Building a business
Use the season to plan ahead
Spring is a time for beginning anew. Leaves are budding yellow-green on the trees, wrens are making nests, and grass is sprouting everywhere. It’s a natural time for looking ahead, planning for the future.
Use the season to plan and grow your business. Here’s a month-by-month list of suggestions to start your thinking.
Vision. As a child care center director or home care provider, you are a leader in your business and in your community. A good leader has vision and demonstrates it by defining objectives and setting an example. Brainstorm with staff or colleagues about your vision for the care and education you provide. Can you beef up professional development training for staff? Is this the year to seek national accreditation? What knowledge and experience can you share with new teachers or providers? Consider giving a presentation at a workshop of your professional association.
Taxes. Find a tax advisor familiar with the child care business, if you haven’t already. Ask the advisor for ways to reduce taxes and avoid possible penalties. If you are a sole proprietor, for example, you should be paying estimated taxes every quarter for the preceding three months. Failure to do so means you will incur penalties and face a big tax liability at the end of the year. You can avoid the tax-time shock by budgeting an amount for taxes every month. A tax advisor can also inform you about expenses, such as mileage and professional membership fees, that you can deduct. For more on taxes, see IRS Publication 583: Starting a Business and Keeping Records, www.irs.gov/pub/irs-pdf/p583.pdf.
New payroll tax requirement
If you have employees, you are now required to deposit payroll taxes electronically, using the Electronic Federal Tax Payment System (EFTPS). According to the IRS, the system is secure and available 24/7. It automates the payment process and helps you avoid common errors. A deposit for wages paid in one month is due by the 15th of the next month. For example, a deposit for wages paid in March is due by April 15. Failure to deposit on time can incur a steep penalty, as much as 10 percent. For more information, see www.eftps.gov.
Cash flow. Project your cash flow—the money that comes into and goes out of your business every month—for the next 12 months. Problems arise when there’s a lag between the time you must pay staff and suppliers and the time that you collect money from parents and funders. Consider creating a reserve fund to cover gaps. When gaps occur, pay staff first and then crucial suppliers. Ask other suppliers about a partial payment until the next month.
Fee collection. Review your parent handbook to be sure there’s no confusion about when fees are due. Consider offering a discount to those paying early. Develop a good relationship with parents so they will alert you if they run into a problem, and work out a weekly payment plan. Post a message on your bulletin board or website a day or two in advance: “Friendly reminder: Payment due tomorrow.” Be physically present when parents drop off and pick up their children. If a parent misses the due date, act immediately. If you say nothing, the parent will assume it’s OK to pay late. Talk to the parent in person, and follow up with a phone call or e-mail.
Client list. As the spring season ends, ask parents about their future plans. Do they plan to take their children out for vacation? Will school-age children come for full days in the summer? Will parents re-enroll children in the fall? Use the information for planning personnel and supplies.
Summer programs. Brainstorm with staff about offering summer activities that are fun yet free or low cost. Will museums offer discounts on admission? Can you take advantage of story time at a nearby library or water play at a nearby park? Is it possible to offer new services for school-age students, such as math tutoring, to bring in extra revenue?
Water. Review your past water bills to identify times of high usage. Save money by repairing leaking faucets, rusted pipes, and broken water sprinklers. Consider replacing old toilets (installed prior to the mid 1990s) that use five to eight gallons of water per flush with new models that use only one or two gallons.
Marketing. Brainstorm with staff on ways to attract and hold parents as customers. Would a business buy slots in your facility for children of its employees? Is child care needed by teachers in a local school or nurses in a local hospital? What message are you sending to prospective parents through your website or Facebook page? Should you host an open house in August?
Inventory. Conduct an inventory of supplies and equipment. Ask vendors about discounts. Shop garage sales and thrift stores for children’s books and play clothes, but be cautious about buying toys or cribs because they may not meet the latest safety standards. Find out about upcoming back-to-school tax holidays (last weekend in July in Texas) and which items (such as diapers) you might buy.
Professional development. Consider the skills needed by individual staff members, and plan ways to help them develop those skills. Options include in-house workshops, mentoring by more experienced staff, and college courses. Investigate the fall conferences of local affiliates of the National Association for the Education of Young Children and similar groups. Membership and early registration can save on fees.
Children’s records. Check state regulations on updating and keeping documents on children. You will need a file folder on each child with subcategory folders such as admission form, contract and payments, immunizations, permission slips, injury reports and medications given, and parent correspondence, for example. For children no longer enrolled, hold records for the required time (three months in Texas) and then shred.
Volunteers. As parents enroll their children, offer volunteer opportunities for the coming year. Some parents might be willing to repair furniture and play equipment, while others would like to read to individual children. Some might be willing to talk to a class about their occupations, while others might agree to helping children start a garden.
Donations. Post a list of needed items such as recyclables, computers, books, cell phones, cleaning supplies, clothing, and diapers, for example. Designate a box in a convenient spot where parents can deposit donations.
HVAC. With winter just a few weeks away, have your heating and air conditioning system checked. If the system is old, consider investing in a more efficient system to save on energy costs. One option is a heat pump, a unit that removes heat from the air outside and transfers it to the inside in winter (and does the reverse in summer).
Cold and flu prevention. For child care centers and schools, the biggest expense is personnel. Avoid absences due to illness—and the need to hire substitutes—by insisting on hand washing and other sanitation procedures for staff and children. Consider investing in flu shots for staff. Remind parents of your policy on when to keep sick children at home.
Banking. Reexamine your banking services. Can you save money by switching from paper to electronic statements, setting up automatic bill pay to avoid late fees, or changing the type of account you have for your business? While you’re at it, explore the services of a credit union to see if you might receive more personal service and save fees by establishing an account there.
Food. Save on food costs—and still serve healthy meals and snacks—by planning menus, making a detailed shopping list, and avoiding impulse purchases. Buy in bulk and look for generic and in-house brands. Serve beans and eggs occasionally instead of meat, use leftovers in soups and casseroles, and serve water instead of juice when children are thirsty. Look into joining the USDA’s Child Care Food Program, www.fns.usda.gov/cnd/care/, if you haven’t already.
Stress prevention. As the holiday season approaches, take steps to prevent burnout among staff. Remember the safety instruction given at the start of airplane flights: “If traveling with small children, put on your own oxygen mask first and then put the mask on your child.” In other words, you must take care of yourself before you can take care of others. Set aside time for meditation or yoga, take a walk, or do movement activities with children. Eat plenty of fruits, vegetables, and whole grains, and avoid sweets and alcohol. Learn to say no to more obligations or delegate them to others. Learn to see humor in irritating situations and laugh. See the Mayo Clinic’s articles on managing stress at www.mayoclinic.com/health/stress-management/MY00435/TAB=indepth.
Gifts from parents. Brainstorm with staff about how to handle gifts. You might post a gift policy on your bulletin board or website that teacher gifts are appreciated but not expected. Suggest that a gift to a teacher be a child-made craft, a healthy snack such as fruit, or something the class needs, such as books, puzzles, or blocks. Remind parents that you prefer hands-on learning materials over videos and computer games.
Gifts among staff. Consider having a white elephant gift exchange, which is more about having fun than giving and receiving gifts. Or invite staff and parents to donate nonperishable food items and slightly used toys and clothing that you will collect and give to a local charity.
Paper organization and storage. Gather receipts for the previous 12 months that support income and expenses for your tax return, and make sure they match your spreadsheet. Give them to your tax preparer as soon as possible to avoid the April 15 due-date crunch. Sort through financial files and make room for documents that will come in 2013. How long you keep records depends upon how long they might be needed. A general rule of thumb for keeping copies of tax returns and supporting documents is seven years. See IRS Publication 583: Starting a Business and Keeping Records, www.irs.gov/pub/irs-pdf/p583.pdf.
Computer cleanup. While it’s cold and blustery outside, take a few minutes every day to organize and clean out electronic files. For example, clear out old e-mail messages and junk mail. Note that all your deleted files still exist on your computer until you empty the trash. Uninstall any programs you no longer use. Check the renewal date on your antivirus software.
Computer backup. Hire a computer consultant to review your backup and security system. Computers can have hard drives fail, get stolen, be damaged by flood and fire, get overrun with viruses, or be subject to human error that can render critical records and data irretrievable, unless you have a good backup system in place. Options include backing up to an external drive that can be stored offsite or backing up to a cloud system.
Insurance. Check with your insurance agent about obtaining or updating child care liability insurance in case children are injured in your facility. A good policy will pay medical expenses as well as attorney fees if you are sued. Check into property insurance to cover unexpected damage to your facility that could force you to close for repairs. Ideally the insurance company is rated “A” or better by the independent insurance-rating company A.M. Best.