Tracking Performance for Success

Last years work gave us an interesting insight into childcare providers understanding of how their respective business or charity was performing and how they used performance information for critical decision making.


Most providers had some business information but did not have basic business performance information like, a cash flow forecast which tells you how cash you have available at any point, or a business forecast which predicts what and when income will be received and vice versa for expenses. There was also an absence of budgets to track progress of your annual forecasts and spending.

As we mentioned in our recent blog, “Tracking financial and general business performance is not the most fun thing to do for some of us, but it is essential for running a successful business and preventing problems before they happen.”


Why track performance?


a. Preventative Measures.

It’s logical to suppose that when you track important key performance indicators, (KPI’s), appropriate to your organization they will provide valuable management information. The value of such information is priceless when it comes to getting ahead with what’s happening today and what is likely to happen tomorrow.

The overarching principle here is that the more you are in touch with ongoing changes to your market, finances, customers and operational activity, the more information there is to help make decisions and take preventative measures to mitigate likely problems on the horizon.


b. Trends and information for decision-making.

Selecting the important KPI’s for your setting provides an overview of trends, real time activity and information to help you assess your position at any point and have a strong idea of where and when things might go wrong.

This is critical management information to support decision-making and help ride the turbulence that is inherent in childcare markets from time to time.


c. Demonstrates & sets important timeframes.

Analyzing management information systematically adds an advantage in that it helps identify timescales required to solve problems that will help you set resources in place to change things and avoid issues in the future.

This is particularly helpful when considering cash flow forecasting and enquiry tracking. For example if you know that your cash flow is looking low in 8 weeks time, that provides you a timescale in which to act to prevent that, like getting more place take up.

Equally if you are looking ahead at parental enquiries and in 9 months time you do not have enough intake to cover costs, then you have a deadline to secure new places and this will directly inform your marketing strategy and efforts to fill new places.


d. Supports sustainability

Obviously anything that provides information to enable critical decision making on a regular basis will positively affect future sustainability, but only if you take actions at the right time.


What measures are useful?


There are many measures associated with running a business and you will already be very familiar with those that you need to track and report against to ensure high levels of childcare quality. Wider business measures will provide the information to be sure that operations and finances are looked after and provide a solid bedrock for delivery of high quality childcare.

Here are just a few;


Forecasts & Budgets

Setting out an annual forecast is an ideal way to identify what plan you have for income, expenditure and profitability for the coming year. You would base this on past information and your best assumptions and knowledge of what is likely to happen in the local and national early years and childcare market. It essentially sets your financial goals for the year.

Budgets will help you review your forecast each month and make sure your plans are on track. If costs are too high or income too low, budgets provide the information you need to take action to rectify matters.


Cash flow forecasting

A cash flow forecast is an essential tool to keep your future bank balance in check. You can have a profitable company but still go out of business if you run out of cash and the bank won’t provide and overdraft. This is a critical tool to review regularly to ensure you chase late payers and control costs to remain constantly in credit. It gives you clear timescales for potential cash problems in advance, giving you time to solve them.


Enquiry tracking

Tracking enquiries has many benefits. It provides a clear picture for future demand, (i.e. those parents who have actually committed to use places in the future), and also provides information about interested parents that you can use to communicate with and nurture.

Having the maximum amount of time to interact with potential new customers provides the opportunity to build strong relationships way before they need a place for their child. Therefore don’t wait until the last minute to try and fill places, set up enquiry tracking and make it easier to achieve sustainability.


Sales mix

A sales mix is the phrase for the mix of services you offer, in the case of childcare providers, each different age range, free early education or private places etc. It’s important to understand this for two main reasons.

Firstly, if you choose to book in a disproportionate amount of places for children all at the same age, then they will all leave for school at the same time, which could leave a gap in take up in September. This is not a problem if you have already filled these places with new children but it will disrupt the flow of children through the age ranges in your setting for a while.

The other main reason for understanding your sales mix is that each age range and service you offer contributes differing levels of profit per place, and to offer skewed places in differing age ranges could affect profitability. For example you may get more profit per place from 2 year olds, than 3 & 4 year olds, or vice versa. Again this is fine as long as you understand that income may be lower or higher if you sell more of one offer than another.


Taking a systematic approach


Tracking business and financial performance does not have to be complicated in fact it is relatively easy to do. There will obviously be an initial set phase to get things moving but after that it can be a daily or weekly activity that takes only a short time.

The information needed will mostly be available in your current recording systems it’s just a case of identifying your key performance indicators, and the easiest way to extract the information you want. Essentially, set it up once and review it regularly and rapidly to make the best of your future prosperity and opportunities for growth.


Take action


If you are not tracking business performance information yet, make a start now and start to see the benefits for your organization!

For details of how to set up performance tracking in your setting and the resources and tools to get you started just get in contact and we can help you get your management information in place quickly.


If you need more information or support on any of the circumstances outlined above please do contact us. We will put all future articles in Best Start and put a link to our website at the end of each article so you can access our information at any time.

If you would like support at any point, please do contact us on contact@cbisengland.co.uk

www.cbisengland.co.uk

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