Nursery owners are under increasing pressure to become more businesslike in order to cope with the burgeoning bureaucracy relating to both childcare and employment issues, as well as to face up to the growing competition in the sector.
But a study funded by the Department of Education and Skills, published this summer, found, 'identifiable cultural resistance to the application of business principles' among childcarers.
The report, Developing the Business Skills of Childcare Professionals: An evaluation of the business support programmes, said private sector providers were generally more comfortable than voluntary sector managers in taking a business approach. However, there was a distinction in the attitude of nursery chains compared with owners of single- site settings, who 'often run the nurseries at a personal cost'.
Motivation
Some proprietors even say that during a poor month they will not draw a salary, according to Naeem Akhtar, business and finance officer at Manchester Early Years Development and Childcare Partnership (EYDCP). 'I tell them, "In your accounts you have got to include what the business owes you so you can eventually make a decision on whether you continue." They don't understand and just think things will improve.'
He believes the reason that so many nursery owners lack commercial skills is that they go into business because of their desire to work in the early years sector rather than because of any wish to be entrepreneurial.
Early years consultant Margaret Edgington says, 'I know quite a few people who have opened their own nurseries. Maybe they have been teachers or nursery nurses and thought they could do better. They work very hard and are really trying to do something a bit special. They come into the sector because of the children, not because they want to make huge amounts of money. In fact, I think none of us in early years particularly likes talking about money - whether that is a female thing or not I don't know.'
But these days, managers have to be able to talk about money and keep on top of the bureaucracy, says Inez Murray, proprietor of Four Seasons nursery in Glasgow. 'If you are in receipt of Government funding in any shape or form, you have to be accountable. You have to be very aware of what is happening. I ran my own business, a sales and marketing consultancy, before I came into the nursery sector. I believe people in the sector should be much more aware of business practice.'
Traditionally, early years professionals shied away from the 'B- word', says Rosemary Murphy, chief executive of the National Day Nurseries Association (NDNA). 'Business has been a dirty word in the childcare sector, along with profit and private,' she says. 'There has been this idea that nobody should make a profit out of childcare, but there has been a misunderstanding about what profit is. Day nurseries are small businesses and have to be in profit to exist.
'In the past, the people who supported the childcare sector in local authorities did not have a business background. Part of the NDNA's role is to break down that barrier and explain that unless you have a viable business, you are not going to have quality childcare. Even the voluntary sector cannot operate at a loss.'
Trial and error
Until recently, lack of available training meant providers learned by trial and error. Nyree Squires, proprietor of Noah's Ark in Plymouth, has been through the business school of hard knocks. She says, 'From some bitter experience, I have acquired business skills. When I started, a course would have been really helpful. My husband, Tim, was a bank manager then dealing with small businesses, which was very useful as he was able to help me understand the business side, which I wouldn't have had a clue about.
'I have learned the hard way. Someone was taking money out of the petty cash and took me to court for dismissing her. I was lucky - by then I had a very good solicitor and I had my paperwork in place. If it had happened a few years earlier she would have had me. She backed down at the last minute, but it still cost me 1,300 to get to that stage.'
Naeem Akhtar cites the case of a woman who had owned and sold a successful nursery in an affluent suburb of Greater Manchester and decided to open a new setting in the city centre. 'By chance, she was lucky the first time and picked a good area for a nursery. The second time, she set up without any consultation or research. She invested 120,000 and spent another 60,000 on refurbishment but had not got a business plan. She was soon struggling because the children weren't coming in. We helped her.
She's got a business plan and it is working now.'
Getting businesslike
Things are changing, according to Rosemary Murphy. 'The Charity Commission has changed the way people think because it insists that organisations are run in a businesslike way, and there has been a big change in the partnerships since they took on business support officers.'
In Scotland, Inez Murray says, 'There is an ongoing review of job descriptions in nurseries and there is a consultation exercise on moves to require anyone who is managing a nursery to have the SVQ Level 4 qualification or equivalent.'
Early years business support officers still find hurdles to overcome in persuading proprietors to adopt a more businesslike attitude. The study by the Institute for Policy Studies in Education at London Metropolitan University reported that some providers were trapped in a 'Catch 22'
situation. They were so overwhelmed by the struggle to run the business that they had no time to attend the very courses which could equip them with the skills to tackle the problems that were absorbing so much of their time.
Providers are often unaware of how to run a business exercise such as a marketing strategy, says Naeem Akhtar. 'People think a marketing strategy is basically spending quite a lot of money on posters. We try to show them that another way is to build up a good network locally with organisations, to get to know the local employers, to attend school parents' evenings and let people know you provide flexible, quality childcare. Get to know everyone who could possibly want childcare.
'I advise people to get to know the other nurseries in their locality. They are reluctant because they see other providers as competition. If they work together, they can help each other out. They can share training costs, or if one is full they can recommend the other.'
Support network
Norfolk County Council, via the EYDCP, is encouraging the development of peer support groups through the internet with an interactive business support programme. Stacey Beddows-Wilkinson, EYDCP business and finance manager for the Norfolk County Council/Early Years, says, 'We got DfES funding last year for a pilot project to develop a business support structure. It is up and running and already has more than 100 users. Our business support pack is on the website, guiding them through childcare development issues and business activities, such as writing a business plan and writing a press release.
'We have a panel of experts. Users can post a question on an issue, for example marketing or care standards, which is forwarded by e-mail automatically to the relevant expert. They reply and the answer is posted on the message board, so everybody gets the information.'
Jargon poses further problems. 'At workshops, when I start talking about doing a business plan they all start trying to hide under their desks,'
says Ms Beddows-Wilkinson. 'So, I say, "You wouldn't dream of going on holiday to Devon without a road map to show you the way; a business plan is a road map for your business, and without one you will get lost." They understand and go away and write one.'
It is not just nursery owners who need a lesson in semantics, according to Rosemary Murphy. 'I am trying to get away from the term "private sector".
Providers should be referred to by what they deliver in the sector, and we deliver day nursery care.'
The NDNA is looking at ways to develop the business role of this sector and has issued a policy paper, 'Childcare: a socially responsible business'. Ms Murphy says, 'We are doing some work around the children's centre philosophy with the DfES and how the children's centre philosophy can be rolled out across the nursery. We are trying to pull together examples of how this sort of approach is working already so that we can run some pilots this autumn doing things like getting health visitors into nurseries or getting health support with special needs children.'
