While understanding your Centre’s numbers is one of those “scary” topics which many Centre owners and operators don’t understand or find interesting – it is actually critical to your business. When you look at the numbers of your business you can get a big insight into how the business operates, its peaks, its shortfalls and identify where you need to take action.
Ask yourself this:
- Do you know & understand your numbers?
- Do you review your Centre’s numbers regularly?
- Do you have a regular budget review?
- Do you do a 4-week occupancy projection?
If not then you NEED to add this to your to do list – stat!
Today let’s concentrate on understanding the occupancy and how important occupancy projection is. Occupancy is defined as the proportion of the Child Care Centre occupied. Do you know what Occupancy you need to be at, in order to make a profit or to break even? Most Centre’s need to be around 75% occupancy to break even. For your Centre it may be more or it may be less, but regardless you need to know what your break-even point is.
If you take anything from this, let it be Cash Flow & Occupancy Projections. By doing a 4-week projection of Occupancy, you can use this percentage to create a Cash Flow Projection. This is so important, as you get an insight of when you might have excess cash or have time to plan for the shortfalls before they happen.
Let’s look at another example- every year we know that our Kindy children leave to go to school- so our occupancy drops & so does the cash flow- we should be prepared for this before it happens.
What if you were to do this every month? Have an insight into what your projected cash flow/occupancy percentage is going to be for the next month, so you can prepare? Whether preparation means leaving some non-urgent or essential costs for when you have excess cash, or when times are good putting aside extra money so that when you have a shortfall of income you can keep the business moving forward at a steady pace – keeping your staff employed and suppliers paid and most importantly keeping the children happy.
Other important aspects to look into, are projected budget and then comparing what the actual figures are against your plan/budget. Look at your Profit and Loss Statements and Balance Sheets each month.
We are fast-approaching the end of another financial year so take this opportunity to end the year strong and start the 21/22 FY even stronger.
At Astute, we use a combination of exceptional Account System reports & spreadsheets to create projected income & projected budgets.
If you need help with understanding your numbers then get in touch. Our experts are here to help, so contact us today at firstname.lastname@example.org and let’s chat.