14th November 2022 Leadership & Management Early Years Foundation Stage All Posts

5 Key Components to an Effective and Efficient Early Years Business

Throughout this blog, Lucy Lewin, a Gallup Certified Strengths Coach, business consultant and nursery owner advises how to navigate the cost of living crisis in early years businesses.

“High-quality early years provision is a key mechanism for closing the gap between disadvantaged children and their peers and supporting maternal employment”.

As I even type that first sentence I know I am preaching to the converted.  We did not need a global pandemic to know that we are an essential service to the economy and social mobility.  As a sector we know the important work we do on developing future generations and most of us hold that responsibility with the due regard it needs.

Now, more than ever, the early years sector is feeling the squeeze of already tight purse strings.  Doing more with less is one of our amazing talents, yet now it feels like even our ability to create magic from dust is wearing out.  The cost-of-living crisis that we now have catapulted into feels like a burden too heavy to bear.

In this period of darkness, it can be so very easy to become overwhelmed with the situation and become disengaged and even want to quit.  Whilst I know that for some settings, this is the end of the road, to them I extend my thoughts that this is happening.  It does sadden me to see the sector lose good settings and people.   When the road ahead is dark, I have learned that the key to moving on is to make small adjustments that can have large, impactful ripples as you head towards more positive times.

What I am sharing with you now are the lengths I had to go to, to save my business even before the pandemic.  The resilience this journey taught me gave me the knowledge and strength to navigate the challenges that came from Covid 19, lockdowns and all that has since been happening in the discombobulated world we now find ourselves living in.

When it comes to a crisis response I believe that the 5 key components to an effective and efficient early years business are even more important to understand and implement.  By dividing the business of business into definable areas you can choose to focus on the areas that ensure you stay afloat, survive and thrive, they are

  1. Planning
  2. Preparing
  3. People
  4. Profits
  5. Personal development 

Let us take a look at each one in turn with a few simple, yet savvy ideas for you to implement.  As you read on, please do so with your mind open.

1. Plan

“He who fails to plan is planning to fail” – Winston Churchill.

The demand for childcare has changed with some parents now working from home, and some stopping altogether. Studies show that because of this there is an increasing demand for flexible childcare.  It is important that you understand what your parents need and want from you as a childcare provider. You can access a free version of SurveyMonkey that gives you up to 9 questions per survey- never assume you know what parents are thinking, just ask!

All Local Authorities have a legal duty, under the Childcare Act 2006, to “provide sufficient childcare” in their area.  The annual census data that is completed by early years settings are compiled together to form the “Childcare Sufficiency Report”.  This is an excellent document for market research indicating the number of children born, total childcare spaces and average prices.  Understanding this information can give you the confidence to make sound, prudent business decisions based on facts, without needing to conduct a market analysis yourself.

Writing a business plan was something I thought you only did if you need to apply for finance, but I was wrong!  Every year I write a business plan so I can understand the landscape in which my business operates.  During these unprecedented times, when costs are rising and there is such instability in the economy, having a current business plan that showcases your business at its very best is a great way to focus your mind on what is working well. 

2. Prepare

Preparation is great for your mental health as it can prevent you from feeling overwhelmed.  Here I outline some tangible preparation tips that I have used in my own setting that have shown small, yet mighty positive impacts on my finances, staff retention and well-being. All of which has had positive effects on the children in our care.

  • Kettles – did you know it takes an average of 34 seconds to boil a kettle and switch it off?  Research carried out by a retired science teacher, suggested, it only takes the kettle 24 seconds to reach 100 degrees and bubble.  To save electricity (and time) when the kettle starts to boil, switch it off manually.  The teacher worked out that this small change saved her on average £35 a year.  
  • Lights – we have replaced our traditional light bulbs with LED bulbs and use more lamps and fairy lights to create an ambient environment.  This has reduced our electric bill by 30% a month. Please make sure you carry out risk assessments and all other health and safety tests with any new equipment you introduce.  This also changed the behaviour of the children, they appeared noticeably calmer and engaged in activities with higher levels of involvement.  
  • Cooking – maximise oven space by cooking larger potions.  You can then freeze leftovers and use them at a later date (ensure that you do so in line with food safety guidelines).
  • Portion Sizes – A child’s stomach is roughly the size of its fist.  Children need to graze more than eat big meals. Allowing children to self-serve teaches key transferable life skills and with food poverty rising, it is not sustainable or arguably, ethical to use food in play. Louise Mercieca from The Food Academy has created a sustainable portable nursery kitchen that teaches educators and children how to make amazing food and bring cooking to the everyday curriculum. 
  • Environmental Impact – Emma Bryce from Anthropocene, the science-based sustainability network, conducted some research into what impact the most commonly consumed foods are ranked by the environmental impact they found that products with a lower environmental impact tended to be more nutritious. Fruits, vegetables, cereals, bread, and meat alternatives like tofu and vegan sausages—were a win for both environmental and human health.  
  • Use a broom – sweeping the floor during the day and saving the vacuum for the end will reduce the amount of electricity consumed.
  • Raditiors – clean the fluff from radiators to ensure they are working as effectively as they can.
  • Freezer – ensure your freezer is defrosted so the elements are clean and don’t need to work extra hard to maintain the temperature. 
  • Energy bill and energy consumption –  Do you know what tariff are you on?  Are you paying standing charges or flat rates?
  • Daily washing – some things can only be used once, however, things such as bedding can be kept for a period of time without washing, as long as the same bedding is used on the same child and is kept clean.
  • Tumble Dryer – drying racks and washing lines can replace the use of the tumble dryer.
  • Sustainable living – invest in tools to support and teach sustainable living such as the Hydroveg Kits – vegetable growing kits that are designed for even the smallest of places.  They use 70% less water and grow 30% quicker than conventional soil patches.  Sue Tonks the founder of Hydroveg and her team have created a wealth of resources to link in with the EYFS too. 
  • Audit your plastic waste –  this was a massive change in how we operate our business and one that was met with some deep professional discussions with the team.  We began our audit by looking at what single-use products we used and asking the question “why am I using this – is there an alternative?”   Did you know the average setting gets through approximately 12-15,000 single-use gloves each year AND that it is a myth that wearing gloves for nappy changing is an Ofsted requirement?   

 In February 2022, the Early Years Alliance printed an article titled- Plastic not so fantastic and it shared a useful table that outlined the plastic waste a 52-place early years setting would create each year.

3. People

As you know, the early years sector is also facing a recruitment and retention crisis.  In the Government’s recent report “The early years workforce: recruitment, retention, and business planning” it was suggested that “the average turnover rate for group-based providers was 16% and around one in five group-based providers had a staff turnover rate of over 25%.”

I was particularly drawn to the fact that half as many volunteers are working in  private, voluntary or independent settings compared to 2019. The help of volunteers makes a difference in what educators and the team can accomplish in a day. Subject to full suitability checks, volunteers can give that well-needed extra eyes and support to the team.

Money can be saved on staffing by understanding some key performance metrics.  Did you know that 53% of your turnover maximum should be covering staff costs?  I found this out in 2018 and was astonished to work out, at that time, mine was closer to 90%.  There is no surprise that I was struggling to balance the books even before the pandemic.  I went back to the staff rota and looked where there were operational inefficiencies and was able to make adjustments that still kept me well within the statutory welfare ratio requirements yet reduced the spending down to between 50 and 53%.  This also improved team morale too!

Create your agency by utilising a flexible workforce.  This has become a huge asset to my business. Having a more flexible workforce means that there can be capacity for current team members to support each other during time off.  Rather than needing to use expensive outside agencies, we have created our team of flexible staff who can take on the extra shifts.  This allows us to ensure that there is a real work and life balance for everyone. 

4. Profits

This may seem like a peculiar time to discuss profits, however, planning for a profit is what a business must do!  Not just in a cost of living crisis, a pandemic or any other external influencing time – always!

Audit your spending – it is not just enough to pay your bills, you need to know and understand what you are paying for.  I use a simple numerical coding system for every spend I make.  I track and measure this each month so I can see where I am spending the most money. Allocate some time to do a spending review and see if you can find better deals.

Make a budget and stick to it – this does not need to be complicated.  Look at what you are spending on each of the grouped items above and set a target.  Estimate where you can make a saving and track this in a spreadsheet too, and celebrate the small wins with the team.  Even more fun, include the team in some cost-saving ideas and exercises – the best ideas often come from the team member you least expect, plus a bit of healthy team competition is great for morale! 

Many of you will have already seen the information about the review by BEIS of the Energy Bill Relief Scheme, for which they are circulating a questionnaire to non-domestic customers – i.e. private businesses.  Ensure you have completed it so that you do not miss out on any support on offer.

5. Personal

Upskill yourself.  What is it you need to do to become the person you want to be and have the business you want and deserve?  What skills, knowledge and/or behaviours do you need to master so you can be in control and feel less overwhelmed?

I promoted myself to CEO.  After googling what a lot of it meant, I printed a job description and set to work on becoming the CEO of my own company.  Sadly I failed my first performance review, I was not performing where I needed to be, so I made myself an improvement plan and set to work on learning what I needed.

There is a wealth of free courses still around that offer a range of knowledge and skills to support you.  Look online or contact your local universities.  I am now a part of the University of Leicester Business School and have completed a number of their free courses on leadership, business development and sustainability.  It is great for experience and building a network.

In these unprecedented times, we often feel so overwhelmed by the magnitude of what is happening that we trigger our internal fight and flight response.  This stress response can lead to long-term negative health issues.  There is a plethora of help, support and guidance for business owners, childminders, managers and our teams.  We need to champion that asking for help is a sign of inner strength and not weakness.  Knowing yourself well enough to understand what is beyond your capacity takes confidence, let us recreate the rhetoric around asking for help.  

Thinking outside the box, discussing your challenges with peers and trusted colleagues, attending networking events or even investing in a business coach can deliver amazing returns on investment, for your well-being, your business health and your financial health.

How can Connect Childcare Help your Setting Combat the Cost-of-Living Crisis?

To learn more about how our nursery management software can support your setting throughout the cost-of-living crisis, contact our team for an informal chat, or book a free demo below.
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About the Author

Lucy Lewin is a Gallup Certified Strengths Coach, business consultant and nursery owner, she is on a mission to empower the early years sector to love itself and bring high-quality education and care to children through creating profitable, effective and efficient child-centred businesses.