Reasons for failure?

[Rachel Steger]

Hi there,

I've started the planning process for a coworking/childcare center but I'm seeing its a challenging business model. Here's what I've come across so far. 

1- Difficulty starting up in space that meets local regulations 

2- Price sensitivity, cant charge enough to be profitable 

3- Inconsistent customer base, no regular cashflow, too niche?

4- More infants than expected, requiring higher ratios

5- Not enough demand for add on programs

6- not enough demand for license exempt care where parents remain on site at all times

Agree/disagree with this? Anything you would add?

-Rachel

[Tamra Johnson]

Hi Rachel,

I've spent a few years playing with the idea, and your list is a good summary of what I've found (and what I've seen as a few have closed in that time period). 

To say a bit more on the items you bring up

• The model requires running two business as one, so it is a challenge to make everything work operationally and from a business point of view
• Coworking spaces oversell their seats/desks, with the more successful (profitable) ones doing so by a factor of 2-2.5 (or more). It's not clear this works for the coworking/childcare model, as people who want the service really do need it to get things done
• The price point to cover the coworking and childcare services starts to get to / exceed that of having a private nanny, which is what a lot of folks do already (and then have total flexibility).

-Tamra

310-562-7890

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[Angela Samuels]

Rachel,

Yes, I was planning on opening a space with a daycare but I'm considering not doing one now because of the challenges that you named in your post above and much more. I hope all goes well.

Angela
Visionary Meetings

[Melissa Tapper Goldman]

I'm also interested in this model and have been exploring launching a space in the northeast. I really want this to work!

People have suggested that I partner with an existing daycare business to start a branch within a coworking space. I'm curious if people have thoughts about that. My concern would be that the mechanics of the partnership (i.e. do you need to be a member to access the independent daycare and how to enforce this) would be complicated and probably not flexible enough to serve both businesses well. But at least it would take a lot of stuff off my plate!

Another factor that I found in my research was a bigger social/psychological issue of new mothers who are small entrepreneurs (photographers, graphic designers, other independent contractors) feeling conflicted about spending money on childcare. It's a big new expense and doesn't necessarily makes sense by the numbers alone. The sticker shock is high already, and compound that with some people's guilt about putting kids in daycare if they don't "have to", strictly speaking. That's not my judgment, just an observation of the landscape. This gets into some bigger social issues, but I do think it's relevant to understanding a target market.

-Melissa
 

[Marnee Chua]

Hi Rachel, 

My partner Jessie and I have both looked into this before we met and also since we've become business partners. Your summary is pretty much right on the nose, those are all the main issues that everyone is dealing with. We are not giving up, but we have temporarily put things on stand by while we try to make our existing coworking space as successful as possible. 

Some of the questions that we have run into (assuming that we find an affordable building that meets code): 

• How do you best price the service compared to the costs?
• From everything I've seen and heard, there are lots of interested mothers (and some fathers!). The idea that they are in the same building with their little ones is very helpful. They can go over any time and check on them and see how they are being cared for. But since they are not committed to full time daycare, how much are they really willing to pay? 
• Where does that cost of in-home nanny compared to drop-in or part-time childcare really cross over? 
• What types of hours are they going to be most interested in? 
  

Melissa, we looked into partnering with a daycare and found no interest. All the full time daycares around us are full, so their is no incentive for them. Also, I feel strongly that the model is for the childcare to be in the same building -  the big attraction is that they are 1. commuting to the same location with their child, 2. not wasting time going back and forth between home/childcare/office, 3. have peace of mind from proximity to the smaller/younger child. 

Has anyone looked into starting it as a co-op?

Is anyone in another state able to offer a drop-in/part-time care situation on-site and NOT license? We are required to license if parents are working on site. I am still looking for an answer as to why that law exists, but haven't found it yet. 

- Marnee

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Marnee Chua

Works Progress

Ellie's Coworking + Childcare

(510) 846-2245 cell

(206) 466-1624 office

[Lenora B. Woods]

Hi Everyone,

My name is Lenora and I am in the beginning stages of opening a coworking space with childcare in Atlanta. I live in Duluth, however a lot of my clients and meetings take place closer to the city. I have a 1 year old and one on the way (11 weeks). I saw the need for this business last year after I had my son but was overwhelmed with the money obligations so I put it to rest and ended up going back to work full-time. I've been back working at home and definitely see the need for myself and are really excited to open my own space. I've been reading through this group and you all are providing so much insight! Invited by Deborah Engel (Work and Play NJ). Thanks so much!

Lenora Woods

404-840-0516

len...@theellenoraagency.com 

On Monday, June 23, 2014 1:25:11 AM UTC-4, Rachel Steger wrote:

[Megan Graham]

Hi Rachel, this is Meg Graham from the Chicago Tribune. Would love to get in touch with you if possible for a story on this topic. Can you email me? mgr...@chicagotribune.com.