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Budgets - Part I: Childcare Centers


Budgets, Childcare Centers

Keeping a budget for your childcare center is crucial. A budget allows you to plan how you will operate your business, taking into consideration expected income and expenses during a 12-month period. A budget helps you develop your strategy for making money during a fiscal year (Jack, 2005).

A budget is created once a year. Once you set your budget for the year, use it as a tool to measure your performance. By evaluating your budget monthly, you can see if your actual costs and revenues differ from your plan, which will allow you to adjust how you operate your business to ensure you stay on track. If you notice you are not meeting your expected budget, you can make changes, such as reducing costs or finding ways to increase your revenue. In this blog, we will focus on ways to construct your budget and cover techniques to review your progress and make effective operational changes.

In the article “Looking at Revenue in a Different Way,” Bob Siegel recommends childcare providers focus on understanding their “Potential Slot Income (PSI)”. The PSI incorporate the maximum number of slots a childcare center can offer at any one time. PSI is calculated by determining the number of slots available multiplied by the fee charged multiplied by the unit of time on which the fee is based. For example, 100 slots available multiplied by $100 per child multiplied by 52 weeks = PSI of $650,000. The revenue you budget for the 12-month period should never exceed the calculated PSI for the year.

When calculating your PSI for the year, the following factors should be considered:

  • Flat Fees – Understand your fee structure. Most flat fees are based on a child’s age. For example, infants are more expensive to care for than toddlers.

  • Discounts – These include sib