The COVID-19 crisis came in as an unprecedented event and many took a hit to their income. As a successful childcare center, you value financial stability – the very foundation of your income. During the pandemic, creating a plan to maintain your operations is crucial. And while you may face challenges along the way, taking the right steps for your organization helps you make it through this crisis.
Part of a good plan includes robust accounting for your childcare center, as well as solid business practices that keep your business afloat and thriving – now and in the long-term. We may not know what is coming next in this new landscape, yet these steps allow you to forge ahead with confidence in the viability of your childcare center.
Financial Wisdom for Childcare Centers
As a childcare center provider, you have the opportunity to take action to safeguard your financial health in the midst of COVID-19. You don’t have to feel vulnerable or that things are beyond your control. Instead, take a hard look at the numbers and make positive changes that reflect moving forward successfully.
Proactive Financial Insight
The first thing to do is look at the situation. It may seem a bit scary but it doesn’t have to be. Almost every other business is facing the same obstacles and challenges but by evaluating your situation, this often makes the difference in who can survive an economic downturn. The good thing is that taking a proactive approach takes nothing but a little foresight, time, and thoughtfulness.
Consider the following:
- Update your budget and your forecast
- Update your cash flow projections
Since these forecasts and projections may differ from before COVID-19, you will be prepared. Keep in mind it is important to adjust your budget each month as you phase into reopening. Update your 30-day cash flow projections on a weekly basis and review your financial situation on a week by week basis. Do what you can to resolve any issues you see, such as trimming extraneous costs during a period of low revenue.
Take Control of Expenses
Of course your expenses are a crucial factor to your financial soundness. One of the areas you can control is by cutting back on extra costs in order to change your financial health.
Start with an overall assessment of where your money goes. Remove or cut back on what you don’t need and assess whether you can spend less on essentials. Here are just a few ways you can potentially save:
- Reduce electricity usage by turning off unnecessary lights and power
- Reduce credit card costs by negotiating with lenders for lower interest rates
- Change suppliers for childcare center supplies, from brand names to generic
- Bring outsourced services like cleaning in-house
While these are just suggestions, they’re ideas that make you think, and may lead to other ideas you have to save money. Often, there are less expensive ways to do the same thing and you can reduce costs. Not only does this help you have a healthier financial outlook but it doesn’t sacrifice the the safety of your staff and clients. It also allows you to maintain a positive experience for the children in your care.
Build Community Alliances
While others in the same industry are normally your competition, during this time they may become some of your best allies. Those in your industry can even help you reduce costs. Here are some ways to use community alliances to cut your expenses:
- Share administrative staff time
- Buy supplies in bulk, such as personal protective equipment, food, and cleaning supplies
- Share subscriptions and memberships, such as to children’s games and other technology
Working together, you can find ways to keep your mutual budgets in check.
Exercise Sound Cash Management
This is an opportune time to preserve as much of your cash as possible. While there are many reasons why this is important any time, it is even more important now. Set a goal to set aside 10 percent of your revenue. If this is too much to reserve and keep up with your expenses, put away all of your profit on a weekly or monthly basis to make it easier to follow.
This money is there for you when you need it most and is perfect to fall back on when times aren’t quite as lucrative as you’re used to. It can make the difference in keeping the doors open and running your business as normal as possible. To make sure you don’t use it unnecessarily, open a new savings account and take the following steps:
- Don’t get a debit card or checks for this account
- Don’t use the account to pay normal bills, such as your credit card or utilities
Online banks are a great option to earn a higher interest rate on your deposit and limit your daily access to your sacred savings. And some even offer incentives for new account holders, which gives you a little extra on top of your own deposits.
Manage Your Tax Liability
One thing to keep in mind is to not put off paying taxes. It may seem like a smart idea at the time but eventually you have to pay. Instead of owing it all at once in the future, make your normal tax payments and keep the bill lower.
The good news is that you don’t need to figure out your tax strategy alone. Talk to a CPA — it’s their job to safeguard your business interests.
Review Your Goals
Now is the time when you can look at your past financial goals and review your childcare center’s finances. There are a number of things you can assess right now that won’t cause a lot of headache. For instance:
- Reviewing insurance policies
- Reviewing bank fees
- Looking at lease costs and other factors that you may want to renegotiate in the future.
Another good idea when it comes to goals is to look at your five-year plan for building your center. Yes, there are challenges right now but this is the perfect time to forecast for a time of growth and it will certainly give you hope into what the future offers.
Remember when it comes to your finances, you want to work towards long-term stability. There are always challenges, but with a few practical steps, you can stay on track.
Operational Strategies for Childcare Centers
The other facet of building your center is attending to your operations in light of COVID-19. Reach out to your clients, support your team members, and stay abreast of changing needs in your community. This is an ideal time to form a bond with people affiliated with your center and come together during difficult times.
Establish Regular Communications
Parents and students are the heart of your business and they want to be informed. Be sure to reach out with newsletters of how you are managing through COVID-19. Develop interactive relationships with your childcare center customers through social media and direct email. Ask for feedback and suggestions of what your clients want in this difficult time. Answer their concerns, such as how your center is safe for children and the steps you are taking to keep everyone healthy.
Create a Business Continuity Plan
A business continuity plan is a strategy to keep your business going in times of crisis. Always have a continuity plan for any unforeseen disruption. This could mean a fire, flood, or even a second wave of the pandemic. At a minimum, include the following:
- Identify critical functions
- Determine for how long those functions could be down
- Develop a plan to keep the business going
In a childcare center, you can develop plans for things like how you’ll keep going in the event most of your staff are out sick, or if a public health order limits the number of children you can have at the center at a particular time.
Develop a Safety Protocol
Fortunately, local authorities give guidance on safe operations during COVID-19. Follow these protocols and adapt them to your childcare center. These protocols will not only satisfy your legal requirements, but help your business function smoothly. You can make your safety protocols available to parents and caregivers, so they feel comfortable leaving their children in your care.
Make Employees Feel Safe
As much as your clients must feel secure with your childcare center, your employees should feel safe as well. Ensure open communication with your staff about the current situation. Keep revisiting the health and safety protocols to make sure they are working for everyone.
In addition to physical health, COVID-19 and its aftermath can also affect mental health. Make emotional support available to employees. That can be as simple as gathering a list of free resources available in your community, or having a private, ad hoc group where people can talk among themselves.
Your Childcare Center Business Can Thrive Post COVID-19
COVID-19 is an unprecedented experience for childcare centers.While the long-term effects remain to be seen, you have the ability to ensure your business stays afloat. Simply create a strategy the helps you thrive by checking the numbers, forging partnerships, and making strategic plans.