Business Planning For Childcare settings offering 2 year old early entitlement

Transcription

1 Business Planning For Childcare settings offering 2 year old early entitlement 1

2 Aims and objectives Be up to date about the Government s Early intervention strategy Be clear about the importance of managing and reporting on occupancy Be able to develop good monitoring and evaluation systems to support with SWOT analysis and business planning Understand the benefits of marketing the offer to parents and supporting parents to access other services and agencies that will enhance employment or training opportunities Understand the range of financial documents that are essential to managing a childcare business, including cash flow forecasts, monthly budget reports and annual profit and loss statements Understand how to make predictions to create a cash flow forecast and how to use a cash flow forecast to measure the situation of the business Appreciate how using the income from the two year old offer effectively can assist with sustainability of the business Be able to calculate the break even price of childcare places across age groups and compare the funding accordingly Personal aims and objectives Change is inevitable, continuous and a process that childcare providers must anticipate and plan for, if they are going to take advantage of opportunities and avert threats to their business.

3 Planning for additional 2 year old places Strategy Structure Staff Leadership Delivery Systems Marketing Financial implications

4 Planning enables a business to: Anticipate challenges Stay on target Be more productive Focus on critical activities Gather needed resources Identify effort and expense Benefits of planning Business planning relies on a consideration of 4 key questions; 1. Where does the business need to be in future? 2. Where is the business focussed now? 3. How do we get from where we are now to where we would like to be in future? 4. What might restrict our progress? The business health check To successfully plan for the future it is essential to identify the current strengths and weaknesses of the business. Accurate information will depend upon honesty and the insight of staff, customers and the market. How does you re your business rate against these business indicators? Where is the business now? Health check Strengths & weaknesses Opportunities & threats Management & information Market research Business planning Financial planning Funding and fundraising Financial management Premises Employment Recruitment Registration Quality Marketing

5 SWOT analysis Use this chart to measure where your business is now. Staff Reputation Finances Occupancy Quality Price Value Systems & procedures Location & access Services Waiting lists Resources & assets Environment Unique Selling point Strengths Weaknesses Specific disadvantage Management & staff Occupancy Fees Finances Marketing Opening hours Services Quality Systems & procedures Environment, resources & assets Reputation New business opening in the area New housing development New services identified Partnerships Training & development Research & policy development Grants Opportunities Increase occupancy and flow through the setting Sustainability through filling open childcare places Raise quality Grants LA support Threats Loss of fee paying places that are entitled Market demand Reputation Political Environmental Legislation Economy Competitors Local business closures School closures Market demand Loss of key staff Positive contribution to children and families

6 Financial documents A cashflow forecast is created to plan business activities for the following year. The document should break down the income and expenditure for each month and this is then reviewed by the management team throughout the year. The business budget is created using the total column of the cashflow forecast. A monthly budget is prepared from the cashflow forecast to analyse how much money was forecast to be spent and received each month. The actual income and expenditure is measured against the forecast to identify any variance. A profit and loss statement is created at the end of the financial year to identify if the business has made a surplus or a loss. Occupancy Occupancy levels in a childcare business are the sales figures used to calculate income and are therefore a direct measure of the finances. To measure the financial success of any business a simple formula is used: Income Expenditure Profit The finances of a setting have an impact on every aspect of the service Calculating occupancy as a percentage: 100 No. of sessions No. of sessions x n = available booked % Full Day Care 0 24 mths mths 3 4 yrs OOSC No. of Children Registered for Sessions available No of sessions booked 9 12 No. of Vacancies (full time equivalent) Occupancy as a percentage (20am/20pm) % (25am/25pm)

7 Staff ratios Balancing the income and expenditure can be a difficult process for a setting that is predicting peaks and troughs of occupancy. Often the process requires detailed analysis of the expenses to inform decisions about where costs can be reduced. As the staff team is usually the biggest cost of a childcare setting, this is one area of the expenditure that can be planned to ensure maximum use of the staff team. Use the information in the table to complete the required staffing levels for each room, for each day of the week and the total number of staff required for the week. 01/02/2009 Mon Tue Wed Thur Fri Total AM PM AM PM AM PM AM PM AM PM Weekly Pink 6 wk - 1 yr Number of staff 1/ Blue 1yr - 2yrs Number of staff 1/3 Green 2-3 yrs Number of staff 1/4 Red 3-5 yrs Number of staff 1/8 Total sessions % occupancy 60.4% 66.7% 53.1% 57.3% 40.6% 55.6% Total No of staff Deploying staff appropriately can be the key to maintaining a positive cash position.

8 Cashflow forecast Complete the balance and cumulative balance to determine the profit or loss for the year. 8 children receive 2 year olds EE and 16 3 year olds receive EE Income April May June July Aug Sept Oct Nov Dec Jan Feb Mar Total Fees 15,496 15,496 15,600 15,128 9,120 10,120 11,700 12,789 14,230 15,200 16,300 15, ,069 2 yr old EE 4,539 3,026 4,888 3,259 3, ,113 3&4 EE , Total 26,624 15,496 23,018 15,128 9,120 22,104 11,700 20,778 14,230 24,616 22,576 15, ,280 Expenditure Wages 8,977 8,977 8,977 8,977 10,234 10,234 10,977 10,977 10,977 11,345 11,345 11, ,342 National Ins ,990 Premises ,400 Utilities ,838 Insurance ,284 Rates ,160 Training Marketing Print & Stationery Telephone Maintenance Materials Toys Food ,725 Milk Accountancy Total 10,845 11,118 10,725 11,265 12,000 12,275 12,960 13,165 12,790 13,702 13,107 13, ,493 Balance 15,779 4,378 12,293 3,863-2,880 9,829-1,260 7,613 1,440 10,914 9,469 2,403 73,841 Cumulative cash balance 15,779 20,157 32,450 36,313 33,433 43,262 42,002 49,615 51,055 61,969 71,483 73,841 73,841 8

9 Income April May June Monthly budget report July forecast July actual July variance Forecast to date Fees 13,496 13,496 14,600 15,128 12, ,720 2 yr EE 4, , ,565 3 & 4 yr EE 6, , , Total 17,996 13,496 14,725 15,128 12, ,345 Actual to date Variance to date Expenditure Wages 8,977 8,977 8,977 8,977 8,977 35,908 35,908 0 National Ins Premises Utilities Insurance Rates Training Marketing Print & Stationery Telephone Maintenance Materials Toys Food Milk Accountancy Total 10,845 11,118 10,745 11,265 11,249 43,953 43,957-4 Balance 7,151 2,378 3,980 3,863 1,096 20,392

10 A simple break even formula The price of any service should be calculated using the expenditure of the business. Hourly break even Step 1 Calculate the weekly costs Yearly expenditure No of weeks open = weekly costs Step 2 Calculate the number of hours No. of hours x No. of children = total no. of hours available Step 3 Break even price Cost per week No. of hours Session break even The cost of the month old provision has been calculated as 1600 a week: work out the break even price for 8 registered places offering 45 hours a week. Break even price Step 1 Calculate the weekly costs Yearly expenditure No of weeks open = weekly costs Step 2 Calculate the number of sessions No. of sessions x No. of children = total no. of sessions available Step 3 Break even price Cost per week No. of sessions The cost of the month old provision has been calculated as 1600 a week: work out the break even price for 8 registered places offering 10 sessions a week. Break even price 10

11 Aim - To create a business plan Objective Information needed Action By Understand current business position Parent opinion gathered by questionnaires - Write questionnaire - Give out to parents - Gather completed questionnaires - analyse information Whom Manager All staff All staff Manager By When Apr 2013 Apr 2013 Apr 2013 May 2013 Create an action plan for next 3 years Market information Use information gathered above to determine what action needs to be taken to move the business forward. - Contact FIS - Internet research - Compile a comparison table Manager Deputy Manager & Deputy Apr 2013 May 2013 May 2013 Manager June

12 Putting it into practice Aim - Objective Information needed Action By Whom By When

13 Useful contacts Business Link Helpline HMRC New Employer Helpline HMRC Employer Helpline Acas Helpline Other sources of support OfSTED Surestart HMRC Daycare Trust National Day Nurseries Association Pre-School Learning Alliance National Children s Bureau Professional Association of Nursery Nurses Office for National Statistics Trade magazines Nursery News Nursery World Nursery Management Today Nursery Education Early Years Educator Childcare Quarterly