Sustainability is all about forward planning, and with this in mind, the National Day Nurseries Association (NDNA) is launching its online business tool, the costing model. It has been developed as part of the organisation's strategic contract with the DCSF to address business issues.
NDNA research suggests many providers need help in getting started with the process of planning, and the aim is to provide a clear understanding of the relationship between occupancy, costs, cost control and profitability.
Rob Shorrock, the NDNA's national development manager for the north, says, 'The tool has been designed to help any size of provider look at their costs for the future and develop pricing structures effectively.'
The tool is an Excel-based spreadsheet that is accessed free from the NDNA website. Users need to input their data against a set of headings, which then allows planning month by month or over the period of a year.
'The tool does all the work based on the information fed in,' says Mr Shorrock. 'It calculates break-even totals and indicates how to set prices. It takes a bit of time to input the data, but then it is a case of updating it regularly.'
As with any such tool, it is only as good as the data that is fed into it. With the right information, it will enable users to monitor monthly performance against projections and take action to address issues at an early stage.
How it works.
Users input their data under seven sections:
1. Your details
Basic information, such as the number of children registered with Ofsted, number of weeks open each year, number of sessions offered. Some of the information entered here, such as occupancy, is used to arrive at calculations within the model.
2. Budget
Expected monthly income and expenditure figures for the financial year broken down under a number of comprehensive headings.
3. Actual vs budget
Actual spend/income figures each month. The budget figures entered in section two will automatically populate the budget columns on this sheet. Each month this sheet will have to be updated with what was actually achieved.
4. Occupancy
Annual occupancy planner asks for percentage to budget occupancy figure you wish to achieve. This will be balanced with the actual number of children who attend.
5. Staffing
Calculates the percentage of total staff supporting three- and four-year-olds. This may help during any costing exercises for the free flexible entitlement.
6. Cost calculator
Compares costs and fee income, and helps cost control.
7. Break-even analysis
Works out the break-even point and helps inform fee level decisions. It arrives at an hourly fee, which is needed to break even at the budget occupancy.
www.ndna.org.uk.
