The healthcare and social assistance sector was hit hard by the pandemic, with nearly 50% of businesses suffering a negative impact. As the owner of a childcare business, you know firsthand the effect of closures, enrollment declines, and safety concerns.
Source: “Which small businesses are most vulnerable to COVID-19—and when,” McKinsey.
Fortunately, as vaccination rates climb and unemployment decreases, childcare services are in demand. We have a few tips to help you as you reopen or ramp up your childcare business.
Childcare providers operate on a thin margin—and pandemic-related revenue decreases and increased COVID-19-related costs didn’t help. Undoubtedly, like many businesses, your revenue and expenses have changed significantly.
That makes consistent and accurate bookkeeping essential to understanding your current bottom line: no more guesstimating how much you’re spending on masks and bleach each month or over-estimating enrollment revenue. Fortunately, Sunrise has tools that can simplify your bookkeeping so you can focus on your business.
Be sure to review 4 key reports routinely—your profit and loss statement, your balance sheet, your cash flow statement, and your accounts receivable and payable aging reports. These reports will allow you to make strategic decisions to grow your business, like modifying your pricing structure to offer different rate tiers.
Reopening or recovering your childcare business will require funds. If you don’t have a rainy day reserve to dip into, then secure the funding you need through financing, such as a business line of credit or a business term loan. For example, you could use a line of credit to cover the cost of installing a high-end filtration device.
It’s important not to let fear or confusion prevent you from securing funding. The US Chamber of Commerce Foundation says that “Some home-based providers did not apply for PPP because the application process was not clear, they were afraid of the long-term tax implications, or they did not have established banking relationships.”
While PPP funding is no longer available, make sure you aren’t that business in the future—the one frozen by indecision. Lendio is always ready to help you find the financing option that fits your business.
Additionally, keep an eye on 2 websites that list financial resources for childcare providers:
Clients may have dropped out of your program, but that doesn’t mean that they’re gone forever. You can get customers excited about your business again.
But first, you have to recognize that your customers have changed—they may be more safety-conscious or have different childcare needs than before. For example, a client transitioning to remote work with a flexible schedule may now only require half-day coverage instead of the 40 hours each week they needed previously.
Recovering your childcare business will include monitoring trend forecasts to understand what customers want. With a projected growth of more than $243 billion by 2022, the e-learning industry includes services to help children “catch up” on deficits caused by distance learning. Could your business offer virtual tutoring to support your customers and increase your revenue?
McKinsey recommends that businesses implement 4 customer experience practices: “focusing on care and connection; meeting customers where they are today; reimagining CX for a post-COVID-19 world; and building capabilities for a fast-changing environment.” While it may be tempting to think that those practices don’t apply to you (after all, a shortage of childcare slots puts your business in demand, right?), you want long-term, not short-term, clients. Improving the customer experience can help you to achieve that.
Source: “Adapting customer experience in the time of coronavirus,” McKinsey.
Focus on using digital tools to recover your childcare business, including:
Digital tools can also help you rebrand your business to highlight your new protocols and services. Branding your small business goes well beyond your logo choice—it includes your message and your voice. If your customers’ needs have changed, consider tweaking pieces of your brand to shape people’s perception of your business.
Ask any parent how they found their childcare provider, and they’ll probably say, “Our neighbor/sister/friend recommended them.” You could capitalize on that by implementing a digital-based customer loyalty program that offers discounts for referrals.
Don’t overlook the importance of having a support group of other small business owners rooting for you. Jumpstart your network by joining various small business associations, including your local chamber of commerce.
Networking with other small business owners might even create a new revenue stream for you. Other business owners need their employees to have childcare coverage—could your businesses collaborate on an employer-sponsored childcare solution?
Your community needs your services to make a full economic recovery.
Even the federal government recognizes this by providing some funding in the American Rescue Plan Act. The act includes “nearly $40 billion to support childcare, including $24 to create an emergency stabilization fund for childcare providers, $15 billion for the Child Care and Development Block Grant program, and $1 billion for Head Start.”
Keep taking those small steps forward, and your business will recover and expand.