A wise person should have money in their head, but not in their heart.Jonathan Swift
If you’re new to the child care industry, or you’re considering how to develop your existing child care centre in a financially prudent manner, there are some critical financial benchmarks that should always be front of mind. This is a quick summary to help you focus on the important ones.
1. Staff costs
Costs to employ staff to help you run your centre can run as high as 70 – 75% of gross revenue derived, so you need to ensure you’re creating an environment where sufficient headroom to cover these costs exists. Factors that can assist you to lower this percentage are:
- Working on maximising your occupancy (as occupancy increases, staff costs decrease);
- As the owner, actively assisting to run the centre as a staff member.
2. Educator to child ratios
Knowing the required ratios is essential to determining how to structure your workforce:
- For children ages 0 – 2, government regulations require 1 adult to 4 children;
- For children ages 2 – 3, government regulations require 1 adult to 5 children;
- For children aged 3 +, government regulations require 1 adult to 10 children.
3. Staffing requirements
- Staff must be a mix of skill levels, including Diploma, Cert III & Bachelor Degrees;
- Centres need to follow the National Department of Education framework. It’s necessary for an Educational Leader Program representative to provide training in observations, portfolios, school reports and curriculum development. This training role will represent an additional cost to the centre;
- A well run centre should always have 1 or 2 casual staff available to cover for staff illnesses and other leave.
- The occupancy level at which ‘break even’ is achieved depends on a number of factors (chief among them the size of the centre), but can be as high as 95%. The way you market your centre, employ staff and determine costs should be driven towards achieving and maintaining high occupancy;
- It’s a good idea to insist on a minimum of 2 days’ attendance per week perf child.
- There is no GST on child care fees;
- The following indicative daily childcare rates (using Sydney and inner suburbs, in 2017) may be helpful in allowing you to determine costs:
- Children aged 0 – 2: up to $140;
- Children aged 2 – 3: up to $130
- Children aged 3 +: up to $120