May 30, 202115 min read

Rapid MBA for Childcare Center Owners

Learn to make data-driven, expert-led decisions to improve your business. Knowledge is power. This is a well-worn adage in many areas of life, but successful business owners know that consistent growth comes from the actions you take off the insights you glean through the constant monitoring of your business’s performance.

Learn to make data-driven, expert-led decisions to improve your business

Knowledge is power. This is a well-worn adage in many areas of life, but successful business owners know that consistent growth comes from the actions you take off the insights you glean through the constant monitoring of your business’s performance. This kind of knowledge, when intentionally collected, organized and analyzed, is also known as data. You might not think of childcare as a data-driven business, but to ignore the power of data-driven decision-making is to miss high-probability opportunities to increase profits, efficiencies and quality.

Your goal is to assemble within your organization’s management the information you need to be an expert on everything that is going on in your childcare operation. Pursuing expertise in your business will better equip you to make decisions that support your long-term growth and profitability. If this sounds complicated, it doesn’t have to be. In many cases, a data-driven approach to running your childcare center simply means adopt the following mindset: There’s a systematic way to track and analyze everything that is going on in your building.

This article will give you actionable ideas you can use immediately to better understand the daily operations of your business, and the expertise to use that information to make decisions that will lead to more profits, happier employees and a higher-quality experience for your students and families.

We call it a “Rapid MBA” for childcare center operators.

Lesson 1: TIME

Know the value of time—yours, your students’ and your staff’s.

In a daycare center, time is gold. It’s the key resource in which you are trading. Childcare centers purchase time from their teachers, and they sell time, in the form of available slots in classrooms, to parents for the care of their children. Time should never be wasted in a childcare center, and that requires a new outlook from three perspectives.

Protect the manager’s time and preserve it for the most critical tasks.

If your business is going to thrive, you as a manager or director need to be free to do the high-level work that will yield growth. Tasks like returning calls from prospective parents, marketing the business, recruiting quality teachers and analyzing enrollment trends are critical to business growth. But they won’t happen if you are too busy filling in for teachers who are out, giving bathroom breaks, and constantly responding to things that are urgent but not necessarily of top importance.

Step one is to know as much as you can about how you invest your time and how long certain tasks take. The best way to gather this data is to track your time for a week or so. You can do this with simple written notes, or use an Excel spreadsheet to assign categories by the half-hour. Once you’ve gathered this data, ask questions, like:

What activities prevent me from performing the most important tasks for growing my business?
What tasks can I delegate to other staff members?
What important activities am I missing?
What non-critical items should I eliminate from my to-do list?

Now that you’ve begun to analyze the way you spend your time with a focus on priorities, you can turn that fresh perspective toward the way you allocate staff time.

Identify ways that you can use staff time to improve your center’s efficiency.

When you start to look at delegating tasks to free up your time as a manager, one of the first areas you’ll need to examine is how you schedule your teachers and other staff. The key here is to think beyond your ratios.

Taking over a classroom so that the teacher can take bathroom breaks is a necessary part of the daycare day. Too often, it sucks up the director’s time. What if you scheduled a teacher to come in 15 minutes early to start a rotation of relieving teachers? This could take care of breaks with your existing staff without eating into your time for tasks that will grow your enrollment and revenue.

Another example of a task that doesn’t have to fall to the manager is supply room inventory. What if you were to create a checklist and train your employees to take inventory? You would be able to maintain your supply stock without emergency trips to the store, while freeing up time to focus on priorities. As a bonus, you would demonstrate to your employees that you trust them to take on more responsibility and play a role in keeping the business running smoothly.

Building an environment where delegation is possible requires setting the right tone from day one with your employees. Understand their skillsets and know which tasks they would welcome during downtime, as well as which tasks might overwhelm them. Provide training so they feel confident doing things like taking inventory, double-checking licensing requirements and giving parent tours. Because you are ultimately responsible for what goes on in your building, it can be hard to hand off tasks to others. Try to shed that mindset as you build quality training that can empower your staff to play a role in optimizing your business operations—a goal that benefits everyone in the building.

Karen Inman, general manager for Callahan Learning Centers, has had to learn this lesson in her own career. “A common mentality for directors is that everything is on your shoulders,” she said. “But you have to learn to let some things go. I tell myself, ‘It’s not just me. There is a team here.’ I set really high expectations and everyone follows them. I need to trust in the training I have done.”

Once you’ve optimized your own time and your staff’s time, turn your focus to the consumers of that time: your families.

Stop tracking your children as Full-Time Equivalents (FTEs)—know how much time your parents really need from you.

Just as you set expectations with your employees, you also set them with parents. How much information do you request about when their children will be arriving and departing from your center? If you keep your doors open 12 hours a day and never bother to ask your parents to tell you what their schedule will be ahead of time, you’re going to have a hard time staffing your building appropriately. If you only look at your children as FTEs, you’re going to staff the building to handle your full enrollment. But modern lives don’t follow a consistent 9-to-5 schedule. There are two things you need to do to get a better picture of how much time your customers actually want to buy from you:

Ask them to tell you when their children will be arriving and departing. This doesn’t mean you can’t be flexible, but if you tell your parents that this input will help you make appropriate staffing decisions, they’ll appreciate that extra level of attention, and they’ll be more likely to give you a heads up when their schedule changes.

Collect data on when children are actually arriving and departing. Even well-intentioned parents may over- or under-estimate their needs for childcare. Find a way to track when children are signing in and out so that you can see how reality stacks up to the schedules your parents give you.

This work is important for so many reasons. Teachers don’t appreciate wasting time, so staffing appropriately is important for employee morale. If a classroom is understaffed, both the student and teacher experiences suffer. On the plus side, when you understand exactly how many children are in your center at any given time of day, you are able to identify excess capacity that additional customers might be able to use. Selling these smaller time increments at a higher rate is key to growing your revenue and the overall health of your business.

The Child Care Seer software used at Callahan Learning Centers provides for both of these functions of time-tracking. The software timestamps when children are checked in and out, allowing operators to easily see their actual building numbers. Seer also provides a user-friendly platform for parents to communicate their regular schedule, along with last-minute changes or needs for irregular hours.

Convenience is a product that has immense value to your customers. A parent who only needs 20 hours of care per week would gladly pay a higher rate per hour for those 20 hours, rather than a lower rate for 50 hours they can’t fully use. For example, if you typically charge $200 per week for a full-time slot (50 hours of possible care), the parent is paying $4 per hour as shown in “standard daycare” illustration below. Most families appreciate that with a bit of communication and the right tools on the expected schedule they can pay $6 per hour for the 20 hours they really want to use instead of paying for 30 hours they aren’t using. When combined with other families’ needs, for example another family wanting 20 hours at different times, the daycare is able to make $240 for the entire full-time slot, and each family has a weekly bill of only $120 as shown in “flexible care” illustration below. Customer satisfaction is dramatically increased and you have an offering that stands out from the competition. By generating more revenue from fewer hours (40 versus 50), the daycare incurs lower costs to serve these families and thus boosts its profits. This is the win/win/win scenario that is possible when you adopt this philosophy and have a tool like Child Care Seer making it easy. The more you know about when customers need you, the better you can tailor your offering to meet their needs—and increase your profits.

Lesson 2: MONEY

Know the difference between costs and investments, and always think long-term.

Understanding how money flows into and out of your business goes far beyond comparing budgeted to actual expenses and revenues. You need to develop a sense for distinguishing quality investments from costs that will weigh you down. You need to be able to project when increased revenues will bring higher expenses with them.

The first step is to understand what drives your costs, and which costs you can control. Some costs, such as salaries and training, scale with the number of teachers in your building. Costs such as art supplies, food and basic supplies will scale with the number of children in the building. You can control these costs by raising or lowering your enrollment and staffing numbers. Fixed costs include your rent, utilities, insurance and many maintenance costs. While you may be able to negotiate these periodically, in general you don’t have a lot of control over them.

Cheapest isn’t always best.

With the costs you can control, it’s critical that you find the right balance between frugality and good value. This is true with labor, systems and materials. Just as you benefit from paying a slightly higher rate for better-quality teachers who may stay with you longer, you will also reap rewards from seeking out vendors who sell quality products that have been proven to stand up to heavy daycare use. This is especially true of furniture, carpet and other basic pieces of your daycare environment. You want quality pieces that come with a warranty. Spending the extra money up-front will keep you from spending time and money replacing items that are constantly wearing out. This is also true of art supplies, toys and curriculum materials, and of cleaning supplies such as paper towels or your center’s vacuum. Likewise, subscriptions or licenses to software that can automate administrative processes within your business should be considered based on the time and labor they will save you—and the increased enrollment they’ll make possible—to understand the total benefit to the business. Skimping in these areas may look good in one year’s budget, but over time, you’re going to spend more money while compromising the quality of the student experience.

Identify worthwhile investments

Making room in your budget for help in specific areas can level up your childcare business. The key question to ask is, “Will this expenditure create a higher-level experience for my students and teachers?” A few areas where investments can pay off include:

A spruced-up lobby. This is the first area prospective parents see, and the only area existing customers see every day.
Landscaping. Curb appeal isn’t only for homeowners! It’s harder to trust a daycare to take great care of your children when all the bushes in the front of the building are dead.
Having a handyman on-staff or on-call. Quick fixes when things break improve the student experience, and could help avoid temporary shutdowns. Having a good pest control service also falls into this category.
Quality playground equipment. This is what the kids will tell their parents about. Budgeting for this must be long-term.
Hiring an employee to handle meals and food. Keeping this off the director’s plate is important. At the very least, spend the money to work with a high-quality food vendor.
Software. Paid subscriptions to software that can automate specific tasks, such as invoicing, sign-ins, reminders about forms and payments, etc., can make your life as a childcare director much easier.

Invest in vendor relationships

In this age of online shopping and anonymous deal-hunting, many business owners lose sight of the value of good customer service. Identifying quality vendors and building long-term relationships with them can save you both time and money in the long-run. Sure, you might be able to find a piece of furniture at a lower price elsewhere from time to time, but that one-time savings doesn’t stack up to the value you can reap from working with a sales representative who does their best to steer you toward value pricing for quality products, and can respond quickly when you need to engage a warranty or replace a broken piece of equipment.

Invest in your staff

Childcare isn’t a high-paying profession, and turnover adds to costs. Identifying ways to invest in your staff without establishing unsustainable payroll costs will lower turnover and improve the quality of care you deliver. Find ways to delight your staff without breaking the bank. Try a few low-cost options and see what gets the best response. From occasional doughnuts and coffee for breakfast to gift cards to recognize a job well-done, small acts of appreciation can have a big impact. Working in childcare is hard. The more you can show your staff that you recognize that and you appreciate them for it, the happier your building will be.

Lesson 3: PEOPLE

Know what you’re looking for.

Human interactions can’t easily be boiled down to data points, but that shouldn’t stop you from setting clear goals for customer and talent relationship management. Whether it’s seeking and hiring teachers or navigating difficult interactions with parents, the more clearly you set your goals ahead of time, the more successful you will be.

Hire staff for soft skills, not hard skills

No degree or magic amount of work experience can prepare you for the stresses of working in a room with eight 2-year-olds. A good childcare worker is a patient, organized individual who has a genuine heart for children. These people are out there, but you’re not going to find them scanning resumes alone. Interviewing job candidates is a crucial skill for daycare operators. Useful interviews will get to the heart of what motivates your candidates, and whether they have the resilience to stay afloat in the chaotic world of childcare. Start by asking every candidate why they want to work with young children. If they say they think it will be “fun,” then you need to dig a lot deeper. What do they know about childcare? Are they prepared for the day-to-day reality of this work?

Here are some interview questions that can help get you there:

What is your favorite and least favorite age group?
Offer scenarios: What would you do if two children are fighting over the same toy and can’t reach a resolution? Note how long it takes them to devise a strategy.
When you get angry in your personal life, how do you manage that moment? This will translate into how well they can handle chaos in the classroom.
How do you handle stress?
How do you manage your personal calendar? This will help you identify an organized person.
What does a perfect day at work look like for you?
Tell me about the worst day of child care you’ve had in the last three months, and the best. Follow-up question: What did you personally do to make that bad day better? By time-limiting this, the candidate will tell you what they like or dislike in their work environment and you’ll gain valuable insights into how they handle stress.
Tell me about yourself. Open-ended questions like this can reveal important insights about your candidates and what motivates them.

As you talk, assess your candidates as communicators. Verbal communication with parents and children is the most important part of a teacher’s job. Do they talk about positive reinforcement, or are they focused on punishment? How is their body language? Keep your eyes open to all of the clues that you can glean from the job interview. Then be sure to check their references. Beware of short, unspecific responses from references who may not have actually supervised your candidate. The process of assessing potential new hires must be thoughtful and deliberate.

Prepare everyone for new additions

It’s your job as a center director to ensure your team works well together, and that new hires aren’t a shock to the system. When onboarding a new hire, be thoughtful and be present. Veteran staff members can be valuable mentors to new hires—but you must give them plenty of advance warning that a new employee is coming. Give them time to be prepared for this changing dynamic in their work environment. Schedule time for the new hire to observe veteran teachers in multiple classrooms and absorb the norms of your center. This isn’t an expense—it’s an investment.

It’s worth spending some time learning about a well-respected model of group formation that was developed in 1965 by psychologist Bruce Tuckman. This model identifies four stages any team must go through as it grows. These are:

Forming – Team members are new and everyone is polite to each other. Roles aren’t clearly defined yet, so you as a manager need to give strong guidance and clearly state your expectations at this stage.
Storming – Group members are testing their boundaries and conflicts arise. This is a key moment where managers may need to encourage group members to respectfully express their frustrations. As soon as you sense something isn’t working, start asking questions to try to get to the bottom of this matter. You must go through this stage. Intentionally delaying it can be costly.
Norming – Team members start to understand each other’s strengths and respect roles. Be on the lookout for conflict in this stage as people are still settling into their new roles.
Performing – Team members feel confident in their individual roles and can solve problems as they arise. Be sure to recognize your performing team, so that everyone knows what this feels like.

These always happen—but teams vary in how long they spend in each phase, with some never having time to reach performing. You as the manager can foster getting to norming and performing by helping the staff understand these phases, processing the feelings in each one and driving them with compassion into (if needed) and out of storming quickly. In general, foster a culture of collaboration. Have your teachers watch and evaluate each other regularly. Create a system for providing relief to teachers on their most stressful days. Teaching young children can feel isolating at times. Building community among your staff can make it less so.

The customer is always the customer.

Your customers always deserve your respect and attention. But they’re human—they’re not always right. When a customer has a complaint, your first priority needs to be to protect your staff and your other customers from any negative impacts of the complaint. Don’t let customers bully employees online, and don’t let them come into your center yelling in front of everyone. Your students are one of the most impressionable and observant groups of people on the planet. Their brains are growing based on what goes on in your facility.

When a customer has an outburst, it’s important to stay professional, be patient and not take things personally. Immediately remove them from the public area of your center. Take them to your office, or to another quiet space where they won’t disturb others. Take out a pad and paper and tell them you’d like to take notes because their perspective is important. You may want to establish an internal policy that no one ever be alone in a room with an angry customer. If you do this, clearly identify the individual you will pull into the meeting with you when you have these conversations. Make sure they understand ahead of time that you may call on them for this role.

Once you’ve protected your building, your next job is to listen to your customer. Remember—it could be something completely unrelated to your business that is causing them to feel slighted. Maybe they had a rough day at work, or just got some bad personal news. They see you every day, and they may take this out on you. Sometimes the simple act of listening can go a long way toward calming them down. But have some boundaries for yourself. You need to accomplish two things in these interactions:

Make it clear that you are listening to them.
Determine if any action is appropriate on your part. If so, state that and be sure to follow through.

If you have accomplished these two things, it’s time to find a graceful way to wind down the interaction. You are not a counselor, and it’s not fair to your staff and other customers to spend an entire afternoon listening to a lengthy gripe session. That is not your role.

By being present for your customers as a center director, you can reduce conflict in your center and build loyalty that will pay dividends for years to come. It also massively benefits the teachers to demonstrably see you’re on their team and in their corner in these high-stress moments. Angry customers may very well come in to apologize to you at a later date. Some may never acknowledge you, but quietly recommend you to friends. Recognizing that people have different styles of interaction and treating everyone with respect lays a solid foundation for strong—if not always pleasant—customer relationships.

From operator to executive

By resolving to become an expert in the ways that time, money and talent are being put to use within your daycare, you will transform your ability to make decisions that will set you up for business success. Start thinking about yourself as the chief executive officer of your daycare, and take pride in the important role you play in the lives of your families and your teachers. Using data to increase your profits and the sustainability if your business isn’t selfish—it's a win for your families, your teachers and your own longevity in this important field of work.