All businesses need to be well managed to be successful and sustainable.
Running a childcare business can have fluctuations that you will need to plan for ongoing. It is important to remain aware of the ongoing financial changes that affect an early years and childcare business such as early years funded entitlement rates, changes to minimum wage and rising costs for rent or hire and insurance premiums. These can all impact your financial forecasting.
We highly recommend you continue to review all your income and expenditure costs to reflect changes to ensure your business remains sustainable. It is important to remain aware of what your breakeven number is when forecasting and planning.
Your breakeven number provides a rough estimate of the number of children needed to meet expenditure. In order to calculate a more precise figure you would need to factor in variables such as staff ratios for different ages and different fee or funding rates.
An example calculation:
- total expenditure for the year ÷ total weeks open = weekly expenditure
- weekly expenditure ÷ hours open per week = hourly expenditure
- hourly expenditure ÷ early years funded entitlement = number of children needed to meet hourly cost
The information below provides help and guidance on some of the key financial issues when running your business.
Invoicing, fees and debt
Financial monitoring
- Financial Planning for Early Years and Childcare Providers course. Visit West Sussex Service for Education and search for 'Financial planning'
- Keeping your pay and tax records
- Cashflow forecast template (including startup costs for new businesses) (Excel, 102KB)
- Cashflow forecast template (Excel, 99KB)
Tax
HM Revenue & Customs (HMRC) provides webinars for employees and employers on topics such as starting a business, employing people, National Insurance, corporation tax and charities.
Redundancy and exit costs
If you decided to close your business, you would need to consider the costs and plan for this. These would include redundancy costs, outstanding payments on premises, professional fees and advance payments from parents.
Where possible, we advise having contingency savings to cover these types of costs. If you are only making redundancies, GOV.UK has a redundancy payment calculator.
For further business and financial support, Early years and childcare providers can request targeted support from the Early Years and Childcare team.