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With various childcare options now open to parents, it's more important than ever for providers to have good business knowledge & respond to the needs of parents.
We know that the main purpose of your business is to offer accessible and high-quality childcare, but improving your business performance won’t and shouldn't detract from this. In fact, it will allow providers to invest more in the things that make the biggest difference to high-quality early years services for children and their parents.
The Government wants to support early years providers of all sizes to build sustainable and successful businesses & in order to help achieve this, Childcare Works has been appointed to work with providers to make sure that you have the tools & knowledge to create & maintain sustainable business models.
In particular, this will include business sustainability support such as:
The Department for Education (DfE) has asked providers to contact them at EYSustainability.Support@education.gov.uk to let them know what further support would be helpful as you move forward. St.Helens Council will also assist by sharing information from the DfE and Childcare Works with you, as it becomes available.
PEST analysis is a useful tool for understanding how the things going on around your setting may impact on your business and your plans. PEST is an acronym for Political, Economic, Social and Technological factors. PEST analysis is similar to a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats).
Think about your setting and the childcare market in a 1.5 –3 mile radius.
Think about the families who currently use your school and nursery.
Calculate the capacity of your setting and monitor occupancy levels against this. Calculate the break even point based on your operating costs against your income (based on actual occupancy - not 100% occupancy).
Consider partnership working and collaboration, changes to staffing deployment and contracts to increase flexibility, managing admissions, lunchtimes and transitions more efficiently etc.
Create a plan of action to prepare for implementation, based on research.
Communicate the plan to staff, partners and parents. Regularly monitor progress against the plan.
Use market research to inform the design of marketing information for parents.
Monitoring progress identifies actions necessary to put plans back on course and build further improvement.
It's worth noting that a setting may not be able to meet the differing needs of all families who may want to use it. Families may still require childcare services that are impossible for a standalone provider to deliver & this is where partnerships and new collaborations can help.
Full daycare and sessional settings connecting up with childminders and other providers, such as out of school groups, can offer funded hours in new models and patterns of delivery. This will work where some providers cannot open beyond the traditional school day other partners will step in and extend the day and year as needed.
Establishing these partnerships or a collaborative model must focus on the experience of the child, especially in terms of quality of provision, transitions and continuity of care. There is learning available from the newly published DfE 30-hour mixed model partnership toolkit.
Independent mediation can help, as can a local authority, provider network, children’s centre, or other organisation to identify potential partners and broker relationships.
If you are interested in partnership or collaborative working with other Early Years settings in your area then please contact us and we can try to facilitate this. Please contact the FEEE team at email@example.com
Understand the local market
Develop a clear understanding of local supply and demand by identifying:
For example, you could ask parents now if they’ll want more hours when 30-hours free childcare for working parents comes into effect in September 2017.
Foundation Years has produced an informative guide to Marketing for Childcare Providers.
Understand and manage your occupancy rate
Your occupancy rate is the amount of places that you offer that are full.
It is important to take a systematic and planned approach to managing occupancy. At a simple level, this means recording and tracking expected and actual occupancy to identify variations across the weeks, months and year. If you know when there are regular peaks and troughs, you can:
The DfE has published information on early years providers’ experiences in successfully managing occupancy
Managing your monthly finances
It’s very important to sit down every month and assess and reflect on how the business is performing compared to your original budget and cash flow forecasts.
You need to track how your actual income and expenditure is varying from your projected income and expenditure and investigate why. For example:
If income is down…
If income is up…
If costs are down…
If costs are up…
Keeping your monthly accounts up-to-date is easy once you get into a routine.
You may need help to set up systems to use. Your local authority may be able to advise you or alternatively you could speak to a locally recommended accountant or book-keeper, but once they are established, try to:
At least monthly, every business should:
Charging parents for additional items or services
You should use government funding for childcare to provide 15 or 30 hours a week of high-quality, flexible early education and childcare.
You shouldn’t use this funding to cover the cost of consumable items, such as drinks, meals or nappies, or additional services, such as baby yoga, music lessons and school trips.
You can charge parents for additional items or services, but you mustn’t make this compulsory for any parents taking up a publicly funded place for their child.
Extra Sources of Income
By accessing these funds, you can be more confident of providing quality for all children without affecting the sustainability of your business.
You should also be aware of the funding that parents - your customers - can access to pay for childcare. This could include:
Get the right support for your business
A lot of specialist support is available for early years settings of all sizes. This can be from your local authority, specialist consultants or software tools. The DfE has published a directory of early years business and finance support suppliers.
If you plan to invest in support, take an approach that is long term and appropriate to the size of your business and your particular challenges and needs.
Local authorities are often able to help, either by providing advice and support directly, or by recommending helpful organisations and guidance.
Sector membership organisations may also be able to recommend appropriate support. Many of these organisations produce useful resources, such as the:
Plan for the future
Business planning includes:
Foundation Years has produced an informative guide to Developing a Business Plan for Childcare Providers.