Back to blog listing

Next article

Maximise income, minimise expenditure

Balancing the books as a childminder is likely to involve a combination of reducing costs and increasing income. In this blog I’m going to focus on some of the steps that you could take to help maximise your income.

Maximise occupancy

Occupancy is simply when your places are filled. Start by mapping out your occupancy over the course of a week to identify periods when you’re not full. Then map it out over the course of a year so you can see the seasonal peaks and troughs. You can then use this information to plan some marketing to attract new customers, particularly to fill those quieter times.

Levels of income

Depending on the range of children you care for, you will receive varying amounts of income and profit. Getting the balance right between funded hours and paid for hours is essential, and between different age groups of children (e.g. 0-2s, 3-4s, older after-school children). Consider how each new child that you decide to take will impact on this overall pattern.

Minimise losses

Childminders can experience problems if parents pay late or, worse still, run up debts and then disappear. Here are some tips:

  • Get yourself into the right frame of mind. Childminders often don’t act quickly enough on late payments. This could be because professional boundaries may not be in place, particularly if caring for a friend’s children. They may be nervous about upsetting parents and, naturally, want to put the child’s interests first. Unfortunately, however, this can mean they get taken advantage of. It sometimes helps to use an analogy: you wouldn’t go into a café, eat your meal and then, when the bill comes, say “sorry, I’ve got no money. I’ll pop back and pay you next week”. Work on developing assertiveness skills so that you won’t allow people to treat you like this. Put simply, it jeopardises your business, your livelihood and valuable provision for the children.
  • Have the right policies from day one. Contracts are essential and should include details of what fees are due and when they must be paid – help make it easy for parents to pay you by introducing mechanisms such as standing orders.
  • A late payment policy is also useful, stating the steps that will be taken if a payment is late. Include charging them interest and administration fees - you’re entitled to!

It’s easier to tackle a challenging situation if you have an established process to follow that sets out what you will do as soon as a payment becomes overdue. This should include:

  • Checking on a weekly basis for overdue fees
  • An immediate informal but assertive chat with the parent
  • Template letters that just need the parent’s personal details to be inserted.

Follow your process, regardless of the situation. As soon as you start making exceptions, you’re on a slippery slope. Assertive conversations with parents are tough but essential.

If your process fails to resolve the situation, be prepared to escalate it with a solicitor’s letter, or taking them to the small claims court. Often these actions (or the threat of them) can resolve the problem. Any costs incurred become a part of the debt owed to you. Remember that PACEY members have access to legal support to help with situations just like this.

Increase your fees

An obvious ways to increase income is to increase your fees. Childminders are sometimes reluctant to do this because they fear losing parents. Take reassurance from other childminders, however. Anyone who has increased their fees will tell you that it simply doesn’t happen. Here are a few tips:

  • Begin with a thorough financial analysis. Calculate how much it costs you to provide an hour of childcare (what we call your break-even point) remembering to consider how this varies depending on the age of each child.
  • Make sure that you charge enough to cover your costs and generate a profit. Rising costs are a fact of life. Think about which of your fixed costs are likely to increase next year – will your rent increase? Will food prices go up? What about utility costs? Make it clear to parents from day one that covering your costs in order to remain sustainable determines how you set your fees. You are running a business – don’t feel the need to constantly provide a justification for future increases.
  • Give sufficient notice so that families can budget for increases. If parents work in jobs where their pay is reviewed annually in April, applying a fee increase in April may make it feel less of a burden.
  • When you tell parents about a forthcoming fee increase, do it in an assertive and business-like manner. Explain why it is necessary i.e. to cover increased costs, but don’t apologise. Your utility company doesn’t apologise for increasing their prices - neither should you.

Charge for extras

Every time you add something new - a service or resource, for example, cost it out and think about how you can cover that cost. Where you provide care for children for funded hours only, make sure you fully understand how to word your contract so that charges for extras are optional for those parents. Some examples of additional services that you could charge for include:

  • Baby wipes and nappies
  • Sun cream
  • Meals, snacks and drinks
  • Trips and visits
  • Extra classes and activities
  • Late collection

Other ideas that you might want to consider offering include:

  • On-call service for school age children
  • Parenting classes
  • Allowing parents to leave their car on your drive during the day
  • Photobooks of learning journeys
  • Uniform or t-shirts
  • A take away breakfast for busy parents

Early Years Pupil Premium (EYPP) (England only)

Encourage parents to check their eligibility for EYPP as this can bring in valuable additional funding. Let them know how this enables you to provide additional support for their child.

So a summary of next steps:

  • Have the right policies and processes in place from day one
  • Be business-minded
  • Be prepared to speak assertively to parents
  • Do your sums so you understand your income and costs
  • Think creatively about charging for additional services.

About the author

Jacqui Burke established Flourishing People in 2001 and specialises in supporting the growth and development of early years businesses including childminders, creating a business environment where practitioners and children can flourish. She delivers business, leadership and management skills training designed to build the competence and confidence of setting owners and managers who need to become as competent in managing the business aspects of their setting as they are in managing the quality of childcare. Jacqui is also the author of Building Your Early Years Business.

Comments
Blog post currently doesn't have any comments.
 Security code