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Childcare Providers

In September 2017, the government will introduce 30 hours of funded childcare for working parents. It will be more important than ever that providers have good business knowledge and can respond to the needs of parents.

Offering accessible and high-quality childcare is what early years providers do. Improving business performance won’t distract 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 and provide the 30 hours of publicly funded childcare. To achieve this the government has appointed Childcare Works to work with providers to make sure that they have the tools and knowledge to create and maintain sustainable business models. In particular, this will include business sustainability support such as:

  • collecting and sharing examples of good practice through group workshops, online resources and practitioner networks
  • training providers in business remodelling, business planning and working flexibly and sustainably
  • running progress reviews with local authorities to identify specific business support needs, examine developments and identify actions

The Department for Education has asked providers to contact them at EYSustainability.Support@education.gov.uk to let them know what further support would be helpful in the coming months.

St.Helens Council will assist this process by disseminating information from the Department for Education and Childcare Works to you as it becomes available.

1. Understand your business

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 –it is simple, quick, and uses four key perspectives. PEST factors are essentially external so it is useful to help you consider the environment in which your service is provided.

SWOT analysis is a useful tool to review your business. It helps you to review your service and will help you to work out where you are now. Before you start to plan for change, growth or expansion.

2.  Understanding the market in which you work

Think about your setting and the childcare market in a 1.5 –3 mile radius.

3. Understanding the needs of your local community

Think about the families who currently use your school and nursery.

4&5. Understanding your finances, managing and monitoring your money

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)

6. Delivering differently

Consider partnership working and collaboration, changes to staffing deployment and contracts to increase flexibility, managing admissions, lunchtimes and transitions more efficiently etc.

7. Action Planning

Create a plan of action to prepare for implementation, based on research.

8. Implementing the plan

Communicate the plan to staff, partners and parents. Regularly monitor progress against the plan.

9. Communicating and promoting the entitlement to families

Use market research to inform the design of marketing information for parents.

10. Ongoing review and monitoring the plan

Monitoring progress identifies actions necessary to put plans back on course and build further improvement.


More details on Getting ready for 30 Hours are available to download in the Related Documents.

A setting may not be able to meet the differing needs of all families who may want to use it. Even if you are able to deliver 30-hours. Families may still require childcare services that are impossible for a standalone provider to deliver. This is where partnerships and new collaborations become a positive solution. 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. Not all will be new many these arrangements will mirror the existing solutions families use to meet their childcare needs currently. The additional 15-hours of funding offered through 30 hours free childcare will make childcare more affordable for parents. In partnerships where some providers cannot open beyond the traditional school day other partners will step in and extend the day and year as needed.

Establishing partnerships don’t just happen overnight, they need work, commitment and an open and honest approach to developing relationships, routines and trust. In any partnership or collaborative model the experience of the child, especially in terms of quality of provision, transitions and continuity of care must be of primary importance. 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.

Since 2016, childminders have been able to deliver up to 50% of their time from non-domestic premises, this offers new opportunities to collaborate with schools and other childcare providers. As demand changes, childminders have new business opportunities with the potential to expand by employing assistants, allowing them to extended opening hours increase numbers and the flexibility of their model. With 30-hours of free childcare, childminders linking much more formally with other group providers may unlock the barriers parents experience to find workable solutions for them and their children, especially for early mornings, late evenings and weekends. There are opportunities for children and families to benefit from both group settings, and a home based provision Children who have grown-up with their childminder since they were very young, can extend their learning by using some of their hours in a group setting; or children starting a group setting at two-, three-, or four-yeasr-old could use their extended entitlement with a childminder. It seems to offer the best of both worlds.

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 earlyyearsfeee@sthelens.gov.uk

The Department for Education and Childcare Works has made available a wide range of resources to assist childcare providers with preparing for 30 hours Free Early Education. We have made these resources available to you in the Related Documents section, or you can visit the various websites in the Useful Links section.

Understand the local market

Develop a clear understanding of local supply and demand by identifying:

  • how much provision parents need now and also in the immediate future
  • how other providers are helping to meet local need
  • the needs and preferences of existing and potential customers

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:

  • respond appropriately and quickly - for example, with marketing activities or by increasing or decreasing your staff
  • make the best use of your resources
  • extend your setting’s reach by filling more places

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 your income is less that you expected it to be, you need to find out why and address the causes.
  • Is occupancy lower than you expected?  And if so, why?  Do you need to do more work on sales and marketing to sell your places and if so, what actions do you need to take?
  • Are parents not paying promptly, or struggling to pay at all?  If so, what steps can you take to ensure that you receive the money that you are owed?

 If income is up…

  • If you are bringing in more money than anticipated, that’s great!  It’s worth investigating what is behind your success so that you can build on it.
  • Alternatively, if you find that it is due to a short term trend, you can prepare for a decrease in the future.

 If costs are down…

  • If your costs are lower than you expected, this is likely to a good thing but could mean that something has been overlooked.
  • Have some of your purchases been less expensive than you thought?
  • Or have you had to buy less of some things than you thought?

 If costs are up…

  • If your costs are up, you need to investigate quickly to make sure that you remain in a healthy cash position.
  • What unexpected items have you had to purchase, and how can you make sure that you don’t have these unexpected costs in the future?
  • If prices for regular items have risen, do you need to review your own prices to take account of this, or could you find an alternative supplier?

Monthly accounts  

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:

  • Set aside time each week to bring your records up-to-date.
  • Use ways that work for you, such as keeping all the paperwork from each day together in a folder until you have time to deal with it – but try not to let it stack up.
  • Make notes as you go along on purchases and payments received – don’t rely on memory.
  • Set aside specific times, say once every two weeks, to pay your bills and see who hasn’t paid what they owe to you.

At least monthly, every business should:

  • Bring all accounting transactions up-to-date in your system, and check that your transactions balance and that you can account for all income and expenditure.
  • Reconcile to bank statements – do they include all the income and expenditure you expect? Identify any large payments that you have made that have not yet gone through (so you don’t become overdrawn). Is there any information that you need to transfer to your accounts system e.g. bank charges?
  • Resolve any queries while the information is still recent – don’t let things linger too long.

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

  • early years pupil premium (EYPP)
  • disability access fund (DAF)
  • special educational needs (SEN) inclusion fund

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:

  • tax-free childcare
  • childcare elements of tax credits
  • childcare elements of Universal Credit
  • employer support, such as childcare vouchers

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:

  • making informed predictions about future cost pressures and new revenue opportunities
  • managing risk
  • having a clear vision for the longer term, whether this is expansion or improvement, and how to make this happen

Foundation Years has produced an informative guide to Developing a Business Plan for Childcare Providers.

SEN Inclusion Fund

The Early Years Funding Formula is an element of funding activity within the remit of the St Helens Schools Forum. Government guidance has given scope for part of the overall fund for 3 and 4 year olds in free childcare. to be top sliced over the forthcoming fiscal year to enhance support for those with special educational needs. In St Helens this is in the region of £250,000. The fund has been created to enhance support for children aged 3-5 and aim is to build the competence and capacity across EY settings and to necessary adaptations where required, which cannot be funded through the current funding, or delivered through quality of early learning staff and settings, input of other services and reasonable adjustments. Children will not need an Education, Health and Care Plan (EHCP) to be eligible.  

Following feedback from Early Years settings the Local Authority will be reviewing the processes for agreeing allocations and will be working with early years settings in preparation for this over the summer. We anticipate that this will be in place for September 2017. For the period April 2017 – September 2017, requests for additional funding will be considered through the existing Provision Agreement Panel.  

The arrangements for assessment, provision and entitlements for children between 0-2 years remain unchanged and will not be affected by the new targeted fund created through the top-slicing arrangement.  

Additional guidance will be available in the near future.