5 Ways to Create More Margin in Your Budget
Could you use more breathing room in your childcare business budget? As we continue our three-part series on how to create more margin in your life as a childcare professional and business owner, we take a look next at your business budget and offer five easy ways to free up money and give yourself more financial margin. Read on to find out more.
1 – Track Your Expenses
One of the most efficient ways to create more margin in your budget is by trimming expenses. As we often say here at Honest Buck Accounting, “You can’t manage what you don’t measure.” That’s why it’s so important for you to track your business expenses on a monthly basis. Take a look at your budget. Where does all the money go throughout a typical month? Reviewing your expenses can tell you a lot about your spending habits, unnecessary expenses, and profit killers.
2 – Reduce Unnecessary Spending
Once you thoroughly evaluate your business expenses, you can take steps to reduce unnecessary spending. For example, are you paying for subscriptions for goods or services you don’t use? Cancel them. Are you paying credit card interest fees, bank fees, and interest? Get in the habit of paying off your business credit cards in full every month and making timely payments to eliminate fees and interest that drain your budget. Are you paying full-time employees for work that can be outsourced or automated? Re-evaluate your staff needs. Look at every expense and see whether it can be eliminated, reduced, or modified.
3 – Raise Your Prices
Another effective way to create more margin in your business budget is to raise your prices. Yes, we understand this is a big move for your childcare business and must be undertaken with forethought. You can check out our guide to raising your prices for your Early Childhood Education center to learn more. However, it stands to reason that raising your prices, especially to account for the rising cost of living and doing business for yourself and your childcare team, is a long-term strategy that can create the financial margin you seek as a business owner.
4 – Charge Late Pick-Up Fees, Late Payment Fees, and Higher Fee Structures for Weekly Payers and Part-Time Attendees
In addition to raising your prices if appropriate, another significant way to create more breathing room in your business budget is to re-evaluate your price structure and compensate yourself for various drains on your childcare budget. For example, you should be charging late pick-up fees, as well as late payment fees, to discourage these habits from families at your early learning program as well as to compensate yourself for the extra time and money spent providing unplanned care and chasing payments. In addition, charge higher rates for weekly payers as well as part-time students, which are typically less profitable for your business than monthly payers and full-time enrolled students.
5 – Automate and Outsource Your Business Operations
In Part 1 of our series on creating more margin in your life, we discuss how automating and outsourcing your business operations can save you valuable time in your work schedule; the same goes for your childcare business budget. Take a look at your current administrative processes. Can any of them be automated with quality digital tools, such as childcare management systems, accounting software, digital storage solutions, and the like? (The answer is usually yes!) Automation can save you money by reserving your staff’s time, talent, and energy for the more specialized tasks for which you hired them.
In addition, you know we are pretty big fans of outsourcing business services to the professionals. Outsourcing can also help you create more margin in your business budget by saving you the payroll expenses that come with employing a full-time or part-time team member to do in-house work that service providers can do for you on a contractual basis. Common professional services to outsource for your childcare business include accounting, marketing, data entry, cleaning, food preparation, and maintenance, and staff recruitment. That’s quite a lot!
Diligence is key when it comes to creating more margin in your childcare business budget. Keeping an eye on your expenses so you can decide which ones can be eliminated, reduced, or modified, raising prices, charging recommended fees, and automating and outsourcing many of your business operations are excellent ways to trim down costs and give your business budget the breathing room you need. Next time, we’ll take a look at five ways you can create more margin on your childcare team.
Honest Buck Accounting provides professional accounting services for Early Childhood Education businesses. Schedule a call with us to speak with one of our experts and learn how we take care of the financial side of your business and free you up to get back to what you love most about it.