5 Risks of Operating a Daycare Center: Are You Opening Yourself up to Liability?


Many adults find working with and caring for children very rewarding, so it should come as no surprise that daycare centers top some entrepreneurs lists of potential business ideas. Operating a daycare center comes with a certain amount of risk, though, so aspiring business owners should familiarize themselves with potential liability issues and come up with ways to mitigate them before taking their first clients. Read on to find out about five of the most serious risks associated with running a daycare.

1Staffing Risks

No daycare owner wants to consider the fact that he or she could inadvertently put children at risk, but not all adults have the best interests of children in mind. Failing to consider worst-case scenarios is a great way to put not just the children in the daycare centre’s care but also the business itself at risk, though. That’s why business owners should run background checks on every job candidate, without exception.

Even a comprehensive background check won’t weed out all potential bad actors. It will only uncover those with criminal records. Personal references and drug screening can also help, but there’s no way to completely eliminate the risks associated with staffing a daycare centre. In some circumstances, business owners can be held liable for the actions of their staff. Those facing charges after claims of child molestation or sexual abuse should contact a Sex Crimes Attorney immediately to minimize the damage done to their reputations.

2Safety Risks

The potential for disreputable staff taking advantage of naive daycare centre operators and the children in their care is not the only risk business owners need to take into account, although it is one of the least palatable of them so it’s worth getting it out of the way early. Daycare owners can also be held liable for personal injuries that occur on their grounds, so eliminating potential safety risks is a must.

Children in the centre’s care should be observed by an adult at all times. Business owners should also ensure that all equipment, including both safety equipment and play equipment, undergoes periodic inspections to ensure that it is functioning as intended.

Make sure the smoke detectors are working and there is a fire extinguisher on-site and consider installing a fire alarm system. Check all the furniture and indoor play equipment daily to ensure that everything is intact, and test the outdoor play equipment for safety. Daycares should also have locked cabinets to store any potentially dangerous items, including cleaning chemicals.

3Health Risks

Providing a healthy environment for children to learn and grow can be more of a challenge than business owners might think, especially if their own children are relatively healthy, to begin with. It requires more than just providing healthy meals throughout the day, cleaning frequently touched surfaces, and installing smoke and carbon monoxide detectors. Before opening a daycare centre, business owners should also have the facility inspected for potential health risks like mold, mildew, lead, and poor air quality.

Keep in mind that not all children are perfectly healthy, to begin with, so some attendees might require extra care. Staff members should have access to a comprehensive list of all the children’s allergies and medical issues and should review it carefully. Daycare operators should also ensure that their staff receives CPR and first aid training.

4Legal and Licensing Risks

Before opening a daycare center, business owners need to contact their local small business administration (SBA). The SBA should be able to provide a list of rules and regulations that apply to daycare centers, including safety stipulations and what requirements business owners must meet to get licensed as an official daycare center. Don’t ever run a daycare center without a license.

To avoid legal risks, business owners should keep records of all the daycare centers’ operations. This includes not just obvious things like proof of licenses and insurance but also contracts filled out by the parents, records of improvements made to the building and the results of any tests that have been performed, and any other paperwork that pertains to business operations. If any kind of legal or liability issue comes up, a lawyer may need access to these materials to construct a rigorous defence.

5Enrollment Risks

Daycare centers are only allowed to care for a certain number of children at a time. Every state has slightly different laws and regulations regarding daycare center operations, but most of them determine how many children can be safely cared for on-site based on factors like the size of the daycare site and how many staff members there are to provide supervision and care. It’s very important to stay under full capacity, as taking on too many children at once can incur steep penalties.

Daycare owners need to prioritize the health and safety of the children in their care, but they also need to ensure that the center will be profitable, which requires walking a fine line. Most daycare center operators start a waiting list for applicants so that if they are already at full capacity, parents can have their children added to the waiting list and get them in when a spot opens up. This allows business owners to ensure maximum profits by keeping the center close to its full capacity without running the risk of incurring penalties or encountering other legal problems.

The Bottom Line

Running a daycare center will always come with challenges, but savvy entrepreneurs can avoid many of the problems described above with careful planning. Come up with a comprehensive business plan that describes not just what the business will need to succeed, but also what it will take to provide supervision and care for every child who will be enrolled.

Ensure that the facility is safe and free from health and safety risks, conduct comprehensive background checks on all employees, check with the small business administration about legal requirements, and conduct ongoing health and safety audits of the center’s premises and operations. It’s always better to be safe than sorry, especially when caring for children in an official capacity.


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