Many nurseries are having to make practical changes to the way they operate in order to strengthen their business in these tough economic times.
That can mean anything from changing staff contracts to undertaking more in-house training and sticking to new budgets. In straitened circumstances there is recognition that marketing needs to be more targeted and cost-effective. Few providers are willing to reduce rates, although many are re-thinking their discount packages and making them more competitive.
The release of the latest job figures has underlined that there is not going to be any quick fix for the UK economy. According to the Office for National Statistics, the number of people out of work has risen to its highest level since 1995, with unemployment now standing at 2,453,000 in the three months to June. Meanwhile, average earnings, excluding bonuses, grew at their slowest rate since records began in 2001.
However, a financial climate that precipitates both parents working is not entirely bad news for the early years sector.
As John Crittenden, corporate relationship manager for the Co-operative Bank in Birmingham, points out, the trend for young mothers to return to work is likely to continue in the face of the ongoing financial squeeze. This is helping to make the right nursery in the right place a good investment. The bank has just given finance to Birmingham nursery group First Steps, which is preparing to open its third site in a former independent school in Northfield.
'It's not a market that is going to go away, but it's a pretty competitive field,' Mr Crittenden says. 'It's a market we are reasonably positive about.'
At the beginning of June the National Day Nurseries Association launched its masterclasses in 'Dealing with the economic recession', which are designed to be funded by local authorities to support providers in their areas. These aim to ensure that participants have a strong understanding of their market, how their local authorities can help them and how they can take a pro-active approach to promoting their business.
NDNA chief executive Purnima Tanuku says, 'The recession is presenting different types of challenges for providers, depending on what is happening in their own local areas. Our recession workshops are proving popular, especially where groups of nurseries are keen to prepare for potential future difficulties. The workshops are based very much on a tailored, interactive approach so that settings can get the most from them. Topics include determining possible issues, looking at how these can be addressed, and areas delegates feel they need support on, such as managing debt.
'The workshops are also useful in identifying and resolving what may be isolated issues. For example, one group said that filling childcare places on a Friday was an issue, and the session explored possible solutions. The recession is still leading to a very mixed picture for providers, and we will be monitoring its impact and supporting our members as necessary.'
Don't stint on staff
Spending only what is absolutely necessary is helping Rosy Apple Childcare, which manages three Little Achievers nurseries in Preston and the County Fields Children's Nursery near Blackburn, Lancashire.
Managing director Sharon Alexander says, 'We have reduced fuel costs by 60 per cent at one of our nurseries and by 30 per cent at two others. It comes down to simple things like keeping lights switched off when they are not needed and turning down thermostats. We've tried to think of every cost we have control over and budget accordingly.'
Ms Alexander reports that her nurseries have enjoyed higher than average occupancy this year, although August has been quieter than usual, with more families opting to save money during the school holidays by using informal care.
'We've noticed there is increasing pressure for both parents to work, and this has benefited us to an extent,' she says. 'We haven't had to get rid of any staff although we have had some natural wastage, with three staff leaving. Some are staff on short-term contracts which are reviewed every month. We appreciate this is not ideal, but we have no alternative currently.'
Ms Alexander says that while expenditure on marketing has been curtailed, the availability of the Graduate Leader Fund has enabled it to keep on top of training. 'But we are using our EYPs to train other members of staff and we are not buying in outside training,' she says. 'It is absolutely vital to maintain training, because only by having the best staff will providers be able to survive in these difficult times.'
Consulting with parents can be useful for coming up with ideas to extend services and keep the cash rolling in. After talking to its parents, Wyngarth Day Nursery, which has branches in Llandudno Junction, Colwyn Bay and Betws-y-Coed, came up with a pay-as-you-go scheme.
'The idea is that we are able to offer parents who may not need regular childcare the opportunity to pay for short sessions on an ad-hoc basis,' says Marlene Williams, manager at the Colwyn Bay site. 'The fee is £5 an hour plus £1.50 for lunch and parents can just drop in and book. The scheme has only been running for three weeks and we are getting a lot of enquiries.'
Bucking the trend
At First Steps, based in Birmingham, nursery owner Debbi Gould says she is spending generously on her new premises in order to deliver the 'wow factor'.
'We started to buy it when the recession had already kicked in. While this might have been a problem for some, it was an advantage for us because we were able to acquire the property at a good price.'
She says she hasn't had the need to budget hard at her existing sites, although she did put a freeze on the annual fee increase for a few months while gauging how her customers were affected.
'We held out for a few months and then raised fees by a small amount,' she says. 'Our annual pay rise for staff rose accordingly - by around 3 per cent - and was also affected by the new minimum wage.'
Opening a new nursery has provided First Steps with the opportunity to promote staff and take on new people. The new nursery, catering for 120 children, will open up 40 jobs.
'We see this as a very good thing for the area,' says Ms Gould. 'In terms of our existing nurseries, we haven't had to lose any staff or change their contracts. All staff start on a three-month contract and get a permanent position after that. A lot of our staff have been with us for almost as long as the business has been going, which is 18 years.'
Ms Gould says that September can be a difficult time of the year, when a lot of children leave to start school, and its Wolverhampton site it is actively recruiting new families. Another current problem is the number of key staff off on maternity leave - particularly now that it is extended to 39 weeks.
'But by the same token, demand for baby care is rising, and we have a lot of registrations at the new nursery for babies aged six months and younger.'
She adds, 'The trend for women to return to work sooner after having their baby looks set to continue, and this is good news for us. Ensuring we are well set up for babies is one way to strengthen our business.'
