If you are planning a significant financial move for your childcare business, you may be eager to act as soon as possible. However, your business will greatly benefit if you first make the time and effort to get a few ducks in a row. In the following guide, learn what important things you should do first before you make any major financial moves for your company.
Check Your Profitability Markers
When was the last time you calculated the full-time equivalency ratio, student turnover rate, and student lifetime value for your childcare business? If it has been a while, or you’ve never done so, take some time to figure out these numbers before you make any drastic financial decisions. These profitability markers help you determine whether your childcare program is operating at its full potential or whether you may need to make some changes. Knowing this information before you make any big moves, such as buying another daycare center or undergoing a major addition to your building, will help you get an accurate picture of how things are going.
Review Your Company’s Financial Statements
How much do you know about the current state of your childcare business’s finances? You should be reviewing your balance sheet, income statements, and cash flow statements on a regular basis, monthly at a minimum. Do the numbers make sense for you to be planning a big financial move?
Consider Your Savings and Emergency Fund
How much money do you have in your business savings and emergency funds? Ideally, you have been setting aside a portion of each month’s budget for unplanned expenses and emergencies, as well as planned business moves like the one you are about to make. If you have neglected your savings and emergency funds, consider how a big financial move might impact your childcare company if things don’t go as well as you had hoped, take more time than you thought, or are accompanied by other challenges that arise. You will want to think about beefing up these funds before you proceed with big plans, just in case.
Evaluate Your Current Expenses and Debts
What story do your current spending habits tell? Are you operating within your monthly budget and spending within your means? Are you able to pay off your business credit cards every month without carrying a balance? What current debts do you carry, such as a mortgage, business loan, and so on? Evaluate your current expenses and debts to determine if the big business move you’re planning can be supported by your spending patterns now.
Meet with Your Accountant
You can take care of all the items we have discussed in this guide by meeting with your accountant before a big financial move. That’s why our number-one tip is to meet with your accountant to discuss your business plans in detail before you carry them out. Here at Honest Buck Accounting, we encourage our clients to get in touch with us before they make any significant financial decision, from opening a new center to making a capital investment. This way, we can go over all of the items we’ve mentioned above together. We can also review the tax implications of your financial move and do some forecasting to see how things will play out on paper if you do go through with your big move. Knowledge is power, and our clients understand the value of gaining a professional accountant’s insight so they can make financial decisions with eyes wide open.
Are you planning a significant financial move for your childcare company? Schedule a call with us today. Together, we can make a plan that sets your business up for financial success.