How to Start a Nanny Referral Agency

Part 1 - How to start a Nanny Referral Agency business - Background

There’s nothing in life more precious than your child. Families looking for a nanny to care for their young ones turn to referral agencies, who have the time and resources to conduct thorough background checks. For many, nannies become an integral part of their family unit, and your work is an integral part of that process.

Our guide is in 3 parts:

• Part 1 - How to start a Nanny Referral business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a nanny referral agency?

Start-up costs for a nanny referral agency are minimal. Since much of the work is done online, many start-up agencies choose to forego the cost of renting office space, working out of their home instead.

You’ll need the following items to get started, regardless of where you decide to set up shop:

• Computer

• Website

• Telephone line

• Marketing materials

• Standard office supplies

Much of your work entails running background checks on nannies you’re looking to place. Spend some time finding out what you have to do to run driving reports, etc in each jurisdiction.

What are the ongoing expenses for a nanny referral agency?

As a nanny referral business owner, you’re facing low overhead expenses. Below are a few items you’ll want to budget for in your monthly expenses

• Fees for background and driving record checks (varies from state to state)

• Insurance $250

• Internet/telephone costs $150

• Advertising and website maintenance $250

• Payment/merchant fees $200

Who is the target market?

While the nanny is, in a sense, your customer, the families are your true clients. Your goal is to connect the right nannies and families together, building long-lasting relationships. Thus, your preferred customer is the family or individual who understands the intricacies and financial implications of hiring a nanny and is committed to ensuring their child(ren) receive the best possible care.

How does a nanny referral agency make money?

All fees are paid for by the family and are set depending upon the services they require. For example, a family seeking a live-in nanny will be charged a higher fee than one that requires a part-time nanny. Fees can be either a fixed percentage of the nanny’s salary or a flat-rate cost.

How much can you charge customers?

Nanny placement fees vary depending upon location and specific services needed. Many referral agencies report charging approximately $1,500 per client, $2,100 for live-in nanny placement.

How much profit can a nanny referral agency make?

If you place 4 clients per month, each with a referral fee of $1,500, your agency will earn $72,000 annually. Assuming your overhead costs are $1,000/month, that’s $60,000 in annual profit.

How can you make your business more profitable?

The following are a few strategies other agencies have implemented to ensure a more profitable business:

• Offer nanny training courses

• Expand your services to include babysitting.

• Offer new parent training classes

Day-to-Day and Growth

What happens during a typical day at a nanny referral agency?

Given the sensitivity of the services your agency provides, you’ll want to take a hands-on approach to your work. There are a number of activities that will keep you busy day in and day out.

Most days will include the following activities:

• Conduct interviews with families to get a feel for what their needs are

• Check nanny’s professional and personal references, passing that information on to the family

• Verify nanny’s background history, including identity, education and employment history, perform state and county criminal searches, including the sex offender registry, review candidate’s driving record

• Conduct personal interviews with nannies

• Identify which nanny would be a good fit with each family

• Perform periodic screening updates to ensure nothing has changed since placement

• Market your business

• Research to ensure your business is current with nanny referral business best practices

In addition, there will be administrative duties to attend to. Once your business has grown and you’ve built a team of trusted employees, you can delegate these responsibilities to your staff.

What are some skills and experiences that will help you build a successful nanny referral agency?

From the nannies you’re considering, to the parents and children who’ve hired you, each day will require you to interact with people. Thus, it is critical that you possess strong interpersonal skills. Your role is to place the best nanny with the best family, so it’s critical that you’re also able to listen to the subtleties expressed from all parties and confident enough to ask difficult questions. This ensures you extract important information that could be instrumental in identifying the best fit. Strong interviewing skills is a must.

Your customers are entrusting the nanny you place with their most prized “possession” – their child. Each job requires your undivided scrutiny. Attention to detail and strength in research are also valuable qualities to possess as the owner of a nanny referral agency owner. The International Nanny Association has a wealth of information available to its members for every step of starting your small business.

What is the growth potential for a nanny referral agency?

The value of nanny care has grown exponentially over the last decade, offering great opportunity for success in the referral agency industry. Growth opportunities are dependent upon demand, affordability of services, and availability of quality nannies in your area.

What are some insider tips for jump starting a nanny referral agency?

Before getting started, contact agencies in other areas of the country. They can provide useful information and tips to ensure the start-up process goes smoothly.

The following are a few insider tips from well-established agencies:

• Conduct interviews in person whenever possible. If this isn’t possible, then you can turn to phone or Skype interviews.

• Check into a registry for families new to the area, as these are potential clients.

• Network within the community to stay on top of the latest changes and trends in your industry.

• Screening of candidates is critical to the safety of your families, as well as your success. Develop an efficient strategy to ensure no stone is left unturned. A basic skills and assessment test is also advisable.

• Your website can be simple and straightforward, but is essential for your success.

How and when to build a team

Much of this work can be done by you, so many nanny referral agency owners choose not to hire employees. Whether you decide to hire employees or work solo, you’ll need the assistance of a reputable attorney to help your customers with their contracts. Once business starts picking up, you’ll also want to consider adding an accountant to your team to ensure the books are kept accurately.

Part 2 - Is a Nanny Referral Agency business the right fit for you?

Part 3 - Action plan to launch your Nanny Referral Agency business in 90 days