Finding kiddies - and parents - for your business

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(FORTUNE Small Business) -- Dear FSB: I own a daycare. My prices are very competitive and so is my curriculum, but I seem to have a problem getting more kids into the daycare. I do not have a problem keeping them once they get in. What am I doing wrong?

- Ursula Thompson, Junction City, Kan.

Dear Ursula: "You're not doing anything wrong with your daycare service at all," assures Lois Geller, author of Response: The Complete Guide to Profitable Direct Marketing. "Your challenge seems to be in the marketing."

Since you're doing a good job with keeping the kids you have, leverage their loyalty by setting up a customer referral program. In your usual correspondence to the parents, enclose a card where they can suggest a few people they know who are in need of daycare services. If they respond, you can send them a "thank you" gift in return.

You could also create an advertisement flyer and post it in all the places that your target parents frequent - local elementary schools, the library, the supermarket, the bank, the ice cream parlor, and so forth. Be sure to have a URL for them to refer to. No experience with websites? No worries: "It doesn't have to be spectacular, just good enough to reflect the great service you already provide," says Geller, who suggests also finding ways to show up on online searches such as "Daycare, Junction City, Kansas."

There's also much to be said about a daycare owner who markets herself. "Start working on becoming a local guru on day care," says Geller, who recommends writing a column for the local paper or doing a daily "childcare minute" on your town's radio station.

Executive Director Honey Niehaus of Family Star Montessori and Early Head Start, a Denver-based daycare for children 2 months to 6 years old, suggests carefully choosing the right buzzwords for your marketing.

"Where she says her curriculum is competitive, I would've liked to hear that her operations are very high-quality, individualized or child-centered," Niehaus says. Of course, putting these words in your ads entails having such perks as a small teacher-to-student ratio - a costly initiative - but in the end it'll be a worthwhile investment in attracting more customers: "Parents know now to expect these things for their kids, especially those under age 3 who are developmentally growing the most."

In addition to the quality of the daycare service itself, Niehaus says parents are also insistent on convenient location and hours.

"Stay open early and late enough for busy working parents, and make sure your daycare is close to a work site so that they can travel to work with their children," she recommends. Make sure that your signs are visible from the road (and if you run your business from your home, find out if it's against zoning laws to post one up on your front lawn).

Depending on how many number of kids you're responsible for, your daycare center may have to be officially licensed with your state's Department of Education. This'll bring on a host of new restrictions and requirements - monthly fire drills, nutrition standards, developmentally-appropriate playground equipment - but the governmental stamp of approval will be extra reassurance for the parents and potential customers.

Getting licensed means you can qualify to accept government assistance for child care, allowing your business to expand its customer base to include low-income families. Another demographic you might want to consider are infants and toddlers: "There is a huge demand for this age group," says Niehaus.