Setting up a new childcare business

Overview 

Developing a high quality, sustainable childcare provision is not a quick process however we hope this useful information and advice will set you up to run a successful new childcare business in Brighton & Hove.  

Suitable premises

Early years and childcare provision can be provided on

  • Domestic premises, which is somebody's home - for setting up a childminding business
  • Non-domestic premises, which can be purpose-built premises like a village hall or school premises - for setting up a nursery, pre-school, out of school provision etc.  

The useable space inside your premises will determine the number of children you can look after. The amount of space needed for each child is dependant on their ages and is clearly stated in Early Years Foundation Stage (EYFS) page 27 section 3.57 . When considering your premises, take into consideration the space required for: storage of equipment and resources, sufficient toilets and washbasins for children, access to a safe outdoor play area, adequate parking for staff and parents or good public transport links. If you are planning to prepare and serve food on the premises see Food Standards Agency, if you need to carry out necessary building work contact the Local Authority Planning team and ensure your premises meet fire regulations  

If you are looking for property in Brighton & Hove to open up a new business or looking to expand your early years business, go to www.GVA.co.uk .If any council properties become available to rent, this is where they will be publicised.

Market research 

It is essential to research your market to gain a thorough understanding and knowledge of the market place. Market research generally highlights gaps in the market that your new childcare business could fill.

1) Analyse the competition.  Go to Family Service Directory to see all established childcare businesses in Brighton & Hove and look at:    

– opening hours – are they open for 52 weeks in the year?
– the age groups they cater for
– the services and activities they provide
– the facilities they offer – for example an outdoor play area
– the fees they charge
– the type of meals and snacks they offer
– whether they offer both full and part-time places
– if they are flexible over dropping off and collection times if parents need it
– do they offer local authority funded places for two, three and four year olds

2) Establish what your customers want. Talk to as many parents as possible and find out:   

– what would they like a new childcare business to provide – discuss opening hours, flexibility and activities
– if there are any gaps in the existing childcare available that you could fill – like after school clubs
– whether they are satisfied with current childcare options in the area – if not, what specifically are they unhappy with
– what they consider would be a reasonable fee to charge for the service they want 

3) Look at demand in the city.  This Childcare Sufficiency Assessment gives information based on the demographics of the city. Look closely at the type of people who live and work in the area where you propose to open your new childcare business. For example are there families with pre-school or school age children? Do both parents work? Are there single parent families that would welcome an opportunity to work if they could find affordable childcare? Are there a lot of businesses? Are you on a main route to getting in and out of the city? Is there a hospital or large supermarket close by as parents may work unsociable hours and require childcare late at night or early in the morning? etc 

Types of childcare  

It is important to establish the 'type' of childcare you will be providing. This is important for registering with Ofsted who recognises 4 types of childcare. 

  • Childcare on non-domestic premises - childcare on premises that are not being used as a home, for example a playgroup, day nursery, pre-school, creche, after school club, holiday club or breakfast club. 
  • Childcare on domestic premises - four or more people looking after children on domestic premises including childminders and assistants.
  • Childminders - individuals looking after children on domestic premises which is not the home of any of the children being cared for. How to become a registered childminder in Brighton & Hove  
  • Home childcarer - childcare at the home of one or more of the children being cared for, for example a nanny or au pair. Information about the At Home Childcare Service in Brighton & Hove 

It is not only important to know what type of childcare will be provided but also what will be offered and how many hours and days per week you will open for.

The Ofsted registers

It is important to know the 'age range' of the children you want to provide care for as Ofsted have different registers and requirements depending on the ages of children you will be caring for. 

  • the Early Years Register - to provide care only for children aged 5 and under
  • the Childcare Register - to provide care only for children aged 5 to 7 years
  • both registers to provide care for children of any age under 8
  • the Voluntary part of the Childcare Register - to provide care for children aged 8 years and above. Registration for this age group is not compulsory however if you join, you will get a certificate and the parents of the children you care for may be able to access other types of financial support. 

Legal business structure  

It is important to know what type of legal business structure you will be. For example you can register as a sole trader, limited company or partnership. If you are looking to set up an Early Years Voluntary or Community run 'non for profit' business then you might consider being an Unincorporated association , Charitable trust , Charitable Incorporated Organisation (CIO) or Charitable Company

Your agreed legal structure will govern who, in the eyes of the law, is responsible for the activities of your organisation. Each legal structure comes with very different legal responsibilities and this information will be required when registering with Ofsted, when employing staff and for administrative purposes such as banking. 

The Ofsted registration process  

You must register with Ofsted if you want to be paid to look after children aged under 8 for more than 2 hours a day in England.

The registration process can take anywhere between 3 months and 12 months depending on your project. The Ofsted Guide to Registration Handbook contains everything you need to know about applying to become a registered early years or childcare provider in England and there is an Ofsted Pre-registration Briefing which you may also find useful.   

The Ofsted Common Inspection Framework details what the inspector will be looking for when they come and visit you and your premises and the Early Years Inspection Handbook is specific details for Early Years.  If you provide care for children aged under 5 years, you will need to follow the Early Years Foundation Stage (EYFS) Framework requirements and demonstrate a good knowledge of this at the time of registration. Having arrangements in place to support children with special educational needs (SEN) or disabilities is essential and more details about this can be found in paragraph 3.67 of the framework

Start up costs

When planning a new childcare business, know your costs! 

  • Start up costs - are the initial costs of setting up the business which can include; the purchase and lease of premises, building costs, equipment, recruitment costs and marketing costs etc
  • Running costs - are the every day costs of running the business which can include; staffing, gas, electricity, insurance, disposable resources (e.g. creative materials) food etc. 

Business planning & financial management  

You will need to do a business plan and include your budget and cashflow forecasts to demonstrate that your business ideas will work. See our Business Success for Childcare Providers webpage for further support with this.

The Department for Education (DfE) has produced some publications to support early years providers to run sustainable businesses. They have spoken to a range of providers about the challenges their businesses have faced and the ideas and schemes they have put in place to be sustainable. See GOV UK summary: supporting early years providers to run sustainable businesses

When setting up a new business, it is important to know your obligations regarding data protection. The Information Commissioners Office provides information on how to comply with required legislation.  

Funding for early years and childcare businesses

Be aware of the funding you can access. In Brighton & Hove, early years providers receive Early Years Free Entitlement (EYFE) Funding for two, three and four year-olds and Early Years Pupil Premium (EYPP)  as well as disability access fund (DAF), special educational needs (SEN) inclusion fund. Read guidance on extra sources of income and Funding Sources for EY businesses [PDF379KB] 

Recruiting suitable people 

When recruiting staff you need to make sure that you are getting the best people for the job so that you can provide the highest quality of care possible. See our recruiting and managing staff for information on safer recruitment support and ensure you comply with all necessary employment law and health & safety law and regulations. There are also early years specific regulations on having a qualified manager and sufficient qualified staff to adhere to child ratios and also regulations on appropriate qualifications that count in the ratios. 

Branding and marketing

To enable successful and effective marketing, it is vital to have a business name, branding logo / image and website. To register a company image and brand logo you can go to The UK Copyright Service