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Business Issues

Every center needs to pay close attention to the business of child care, even if the center is run as a nonprofit. Good management is essential to maintaining the center's viability over time and continuing to offer quality care.

 

Budget

Your choice of legal structure (e.g., nonprofit, religious affiliation; for-profit business) will affect your total budget and the way the center is run, so it is important to consider this carefully before starting your center. Seek legal advice as you make these important business decisions. No aspect of managing your child care program will be more important than tracking your budget.

You'll need one type of budget for your start-up operations, and another once your center is up and running.

Start-up Budget
A start-up budget will help you to plan and project the expenses and income for your center's initial months of operation, and should include:

  • One-time capital expenses, such as installed playground equipment, furniture, indoor equipment and materials, computers, kitchen supplies, etc.
  • Renovations to make the space suitable for child care and to meet all licensing regulations
  • Legal fees, licenses, and permits
  • Rent deposit and insurance
  • Marketing and advertising costs
  • Staff time before the center opens for business
  • Cash to cover start-up expenses, food, and supplies for the first three months

Operating Budget
After you establish a start-up budget, you will want to create an operating budget for running the center. Personnel costs (salaries and benefits) for a high quality center are usually 75 to 85% of the total budget.

Keeping control of your budget requires accurate record-keeping. Some centers (especially centers receiving grants) have an annual audit completed by an accountant.

If your center has a governing Board, you may have a treasurer. You may also hire a part-time bookkeeper or accountant to balance the center's books, pay outstanding invoices, bill parents, cut payroll checks, submit paperwork, and file payroll withholding and other taxes.

Important elements to track:

  • Attendance and enrollment records, including part-time and full time enrollment, and fees to be charged for each family
  • Income records: parent fees, outside donations, grants, government subsidy payments, etc.
  • Petty cash fund · Receipts for all expenses
  • All payables, including insurance, rent or mortgage, utilities, capital expenses, furniture, office equipment, classroom equipment, supplies
  • Payroll, including tax withholding, Canada Pension Plan, worker's compensation, and other payroll expenses
  • Tax statements and records
  • Bank statements, loan statements
  • Financial reports made to parents (for nonprofits) and to the Board, and/or to owners/shareholders (if applicable)

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Staffing

The ability to hire and retain excellent staff -- with appropriate education and experience, who enjoy working with young children and are dedicated to their well-being -- is a vital part of running a quality child care program.

Managers who know how to praise sincerely, encourage and motivate their staff, and deal with problems quickly, directly, and respectfully, can build a strong and dedicated staff.

Staff Roles and Responsibilities
The Director should have training and experience in early childhood education, a knowledge of child development, and the ability to manage all aspects of the center.

While minimum educational requirements for teachers and directors are determined by provincial regulations, additional requirements are determined by your preferences and goals for the center.

The Director's Role:

  • Hire and supervise all staff members
  • Keep all records and reports, including financial, personnel, medical, individual child and family files
  • Purchase supplies and equipment
  • Communicate with parents, and serve as facilitator between staff and parents
  • Organize and delegate tasks in the center on a daily basis
  • Involve the community in the center; serve as the liaison to the community
  • Work with teachers on developing curriculum (if there is not an Educational Coordinator)
  • Facilitate staff, parent, and Board meetings, and center-wide events · Plan for staff development and training
  • Oversee compliance with all licensing regulations

The Staff's Role:

  • Provide a nurturing, secure environment for children
  • Communicate with parents daily, and prepare for and participate in parent meetings
  • Create and implement curriculum and daily activities for children
  • Maintain records of each child's development and progress
  • Attend staff meetings
  • Participate in ongoing professional training and development

To work in a child care centre, staff must have a current Early Childhood Eduation Certificate.For Infant/Toddler programs a post-basic Infant/Toddler certificate may also be required. For more information contact OUC or a licensing officer. For more information contact the Early Childhood Education Department at Okanagan College (762-5445).

The Selection Process should be conducted by the director ;Involvement of parents and members of the governing Board should be an option. Notes for the personnel file should be kept at every stage of the screening and interviewing process, which should include a phone screening interview, a candidate's visit at the center, a personal interview, and a reference check. As an employer, you will need to be familiar with the provicial laws regarding equal opportunity, affirmative action, and sexual harassment.

Salary and benefits offered to candidates should be based on several factors, including community norms for this type of position, minimum wage requirements, your center's financial resources, the local demand for qualified personnel, and the candidate's qualifications.

Additional benefits you may offer include dental coverage, flex-time arrangements, retirement program, Employee disability insurance, paid or unpaid leaves, and a child care discount.

Good staff management and supervision will help your center attract and retain talented teachers and other staff, and includes setting clear expectations and goals for your staff, both individually and as a team. In addition, plan for regular observation, feedback, and evaluation of your staff.

It is sound business practice to have written personnel policies for all of your staff. You may wish to have written job descriptions as well. Most employers will have an introductory period of three to six months, to determine if the employee is a good fit for the job.

Staff retention can be a serious problem in the child care field, due to relatively low pay-scales and staff "burn out" from often stressful work. Frequent turnover disrupts children's ability to form strong attachments to their caregivers, and has a negative effect on program quality, whereas a stable teaching team allows children (and their families) to feel secure.

It behoves the center's manager to encourage long-term retention of good staff by practicing the 3 R's:

Raises to affirm that your staff are valued professionals; Recognition, both official and spontaneous, for the good work they do; and new Responsibilities, to allow your staff to learn new skills.

Annual reviews should be a formal part of your staff management program. It is a time to go over progress, goals achieved during the past year, any training or educational achievements, and other contributions the staff person has made to the center.

The employee should understand the criteria for review and know, in general, how he is performing. There should be no surprises in an annual review. If your center's raises are merit-driven, note on each review the raise's dollar or percentage amount, and how it was determined.

A written evaluation should be given to the employee, and the employee should have a chance to respond and add to the evaluation.

Training and Development opportunities should be provided to staff on a regular basis. Staff should receive both in-service trainings and have the opportunity to attend outside trainings and conferences (e.g., Early Childhood Development; Communicating with Parents; Cultural Diversity; CPR).

If termination of a staff member is necessary, be sure you have kept all records of proof of poor performance (e.g., annual written evaluations) or misconduct (e.g., statements by eyewitnesses) in a secure file. If you need to follow up a termination with a criminal prosecution, this proof will be vitally important.

Many employers offer employees the option of resigning rather than suffer the humiliation of being fired. Depending on how your center is governed, you may need to obtain approval from your board or parent members before terminating any employee.

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Insurance

Insurance coverage is essential to starting and running a child care program. Check with your own insurance agent to be sure your center has ample coverage.

Below are some types of insurance you may need to obtain.

  • Liability Insurance -- to cover negligence that may occur on your premises, and vehicle negligence for both center-owned and non-center-owned vehicles; could include coverage for discrimination suits
  • Bonding -- covers any employees who may be dealing with money, and protects the center from theft
  • Fire Insurance -- for the building, equipment, and supplies you own

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Income

The primary source of income for many centers is the fees that parents pay for child care. The fee amounts will be determined in great part by the funding your center receives.

Many centers do not reach full enrollment until the end of the first year of operation, so it is important to take into account lost revenue during this period. Also, it is important to plan for lost revenue during the time after one child leaves the center and another child is enrolled.

Most centers plan on an 85 to 90% utilization rate and calculate fees accordingly. After you've estimated monthly costs to run the center, you can calculate what you'll need to charge for each child to cover costs.

The teacher-to-child ratio is generally much higher for infants and toddlers than older children, so infant and toddler fees are usually significantly more expensive than preschool and pre-K fees.

Your center's fees should reflect realistic expenses, and should be in alignment with the fees charged by other centers of similar size and quality in your community. Many centers collect fees on a monthly basis, and may charge late fees for tuition paid past the deadline.

Some centers bill parents in installments over the course of the year. Your center should publish and follow a consistent policy on fees and payments. Set a schedule for payment (weekly, monthly, or annual tuition installments).

Child care fees vary; some centers operate with a sliding fee scale based on family size and income, while others depend on parents to pay a set fee, regardless of income. Many centers give a sibling discount for families enrolling two or more children.

Track fee collection accurately, including late payment fines or other supplementary fees, and give parents a regular accounting of fees due and fees paid.

Your bookkeeper or accountant should reconcile the center's income on a regular basis to make income reporting and tax payments (if applicable) in a timely manner. Government grants may also be avaialable.

Contact the Child Care Resource & Referral Program for information on active grants.

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Costs and Expenses

The center's annual expenses will include:

  • Staff salaries and benefits
  • Payroll taxes (federal, provincial)
  • Rent or mortgage
  • Utility costs, including heating and cooling, electricity, telephone, and hot water
  • Building repairs and maintenance
  • Educational supplies and equipment
  • Food and kitchen supplies
  • Staff training and development
  • Advertising and marketing costs
  • Insurance
  • Cleaning
  • Office supplies
  • Other: legal fees, transportation, professional memberships

Buying materials and supplies in bulk can greatly reduce costs. Some centers may form "buying co-ops" to order supplies together. Many centers control costs by requesting materials through donations, and by purchasing items second-hand (making sure they are in good, safe condition, and are not unsafe products that have been recalled.

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Marketing

Good news travels fast, but when you first start up or during certain times of the year, you may find that your center is under-enrolled. Filling one or two empty slots can be as simple as asking parents to spread the word. If you have many empty slots, however, or if your center is new in the community, you may need a marketing campaign to attract new families.

We refer parents to child care providers. Be sure to notify us whenever you expect to have openings in your program.

Word of Mouth
If you have openings coming up in your program, tell the parents in your center and host an open house for prospective parents. Use your own professional networks and contact other centers to spread the word.

Print Advertising and Publicity
Local newspapers often offer reasonable ads at low cost, particularly for nonprofit organizations. You may wish to advertise "Quality Child Care for [ages]" in the Classifieds of your town's newspaper, in the local Yellow Pages, and in local newsletters.

Make your ad stand out, and give concise, specific information about your program. Flyers or brochures can be made inexpensively and posted where parents are most likely to see them (e.g., grocery stores, laundromats, children's bookstores, and toy stores).

Other good places are colleges and universities, hospitals, and office buildings with public bulletin boards. Make your flyers simple and cheerful, with tear-offs at the bottom with your center's name and telephone number.

Radio is often above the budget of child care centers. Some radio stations may offer "public service announcements" at no cost for nonprofits. If you have a lavish budget and many openings, radio ads during morning and evening commute times can reach working parents.

Online Marketing
Be sure that we have all of your current information, including available slots for children in your program. We reach many online parents and can refer parents to your center when you have appropriate openings.

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