5 Common Mistakes Start-Up Childcare Businesses Make

1. Going for a complex business model

A cardinal mistake many start-up childcare businesses tend to make when shaping their business model is – providing too many choices (service offerings) to their customers. Eight to nine different session choices with varying price structures for additional hours might seem like a good idea when you are trying to attract as many customers as you can in a competitive market.  The underlying assumption being - a bigger set of flexible options will add more value to your customers.

A long set of economic choices can definitely prove to be helpful and attractive to your clients and might even help in increasing the number of sign-ups to your centre. But the downside? The more options you offer, the more time and resources you will need to manage your billing and invoicing. And, higher will be your chances of sending out wrong invoices and losing your credibility with your customers.

Errors in invoices are not only notorious for putting strains in carefully-built client relationships, but the delay in payments it can set off can strangle the all-important cash flow of your business. A simpler business model on the other hand - with a few practical choices - will make it easier for you to grow your business into a scalable and sustainable venture that is easy to manage.

2. Trying to wear too many hats.

It’s not unusual for entrepreneurs to juggle multiple roles – and do a great job at it too. But all the adrenaline and enthusiasm of starting a new business might sometimes get you to go slightly overboard and take on much more than you can realistically manage. From book-keeping and document management to staying on top of the nitty-gritties of compliance and legal requirements, there could be many crucial areas which are not exactly within your realm of expertise (or interest).

It could be tempting to take the plunge in good faith after arming yourself with some solid research and YouTube tutorials. But all the added strain can take its toll on you once the centre starts running full-throttle, and the cracks might become evident in your business as well.

For instance, if you are not a numbers-person, think about hiring a professional bookkeeper who can handle all the number-crunching for you. This will take some of the unwanted pressure off your shoulders and help you channelise your time, efforts and expertise into other core areas of your business that need it the most.

3. Sweeping late payments under the carpet

Unlike big corporate organisations, small businesses, especially those in service sectors like childcare often have a closer relationship with their clients. This can sometimes make chasing up payments a delicate topic. However, with staff to pay and operating expenses to cover, you would have to start scraping your buffer funds or resort to credit if you do not get your incoming payments on time. This can ultimately push you into a vicious cycle that can be damaging for your business in the long haul.

A polite reminder is sometimes all it takes to get your client to make the payment. If you are hesitant to pick up the phone and give them a call, a quick email or an alert using your invoicing system should do the trick. Check out our article on billing and invoicing mistakes to learn how to create professional invoices to ensure you get paid on time.

4. Resistance to automation

Automation tools for administrative work have become more accessible than ever. From auto-populated attendance sheets, invoicing systems and payment gateways to take the pain out of billing and payment reconciliations - there are plenty of convenient industry-specific automation tools to take on the cumbersome, repetitive tasks involved in the childcare business.

Many business owners, however, tend to dismiss automation tools as additional expenses. But sticking to traditional paper-based management could end up forcing you to eventually spend more on additional staff members to handle the extra work. Choosing the right balance of automation tools (for repetitive, time-consuming tasks) and expert help (for book-keeping/contractual advice) for areas requiring specialist advice can help avert more significant costs from inefficient management.

5. Underestimating the importance of a strong team

When it comes to choosing childcare, the general conduct of the staff at the centre can play a big role in influencing the choice of the parents. Irrespective of how qualified or experienced your team members may be, poor communication and personal differences between staff members can weigh heavily on the reputation of your childcare business.

Though it might seem trivial, any bickering or arguments between the staff in front of parents could be enough reason to bring in an unannounced visit from the authorities and potentially jeopardise your business. Ensuring clear communication, establishing clear organisational guidelines and procedures and following it up with regular training sessions will go a long way in weaving a strong team who are on the same page about the values you want to emulate as a business.

Related Links:

Checklist for starting your own childcare business

How to choose a staff clock-in-out software