We have a saying around here at Honest Buck Accounting when it comes to keeping track of the financial health of your business: “You can manage what you measure.” The opposite, of course, is equally true. Childcare business owners who do not measure Key Performance Indicators (KPIs) for their businesses find themselves unable to identify how their business is performing and where improvements need to be made. In the following guide, we define Key Performance Indicators and offer several important KPIs to consider tracking for your Early Childhood Education business.

What is a Key Performance Indicator (KPI)?

A Key Performance Indicator (KPI) is a measurable value that indicates how effectively your childcare business is performing in a specific area. Whereas some financial tools, such as the percentage of costs and the break-even point, evaluate your business’s ability to stay afloat, KPIs are used to evaluate the overall success of your business and are based on data that isn’t generally included on your financial statements. Every industry tracks different KPIs, so what should you be tracking for your childcare business?

Which KPIs Should You Track for Your Childcare Business?

We all process information in different ways. Some of us are linear thinkers, while others of us are abstract thinkers. The most important thing when it comes to KPIs is deciding which metrics matter most to you. Choose three to five KPIs you want to measure for your childcare business, then do it. Here are some common KPIs you may want to consider tracking 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 + 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 from this list, you have a lot of choices when it comes to which KPIs you can measure! Once you pick your top three to five KPIs, you will want to keep track of them on a monthly basis by setting up a financial dashboard for your childcare business.

Why a Financial Dashboard Will Help You Track KPIs

Basically, a financial dashboard is a fiscal management tool that helps you visualize and analyze your business’s KPIs on demand.

Here are a few reasons why you need a financial dashboard:

• It helps you visualize your company’s KPIs with charts, graphs, and other visual aids that are easy to interpret.
• It gives you an overview of all your KPIs to help you make informed decisions and maximize performance.
• It displays financial trends and helps you monitor your fiscal performance over time.
• It helps you figure out your company’s strengths and weaknesses, allowing you to invest your focus where it’s most needed.

Following a few best practices for your childcare business financial dashboard, like deciding your metrics, choosing display options, focusing on key data, and using financial software or working with your CPA, will help you use KPIs to your advantage.

The takeaway here is to decide which Key Performance Indicators are most important to you, track them on a regular basis with your financial dashboard, and use them to keep a pulse on the health of your childcare business.

Need help figuring out which KPIs to track for your Early Childhood Education business 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.