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How do I start a publishing business?

A guide to starting out in publishing.

Entrepreneur

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The Basics

Starting a book publishing business is fairly straightforward. However, to start a publishing business you need more than a computer, software and the ability to edit copy. Assess your entrepreneurial abilities. Determine whether you have business and financial skills and the entrepreneurial mindset to run your own business.

Decide what you are going to offer your clients

There are numerous services to choose from in both print and electronic formats. Publishing includes many stages such as copy editing, graphic design, production, marketing, selling and distribution. As a publisher, you can work in a number of mediums – newspapers, magazines, books, software, music publishing, and the fast changing world of electronic media.

Types of Publishing

Within the world of print there are different kinds of publishing:

1. Consumer publishing:

This is related with publishing books for general consumers. These are the books that you see and buy in bookshops.

2. Trade publishing:

Also know as business-to-business publishing, This type of publishing is targeted to specific industries.

3. Educational Publishing:

Books and guides that schools, colleges and universities require.

4. Independent Publishing:

Independent publishers publish all types of books, catalogues, brochures and magazines. They also deal with authors and writers in specialised fields who produce publications that have a narrower appeal .These options often include “print on demand” and even “eBook” formats.

Find a niche

You have to ensure that you have researched the market and have found a niche in the market for your enterprise.

Write a business plan

You have to sit down and write a business plan. It is something that has to be done as it maps out your business and puts the process of starting the business into action. When you are preparing the plan, keep in mind that the competition among publishers is cut-throat. In addition, you have to make sure that the business model you put together ensures that it can stand competition from big publishing houses.

What must a business plan include?

A business plan conveys your vision to possible investors. A good business plan must include key components:

  • Executive summary
  • Business description
  • Marketing plan
  • Competitive analysis
  • Operations and management plan
  • Financial plan

Choose a business entity

The next thing to do is to choose a business entity, which can be a sole proprietorship, closed corporation or private company. When you have decided on the entity and selected a name for the business register your business with Cipro.

Set a price for your services

In order to make money you have to charge for your time, your expertise, and your supplies.

Hardware and software

Select a software program in which to lay out your books. Microsoft Word, WordPerfect or Microsoft Publisher work well. If you are working within the electronic media, you would need to select suitable software and hardware to support the electronic media of choice.

A good marketing plan

The publishing business is all about marketing. Clients don’t come knocking on your door just because you say you’re open for business. You have to go out and bring them in whether it’s through cold calling, advertising, networking, or sending out press releases.

Tie up good contracts

Companies negotiate and enter into contracts fairly frequently in the course of business. Small business need to negotiate the best terms for their business and create a well-drafted agreement that will avoid any dispute or potential litigation. It is important to go to a negotiation having done your research. Know relevant law, facts, and figures.

Publishing is changing

The publishing world is changing fast. Authors around the world can now self-publish a Kindle version of their books. A Kindle is an electronic book reader. This digital text platform enables writers to publish without a publisher simply by up loading a PDF, text, Word or HTML version of their book. Authors then set their own price for the book and get paid 35% of the sales.

Regulations

These are the steps to take when starting a publishing company or for that matter any company:

  • Reserve a company name with the registrar of companies
  • Lodge formation documentation with Cipro – register the business entity of choice
  • Open a business bank account
  • Register with the local receiver of revenue
  • Register with the department of labour
  • Register with the Commissioner according to the Compensation for Occupational Injuries and Diseases Act.

Audit Bureau of Circulations of South Africa (ABC)

Besides registering your company as a business entity, registering with SARS and for VAT,  any printed newspaper or magazine that you intend to publish should be registered with The Audit Bureau of Circulations of South Africa (ABC).

Is joining the ABC useful?

There is a very good reason why you should join the Audit Bureau. The primary function of this Section 21 Company is to provide accurate and comparable circulation figures to help advertisers, marketers and publishers in the buying and selling of advertising and promotional material regarding your publication.

How to join

Prospective members may only apply for membership once they have published at least one issue. The registration process isn’t difficult. All that is required is that the application form is completed and the non-refundable administration fee is paid.

After the fee is received an ABC auditor will e-mail an auditability questionnaire which must be completed. Once the ABC auditor is satisfied with all the information, The ABC will send you a letter granting you provisional membership and when your initial certificate is required to be submitted to the ABC.

South African National Editors’ Forum (SANEF)

SANEF was founded in 1996 and is a voluntary organisation representing senior journalists, editors and journalism trainers, from all areas of the media industry. They promote quality and ethics of journalism and defend and promote media freedom and independence. Membership forms can be downloaded.

The World Association of Newspaper Publishing (WAN)

Need advice or inspiration? WAN is an “idea forum” for publishing companies and suppliers to the publishing industry. WAN’s website supplies conference information, recent publications and newsletters.

Starting a Magazine

How to start an electronic magazine or “ezine”?

Once you have decided on a topic, you need to establish who the target market is. It is very important not to make the target market too broad or too narrow.

Research your competition

You can do this by doing a Google search and look at how many “ezine’s” there are on the topic you are interested in. Try to work out how to be different or how you can offer more value. It’s important to understand the competition as well as who advertises on various ezines. You need to decide how often you are going to publish the ezine and if it will be emailed automatically to your subscribers. Monthly is a good starting point.

Plan the ezine

Prepare a dummy copy. Decide whether or not you are going to write the ezine yourself, or if you are going to employ freelance writers to help you. Also, unlike traditional authors, “zinesters” are free from editors or publishers that would regulate the content of their work.  Remember if you are employing staff you have to pay them. So, it would probably better if you do it all yourself until the ezine is generating income.

Register

Register the business and the domain name. Design a template with a masthead.

Join a matching making service

You are now ready to sign up with an organization like “Ezeine” or “Zinester” who are what could be described as a “matching service”. Their function is to connect your ezine with a suitable mailing database and to bring real-world experts and ezine publishers together.

Expert authors and writers are able to post their articles to be featured within the site. They offer searchable databases of hundreds of thousands of quality original articles for ezine publishers hungry for fresh content to find articles that they can use for inclusion within online publication

Publishing online can be lucrative

Online publishing for profit is one of the fastest growing areas on the web. An online publication will generate revenue in a similar way to a printed magazine – by selling advertisements and selling subscriptions for the online magazine or “ezine” as they are often referred to.

As it is paperless, you save a huge amount on printing costs. It is easy to collect payments when operating an online publication. After choosing an electronic payment service such as PayPal or Google Checkout, you are set to go. They are easy to use and to set up.

What are the pros and cons of launching a printed magazine vs. an online ezine?

Unit sales mean that the publication is sold at a price per issue. If you sell 1 000 copies at R10 a unit through retail outlets you will make R10 000 in revenue. You increase the revenue stream further by selling subscriptions at a cheaper rate.

Bear in mind though that your may pay up to 50% of revenue generated through unit sales to your distributor. The other big revenue stream is advertising which generates most of the money required to produce a publication. You need a large amount of revenue to fund a printed magazine as printing and paper costs are high, as are staff and contributor bills.

Advantages of launching an online magazine

  1. An online magazine includes functionality that is impossible to deliver in print. This will give you an immediate and sustainable advantage over your print competitors because you can stream audio and video. It is simple and cheap to produce professional audio and video clips that can be streamed from the website.
  2. Discussion forums provide tools that build a community that in turn creates loyalty, and loyalty creates strong recurring revenues. Digital opportunities such as podcasts, e-books, reports and software can be part of your daily content that will encourage people to subscribe, or they can be sold as an extra revenue stream.
  3. Other wonderful option is user created content that encourages users to provide content and other contributions. This can be comments about articles, ratings and forums. These are all excellent ways to get to know and understand users.

Disadvantages of launching an online magazine

  1. It is extremely important however to bear in mind that when you launch an online publication you will quite literally have millions of competitors.
  2. Publishers find it very difficult to generate revenue from charging a subscription fee. Most websites that charge fees give away the majority of their content for free.
  3. If you wish to generate revenue from selling banner ads and sponsorships you will need to build significant traffic – hundreds of thousands of page impressions per month may just enable you to break even.
  4. It will take a lot of time and energy split between marketing and optimisation activities to just achieve those hundreds of thousands of page impressions.
  5. Running a successful online ezine will require that you are not only a masterful publisher who is able to provide good content, but you will also need to have the technical savvy when it comes to online business.
  6. Building an effective website can be done on the cheap if you have enough know-how, however ignorance of the industry and poor planning can result in high costs and an ineffective site.

Creating Content

How to find authors/photographers to write and photograph content?

Photographers

First consider what type of writer and/or photographer you are looking for and providing a brief of what you want to achieve on websites that cater for freelance writers and photographers.


Finding Freelancers

Then look for talent on these sites:

  • Post an advertisement in Bizcommunity – in the recruitment section of the site.
  • Freelancentral is a good place to find freelancers. The site features comprehensive portfolios, posted on line, which include writers, photographers and designers looking for work.
  • You can contact The Write Company, a Johannesburg based company, who teach and train writers, journalists and PR writers. They would have a database that may be of help.

Buying syndictaed content

When looking to buy syndicated articles, where you source stories, would depend largely on the subject matter of the publication you intend to publish. The are a lot a websites which offer free use of articles; however, it is very important to check and understand their terms and conditions. Articlesource offer a variety of articles covering a comprehensive range of topics from business to health matters.

Publishing a Book

How to self-publish a book

Publishing online costs very little while printing a book requires a lot of capital investment.

The traditional route

If you would like a book to appear on the shelves of local bookstores, it is best to send your manuscript to a traditional publisher. If they deem the book good enough to publish, they will take care of everything on your behalf. Local publishing houses include Penguin Books, Van Schaik Publishers and Macmillan, South Africa.

The Publishers Association of South Africa will be able to offer more information with regard to traditional publishing; however, it recommends contacting local digital publisher Crink, which deals extensively with the self-publishing market.

Self-publishing options

There are various companies in South Africa that provide self-publishing options both online and as a printed book. One of South Africa’s better known online publishers is Crink. “Crink is a digital publishing space, where authors can publish, sell, market and distribute their work in an online customised environment.

The best part is that you can interact and engage with the reading public on your own terms. You control your own content in an online community of authors and buyers,” advises Mari Beukes, online editor for Crink. “Crink offers a second alternative where the author hires a publishing consultant to get the book published and distributed through online platforms and in retail outlets. The fees are charged according to the scope and depth of the book,” continues Beukes. “We also offer various marketing packages designed to increase sales.”

Another local self-publishing company that you can contact is Just Done Productions – Publishing, which offers a service that allows authors to publish their work without having to speculate about its commercial viability.

Print-on-demand

Another company option is New Voices Publishing, which offers technology that gives the author the opportunity of getting their work published through alternative methods using Print-On-Demand (POD) technology. POD takes care of layout, typesetting, design and can publish a book in under six weeks.

The benefit of digital ready-to-publish files for books and covers is being able to print when the demand is there and not warehousing masses of books that may or may not sell.

For more information on local self-publishers go to:

  • New Voices
  • Just Done
  • Crink

For traditional publishing visit:

  • Publish SA
  • Penguin Books
  • Pan Macmillan

For more information

Contact the Publishing Association of South Africa (PASA) who promote and protect the rights and responsibilities of the independent publishing sector in South Africa. They will be able to help with regard to further legal steps you need to take, depending on the kind of publications you intend to publish.

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

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Start-up Industry Specific

How Do I Start A Transport Or Logistics Business?

An all in one guide to starting a transport and logistics business.

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Thinking about starting a transport business?

Forecasts indicate that the demand for freight transport will grow in South Africa by between 200% and 250% over the 15 to 20 years.

Some corridors, (high volume transport routes that connect major centres), such as the corridors between Gauteng and Cape Town (which amount to 50% of all corridor transport) will increase even faster.

Your Free Cheat Sheet: Transport and Logistics Business Cheat Sheet

The scope in the transport and logistics industry is varied – from a one-man show using a small truck to transport goods and offer services, to a fleet of transport vehicles which travel the length and breadth of South Africa’s roads.

Road transportation includes commuter transport from taxis to bus transportation.

It can be a tough industry and there are many threats facing transport businesses but if you get it right, you can build a successful business.

What is covered in this guide:

  1. How to start your transport and logistics business
  2. How to get funding for your transport business
  3. What are the costs involved
  4. Finding customers and getting transport contracts
  5. Getting onto suppliers lists
  6. Buying trucks and employing drivers
  7. What are the regulations and risks
  8. Where to find guidance to start your business.

Ready to get going? Click the arrow button to learn how to start your own transport business.

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Want To Start A Property Business That Buys Property And Rents It Out?

Information on starting a property renting business.

Shawn Theunissen

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Start your property rental business using this guide

I would like to start a property business where I purchase the properties and I rent it out, I already have a paid up property that I am renting out but my taxes are too high on the rental income so I am considering starting up a business. Could you advise me on where I can get more information on the requirements to start this and provide some guidance on whether it would be wise to pursue this business?

Before starting any business, it’s important that you’re absolutely clear about why you’re doing it – and that it’s going to be something that excites you, drives you and challenges you in the long-term.

If you’re only considering starting a property investment and management company to try and reduce your taxable income, then I don’t believe this is an appropriate – or a sustainable – solution. You should rather consult a reputable financial adviser about other investment options that would better suit your personal needs.

If owning and managing properties is, however, an opportunity you would like to pursue, I would then recommend that you start off by equipping yourself with a proper understanding of what it actually means to be a landlord. This will help you to make an informed decision about whether or not you want to start this (ad)venture as an entrepreneur.

Related: How The Property Brothers Built Up A Real-Estate And Entertainment Empire One Brick At A Time

At a very basic level, here are some of the things you might want to consider to determine if this is the right business for you:

Initial cost

initial-cost-and-property

This is what you need to consider, cost wise, when you start up your business

You need to consider the initial cost that you will be incurring when setting up the business, especially since you have a property in your personal capacity.

You will need to transfer the property from your personal capacity into your business and pay transfer fees and transfer costs.

These costs will be calculated based on the current value of the property.

The work and planning

No matter whether you’re a residential or commercial landlord, property management requires a great deal of work and planning. Remember you will be responsible for all aspects of the property: From purchasing it to maintaining it on a day-to-day basis.

This involves everything from transfer to managing the monthly utility bills, all the way through to replacing the geyser when it bursts and ensuring your tenants behave appropriately in the building. You would also need to source your tenants and ensure that they pay you on time.

All by yourself

business-owner-development

Starting your business alone? You need to know this

From a start-up perspective, you would probably need to do all of this yourself in the beginning. As such, you would need to work to build up your own database of reputable suppliers: Plumbers, electricians and handymen. It’s important that you find experienced, qualified suppliers that you can trust, and who will be able to deliver on time and cost-effectively.

This can be a very time consuming process. Also consider that you would need to be on hand to facilitate all of this work: Arranging the call-out with the supplier and the tenant; overseeing the work delivered; paying the supplier etc.

Related: Handyman Joshua Cox Of Trade-Mark On Thinking Like A Tech Start-Up

Business owner development

Above and beyond that, you’re then going to need to develop yourself as a business owner. You will need to equip yourself with the skills and knowledge required to lead and manage this business in order to make it both sustainable and profitable. This will require a significant investment from you: Time, effort and money. The more you commit to this journey of personal and professional development, the better your chances of success.

If you can picture yourself doing – and enjoying – all of the above, it’s then equally important to consider if this is a viable opportunity.

The greatest barrier to entry in this sector for you as an entrepreneur is probably going to be finance. You need to be conscious of this from the outset.

  • Do you already have access to the funds you need to purchase the properties you are going to rent out?
  • If not, what are your plans to secure this funding? And what are the returns you are expecting?
  • Also consider the funding of the business itself. How will you finance this, especially during the first year?

My recommendation here is to take the time to do your homework – and the maths. While this could be a business opportunity, it might not be something that will be possible for you to do on your own.

Related: What You Need To Know To Become the Next Property Entrepreneur

If you have a feasible plan regarding the above, you then need to start working on developing a model for this business – as well as a strategy and plan. All of these will require research on your behalf: From reading Entrepreneur to accessing websites, possibly visiting walk-in centres etc.

This will include unpacking the actual opportunity itself – and determining if there really is a demand for your service offering.

Please note that the above are thinking or “trigger-points” – listed simply to give you an idea of some of the things you need to consider, as well as the mindset you will potentially need to adopt as an entrepreneur. Your response to them should give you a good sense of if this is the path you wish to walk.

Remember that entrepreneurship is a journey – and every day on this road is a learning opportunity. If it is for you, embrace it whole-heartedly, don’t be afraid of failure and be sure to seek out the assistance available to you.

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Start-up Industry Specific

How Do I Start A Child Services Business?

The ultimate guide to starting a child care or child services business.

Entrepreneur

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Is It for You?

Does children’s laughter sound like music to your ears? Do you enjoy the idea of six kids chaotically crawling at your feet at any given moment? Then read on for your perfect business.

The number of working parents – including single-parent families and families with both parents employed is climbing, creating an ever-growing need for quality child care. That need is creating a tremendous entrepreneurial opportunity for people who love children and want to build a business caring for them.

Related: Free sample business plans here

Child-care services range from small home-based operations to large commercial centers and can be started with a small investment.

You can stay very small, essentially just creating a job for yourself, or you can grow into a substantial enterprise with potentially millions of Rands a year in revenue.

You also have a tremendous amount of flexibility when it comes to the exact services you choose to offer. You may limit your clientele to children in certain age groups or tailor your operating hours to meet the needs of a particular market segment. You may or may not want to provide transportation between your center and the children’s homes and/or schools. You may want to take the children on field trips.

As an alternative to child care, you may want to consider a business that focuses solely on providing transportation for children. Of course, the basic work you’ll be doing − caring for someone else’s children − bears a tremendous amount of responsibility and requires a serious commitment. When the children are in your custody, you are responsible for their safety and well-being.

You will also play a key role in their overall development and may well be someone they’ll remember their entire lives.

Filling an important need

day-care-research

Starting an educational business in South Africa is always beneficial

One of the biggest challenges facing South African families today is caring for their children while the parents work. According to Stats SA 39% of women head households in South Africa. A higher percent than ever of married-couple families, both husband and wife work outside the home. The labor-force participation of women in their childbearing years continues to expand. As the number of working parents rises, so will the demand for child care.

Another issue that has an impact on child-care issues is the new, 24-hour global market. Occupations with a high number of employees working nights and weekends − such as janitorial, hospitality, customer service and technical support − are experiencing substantial growth, and workers in these fields find obtaining quality child care an even greater challenge than their 9-to-5 counterparts. For many working parents, there is no single solution to their child-care needs.

More than a third use more than one option, such as day-care centres part of the time or full time or use domestic staff to provide care for children who don’t attend a daycare centre.

Related: How to Choose a Business Name that Works

Do you have what it takes?

What are the characteristics of a person who would do well operating a child-care. The person needs to be energetic, business-minded, a competent leader, have a pleasant personality, be professional, be willing to take calculated risks, be a good role model, have strong financial resources, be consistent in expectations of the staff, and be consistent in the delivery of service.

A child-care business can easily be started in your home with just a few weeks of planning and a modest amount of start-up cash. A commercially located centre takes a greater investment of time, energy and money. The size and type of business you choose will depend on your start-up resources and goals for the future.

Many child-care providers are satisfied with a one-person operation in their home that generates a comfortable income while allowing them to do work they enjoy (and possibly even care for their own children). Others may start at home and eventually move to a commercial site as the business grows. Still others begin in commercial locations and are either content with one site or have plans to expand.

The Beginning Stages

Childrens-day-care

Start-up blocks

Start-up checklist

As you complete your startup efforts, use this checklist (and tailor it to your own needs) to make sure you’ve covered all your bases before you open your doors.

  1. Type of centre: Will you operate from your home or a commercial location?
  2. Licensing: What licenses are you required to have and from which agencies? What are the requirements, costs and lead times?
  3. Training and certification: What types of training and/or certification do you need?
  4. Market: What are the child-care needs of your community?
  5. Location: Choose a site that is appropriate and affordable.
  6. Legal requirements: Check on zoning and any other legal issues. (See regulations later on in the story)
  7. Financial issues: Estimate your start-up costs and identify the source(s) of your start-up funds.
  8. Health and safety issues: Plan for accident and illness prevention, and develop emergency procedures. See regulations later on in the story)
  9. Programs: Develop an appropriate schedule of activities for the children.
  10. Equipment: What do you need to adequately equip your centre, where will you get it, and how much will it cost?
  11. Insurance: What coverage do you need to adequately protect yourself and the children in your care?
  12. Staffing: If you plan to hire people, know the required staff-to-child ratios and develop your human resources policies.
  13. Links: What community and professional resources are available to you?

Related: The Complete Guide to Starting a Business in South Africa

Conducting Market Research

Prime candidates who need full-time child care are parents with infants to 5-year-olds. Parents with children over 5 are good prospects for after-school care programs. The market segments most likely to use child-care services are dual-income families and single-parent households in most income brackets.

A number of government programs help low-income families pay for child care so the adults can stay in the work force.

Within this very broad market is the narrower group of clients you’ll serve. Use market research to figure out who these people are and how you can best attract them to your center. Lois M. says the primary market at four of her six locations is parents who are upper-income working professionals; the other two centers serve a number of middle-income families as well as those being subsidised by public funds.

Janet H. says about half her clientele consists of dual-income families, and the other half is single mothers who receive government assistance as they work through programs designed to get them off welfare. The goal of market research is to identify your market, find out where it is, and develop a strategy to communicate with prospective customers in a way that will convince them to bring their children to you.

When Lois M. opened her first centre, her demographic research revealed that there were 9,000 children from infant to 5 years old within a 5-mile radius of the site; half the pre-school children in the area were in day care of some sort because their mothers (or both parents) worked; and the number of households in the area was expected to double within a decade. Contained in that 5-km radius were six child-care centres serving approximately 800 children.

Brenda B.’s research wasn’t as sophisticated. Living in a small town, she knows just about everyone and is well aware of the lack of child-care services.

“There’s such a need for day care,” she says. “I go through periods where I’ll get as many as five calls a week from parents needing care, and I don’t have room for them. I’ve had families on my waiting list for up to two years.”

Related: How to Research the Competitors in Your Area

What licenses do you need to start a pre-school?

Department of Social Development

Department of Social Development

Early Childhood Development Centre have to be registered with the Department of Social Development (DSD). This registration can be done through your local branch of the DSD.

The DSD suggest that you follow the following steps:

  • Complete an application form for registration as a place of care. You can get the application form on the web.

In order to apply you must submit a weekly menu and daily programme and then submit the following information:

  1. A building plan/hand drawn sketches of building
  2. A copy of constitution, signed and dated (only if you also require funding)
  3. Service/Business Plan (for application for funding
  4. Financial report of the past year (for funding purposes)
  5. Contract with the owner of the building (lease – for funding purposes)

Once the documentation is approved, you will have to undergo an assessment from the Local Authority on structural and health requirements

What types of child-care services can be offered

Before you open your doors to the first child, you should decide on the services you’ll provide and the policies that will guide your operation. To simply say you’re going to “take care of children” is woefully inadequate.

  • How many children?
  • What ages?
  • What hours?
  • Will you provide food or ask their parents to?
  • What activities will you offer?
  • What sort of price and payment policies will you have?
  • And the list goes on.

Your first step is to check with the appropriate regulatory agencies, which in South Africa is your local municipality and the local division of the Health Department. They will explain to you what’s involved in providing particular services.

For example, each province has its own guidelines for the maximum number of children and maximum number in each age group in a family child-care facility. Municipalities in various regions also have guidelines regarding caregivers. There will likely be other requirements and restrictions, depending on the type of facility you run.

Decide what services to offer based on your own preferences and what your market research says your community needs. Your choices include:

  1. Full-time care during traditional weekday hours
  2. After-school care
  3. Non-traditional hours (very early mornings, evenings, overnight care, weekdays and/or weekends)
  4. Drop-in or on-demand care, either during traditional or non-traditional hours
  5. Part-time care
  6. Parents’ night out (weekend evening care)
  7. Age-based care

Location

child-education

This is how you can choose your location to start your business

How to find the right location for a child-care business?

If you’re going to open a center on a commercial site, it makes sense to locate your facility close to your target market. Some parents may prefer a center close to home; others may choose a center close to their workplace. In the latter case, parents get to enjoy more time with their children during their morning and evening commutes, as well as the opportunity to spend time with them during the course of the day, perhaps for lunch or special programs.

Some site suggestions to consider include:

  1. A facility within or adjacent to a residential neighbourhood or near a school
  2. A facility in a shopping centre where parents with children are likely to pass by
  3. Sharing a facility with other community organisations
  4. Office and planned light-industrial parks with a sizable work force.

Opening a child-care centre at home

If you’re going to open a child-care centre at home, discuss your plans with family members and neighbours before you open. Younger children may resent other children coming into your home and changing their lifestyle.

Older children − especially teenagers who will need to be told what’s expected of them and what they can expect as your business gets off the ground. Spouses may not completely understand the time commitment involved in this business, so talk about things in detail well in advance of bringing the first client in.

You may find that your extended family and friends don’t really understand what’s involved in a professional child-care business and may think that, since you’re at home during the day, you’re “not really working” or you’re “just baby-sitting.”

Talk to your neighbours about the impact your business will have on them in terms of traffic (as parents drop off and pick up their children) and noise (think about the decibel levels five or six children can generate when playing). Let them know what steps you’ll take to keep any irritation or inconvenience to a minimum, and reassure them that they should feel free to contact you with any concerns or questions.

Some family child-care centre operators have certain rooms of their homes designated for their business; others use their entire homes. Your decision will be based on your state guidelines and personal preferences.

Brenda B. has a playroom for the children, but they are not restricted to that area; she says she pretty much uses her entire house and her large, fenced backyard for her business. Sherri Ax’s house in Durban has a living room that serves as the primary child-care area.

The Funds

funding-a-business

How much cash is needed to start a child care business

So what do you need in the way of cash and available credit to open your doors? Depending on what you already own, the services you want to offer and whether you’ll be home-based or in a commercial location, that number could range from a few hundred to tens of thousands of Rands.

As you consider your own situation, don’t pull a startup number out of the air; use your business plan to calculate how much you need to start your ideal operation, and then figure out how much you have. If you have all the cash you need, you’re very fortunate. If you don’t, you need to start playing with the numbers and deciding what you can do without.

Start-up costs can be low

Many of the child-care entrepreneurs we talked with used their own personal savings and equipment they already owned to start their businesses. Because the startup costs for a family child-care business are relatively low, you’ll find traditional financing difficult to obtain − banks and other lenders would much rather lend amounts much larger than you’ll need and are likely to be able to qualify for. A commercially located centre will take a more substantial investment and would likely qualify for a bank loan.

Brenda B. estimates that she initially spent R3000 to R4000 on equipment for her family child-care centre. She shopped at second hand shops and accepted donations of used toys and other items from friends and acquaintances.

Janet H. spent considerably more – about R40 000 – to set up her family child-care centre because she remodeled her garage to serve as the primary room for her business as well as added a bathroom for the children. When she opened her first commercial location, she used a combination of personal savings and credit cards to pay the expenses. By the time she opened her second location, she was able to qualify for a commercial loan.

Lois M. took out a second bond on her home to get the R105 000 she needed to adequately equip her commercial centre when she opened. Yvette B. in Miami, put R250 000 of personal savings into her children’s transportation service. Deborah B.’s start-up costs Johannesburg, were in the range of R40 000 to R50 000, which she funded primarily with personal credit cards.

As you’re putting together your financial plan, consider these sources of startup funds:

  • Your own resources. Do a thorough inventory of your assets. People generally have more assets than they immediately realise. This could include savings accounts, equity in property, insurance policies, unit trusts, and other investments. You may opt to sell assets for cash or use them as collateral for a loan. Take a
  • Look, too, at your personal line of credit. most of the equipment you’ll need is available through retail stores that accept credit cards.
  • Friends and family. The next step after gathering your own resources is to approach friends and relatives who believe in you and want to help you succeed. Be cautious with these arrangements; no matter how close you are, present yourself professionally, put everything in writing, and be sure the individuals you approach can afford to take the risk of investing in your business.
  • Partners. Though most family child-care centres are owned by just one person, you may want to consider using the “strength in numbers” principle and look around for someone to team up with you in your venture. You may choose someone who has financial resources and wants to work side by side with you in the business. Or you may find someone who has money to invest but no interest in doing the actual work. Be sure to create a written partnership agreement that clearly defines your respective responsibilities and obligations.

Government programmes

Take advantage of provincial and national government grants and funding programs designed to support small businesses. Women, minorities should check out niche financing possibilities designed to help these groups get into business.

Related: Need to Fund Your Business? Here’s What GPF is Looking For

Regulations, legal and licences

legal-business-documents

What are the regulations in South Africa concerning child-care businesses?

You have to register with the local municipality and apply for a health permit. Contact the Department of Health who will refer you to the correct area that you are zoned for and provide. Once you have selected a venue you have to register with the local municipality who in turn follows the regulations laid down by the Department of Social Development in accordance with the Childcare Act, 1983 ( Act No 74 of 1983).

When approving an application for registration, the Council can impose further conditions and restrictions as it sees fit. Once the application for registration has been approved, the Council will issue a Certificate which will:

  • State the name of the person to whom it is issued
  • Describe the premises in respect of which the application was approved
  • Will specify any conditions or restrictions which it may have imposed
  • Will state the period for which the premises will be registered.

Health Permit

The crèche or crèche-cum-nursery school has to comply with health by-laws to the to the satisfaction of the Medical Officer of Health who issues an Environmental Health Permit which every day centre or crèche should have. Setting up a crèche or day care centre regulations state that there should be:

Office, staff room and sick-bay

If there are more than 30 children are cared for on the premises, provision should be made for a separate office large enough to be divided into a sick bay to accommodate at least two children, as well as a staff room. These can be combined

Indoor Play Area

  • There must be an indoor play area covering a minimum floor space of 1,8m² per child to be used for play, meals and rest.
  • Cots and mattresses utilised for sleeping purposes by children must be arranged so that there shall be a minimum of 50cm space between the cots or mattresses.

Kitchen

  • The kitchen must have suitable cooking and washing facilities. Kitchen has to be separate from the play area and not be accessible to the play area or the children
  • There must be adequate natural lighting and ventilation
  • Wall surfaces should have a smooth finish and should be painted with a washable paint

Sanitary facilities

There must be one toilet and one hand washing facility for every 20 or less children under 5 years of age, irrespective of sex.

  • Or one toilet and hand washing facility for every 20 or less children above the age of 5 years, separate for each sex.
  • Separate toilet facilities must be provided for the staff as set out in the National Building Regulations.
  • There must be a supply of hot and cold running potable water at the wash-hand basins, or if no running water is available, a minimum of 25 litres of potable water, stored in a hygienically clean container.
  • If potties are used they must be emptied, cleaned and disinfected with a disinfectant immediately after being used and stored in a suitable place

Outdoor play area

If you have an outdoor play area it must provide at least 2 m² per child. The play area must have shady areas or other safe surfaces, be fenced / walled and have approved lockable or child-proof gates and should be free of excavations and dangerous steps and levels.

General

The crèche must keep a health register.

What licences are required and what legal, health and safety steps that must be taken?

A safe playground is crucial

Operating a safe playground for children to enjoy means that you have to follow the regulations as stipulated by the local council. You must also take advice from your insurer and your lawyer.

Insurance cover

It is important to buy liability insurance, including accident and equipment liability. Be sure to get a detailed list of insurer’s requirements and follow those to the letter. When purchasing play structures, make sure that they include warranties.

Comply with local council

Once the playground is built, you will have to comply with health by-laws to the satisfaction of the Medical Officer of Health who issues an Environmental Health Permit for the playground. You will have to undergo an assessment from the Local Authority on structural requirements before you can open the business.

Health and safety bylaws apply

In terms of the playground, the business has to comply with health by-laws to the satisfaction of the Medical Officer of Health who issues an Environmental Health Permit for the play area. You will have to undergo an assessment from the Local Authority on structural requirements before you can open the business. Contact the DoH and request the details of the local authority in your area

Getting your own licences is difficult

If the business is an independent operation, it’s harder. Your first step is to check with the appropriate regulatory agencies, which in South Africa is your local municipality and the Department of Health. Each municipal area has different by-laws, which is why it is so difficult to be specific in terms of licence requirements. The local council will explain to you which licences are required in providing particular services.

Food and liquor compliance

To serve food, a Certificate of Compliance for Food Preparation is required. If you sell any form of alcoholic beverage, you have to apply for a liquor licence.

Get legal advice

Consider consulting an attorney to ensure that you have all the correct licences. Browse through the Entrepreneur legal directory for options.

Pricing System

How to set prices and receive payments for a child care business?

The fees you charge will provide the financial base for your company and your income. They need to be competitive in your market, reasonable and affordable for the parents, and also fair to you. You need to consider a variety of issues, including your costs, the profit you want to make, the going rates in your area and what the families you’re targeting can afford. Setting your rates, explaining–and often justifying–them to parents and then collecting the money are all part of being in the child-care business.

Since you’ll be offering a carefully planned curriculum that is far more than a mere baby-sitting service, you are justified in establishing a fee structure similar in design to a private school. A one-time enrolment charge of half a week’s tuition will hardly raise an eyebrow, but it will compensate you for the cost in time, paperwork and special attention each entrant needs.

Calculating how much to charge for space in your centre will be based primarily on three variables:

  • Labour and materials (or supplies)
  • Overhead
  • Profit

 Limited intake

A fourth factor uncommon to most businesses but significant for a child-care centre the limit to the number of children you can accommodate. In most fields, if your business grows, you just keep hiring employees to serve the increasing number of customers. But in child care, municipal by-laws and practicality limit the number of children you can accept, putting a lid on the income potential of your business. To overcome this, successful child-care centre operators often open more locations in nearby areas to increase their client base and income.

Forms of Payment

You’ll receive payments by check and cash, and you may also want to set up a merchant account so you can accept credit cards or electronic transfers. Check with your bank or the different credit card companies for information on accepting credit cards. Many child-care and transportation service providers find that automatically debiting parents’ credit cards is the easiest way to obtain payment. “A debt order every month is the easiest way to get your money,” says Yvette B. “There are discount fees involved, but its well worth it.”

In most parts of South Africa, the demand for quality child care is so high that marketing your business will be relatively easy. In fact, many of the providers we talked to for this story − especially the home-based centres − do little or no marketing because they’re established, with strong reputations and waiting lists.

But every business needs a marketing plan, and yours is no exception. All your marketing materials should be professional and letter-perfect. Consider hiring a graphic designer and/or professional writer to help you with your marketing package. If they have children, you may be able to negotiate their fees in barter.

Keep these questions in mind as you form your marketing plan:

  • Who are your potential customers?
  • How many of them are there?
  • Where are they located?
  • What are they currently doing for child care?
  • Can you offer them anything they’re not getting now?
  • How can you persuade them to bring their children to you?
  • Exactly what services do you offer?
  • How do you compare with your competitors?
  • What kind of image do you want to project?

The goal of your marketing plan should be to convey your existence and the quality of your service to prospective customers, ideally using a multifaceted approach. The child-care center operators we talked with used a variety of marketing methods, from simple word-of-mouth to more sophisticated techniques.

Smart Tip

Ask new clients how they found out about you. Make a note of their answers and what kinds of businesses they represent (how many children they could potentially refer to your business). This will let you know how well your various marketing efforts are working. You can then decide to increase certain programs and eliminate those that aren’t working.

Related: How to Set the Prices for Your Child Services Business

Registration

How many children can a day-care centre accommodate before registering the business?

If there are five children or less you do not need to register the business. However, once there are six or more children you have to register.

When should a day-care centre be registered?

“You only need to register a day-care centre if there are six or more children,” says community development officer, Tinyiko Shibambu at the Department of Social Development in Johannesburg. “First you have to register the business as an NPO (Non Profit Organisation). Once you have a NPO certificate, then you can register the day-care centre with the Department of Social Development,” advises Shibambu. Contact the Department of Social Development for details.

Procedure to register an NPO

There is a specific registration process to follow in order to register an NPO

In a crèche scenario, how many caregivers should there be for the number of children in a class?

According to the Department of Social Welfare, to operate a basic crèche you must have a minimum of three staff members per class. In South African childcare centres, the staff to child ratio for 0-2-year-olds in an ideal situation is one caregiver to every five children, 1:5. For 2-3-year-olds, the ratio is 1:10. However, according to the Department of Social Welfare, to operate a basic crèche you must have a minimum of three staff members per class and you can employ more if the business can afford it. However, it is best to contact the municipal office in your area and check the regulations as each municipality has different regulations

Management

What goes into effectively managing a child-care business

The high rate of attrition in the child-care business is driven in large part by the fact that many caregivers focus almost exclusively on nurturing and caring for the children in their charge, and neglect the financial and management sides of their operations. But whether your goal is a small, family child-care centre or to build a chain of commercial locations, you must deal with administration and management issues if your business is going to survive. If you plan ahead, that won’t be hard.

Set up your financial record-keeping system

From the outset in a way that will provide you with the information you need to monitor your profitability and handle your tax payments to SARS. You may want to hire a consultant or an accountant who specializes in small businesses to help you at first; this small investment could save you a substantial amount of time and money in the long run.

Spend time marketing and doing admin

Expect to spend a significant amount of time on management, marketing and administration. If you have employees, they need to be trained and supervised. Although the demand for child care is high, parents won’t be able to find you if you don’t market your service.

And keeping up with administrative details–paying accounts, buying supplies, doing budgets and forecasts, meeting ongoing licensing requirements, facility maintenance, etc.− is a never-ending process.

Choose staff very carefully

The staff that you employ must be children-friendly. Conduct thorough background checks on all potential staff.

Ready to Take the Next Step?

You will need to create a business plan to get you going.

Here is a Free Sample Business Plan

Capital is essential to starting up your business. You can self fund, or alternatively seek outside funding to assist you in starting up your business.

Here are New Ways SMEs Can Find Funding.

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