You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your babysitting business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a babysitting business?
Regardless of how you structure your new business, start-up costs are extremely low. Reliable transportation is paramount to the success of your company. This cost will most likely fluctuate, so keep some revenue in savings, whenever possible. A website will be your largest initial investment. It does not have to be fancy, but a website will help with your marketing campaign. Consider the online services you would like to offer your clients before discussing a site build with a developer.
The two main expenses a babysitter will have are transportation and marketing. Gas may cost an average of $15 per week, or perhaps you’ll use public transportation, which may cost $20 per week. Marketing, on the other hand, can be as simple as a website and social media promotion. A website will likely cost $500 or so for design, development, hosting, domain registration, etc.
What are the ongoing expenses for a babysitting business?
Like the startup costs, there is very little overhead involved in running a childcare business. Your website should be properly maintained and updated as a standard regimen. Since you are commuting regularly, fuel costs and vehicle maintenance should be budgeted on a monthly basis. If you employ other babysitters, consider paying them as a freelancer to cut down on your ongoing expenses. Aside from the costs associated with commuting, your largest business costs will be business insurance and a marketing strategy.
Who is the target market?
Families and working parents, ranging from affluent to middle class, will be your primary target audience. In general, your clients are looking to build a long-term relationship with a trusted and reliable caregiver.
How does a babysitting business make money?
This business draws in revenue from each babysitting job completed.
How much can you charge customers?
The national average hourly wage for babysitting is $13.97. Your fees should vary, depending upon a number of factors, such as: how many children, the age of the children, special needs or instructions, and the length of time your services are needed. Fees are typically determined by hourly rate, flat fee, or on a per child basis.
How much profit can a babysitting business make?
While you are the only babysitter on staff, your profits will be limited. If you charge $15 per hour and are able to babysit forty-five hours per week, your profit will be $2,700, minus expenses, per month. For each sitter you hire, your profits rise exponentially.
How can you make your business more profitable?
The following tips can help improve profitability for your new business:
- Focus on your online services. Many consumers turn to the internet for virtually everything, including researching their childcare options. This will also extend your reach, allowing you to service customers wherever you have a babysitter available.
- Consider opening a babysitting facility. While the overhead will be higher, this will afford you the opportunity to take on several clients at a time.
- Offer online and in-person courses. This could include standard safety, CPR, and first aid.
- Research indicates that parents are willing to pay more before and after school and for last-minute sitters. Make yourself available during those times.
- Early education degrees and sitters with pre-school education knowledge are often paid a higher wage. If you do not possess this knowledge, try to hire others who do.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your babysitting business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a babysitting business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits. In addition, certain local licensing or regulatory requirements may apply.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
If you’re operating a babysitting business out of your own home, you will need a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a babysitting business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your babysitting business will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a babysitting business
Unlike most businesses, the babysitting industry relies heavily on reputation and referrals. When first starting out, make your services available to friends and family members. Offer your services to the local church. This will help you build your skills and reputation; those within the church community will know to turn to you, when they require their own babysitter.
There are a number of online babysitting resources. In the beginning stages, consider listing yourself with one of the online babysitting forums. Use your profile as a resume, building on it as you achieve new business goals.
Additionally, social media outlets, such as Facebook and Twitter, are an effective way of reaching a wide audience. Think about what your prospective clients are looking for and what kind of establishments they would frequent. Place business cards or ads at these locations.
Another effective marketing strategy is to target party and wedding planners. Many events are adult-only, leaving parents unsure of where to turn, particularly if they are visiting from out of town.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Reputation goes a long way for business success, especially one as personal as childcare. Ideally, you’ll develop a good rapport with the children and the parents and, when both are happy and satisfied with your work, you’re more likely to get the call backs and referrals. Remember, it’s always easier to retain happy clients than search out new ones.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Babysitting Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
If you enjoy the company of children and are able to connect and communicate with both your children and their parents comfortably, owning a babysitting service could prove to be a profitable business venture.
What happens during a typical day at a babysitting business?
Your daily activities will vary, depending upon the scope of the services you offer. If you are the sole babysitter, your days will be spent babysitting, marketing your business, and handling administrative duties. To maximize profits, be sure to include travel time when setting your schedule and fees.
Once you are able to start building a team of employees, your task list will increase. You will field calls and schedule reservations. To ensure a good fit between babysitter and child, time should be spent communicating with parents, getting to know their specific needs and routines. Background checks should be run on each new employee, as well.
What are some skills and experiences that will help you build a successful babysitting business?
Whenever dealing with someone’s children, it is imperative that you conduct yourself in a professional manner. Be organized and attentive to the client’s needs and wishes, as well as the children’s. Treat their house and belongings with respect and a mature attitude. This keeps you in good graces with the parents and spreads a positive reputation to other potential clients. And, if you find that your experience level is lacking or might be holding you back, consider options for increasing your expertise. Consider volunteering for Sunday school or church daycare, help out at friends’ children’s birthdays, or volunteer through public libraries. There are even numerous online programs to help you become more familiar with child pedagogy.
It would also be advisable to stay regularly trained in CPR and first aid procedures. Emergencies can happen and it is best to be prepared for all circumstances. The National Child Care Association offers educational events, conferences, and even resources for insurance and other business-related items.
What is the growth potential for a babysitting business?
According to recent statistics, babysitting is a $5 billion a year industry. Many parents find it difficult to locate a trustworthy and honest sitter for their children. Therefore, those who prove themselves to possess the skills and integrity necessary have an opportunity to expand their business on a national and/or international level.
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One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a babysitting business?
Those looking to become leaders in the Industry should consider the following advice:
- To ensure consistency and quality service, design a checklist. This should include information regarding emergency contacts, allergies, medical conditions, behavioral issues, and the child’s schedule.
- Bring activities with you, whenever possible. Whatever you bring is sure to be more exciting to the children than what is at their own home.
- Do not babysit if you are sick.
- Never post photos of the children on social media.
How and when to build a team
As the business begins to grow, you will need to add additional employees to your team. Thorough background checks should be conducted on each babysitter. CPR and first aid certification is a standard requirement. If possible, consider building a team that spans every age group and try to employ individuals with special skills or training.