Important KPIs to Track for Your Early Childhood Education Business

At Honest Buck Accounting, we have a saying about the financial health of your business: “You can manage what you measure.” The opposite is equally true. Childcare owners who don’t track the right child care KPI metrics can’t tell how their business is really performing — or where to improve. In the following guide, we define Key Performance Indicators and walk through the most important child care KPI metrics to track for your Early Childhood Education business.

What Is a Child Care KPI?

A Key Performance Indicator (KPI) is a measurable value that shows how effectively your childcare business is performing in a specific area. Some financial tools — such as percentage of costs or break-even point — evaluate your ability to stay afloat. A child care KPI, however, measures overall business success and usually draws on data that doesn’t appear on your financial statements.

Every industry tracks different KPIs. So what should you be tracking for your childcare program? Investopedia offers a helpful primer on KPIs if you want a general refresher before digging into the industry-specific metrics below.

Which Child Care KPI Metrics Should You Track?

First, remember that we all process information differently. Some people are linear thinkers. Others are more abstract. The most important thing is deciding which metrics matter most to you. As a rule of thumb, choose three to five KPIs to measure consistently — then actually do it.

Here are the most common child care KPI metrics worth considering for your Early Childhood Education company:

• Full-Time Equivalency
• Student Turnover Rate
• Student Lifetime Value
• Employee Turnover Rate
• Revenue Per Student
• Revenue Per Classroom
• Cost Per Acquisition
• Average Cost Per Employee
• Average Child-to-Employee Ratio
• Students Dropped Versus Students Added
• Leads to New Student Percentage
• Overtime and Contractor Expenses Per Month
• Unnecessary Expenses Per Month
• Food Grants Versus Food Expenses
• Payroll Expenses as a Percentage of Revenue
• Program Expenses as a Percentage of Revenue

As you can see, you have plenty of options. NAEYC also emphasizes operational effectiveness as a pillar of a sustainable early learning program, which aligns with several of the financial KPIs above. Once you pick your top three to five, track them monthly by setting up a financial dashboard for your business.

Why a Financial Dashboard Is Essential for Child Care KPI Tracking

Simply put, a financial dashboard is a management tool that helps you visualize and analyze your KPIs on demand. The SBA highlights regular financial review as a cornerstone of running a healthy small business — and a dashboard makes that review actually possible.

Key Benefits of a Childcare Financial Dashboard

Here are a few reasons why you need one:

• It helps you visualize your company’s KPIs with charts, graphs, and other easy-to-read visuals.
• It gives you a complete view of every KPI so you can make informed decisions and maximize performance.
• It surfaces financial trends and lets you monitor performance over time.
• It highlights your company’s strengths and weaknesses so you can focus your attention where it matters most.

Best Practices for Your Dashboard

A few best practices go a long way. First, decide which metrics matter. Next, choose display options that make the data easy to read at a glance. Then, focus on your key data — not every possible number. Finally, use quality financial software or partner with your CPA to keep the dashboard accurate and up to date.

Turn Your Child Care KPI Data Into Smarter Decisions

The takeaway is simple. Decide which child care KPI metrics are most important to your business. Track them consistently with a financial dashboard. Then use them to keep a steady pulse on the health of your program.

Need help choosing the right KPIs or setting up a financial dashboard that works for your company? The experts at Honest Buck Accounting can help. Schedule a call to speak with one of our professional accountants. We look forward to hearing from you.