Business Planning
For
Childcare settings offering
2 year old early entitlement
1
Aims and objectives
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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.
Planning for additional 2 year old places
Strategy
Staff
Delivery
Marketing
Structure
Leadership
Systems
Financial
implications
Benefits of planning
Planning enables a business to:
• Anticipate challenges
• Stay on target
• Be more productive
• Focus on critical activities
• Gather needed resources
• Identify effort and expense
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
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
Threats
Political
Environmental
Legislation
Economy
Competitors
Local
business
closures
School
closures
Market
demand
Loss of key
staff
Increase occupancy and
flow through the setting
Loss of fee paying places
that are entitled
Sustainability through filling
open childcare places
Market demand
Reputation
Raise quality
Grants
LA support
Positive contribution to
children and families
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:
Expenditure
Income
Profit
The finances of a setting have an impact on every aspect of the service
Calculating occupancy as a percentage:
÷
100
No. of sessions
available
Full
No. of
Day
Children
Care Registered for
0 – 24
mths
24 –36
mths
3–4
yrs
9
20
25
15
OOSC
Sessions
available
x
n= %
No. of sessions
booked
No of
sessions
booked
No. of
Vacancies
(full time
equivalent)
Occupancy as
a percentage
12
40
(20am/20pm)
50
(25am/25pm)
15
23
8.5
37
6.5
13
74%
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
AM
PM
AM
PM
AM
PM
AM
PM
AM
PM
Total
Weekly
Pink
6 wk - 1 yr
5
4
5
3
5
3
4
4
2
2
37
Number of staff 1/3
2
2
2
1
2
1
2
2
1
1
2
Blue
1yr - 2yrs
8
8
7
9
9
7
9
7
7
6
77
7
7
10
11
7
8
5
6
5
5
71
9
9
11
10
7
7
10
10
5
5
83
30
28
33
31
26
25
28
27
20
19
267
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%
Total
No of staff
Deploying staff appropriately can be the key to
maintaining a positive cash position.
55.6%
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
Fees
2 yr old EE
15,496
4,539
15,496
15,600
3,026
15,128
3&4 EE
6589
0
26,624
0
15,496
4392
0
23,018
0
15,128
8,977
346
8,977
346
8,977
346
Premises
Utilities
450
0
450
458
Insurance
Rates
107
180
Training
Marketing
Print &
Stationery
Telephone
Total
Expenditure
Wages
National Ins
Maintenance
Materials
Toys
Food
Milk
Accountancy
Total
Balance
Cumulative
cash balance
Aug
9,120
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Total
10,120
4,888
11,700
12,789
3,259
14,230
15,200
3,841
16,300
2560
15,890
167,069
22,113
3716
0
22,576
0
15,890
221,280
0
9,120
7096
0
22,104
8,977
346
10,234
414
450
0
450
180
107
180
107
180
0
0
100
50
20
155
32,098
0
0
11,700
4730
0
20,778
0
14,230
5575
0
24,616
10,234
414
10,977
446
10,977
446
10,977
446
11,345
480
11,345
480
11,345
480
123,342
4,990
450
0
450
180
450
0
450
240
450
0
450
390
450
0
450
390
5,400
1,838
107
180
107
180
107
180
107
180
107
180
107
180
107
180
107
180
107
180
1,284
2,160
0
100
100
150
0
150
100
150
0
150
200
100
100
00
100
0
100
0
0
0
800
850
20
0
20
0
20
155
100
0
25
0
30
155
100
0
30
0
30
155
35
0
35
0
465
620
15
35
0
35
20
35
30
35
30
35
20
35
20
35
20
35
50
70
30
35
30
35
25
35
290
455
150
360
0
350
0
360
150
340
0
275
0
275
100
290
0
290
0
275
100
275
0
310
0
325
500
3,725
50
0
10,845
45
0
11,118
50
80
10,725
45
0
11,265
25
0
12,000
25
80
12,275
20
0
12,960
20
0
13,165
25
80
12,790
25
0
13,702
35
0
13,107
35
80
13,487
400
320
147,493
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
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
Monthly budget report
Income
Fees
2 yr EE
3 & 4 yr EE
April
Total
Expenditure
Wages
National Ins
Premises
Utilities
Insurance
Rates
Training
Marketing
Print & Stationery
Telephone
Maintenance
Materials
Toys
Food
Milk
Accountancy
Total
Balance
May
July
forecast
June
0
0
0
0
17,996
13,496
14,725
15,128
July actual
12,345
0
0
0
12,345
8,977
8,977
8,977
8,977
8,977
346
346
346
346
346
450
450
450
450
450
0
458
0
180
180
107
107
107
107
107
180
180
180
180
180
13,496
13,496
14,600
15,128
4,539
0
3,026
0
6,589
0
4,392
0
July
variance
-2783
0
0
0
-2783
Forecast
to date
61,720
7,565
10,981
0
64,345
Actual
to date
35,908
1384
1800
638
428
720
220
450
100
310
65
165
150
1344
195
80
43,957
20
20
40
20
20
155
0
0
155
155
15
0
20
30
30
35
35
35
35
60
50
0
0
150
100
360
300
360
340
324
50
45
50
45
50
0
10,845
0
11,118
80
10,745
0
11,265
11,249
35,908
1384
1800
638
428
720
200
300
80
310
65
140
300
1410
190
80
43,953
7,151
2,378
3,980
3,863
1,096
20,392
0
100
0
100
120
100
100
100
150
150
0
Variance
to date
0
0
0
0
0
0
-20
-150
-20
0
0
-25
150
66
-5
0
-4
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 24 – 36 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 24 – 36 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
Aim - To create a business plan
Objective
Information needed
Understand current
business position
Parent opinion gathered by
questionnaires
Market information
Create an action plan for
next 3 years
Use information gathered
above to determine what
action needs to be taken to
move the business forward.
Action
By
Whom
By When
- Write
questionnaire
- Give out to
parents
- Gather
completed
questionnaires
- analyse
information
Manager
Apr 2013
All staff
Apr 2013
All staff
Apr 2013
Manager
May 2013
- Contact FIS
- Internet
research
- Compile a
comparison
table
Manager
Deputy
Apr 2013
May 2013
Manager
& Deputy
May 2013
Manager
June 2013
1
Putting it into practice
Aim Objective
Information needed
Action
By
Whom
By When
Useful contacts
Business Link Helpline - 0845 600 9 006
HMRC New Employer Helpline - 0845 60 70 143
HMRC Employer Helpline - 08457 143 143
Acas Helpline - 08457 47 47 47
Other sources of support
OfSTED – www.ofsted.gov.uk
Surestart – www.surestart.gov.uk
HMRC – www.hmrc.gov.uk
Daycare Trust – www.daycaretrust.org.uk
National Day Nurseries Association – www.ndna.org.uk
Pre-School Learning Alliance – www.pla.org.uk
National Children’s Bureau – www.ncb.org.uk
Professional Association of Nursery Nurses – www.pat.org.uk
Office for National Statistics – www.statistics.gov.uk
Trade magazines
Nursery News - 01484 541641
Nursery World – 01454 642280
Nursery Management Today – 0171 720 2108
Nursery Education – 01926 816250
Early Years Educator – 0800 137201
Childcare Quarterly – 0207 512 2112
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