2018

Understanding the Financial Key Performance Indicators

Childcare Business owners and managers know that income minus costs equal profit or financial key performance. This is a pretty simple view of procedures. Understanding what makes up the key performance indicators for financial growth will help a childcare business owner or manager recognise where he or she should concentrate efforts for improvement.

Revenues are the monies that the childcare centre takes in for the products and services that are offered. Once the revenues are gathered, then it is time to deduct the costs of the business and calculate the profit. Keeping good records helps with this step.

The cost is anything that the childcare centre pays out for operations. This includes employee wages, supplies, insurance, repairs, and advertising. Any debt paid by the business goes into the category of cost. After costs are calculated, deduct from the revenues and what is left is the profit for the business.

The financial key performance indicators tell the childcare centre how well it is performing and gives insight into where cuts can be made. Analysing all the costs is an important step that a childcare centre should use frequently. It can be broken down into weekly, monthly and yearly increments.

The more frequent the analysis, the better equipped the childcare centre is to spotting trouble areas and fixing the issues involved. Spotting repairable issues and areas where waste can be cut is vital to keeping a centre afloat. Paying attention to the financial key performance indicators helps a business stay viable and avoid going bankrupt.

Owning and operating a childcare centre involves vigilance and a desire to see the business succeed. Financial key performance indicators are part of the tools a childcare centre should use faithfully. When these tools are used correctly, childcare centre owners and managers are providing the business with a detailed blueprint for the success of the business.

An example of some KPI may be:

  • Average Daily Fee Per Place
  • Average Occupancy
  • Revenue per fee place ($)
  • Labour cost per licence place ($)
  • Labour as % of revenue (%)
  • Rent as % of revenue (%)
  • Direct Costs of proving services as a % of revenue
  • Other costs as a % of revenues

Early Learning Management has been providing professional childcare services for the last 28 years. We have the knowledge; expertise and experience to help you quickly implement value-add systems, allowing your business to achieve its goals and deliver a high level of service. Let us help you grow your business!

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