Barnsley Early Start and Family Services
Funding
Most new businesses need some sort of funding when starting up, although sometimes they are self funded by the owner. The amount of funding and length of time you'll need funding support for will depend on your speed of growth and how well your business is managed. Where businesses need external funds it's necessary for them to plan well and develop a funding strategy.
Funding can be from private finance (investment by the owner, friends, family, private investors and business loans) or public (government funds to meet new initiatives, or funding provided by charities).
There are many opportunities for not-for-profit organisations to get grants and funding from a range of sources. The South Yorkshire Funding Advice Bureau (SYFAB) is a useful place to start - providing help, advice and training for fundraisers.
Finance
For your childcare business to be successful you'll need to plan your finances. Knowing your costs will enable you to plan your fee structure.
You'll need to consider all of the costs below.
Staffing
Unless you're a sole trader, staffing is likely to be your biggest cost. You'll need to include things such as:
- wages
- National Insurance contributions
- pension contributions
- holiday pay
- sick pay
Premises
These costs will include your rent or mortgage, business rates, utilities and security maintenance.
Insurance
If you employ staff you'll need to have employer's liability insurance, and all registered childcare businesses must have public liability insurance. You may also want to take out insurance for equipment, children's personal belongings, personal accidents for employees and children, plus others.
Administration
This includes things such as telephones, postage and website maintenance, but also Ofsted registration fees.
Activity and materials
Consumables should be included here but not large pieces of equipment and furniture. Include costs for visits and outings, entertainers and stationery.
Marketing
The advertising of your business, and the costs of designing and printing brochures and leaflets.
Volunteers
Providers other than childminders must obtain an enhanced disclosure and barring service (DBS) check for every person aged 16 and over who work on the premises on which the childcare is provided while children are present. Therefore you need to include the cost of recruiting and checking suitability, as well as training, any volunteers.
Transport
All transport costs need to be itemised, including any mileage payments to staff for training. Vehicle maintenance, tax, MOT, insurance and licences for transporting children also needs to be detailed here.
Capital costs
Capital purchases when you're starting-up can be large and are normally for the purchase or refurbishment of premises and for the purchase of large equipment. You need to make sure you include the depreciation of equipment as part of financial planning so that over the lifetime of the piece of equipment enough money has been set aside to buy a replacement when needed. You can find out more about capital allowances and depreciation.
For more information on funding and finance
Call us on 0800 034 5340 or
Setting your fee structure
The fees you charge for childcare in your setting can have a big effect on take up of your service. If your prices are too high it can reduce sales, whilst undercharging can affect your sustainability.
You'll need to know your break-even point - when your income from sales covers all the costs of the business. You can work this out as the number of places that your childcare business has to have filled in order to break even.
A break-point is when the number of children you can care for with your current number of staff has been reached, and to provide care for any more children you need to employ another member of staff and increase your outgoings to allow you to increase your income.
Income projection
Childcare business income is generally from three sources: parental fees, funding or grants (2, 3 and 4 year old funding) and fund raising. You'll need to predict your income accurately, including when you expect customers to pay you. You'll need to decide if you will take payment in advance, and if you'll take payments weekly or monthly. You'll also need to identify grant funding income and when this will be received, such as Early Education Funding.
Resources
You can use our example resources to help you with finances: