Your childcare business may be running fine at the moment, but what will happen if there's a major problem? Here are four ways to prepare it for disaster.

Melbourne’s weather is pretty unpredictable. We can have clear skies and sunshine one day, and high winds and thunderstorms the next. There are even days when we have both.

Running a childcare business can be just as unpredictable. You can have everything under control when you lock up for the night, only to face complete chaos when you arrive the following morning. Equipment may need replacing when you don’t have the cash flow to cover it. Changes in legislation could mean having to completely change your business model. Or maybe you’ve just found out the rent is going up again.

Okay, so it’s not as if the fences have blown away and there’s rain pouring through the ceiling (although that’s definitely possible). But it can still spell disaster for your business.

So how can you prepare for situations like these? Here are four ways you can disaster-proof your childcare business.

1. Have enough cash in reserve to cover emergencies

One of the first, and most important, steps you should take is to set up an emergency fund. Ideally the fund will be large enough to cover three months of ordinary business expenses.

Of course, to know how much that will be you’ll need to keep track of the money coming into your childcare business (fees from parents) and going out (wages, rent, utilities, tax obligations, etc.)

You should also be aware of any upcoming issues that will have an impact on your finances—new legislation, equipment that needs repairing or replacing, software upgrades, rent increases, etc. The last thing you want is an unexpected expense derailing your business.

And if you’re thinking about expanding the business, employing more staff or spending more on overheads in the near future, use a cash flow forecast to get a clearer picture of whether it’s financially viable.

2. Take advantage of overdraft and bank loan facilities if necessary

Many banks offer flexible products such as credit cards and loan overdrafts, depending on your business’ circumstances. Having access to business finances such as these can not only provide money for your regular operational costs, but also help your business stay afloat if disaster strikes.

By maintaining the flow of money through your business, you can continue bringing in new customers to build up your revenue and make up for other losses.

3. Make sure you have sufficient business insurance cover.

You might think of business insurance as just another one of those bills you have to pay every year. But having the right cover will protect not only you, but also your investment and your business.

As I said earlier, you could come in one day to find your fences have blown away and your roof is leaking. Or someone could get injured on the premises, and decide to take legal action. Whatever the situation, having the right insurance (and enough of it) will give you peace of mind knowing that if anything does happen, both you and your business will remain financially secure.

4. Check your childcare centre’s facilities regularly.

Make sure all the equipment you use at your childcare centre is being used and maintained correctly to:

  • reduce the risk of accidents or injury 
  • meet health and safety requirements.

We recommend establishing a maintenance program to make sure your centre’s equipment is inspected and tested regularly. Record all the equipment on your premises, and schedule when each item should be checked. Tell your staff to keep an eye out as well, and make sure they report anything that’s lost, damaged or deemed to be unsafe. And if anyone does find a problem with a piece of equipment, arrange to have it repaired or replaced as soon as possible.

Okay, so you can’t actually make your childcare centre disaster-proof. You can minimise the risks, but you’ll never eliminate them completely.

But if you take the steps we’ve just outlined, you’ll be much better prepared if and when something does happen. And so will your business.