Operating a childcare business from day to day
Once you are ready to welcome children into your childcare centre, there are still some operational issues to iron out and systems to put in place.
Before you can register a child, you have to sign an agreement with the parents, setting out your role and policies of what kind of care will be given, and what you cannot be held responsible for. Showing the parents that there are regulations being adhered to will add to their comfort level of leaving their child with you.
Setting the fees
The fees you charge will have to be competitive with other centres in the area, affordable to your target market , but still be high enough to cover all your running costs and make a profit.
If you are setting a curriculum, combined with a full service offering and a safe, nurturing environment for children, you can set your fees according to what the average private school would charge. A once-off enrolment fee will also help to offset the admin-related costs of registering the child.
Calculating what to charge for admission is based (mainly) on three factors.
1. Labour and supplies
2. Overhead costs
Something that is unique to a nursery school is the limit placed by the municipality on the number of children one can enrol according to the space and amenities. This places a ceiling on how much profit the business can generate.
According to the Department of Social Welfare, to operate a basic crèche you must have a minimum of three staff members per class. In an ideal situation, the staff to child ratio for 0-2-year-olds is one caregiver to every five children, 1:5. For 2-3-year-olds, the ratio is 1:10. Contact the municipal office in your area and check the regulations as each municipality has different regulations.
It’s very important to hire people who love children and perhaps even have experience in the childcare industry. Teachers must have qualifications in early childhood development. It’s important to do a thorough background check on prospective employees.
You may have to do some on-the-job training in the beginning and this cost should be factored into the budget.
Marketing the business
The high demand for quality childcare makes marketing the business a lot easier. However, it’s still important for you to have a marketing plan.
- The point of your marketing campaign is to tell people about your business and the services it offers. So you can advertise in the local newspapers and radio stations, place pamphlets in strategic places that parents frequent or rely on word-of-mouth
- Spend some money to have professional logos, marketing material and a website designed.
- Ask parents where they heard about you to see which of your marketing efforts are paying off
Managing the business
The problem in this industry is that many caregivers focus almost exclusively on nurturing and caring for the children, neglecting the financial and management sides of their operations. There must be the necessary systems in place if your business is going to survive.
A lot of time will be spent on the administration of the business. If you can afford it, perhaps a person can be employed to manage this aspect of the business, i.e. pay accounts, buy supplies, keeping up license requirements… the list is endless. This person can also make sure that there are adequate marketing activities happening to attract more parents.
Financially, running a crèche is tough and profit margins are low while overheads are high. Many businesses run into financial trouble because they don’t keep adequate records, which can also mean that they are failing to pay their tax.
If necessary, hire a bookkeeper to keep your financials in order, but don’t let go of the process completely. Successful entrepreneurs know what’s happening in all areas of their business.
Having the right systems in place to manage all operational areas will ensure the smooth running of the business and leave you with more time to be with the children.