Susan Moreau encounters this embarrassment regularly in her job as business support officer at Bradford Metropolitan District Council. But she believes a lack of business skills is a major threat to many childcare providers' long-term viability. "The costs of delivering quality childcare is high," she says. "If providers don't see themselves as businesses, then they'll not understand costs."
Moreau argues that this hand-to-mouth approach is not sustainable and that providers must focus on generating profit - or "surpluses" as many in childcare prefer to call them - to reinvest back into the business.
A report by the National Audit Office last year revealed that only half of new childcare providers had a clear idea of how they'd continue running their business when their start-up funding ended. And it said a lack of business planning was one of the main reasons to doubt the sustainability of child-care provision. In 2003, of the 623,000 new childcare places created since the National Childcare Strategy was launched 301,000 had closed.
To help childcare businesses become sustainable, Moreau encourages local firms to attend Sure Start-funded business courses, run by training company A4e. These courses are designed to be accessible and relevant to people working in childcare.
On average, there are 20 participants per course with two trainers, and the room is split into four round tables to aid group work and make the atmosphere more relaxed. Participants take course notes away with them, designed to be an easy-reference resource when they get back to work.
Giving providers confidence
"The idea is that attendees go away with specific ideas and feel confident that they can improve their business," explains Rhian Belcher, programme manager of Business Success for Childcare at A4e.
Since April 2004, A4e has run 1,200 workshops attended by 22,000 delegates.
It's gearing up for an even busier year in 2005. Results are difficult to measure, but survey feedback shows 98 per cent of attendees feel more confident about running their business more effectively after completing a course.
Nursery owner Donna Barrett found advice on dealing with parents when raising prices most useful. Following the course, she wrote a letter to all parents with the new prices, explaining why they had to go up. "I was nervous about raising prices before the course, but it made me more confident," she admits. "And I was pleasantly surprised by parents' reactions; 99 per cent were fine because they understood." Barrett has also become more self-assured when sourcing suppliers for her business. "I now shop around for the best deal," she adds.
For Ann Whitby, manager of The Railway Children Childcare Centre, the most beneficial elements of the course were meeting other attendees, and advice on marketing. "Far too many childcare providers are embarrassed to say how good they are and what they offer but the course taught me not to sell my nursery short," explains Whitby.
The need for these skills is even more acute in light of the Government's ambitious targets to provide childcare for all, as part of its 10-year childcare strategy. Competition between providers for paying parents will become more intense, especially in deprived areas. To survive, providers must be more business-savvy.
The situation is complicated further by the fact that children's centres, a mainstay of the Government's future childcare plans, will be less cash rich than Sure Start. "These centres work on a business model much more than Sure Start does," claims Anne Longfield, chief executive of 4Children, which provides business support to childcare providers. However, Longfield is convinced that the Government will not allow the valuable lessons from Sure Start to be lost. "The political vision and commitment is there, though there's still a gap in funding," she says.
Some, like Suzanne Carmichael, manager of the West Green Learning Centre in Tottenham, which enlisted the help of 4Children to plan its after-school club, believe that the planned changes in funding will give these providers the wake-up call they need.
"With the New Opportunities Fund and Sure Start money, providers have become very complacent. They're very cash rich, so they often lack forward planning," she claims.
Searching for sustainability
Jayne Meyer, the director of Sure Start Dover, agrees and is viewing her day job for the next 18 months as a search for a sustainable strategy.
She's drawing on commercial knowledge gained in her previous private-sector career. She asks: "What's the option, to spend the next 18 months complaining and leave the job half-done?"
Meyer believes effective partnerships are the answer. She's co-ordinating meetings between health and education professionals, social workers, the local authority and community groups to cherry-pick the most successful elements of Sure Start and integrate them into the long-term strategy.
"I'm using the current funding to embed what's needed for the future. I'm also selecting the key things that need to be transported and will focus the business plan on those.
"By April 2005, I want every staff member to know where they're going to work post 2006," she adds.
Michael Craft, programme manager at Sure Start West Green in Haringey, agrees that partnerships pave the way to sustainability. However, he believes that business skills are only one part of the equation for success.
Business people can often underestimate the cultural dimension to childcare and the fact that professionals from different backgrounds often struggle to work together, he says. While a business approach is necessary, there are intangible cultural barriers to overcome that do not fit neatly into a business plan.
Craft cites the example of a nursery provider currently trying to set up in his area. The owner has exemplary business skills but the venture's success relies on parents claiming Working Tax Credits. What the entrepreneur doesn't realise is that his strategy sounds much more straightforward on paper than in practice. Why? Because parents who are eligible are failing to apply for the credit. "The target market may have very low confidence and might not know how to get this credit or terrified of authority, or simply cynical about government credit," says Craft.
Nevertheless, despite the hurdles, Craft is optimistic that Sure Start will survive in the long term. Echoing the thoughts of many other childcare professionals, he concludes: "The political will is there for the first time, the next step is how we deliver services. The jury is still out on that. Community development is a way of working and it's difficult, but I believe it will happen. However, it will be slow, and there will be resistance."
TELL ME MORE
- A4e www.a4e.co.uk
- Business Success for Childcare www. surestart.gov.uk/support4business
- 4Children www.4children.org.uk/whatwedo/view/node/23
- National Day Nurseries Association www.ndna.org.uk
- Sure Start Childcare Link www.childcarelink.gov.uk
CASE STUDY - How the Railway Children Childcare Centre is ensuring a long-term future
Twenty years ago, four friends set up The Railway Children Childcare Centre. Based in Kidderminster, the centre started by providing childcare to 13 children aged three to five, three mornings a week. It now has 138 childcare places and 16 staff and is open from 7.45am until 6pm catering for babies aged from three months to 13-year-old children, 51 weeks of the year. Funding comprises fees paid by parents, money from local education authority grants and fundraising.
Ann Whitby, centre manager, remembers feeling "totally isolated" four years ago when applying for funding. "They were asking for business plans and lots of things I'd never done," she explains. "I submitted accounts but they told me they weren't sufficient." As a result, Whitby signed up for Sure Start's Business Success for Childcare training and, since completing the course, she's implemented changes that have helped ensure her business's long-term viability.
"I used to really worry about charging parents. I'd accept any excuse from them if they said they couldn't pay," she recalls. Now, however, she charges parents 30 to reserve a place. This avoids the nightmare of vacant places when term time starts because they've registered with another provider. She also charges 5 to register.
Whitby argues that there are many benefits, not just financial, to being firm about making parents pay for the service. She believes parents respect a service more if they pay for it. This is reflected by the fact that many of the places that parents don't pay for, covered by government agencies for example, are poorly attended. "Half the week they won't turn up, which is appalling," she says.
However, business skills have transformed Whitby's business and have made her life as a nursery manager much less stressful. "They've kept me on the right path, kept me focused and helped me manage my time better," she concludes.
