How To Make Your Nursery Setting More Profitable

How To Make Your Nursery Setting More Profitable 2560 2171 Nursery Story

Nurseries play a crucial role in society, as they help children grow into healthy and capable adults. Not only that, childcare settings can be a profitable business if they’re well managed. 

Here, you’ll find advice on how to improve the finances of your nursery business.

Understand the challenges

The main challenges nurseries will face during fiscal year 2021-2022 are:

1. Low occupancy rates

In 2020, UK nurseries had an average occupancy rate of 37%, which represents a 40% decline compared to 2019. Low occupancy levels translate into operational losses that could end up putting your business at risk.

A possible strategy to prevent this includes:

  • Focusing on lead generation and follow-up high-value enquiries to turn prospects into customers.
  • Move enrolment dates to July, since September intakes are traditionally low.
  • Advertise online and locally (in schools, noticeboards and nearby businesses).
  • Extend or shorten opening hours in line with parents’ needs.
  • Offer reduced prices at times of the year when occupancy is low.
  • Keep your waiting list well-managed.

2. Bad debt

Getting paid on time is an issue for most businesses nowadays. Nurseries should prioritise avoiding bad debt by automating fee collection. We know that the majority of nursery managers would rather focus on the educational aspects of their business, but a robust fee collection system is key to business survival. In the UK, direct debit is the most reliable solution.

3. Staff engagement

Qualified and motivated staff are your nursery’s best assets, so it’s worth structuring your staffing plan to attract and retain talent. You can do this by:

  • Ensuring staff’s values and vision are aligned with your business ethos.
  • Creating training and support plans.
  • Providing supervision and constructive appraisals.
  • Requesting honest feedback.

4. Staff Occupancy

Lack of funding in the early years sector can make it difficult to always offer a competitive wage when hiring. However, there are some small steps that can be taken to help find (and keep) amazing staff. Creating a nurturing and encouraging environment for not only the practitioners but also the children and their families too, can lead to job satisfaction and staff retention.

Suggestions to help with staff occupancy:

  • When hiring, think outside of the box – why not cast a wider net and look outside of your regular catchment area? Perhaps there are some universities or colleges nearby, or even some parents, who could make a great addition to the setting.
  • Encourage leadership and growth. Have an open door policy and the space for your staff to gain confidence and become part of the family.
  • Parent engagement not only makes for happy homes, but happy staff also.  Why not check out our recent article on how to increase collaboration with parents at home.

Review your nursery’s finances

There are three key elements to consider:

  • Your business model, your target market, and how well-suited they are to each other.
  • Get your latest occupancy data, break-even figures, net profit, and debt profile.
  • Develop a profit mindset. This doesn’t mean you’re overlooking the educational focus of your nursery. If you offer top-quality services, they should be priced accordingly.

You can then use the above data to create strategies to increase your occupancy rates.

Promote engagement among parents

Happy parents can become your biggest ambassador and boost your bottom line through word of mouth. Here are some ideas to keep parents engaged and satisfied:

  • Show personal interest. For example, contact them before their child’s birthday and ask if there’s anything you can do to make the day more special. Or send handwritten birthday cards to the parents when it’s their birthday.
  • Be useful. For example by texting them whenever there are traffic problems or weather warnings in the area.
  • Partner with local businesses to offer something valuable to parents, like a free class or a box of local produce.
  • Create a loyalty package or rewards for parents who stay with you for years or enrol all their children.

Other ways of getting extra income

You can create multiple sources of income for your nursery by offering extra activities. Here are some suggestions to try:

  • After-school lessons.
  • Weekend classes.
  • Creative activities, like craft parties, music or drama lessons for children.
  • Personal tutoring services.
  • Outdoor learning sessions.

How to Increase Your Occupancy Rate

Nursery owners and managers are looking to attract parents and increase revenue. Here is how…

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