Child's care rates

Is There a Time When You Should Lower Your Rates?

By Tom Copeland. Posted with permission.

Let's say you have had two openings in your family child care business for quite some time.

You've tried a variety of things to fill these openings, but without success.

You conclude that perhaps the reason you aren't having success is because your rates are too high, and so you are considering lowering your rates to attract parents.

Is lowering your rates a good idea?

The short answer: probably not.

Parents looking for child care have a lot of programs to choose from: licensed/regulated family child care, illegal child care, kith and kin, child care centers, Head Start, school age care, etc.

There is an extremely wide range in the cost of care among these programs. This is also true among licensed family child care.

It's a bad idea to compete based on the cost of your care because there is always going to be someone charging less than you. You don't want to promote yourself as "the cheapest care in town."

Compete on Quality, Not Price

Instead of lowering your rates, you might consider offering a short-term discount to attract new families:

        "$30 off the first week of care if you enroll by the end of this month."

        "No registration fee for new families this month."

        "Free night of evening care for a parents' night out for all new enrollees."

In the long run, however, you should be competing based on the quality of care your program offers parents.

Parents will pay more for child care if they can see the quality/value of your services. You need to be communicating the benefits of your program, so parents can see what they are paying for.

In my opinion, the problem with rates in family child care is that too many providers aren't clearly communicating their benefits to parents.

Here are some examples of what to say to parents:

"I am an experienced preschool teacher who offers a child-center curriculum with planned learning activities and weekly themes."

"I offer informal care that allows your child to explore and be creative. My loving approach will help your child learn and be ready for school."

"I provide an enrichment program that will expose your child to other cultures."

In the end, the price of your services should be directly related to the quality of your care. If you offer average quality care, your fee should be an average fee.

But, if you offer high quality care, your rates should reflect this!

Under what circumstances should you even consider lowering your rates?

Maybe if you are cutting your hours. Or maybe if your rates are currently in the top 10% of rates in your area and you have had a number of families turn you down or leave your program because of your rates.

But, I believe your rates are about right if occasionally a parent leaves your program because of your rates.

Note: If your mission is to service low-income families then it is logical to keep your rates low.

Tom Copeland - www.tomcopelandblog.com

Image credit: bestsalestalent.com

See my book Family Child Care Marketing Guide.

Illegal child care

A Plan to Eliminate Illegal Child Care

By Tom Copeland. Posted with permission.

No child should be cared for by a person who is operating a child care program in violation of local child care laws.

This is a simple goal that I think all family child care providers, parents, and organizations in the child care field should support.

State laws vary greatly, so the definition of illegal care will vary from state to state. We may never achieve consensus among the states about the specifics of child care regulations, but I hope we can agree that a child care program that operates in violation of their state law should be shut down.

My definition of illegal child care does not include child care that is exempt from state laws, that is, care that is not required to be regulated by the state (kith and kin, relative care, care for one family in some states, and so on).

When I speak about illegal care I am also not including state regulated child care providers who are in violation of a particular state rule (for example: over enrollment on one day).

Throughout the country, illegal child care is widespread. I could open up an illegal family child care  home in any part of the country, and practically nothing would be done to stop me from operating.

Illegal child care is unfair competition to those program who do follow the rules. It undermines the reputation and quality of care for the entire child care field.

Unfortunately, the child care field is reluctant to address this issue. Parents are not going to lobby to drive out illegal child care. Politicians won’t act unless pressured by the public.

Since I believe that everyone in the child care field agrees that children should not be cared for in an illegal setting, it is up to us to take action for the sake of these children.

Our goal should be to end the practice of illegal child care. Persons who are currently operating illegally should either become regulated under state law or should be shut down by local authorities.

I propose a two-step plan for addressing this problem.

Step One: Education

Local family child care associations should talk with their local Child Care Resource and Referral agency and their local child care regulatory agency about the issue of illegal child care.

Since some parents and illegal child care providers do not understand what is and is not legal, I recommend that these organizations initiate a community education campaign.

This campaign should educate parents and child care providers about the benefits of regulated child care. It should also define the differences between illegal, exempt, and regulated care in the local area.

One example of a local activity might be to insist that all classified ads in local newspapers and online referral services such as Craigslist post a definition of what is legal child care and forbid illegal caregivers from advertising. 

This education effort should also include a plan for how the public can report illegal child care providers and what local regulatory agencies will do in response.

Ideally, local authorities should inform illegal child care providers that they must become regulated or shut down their operation. If a child care provider refuses to shut down, local authorities should take legal action to enforce the law.

Family child care providers should work through their local associations to establish a cooperative partnership with their local Child Care Resource and Referral agency and their local child care regulatory agency to pursue this public education campaign. State and national associations such as the National Association for Family Child Care should also assist local campaign efforts.

Step Two: Enforcement

What should happen if child care associations do not receive cooperation from local regulatory agencies?  Regulatory agencies may not be willing to take actions that leads to the shutting down of illegal child care programs because of budgetary or other reasons.

If this is the case, child care associations should discuss what further actions can be taken with their local police department. Turn over the names of illegal programs to them and ask that they be investigated and fined. After all, it's against the law!

If none of this effort leads to effective action against illegal child care, I recommend that child care associations report these illegal caregivers to the Internal Revenue Service.

It is quite probable that illegal child care providers are not reporting all their income to the IRS. I have spoken with IRS officials about this issue and they have indicated that they do want to hear about illegal child care providers so they can recover unpaid taxes.

You may call the IRS criminal investigation informant hotline (800-829-0433) or you may write to the IRS to report an illegal caregiver. No matter which method you choose, your name will be held in confidence by the IRS. If you wish, you do not have to identify yourself when turning in an illegal caregiver.

If you write to the IRS, you can use IRS Form 3949-A Information Referral that asks you to answer a few simple questions about the illegal child care provider. You do not need to know the illegal child care provider's Social Security number or have proof that the person is not reporting all their income.

You may also simply write a letter to the IRS instead of filling out this form. Send your correspondence to Internal Revenue Service, Fresno, CA 93888. Again, you do not have to identify yourself in your letter.

An IRS official has informed me that they are more likely to investigate if they hear from more than one person. Therefore, I suggest the child care associations have several different members of their organization fill out Form 3949-A.

If the IRS investigates and determines that the illegal child care provider did not report all her income, they will take action to collect this unreported income. This will put pressure on the provider to become regulated or to shut down.

Are there illegal child care providers in your community? What are you doing about it?

For more, see "How to Report Suspected Fraud Activity?"

I've recorded this article as a podcast.

Here's a link to all my podcasts.

Tom Copeland - www.tomcopelandblog.com

Image credit: digoutreach.blogspot.com

Unregulated caregivers

How to Compete Against Unregulated Caregivers

By Tom Copeland, posted with permission.

It's not easy trying to attract new parents to enroll in your family child care program.

You are competing against other family child care providers, child care centers, school-age programs, Head Start, and unregulated caregivers.

When competing against unregulated caregivers, you have some special challenges.

I am defining unregulated caregivers (also called exempt care, kith and kin, relative care or informal providers) as those who are not in violation of state child care licensing rules. They don't have to follow all of the regulations that a licensed family child care provider must follow.

I'm not talking about child care programs that operate illegally, in violation of licensing rules. I believe illegal providers should be convinced to become regulated or they should be forced to shut down. See my article, "A Plan to Eliminate Illegal Child Care."

Parents use unregulated caregivers for many reasons: it's usually cheaper, it may be provided by a relative, or they may know the caregiver from their community. Some parents don't know the difference between regulated and unregulated care.

You should assume that when a parent looking for child care contacts you, she is also considering using an unregulated caregiver.

Here are some suggestions for how to compete against unregulated caregivers:

Safety - Parents' number one concern about child care is safety. Therefore, when talking to prospective parents you should emphasize that being regulated means you and your home have passed a series of safety tests, including criminal background checks, first aid and CPR training, fire department inspections of your home, and adherence to safety standards, such as the proper storage of hazardous materials in your home.

Say to the parent, "If you are considering enrolling your child in another home, ask if that caregiver is licensed. If not, ask if they are trained in CPR and first aid? Do they have any history of criminal activity or sexual abuse? Do they have an emergency evacuation plan?"

Fees - Informal caregivers probably charge less, perhaps significantly less, than you. Do not try to compete on the basis of price. There will always be providers with lower rates than yours, and you can be successful even while charging higher rates.

Say to the parent, "If you are looking for the cheapest care in town, that's not me. My rates are based on the quality of care I offer and the safe and healthy environment I provide for your child."

Value - Stress the value of your services by promoting the benefits of your program. Tell the parent what advantages you offer to children that unregulated programs don't offer.

Say to the parent:

"I offer a variety of planned learning and play activities that will help you child be ready to succeed in school."

"I have specialized training in child development so I can respond quickly to meet your child's needs."

"I offer special services (piano lessons, second-language exposure, numerous field trips, computers, etc.) that will enrich your child's education."

Conclusion

Parents who can see that you offer high-quality child care will pay for it. It's your job to show them. See my podcast,  "How to Identify the Benefits of Your Program."

You can't appeal to every parent. Some will always pick the cheapest care. Let those parents go. People usually get what they pay for. Parents who pay bargain-basement rates will get bargain-basement care.

What ideas have you used to compete against unregulated caregivers?

Tom Copeland - www.tomcopelandblog.com

Image credit:  medimoon.com

For more marketing ideas, see my book Family Child Care Marketing Guide..

Attention

“According to DCFS rules,  you must report child abuse, or when the children are endangered, and  you have the obligation to report to DCFS anywhere an unlicensed  care more than three children.”

(Ángel Olmedo)

The problem of Social media for the child care

Using Social Media Can Get You Into Trouble

By Tom Copeland. Posted with permission.

Here's some situations when using social media got family child care providers into trouble with their licensor:

* A licensor walked around the back of a family child care provider's home and saw the provider texting on her phone while children were playing. The provider kept her head down texting for ten minutes before she noticed the licensor watching her.

* A provider posted a series of negative comments about the children in her care to her "friend" on Facebook. The "friend" copied the comments and sent them to her licensor.

* Here are some comments by family child care providers venting on the Daycare.com forum:

        "I'm so depressed and overwhelmed right now."

        "I'm exhausted this week. I can't seem to sleep much at night."

        "I'm going stir-crazy!!!!!"

        "I've spent most of the past two weeks on the verge of tears."

There are times when we've all felt these emotions. Talking to our family and friends about our feelings is entirely appropriate.

However, if you write them down and post them on the Internet, even seemingly innocently expressed feelings have the potential to bring you harm.

In an earlier article I shared the advice from a lawyer about being careful about what you post on Facebook, or other social media. Statements such as, "I feel so frustrated today with the children," or "I don't know what I'm going to do about this child" can be viewed by your licensor as a sign that it's not safe for you to be around children.

I've received calls from family child care licensors who are concerned that providers who are posting on Facebook throughout the day are neglecting their children.

I believe it will become increasingly common for licensors to monitor your Facebook usage during business hours. This could lead to negative licensing actions for providers who over use Facebook.

The state of New York recently instituted a new licensing rule to address this situation:

        "The use of any type of device for social or entertainment purposes, listening to music on headphones, playing screen games, using the Internet, or making personal calls by caregivers while supervising children is prohibited. Use of any devices for brief and     necessary communications or purposes directly related to the child care program such as communication with parents or the Office and its representatives is allowable."

I believe it's likely that in the future we will see similar rules adopted in other states.

You can use social media as a positive tool to promote your program, share ideas with other providers, and learn how to improve the quality of your program.

I've written about how to do this using Facebook, YouTube, and Craigslist.

At the same time, over-use of this technology, or not realizing that the comments you make over the Internet are permanent and can be seen by your licensor, can get you into trouble.

So, be smart about how you use social media.

Tom Copeland - www.tomcopelandblog.com

Image credit: www.business2community.com

A personal commentary (Ángel Olmedo)

Take care also the photos posted, and the sites where they appear: A photo in a workout, ¡great! A weekly photo in the middle of a party gives the impression that you are not a serious and reliable person.

And a text from her husband saying, "What a magnificent night! Here, I am taking my twelfth beer "or your own text" I do not know what to do with my husband, he every day drink more and more, "It will cause that your licensor think that your home is no longer safe for child care.

Facebook is extremely dangerous. It can see for your friends and also for your enemies, they don’t need even be on Facebook.

Money for retirement

"I've Got Some Money Saved for Retirement: Now Where Do I Put It?"

By Tom Copeland, posted with permission

Most family child care providers are not comfortable with choosing investments for their retirement.

Unless you are spending a lot of time researching various investment options, it can be daunting to try and decide what to do with your money.

If you are someone who doesn't know much about investing, this article offers my simple explanation for what to do to get started. Later you can learn more and make changes to your investments.

When investing for retirement you want to minimize your risk and maximize your return. To do that you need to have a proper balance of two major kinds of investments - fixed income investments and equities.

Fixed income investments are like IOUs; they include bonds, money market funds and certificates of deposit(CDs). A company or government entity promises to pay you back your investment at a certain date in the future with a fixed rate of return. The interest you earn on these investments are relatively low, but they also have a relatively low risk.

Equities are investments in which you assume some ownership of an asset, such as a company in which you buy shares. These investments include stocks and real estate. Equities have a potential high return and a potential high risk.

You want some of each type of investment. You don't want to put all of your money into fixed income assets because your return will be too low to beat inflation.

You don't want to put all your money into equities because their value may decline abruptly just at the point when you want to start withdrawing money to live on.

So, what is the best mix of these two types of investments?

Here's two simple options:

Option #1

60% in the Vanguard Total Stock Market Index Investor Shares Fund

40% in the Vanguard Total Bond Market Index Investor Shares Fund

Option #2

45% in the Vanguard Total Stock Market Index Investor Shares Fund

25% in the Vanguard Total Bond Market Index Investor Shares Fund

10% in the Vanguard REIT Index Investor Shares Fund

20% in the Vanguard Total International Stock Index Fund

Here's why I selected these options: To get the broadest possible exposure to the stock market, invest in a total stock market fund that invests in a representitive sample of all companies. You are spreading the risk of equities by buying into the entire stock market.

To get the broadest possible exposure to bonds, invest in a total bond market fund that buys the various types of bonds (short term, long term).

Invest in index funds because these have the lowest management fees. The most important factor that will determine the performance of a fund is the annual costs of the fund, according to a 2004 study by Standard & Poor's, an investment research and rating firm. Since then the basic conclusions of this study have not been challenged.

Your choice about how much of your money to put into fixed income and equities can be influenced by your age, your willingness to take risks, your health, and other personal circumstances. My suggestions above are a starting point.

See my article "Where Should I Invest My Money For Retirement?" for a detailed discussion of where to invest and why you should invest in index funds.

Note: I chose to use the Vanguard company in my options because they are the biggest investiment company that offer the most choices for index funds. Here are three other companies that offer many index funds. I've listed the names of their funds that are the same as Option #1:

Fidelity: Spartan Total Market Index Fund and Fidelity U.S. Bond Market Index

Charles Schwab: Schwab Total Stock Market Index and Schwab Total Bond Market Fund

T. Rowe Price: Total Equity Market Index and U.S. Bond Index

Summary

Don't know much about investing? Choose Option #1.

If you are a little more knowledgeable about investing and want to diversify more, choose Option #2.

Caution: Don't invest in something if you don't understand it. My Option #1 is very basic, but if you don't understand it, don't do it. Begin to educate yourself about investing for retirement so you can make informed decisions later.

Tom Copeland - www.tomcopelandblog.com 

Image credit: www.quizzle.com

For more information about investing, see my book Family Child Care Money Management and Retirement Guide.