Purnima Tanuku
Chief executive, National Day Nurseries Association

The financial situation that this childcare provider reports is not uncommon across the day nursery sector. However, there are ways to improve and strengthen the nursery. The nursery has already responded to parental need with after school and breakfast clubs – why not take this further? Many nurseries now try to help working parents with school pick-ups, dry cleaning and haircuts for children. If demand is high enough this can boost income while keeping that ‘personal touch’.

Annual reviews of fees are one of the key ways to cover costs. While affordability for parents is important, nurseries need to cover outgoings, and with a rising cost base the nursery may perhaps need to make its fees more in line with local competitors – perhaps signposting parents to sources of help such as tax credits and employer childcare vouchers.

To encourage staff retention, it may be necessary to look at enhanced wages for staff, combined with training and development to give the team career goals. It is sometimes possible to get funding for training and cover, and the nursery should contact their local authority for details. It is important to retain staff, both for the benefit of the children and the nursery – there are high hidden costs associated with recruitment.

John Capper
Head of audit and business services at RSM Bentley Jennison

The answers to the challenges faced by Chelmsford YMCA may be found within the wider YMCA organisations so seek help from them as to how to most profitably run childcare provision and whether to diversify into other areas.

For the nursery, a proper analysis of the local market and the competition could be valuable information allied to a survey of parents and potential parents. The aim would be to investigate what could be done to increase usage of the facilities by, say, 30 additional children. A possible answer could be to see whether a decrease of 10%in the fees might result in an increase in usage by 30 children to yield an extra £100,000 of income less any additional staff cost.

A marketing push could also be useful in the form of leaflet drops, encouraging existing nursery users to recommend others to use it or to offer the facilities to the employees of local businesses. Get a volunteer to undertake these tasks together with the parents’ survey mentioned above. Approach local businesses to see if any of their staff are prepared to help as volunteers in professionalising aspects of the nursery business or as a non executive to help focus on the trading business. If the above does not result in more nursery business the extra unused space could be used for another operation.

Neil Atkinson
Senior commercial manager, HSBC

Rowena is facing several issues that affect many businesses, rising costs, pressure upon cash flow and staff retention. The overall plan to diversify to provide more income is worthwhile; however, she should first concentrate upon the childcare business to ensure a long-term sustainable income stream before investing resources into new ventures.

Rising costs are eating into profitability and reserves and as the YMCA is already the cheapest in the market there is scope to increase prices to counter these problems. Although this should only be implemented if a competitive study shows that there is a case. Research into what competitors charge, the facilities they offer and their approach to staff is key.

The business also needs to understand why its youngest staff are leaving and address this issue. If staff are leaving to join other nurseries then a review of the salary scales, paid holiday entitlement, both annual and bank holidays, and training schemes against those of the competition is paramount.

Develop skills which enable younger staff to take a hand in their own development. Individual learning plans will help in this area. Looking towards new opportunities, one of the most powerful activities that any business can undertake is to ask its customers what they want and move to meet their needs.

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