How to Calculate Student Turnover Rate for Your Childcare Business

One of the most important financial measures you will want to know for your childcare business is your student turnover rate. Calculating your student turnover rate will allow you to assess the current and projected health of your business and show you whether you need to boost your student retention approach. The following guide will provide an overview of your student turnover rate: what it is, how to calculate it, how turnover rate impacts your financials, and what you can do to improve your student turnover rate.

How to Calculate Student Turnover Rate

Your student turnover rate is the percentage of children who left your daycare program over a certain period of time. It is fairly simple to calculate your student turnover rate. You will need to determine the following information in order to calculate the student turnover rate for your daycare business: the time period you want to look at in which students left your program (such as one month, one quarter, or one year); the average number of students during that time period; and the number of students who left in that time period.

When calculating your student turnover rate, you should use your total student numbers, which will include your full-time and part-time students, not just full-time equivalent students. If you need to figure out the average number of students in the time period you are looking at, you can use this simple formula:

Average Number of Students = (Number of Students on First Day + Number of Students on Last Day)/2  

If you are looking at your student turnover rate for one month, for example, you would input the number of students you had on the first day of the month and the last day of the month.

Once you know the average number of students in your specified timeframe, you can use this figure to calculate your student turnover rate. Here’s the turnover rate formula:

Turnover rate = (Students Who Left/Average Number of Students) x 100

Here is an example: Laura wants to determine the student turnover rate for her daycare for the month of November. She had two students leave her daycare program between November 1st and November 30th. She has an average of 54 students enrolled at her daycare. Laura uses the turnover rate formula to calculate her student turnover rate for November:

Turnover rate = (2/54) x 100

Turnover rate = (0.037) x 100

Laura’s student turnover rate for November = 3.70%

As you can see from the example above, it is relatively straightforward to calculate your student turnover rate. You can use this formula for any timeframe you choose, but the more frequently you keep tabs on your student turnover rate, the more you will have a better pulse on the health of your business.

How Student Turnover Rate Impacts Your Childcare Business

A high student turnover rate can be very costly for your childcare business—a position you don’t want to be in! If your student turnover rate is too high, it not only affects your reputation as a childcare provider in your community, but it also negatively impacts your overall financial well-being. It is much easier and more cost-effective to retain robust enrollment numbers than to constantly put money, time, and effort into attracting new clients to replace the ones you are losing.

Naturally, you will want your student turnover rate to be as low as possible.

Tips for Improving Your Student Turnover Rate

It’s important to focus on practical ways to retain the students you have already enrolled in your program. After all, it’s much easier to keep your current clients happy than to establish relationships with brand new clients. Here are several tips for improving your student turnover rate and retaining great clients:

  • Nurture Client Relationships – One reason parents may pull their child out of a daycare program is because they just don’t feel very connected. You can avoid this problem by being intentional to build those relationships with your current clients. Be sure to engage with parents. Tell them about their child’s day, a milestone they reached, a memory they made—demonstrate you truly care about their child. Reinforce positive interactions with parents among your staff of teachers too. The culture you create at your childcare business has a huge impact on how parents feel about placing their child in your care and whether they will stay.
  • Prioritize Great Communication – Another important factor in retaining your current clients is having excellent communication. Give parents’ a window into their child’s world at daycare and show them all the wonderful aspects of your program. Respond promptly to parent calls and emails. Make yourself available to chat at pick-up and drop-off times as much as possible. Send regular parent newsletters. Use a community bulletin in you center to post important memos. Consider using a more formal communication system, like a parent app. When parents feel like you are approachable and easy to communicate with, you build rapport with them that will give them a great reason to stick around.
  • Establish Client Retention Incentives – Reward your long-term clients for their loyalty! Give your clients a discount when their child reaches a pre-determined milestone at your daycare program. Give a gift card for so many months or years or continued care. Implement a referral program. Get creative to show your current clients that you value them and appreciate their continued loyalty.
  • Assess the Quality of Your Program – Ifyour student turnover rate is alarmingly high, take an honest look at your childcare program through parents’ eyes. When parents drop of their children at your daycare center, is your facility clean, well-organized, and presentable? Are there any glaring safety issues, unpleasant smells, evidence of dirt and grime? Is their child welcomed warmly by attentive, professional teachers? Are you and your staff exuding genuine care for each child and competency for the responsibilities of childcare? If parents do not trust you with the well-being, safety, and care of their precious children, they simply will not stay. Be sure you are offering the highest quality childcare you can, and your student turnover rate will begin to reflect your standards.
  • Know When Issues Are Beyond Your Control – Sometimes you will lose students for reasons beyond your control. A family may move out of the area or their financial circumstances may change. In these cases, knowing that you have done your best to provide excellent care for each child who leaves unexpectedly can help ease your mind about the loss. As far as it depends on you, do your best to help each family who leaves your program to do so on a positive note. You never know whether they may decide to re-enroll in the future or spread the word about your business to family and friends.

Now that you know the importance of a low student turnover rate to the success of your childcare business, you can calculate your own student turnover rate and decide what approach you will take to improve your student retention! The Honest Buck Accounting team is here to help you make decisions that will grow your childcare business and reach your goals. Contact us today to learn how we can help you take your financial strategy to the next level!

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