It’s hard enough running a business that constantly strives to keep the operating costs to a minimum, now imagine doing all that with the added pressure of a highly regulated industry like Childcare. In July 2017 the Government introduced a mandatory wage increase of an extra 3.3% to be applied to all Educators working in Childcare Centres. This means a decrease in margins from wages for many businesses, however, to the savvy Business Owner this could also mean a stellar opportunity to consolidate the business and find other areas of profitability which are just as effective.
1. Administration is your new best friend.
Yes, you heard that right. The drudgery of paperwork, the tapping on the keyboards could be exactly where your business can make a tidy increase in profits. There are many areas of a business “back-end” which can be revitalised to actually create more time (not less) doing those tedious and necessary tasks. For example the choice of printer may be too expensive to maintain, the amount of time spent manually checking invoices may be creating a higher wage cost or the building rental agreement may include services such as cleaning air vents which the business has been paying for inadvertently.
2. Systemise to capitalise.
In the Childcare Industry there are the usual suspects in administering care and education. Childcare businesses need tailored invoices with Child Care Rebates and Child Care Benefits clearly shown, their hourly percentages worked out and a direct link from Centrelink to the Childcare Centre for all financials. Luckily there are many systems in place to assist in this area, however there are only a few systems which can truly minimise the time spent managing not only these invoices but the centres entire accounting needs. It is worth exploring as a User Friendly that is easy to understand to save on the cost of Administrative Staff. Investing in a easy to use system reduces time spent on managing tax, payroll, accounts receivable/payable and generating invoices. A reliable system could mean the difference between spending 2 weeks or 2 days on the same task.
3. Quality Staff.
An increase in wages which is benchmarked against the population is a positive for the Educator/Carer which is a terrific milestone. The industry is improving and will grow to become more attractive to more people seeking a long term career in Childcare. The business can ultilise this momentum to attract and retain staff through programs that will engage them and assist in reducing turnover (as turnover is where a business often feels it's decreases in productivity and profitability). The key to quality staff is in creating a positive culture, providing flexible work arrangement and opportunities for professional development. Businesses who are able to achieve this get pick of the bunch in terms of talent (and can negotiate on pay better too).
4. Smart Bulk Buys. List out your spend.
Often business manuals and help books talk about bulk buying as a means of reducing the cost per unit on an item. However, in the Childcare industry there is a cross over to the Food Industry through the administration of food items and bulk buying needs to be in alignment with Health Regulations with proper storage, back-up generators for fridges, correct handling, clear labelling etc. The question to ask this line of business is where can you successfully make savings in your spend? The answer lies in listing out all the areas of spend and finding which ones will realistically give a proper (and ongoing) cost saving. It may be in nappies, wipes, gloves, tissues, toilet paper for lots of 4 months as the storeroom. Perhaps you could negotiate to pool as many items together as you can with one supplier and ask for a 12 month price freeze based on the overall quantity.
The wage increase will make an impact on a business - that is true - for all Childcare Centres in Australia. That’s one way to think about it, certainly. There is another way to look at it and it starts with a question Tony Robbins asks all Entrepreneurs and Business Leaders when they experience a bump in the road, he asks them this “what is great about this situation?”. One thing does spring to mind. Managing a business is entirely in the control of the Business Owner. Focus on that and the real benefits will start rolling in.