Another big risk is government policy changes; particularly subsidies and regulation.
Just like aged care, private health care, superannuation and private education, child care is a heavily protected and regulated industry that relies on the taxpayers' tit.
As soon as the government gives subsidies or tax breaks (whatever you want to call it) to an industry they will almost certainly wish to impose some control. This reduces the entrepeneur's ability to control their own destiny or achieve extraordinary returns.
Politically, childcare appears safe; any major policy tampering that would reduce funding (and therefore demand) would hurt the sacred 'working families' and is unlikely to be countenanced by a vote-seeking politician.
The other possible threat is creeping regulation that may increase overheads without compensation. Governments are particularly active in regulating anything to do with children and, just like with schools, there are frequent demands for childcare to 'do more'.
However, as we have seen in NSW and WA recently, politics can change dramatically and the risk-averse investor might wish to steer clear of industries that have high political exposure.
Peter
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