The need for childcare is well known. So too are the costs of not having childcare. Without access to quality childcare, many parents cannot work full time and become trapped in a cycle of poverty. Shortages in childcare not only limit family income but in some cases, keep parents out of the workforce altogether. 

What can be done to address this gap? The need to develop more childcare businesses is obvious, but how to build and sustain viable childcare businesses is not. 

Coastal Enterprises, Inc., the community development financial institution where I work, lends to families and businesses throughout the state of Maine. Back in 2019, during a listening tour of the seven rural Maine counties that border Canada, we learned that many people—predominantly women with a passion for early childhood education—would like to start a home- or facility-based childcare but lack the business acumen and confidence to get started. 

As a result, four years ago, in March 2020 we started what we now call the CEI Child Care Business Lab, an incubator that teaches the specific business skills needed to open, staff, and operate a licensed quality childcare business. To date, through this incubator, 19 new businesses licensed for a total of 390 children have opened. Nine others are in the process of becoming licensed.

Below, we share successes, challenges, and lessons learned to encourage others, especially CDFIs, to consider developing similar programs in their communities. 

Any CDFI or other nonprofit seeking to build a childcare business incubator should consider five main factors: 1) identifying focus communities and cohort members, 2) crafting the incubation curriculum, 3) designing both peer and external mentoring support systems, 4) creating appropriate finance tools, and 5) developing a sustainable funding model for the incubator itself. We turn to each of these themes below.

Read the full article about childcare businesses by Cynthia Murphy at Nonprofit Quarterly.