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Making a success of your small business

From managing cash flow to market research; from business planning to personal resilience, PACEY asks Jon Hopper (pictured right), Commercial Director for Retail Business Banking at Lloyds Bank, for advice to help childminders ensure that their small businesses flourish.

Making a plan

‘Having a passion for childminding doesn’t necessarily bring with it a head for business, and that’s where business planning can be useful,’ says Jon.

Whether you started out with a business plan or are writing one for the first time, this is one of the best ways to help get into the mindset of a small business owner.

A business plan has the ability to quickly highlight any issues in your planning and allows you to make your mistakes on paper, rather than in your business.

Whether it’s a one or two-page document or something more in depth, the idea is to ‘focus on what’s important to the success of the business,’ he explains. That includes setting out ‘what you want to achieve,’ and importantly doing your market research.

‘Find out what people are doing in your local area,’ he adds. ‘How many providers there are, how parents find childminders in the area, and how you can tap into that.’

Understanding cashflow

Fundamental to any business success is a ‘deep understanding of the economics’, he adds – each component of cost, and each component of income – and their timings.

Jon says: ‘One of the potential problem areas for small businesses, especially those starting out, is cash flow. It’s vitally important in the childcare sector to have a robust payment policy to avoid issues like late payment.

‘Often small business owners don’t think of their own time as a true cost to the business – and consider themselves last once everything else has worked through. Thinking of yourself in terms of a ‘per hour’ charge may help you think differently about your business.

‘The other thing for childcare businesses, in particular, is to plan for a slow start. It takes time to build up regular customers and establish a good reputation. You need to be realistic about how patient you need to be.’

Let it grow

There are many opportunities open to childminders to think about if they are interested in growing their businesses. Growth doesn’t only mean taking on more staff or expanding your premises – it might just mean working in a different way or stretching your services, for example, by running a breakfast or after school club. If you’re thinking of growing your business, Jon advises: ‘It might sound counter-intuitive but you need to be mindful of the speed of growth. It’s great if you are thinking of growing, but if you do this too fast, you could find you’re stretching resources, having an impact on quality and then reputation. Grow too slow and you risk either standing still or find yourself carrying additional costs before you get that additional revenue flow.’

And even once a business is up and running, there is no time to rest on your laurels. ‘You need to be restless in terms of regularly reviewing how the business is doing,’ adds Jon. That might mean refreshing plans, keeping an eye on where the money goes, and staying abreast of what customers want, what competitors are offering, and if regulation is changing.

‘Consider seasonality too, and be prepared to be flexible during those periods,’ he adds. ‘This might mean doing things differently, like offering a holiday club during the summer holidays for instance. And recognise that the good times are good times – make sure you are setting something aside for the leaner times in the year.’

And even if times do get tough – keep at it. Says Jon: ‘The best bit of advice I give to small businesses is what my son’s karate sensei told him when he was seven. His sensei said ‘a black belt is just a white belt who didn’t give up.’ It was at a time when he was about to quit. He’s 18 now and a 2nd dan black belt.’

‘Personal resilience is such an important characteristic for small businesses; facing challenges, reacting when situations change and changing course when required.’

The right tools

There are a myriad of digital tools and resources to help early years businesses, from digital learning journeys and accounting and invoicing packages, to website development tools.

‘For a childminder, I think it’s about being clear about what you need rather than trying to be oversophisticated about it. A lot of small businesses just use Microsoft Excel,’ adds Jon.

‘You shouldn’t allow tools to replace understanding. A tool isn’t going to give you a business plan, although it might help you structure it. A tool isn’t going to give you an understanding of the economics of your business, though it might be really useful to control it.’

Get networking

And, finally, taking yourself seriously as a business owner can also mean taking your place among business leaders in your community, as well as among your early year’s peers.

Jon urges childminders to take advantage of the supportive network small businesses tend to create around them.

‘I would really encourage people to tap into that local community,’ he adds. ‘It’s about learning from people like you, who may approach their business in a different way.’

‘Small business owners are all individuals following a passion or a dream – childminders among them. For me, they are the unsung heroes of the British economy.’

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