Key Takeaways

  • A nanny agency connects families with qualified caregivers, handling screening, background checks, and placements.
  • Running a successful agency requires strong interpersonal, organizational, and research skills.
  • Agencies generate revenue through placement fees, membership models, or subscription services.
  • Licensing requirements vary by state and may include business registration, tax permits, and referral agency licensing.
  • Additional services, such as temporary nannies, babysitting, and corporate childcare, can diversify income streams.
  • Effective marketing, including online advertising, social media presence, and partnerships with local businesses, is crucial for success.
  • Agencies should invest in management software to streamline operations, scheduling, and compliance tracking.

Nanny Business - Overview

Wondering how to start a nanny agency? Nannies offer child care service in the home of the family rather than in a daycare center. It's a popular alternative for many reasons. Finding a nanny is hard work for parents. They don't have the time to find a nanny that is reliable, honest, and focused on the children. Your nanny agency takes on the job of interviewing, screening, and finding the perfect nanny for the family.

Creating a nanny referral agency means you are taking on the responsibility for looking into the background of applicants, their previous experience, and checking references.

Who Should Enter Into This Kind of Business?

This business works for those who like to spend time on a computer and doing research. They also should enjoy making connections and interacting with people on a daily basis.

Understanding the Nanny Agency Market

Before starting a nanny agency, it's important to understand the childcare market. Demand for nannies varies by location, influenced by factors such as population density, working parents, and availability of daycare alternatives. Researching market trends, competitor pricing, and industry standards will help you set realistic service offerings and pricing structures.

Some factors influencing the nanny agency market include:

  • Increasing number of dual-income households
  • Preference for in-home childcare over daycare centers
  • Demand for flexible childcare solutions, including part-time, live-in, and temporary nannies
  • Growth in corporate childcare assistance programs

A solid understanding of these trends can help you tailor your services to meet current needs.

What Happens On a Day-to-Day Basis at a Nanny Referral Agency?

This is a hands-on type of business. You'll be doing a lot of things on a daily basis that will keep you busy. A typical day will include the following activities:

  • Interview families to determine their needs and expectations.
  • Look into the professional and personal references of a potential nanny.
  • Verify the background history of the nanny. This can include identity, education, employment history, state and county criminal searches, and review any pertinent background information.
  • Conduct one-on-one interviews with nannies.
  • Determine which Nanny would be a fit for a particular family.
  • Perform periodic updates on screenings to make sure nothing has changed in a nanny's background.
  • Market your referral service.
  • Make sure your business is current with local, state, and any federal regulations.   

The agency is going to have administrative duties to take care of. In the beginning, you'll find that you have to take care of most or all of the paperwork on a daily basis. But, as your business grows, you'll be able to send the work out to employees or outside vendors. 

Essential Business Operations and Compliance

Running a nanny agency involves a range of operational and legal considerations. Key tasks include:

  • Screening and Vetting: Conduct in-depth background checks, including identity verification, employment history, reference verification, and criminal background checks.
  • Legal Compliance: Stay updated with labor laws, tax requirements, and any state or local licensing requirements for staffing or referral agencies.
  • Client Contracts: Create clear agreements outlining services, fees, and expectations for both nannies and families.
  • Payroll and Taxes: If your agency employs nannies directly, you must handle payroll, taxes, and benefits. Otherwise, ensure families understand their responsibilities as employers.

Investing in software that manages scheduling, payments, and compliance tracking can help streamline these processes.

What Skills Do You Need to Help Build a Successful Nanny Referral Agency?

Your role as a referral agency of nannies will require you to interact with people on both sides of the table. You have a dual role as employer and salesperson. It's critical that you have strong interpersonal skills and a talent for managing egos. Your goal is to place the right nanny with the right family which means you need to be able to listen and read between the lines and grasp the nuances of what people are saying. You must also be willing to ask tough questions of all parties. This helps you get the information you need to identify the best fit between nanny and family. Strong interviewing skills are necessary.

It's important to view each placement as a unique pairing of nanny and family. Attention to the details means you'll make the best possible fit for everyone involved as well as earn valuable word-of-mouth referrals.

Technology and Tools for Managing a Nanny Agency

To operate efficiently, a nanny agency can benefit from specialized tools and software. Some key technologies include:

  • Recruitment Software: Helps manage applications, store nanny profiles, and streamline hiring.
  • Background Check Services: Provides quick and thorough screening of potential caregivers.
  • Client Relationship Management (CRM): Tracks client inquiries, placements, and service history.
  • Payroll and Accounting Software: Simplifies payment processing for families and nannies.

Using digital tools not only saves time but also ensures compliance with employment laws and improves customer satisfaction.

How Does a Nanny Referral Agency Make Money?

Fees for the service are paid by the family. The amount of the fees depends on the services that are required. Every time you place a nanny through your service, you collect a fee. The amount depends on the type of service required. For example, a family that needs a part-time nanny will pay less in fees than a family that needs a live-in nanny.

Revenue Models and Pricing Strategies

Nanny agencies have various revenue models. Understanding these can help maximize profitability:

  1. Placement Fees: Families pay a one-time fee for each successful nanny placement. Fees vary based on the position's duration (part-time, full-time, or live-in).
  2. Membership Model: Clients pay a monthly or annual subscription for access to screened nannies.
  3. Temporary Staffing Fees: Agencies provide short-term or emergency nanny services, charging a premium for on-demand placements.
  4. Corporate Partnerships: Businesses offer nanny services as an employee benefit, with agencies earning through company contracts.

Each pricing model should reflect operational costs, industry standards, and client demand.

Determine What Type of Business License is Needed by Your State

All states have different regulations for child care businesses. These regulations cover placement agencies like nanny referral services. Check with your state in question to determine if you need a referral agency license, or if another type of license is applicable to a nanny referral agency. Also check local, state, and federal licensing laws to determine what licenses you need to operate.

You may be located in a state that collects sales tax for service providers. Visit the website for your state's tax agency to learn more about the license needed to collect and report sales tax. If you are unsure about what you need to operate legally, contact a lawyer or accountant for assistance.

Insurance and Liability Considerations

A nanny agency must protect itself from potential legal and financial risks. Important insurance policies include:

  • General Liability Insurance: Covers accidents or damages occurring during nanny placements.
  • Professional Liability Insurance: Protects against claims of negligence or improper vetting.
  • Workers’ Compensation Insurance: Required if the agency directly employs nannies.
  • Bonding Insurance: Provides financial security in case of fraud or theft by a placed nanny.

Consulting with an insurance provider ensures your agency meets industry standards and legal requirements.

Frequently Asked Questions

  1. Do I need a license to start a nanny agency?
    Licensing requirements vary by state. Check with local and state regulatory agencies to determine if a business or staffing agency license is required.
  2. How do I find clients for my nanny agency?
    Use a combination of online marketing, networking, partnerships with local businesses, and word-of-mouth referrals to attract clients.
  3. What should I include in a nanny agency contract?
    Contracts should outline fees, services provided, nanny responsibilities, family expectations, and legal protections for all parties.
  4. How much does it cost to start a nanny agency?
    Startup costs range from a few thousand dollars (for home-based operations) to significantly more if renting office space or hiring staff.
  5. Can a nanny agency operate remotely?
    Yes, many agencies operate online, handling interviews, background checks, and placements virtually, reducing overhead costs.

If you need help with starting a nanny agency, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.