personnel costs prior to opening,
   supplies and equipment costs,
   lost income if the program has to close during construction,
   other costs like insurance, advertising, legal, professional and licensing fees, and
   contingency costs to cover unexpected expenses.
   
   
3. Identify likely funding sources (e.g. public, philanthropic, nonprofit, and commercial sources). Look first to financial institutions where you already have a relationship. If there are none, think about local community lenders, and be sure to price shop for the best overall terms. (For more information visit the Financial Resources page)
   
   
4. Apply for funding, secure commitments, close loans, and have cash in hand before construction begins.

MONEY NEEDED DURING THIS STAGE: Equity (planning grants, internal resources) and limited Debt (soft loans)

Development

1. Construction or Renovation of the Site 2. Equipping the Classroom 3. License Approval for the Facility 4. Personnel 5. Marketing the Program in the Community

1. Construction or Renovation of the Site

1. Identify the key person responsible for overseeing all site and design developments.
   
   
2. Ensure that the construction process is conducted according to the arranged design, budget, and timeline.
   
   
3. Develop a "punch list" of corrections that need to be made after the final inspection.
   
   
4. Release the final payment (the "retention") only after the punch list is completed.
   
   
5. Clarify call back and warranty procedures.
   
   
6. Prepare a maintenance shedule for the facility.
   

2. Equipping the Classroom

1. Purchase appropriate furniture and curriculum specific materials for the classroom(s). Make sure the timing of this step correlates with the timeline established for developing and opening the facility.
   
   
2. Develop a plan for receiving, installing, and taking inventory of all supplies and equipment.

3. License Approval for the Facility

1. Submit a completed application and pay fees to your local Community Care Licensing office. You will receive further details and materials at the orientation meeting.
   
   
2. Submit fingerprint cards and child abuse index form.
   
   
3. Set up an appointment with your local fire department for an inspection to obtain fire clearance.
   
   
4. Set up an appointment with a certified playground inspector to review your playground.
   
   
5. Make sure that you have obtained all required public approvals (see Predevelopment 2c). Then send your criminal record, child abuse index, and clearances to your Community Care Licensing Office.

4. Personnel

1. Identify how many staff members you will need, when they will work, what their responsibilities will be, and how much they will be paid, including benefits and staff training opportunities.
   
   
2. Begin advertising for staff at least 60 days in advance of your anticipated start date by contacting local teachers, college placement offices, vocational high schools, the state licensing office, your local Resource and Referral agency, and the local employment agency.
   
   
3. Place job advertisements in the paper and post them at local grocery stores and laundromats.
   
   
4. Include the job title, a brief job description, required qualifications, application deadline, resume request, your telephone number, address and name on the job advertisement.
   
   
5. Review applications, conduct interviews, contact references, and notify all candidates of your decisions.
   
   
6. Clearly define personnel expectations and responsibilities to your staff.
   
   
7. Recruit volunteers who can help with clerical and administrative tasks in order to save staff time.
   
   
8. Contact government agencies to learn about public dollars that pay the salary of those needing job training and apprenticeship experience in child care settings.

5. Marketing the Program in the Community

1. Create a unique message that clearly and concisely describes what is special about your child care business.
   
   
2. Start marketing your services three months before you open. Include your program's name, address, hours of operation, ages of children served, fees, contact information, your unique message, and expected opening date on all advertising materials.
   
   
3. Identify what parents look for and need from child care services in your community, and cater your child care program and marketing efforts to those needs.
   
   
4. Devise an effective plan to promote your services and message. This plan will depend on your community and the type of organization you are promoting, but will most likely include a number of different techniques, such as word of mouth networking, creating a distinctive logo, distributing business cards, flyers, signs and brochures, participating in community events, seeking free media coverage, offering on-site workshops and lectures, listing your program in the yellow pages, hosting an open house, and making a good first impression!
   
   
5. Make sure that your program is registered with the local Child Care Resource and Referral Agency (R&R) so that they can refer parents in need of care to any slots you have available.

MONEY NEEDED DURING THIS STAGE: Debt (loans) and Equity (internal resources, grants)

Start-Up

1. Phase in Staffing and Children 2. Program Sustainability

1. Phase-in Staffing and Children

1. Remember that you need to build up to full capacity. You won't start with a full staff or full enrollment the day you open.
   
   
2. Try to start up in either early fall (August/September) or January, because these are the times of year when parents are most likely to make changes in care arrangements since they correlate with breaks in the school schedule.
   
   
3. Create parent/provider contracts in order to lay out in advance all expectations and responsibilities for both you and the parents whose children are enrolled in your child care program.
   
   
4. Maintain your image and publicity even after the facility is up and running. For example, bring business cards with you whenever you go out with the children, make T-shirts for the children to wear on field trips, and make sure your services are well known throughout the community.
   
   
5. Establish a waiting list if possible because child care enrollment can fluctuate easily and you will want to fill vacancies as quickly as you can to ensure regulare cash flow.
   

2. Program Sustainability

1. Maintain relationships with funders and build new relationships with funders consistently, even when you don't need money. It is important to stay aware of all funding opportunities.
   
   
2. Establish an operating reserves budget so that you are prepared for unexpected expenses and cash flow inconsistencies.
   
   
3. Be realistic about the fees you charge and adjust them over time as your expenses change, but always give parents advance warning of these changes.
   
   
4. Above all, balance your service obligations with your business obligations. If you don't attend to the business matters of your child care program you won't be able to provide high quality services.
   

MONEY NEEDED DURING THIS STAGE: Equity