Budgeting in general can be daunting, but Daycare Budgeting, and ensuring that your childcare business is profiting can be even more stressful.
Let's face it. If your childcare business is not profiting, then you are doing nothing but running an expensive hobby right? And I don't want you to just do this as a hobby, but your childcare business should be something that one: Allows you to make a decent living and two: Allows you to make a living plus enrich your own life.
So today, I want to focus your attention to the word PROFIT, and help you answer the question: "Is your Childcare Business set up to profit? Let's Dive in.
First let's look at what the definition of the word Profit is.
Investopedia.com says that Profit is a financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs and taxes needed to sustain the activity. Any profit that is gained goes to the business's owners, who may or may not decide to spend it on the business.
In a nutshell, profit basically is the amount of money that your childcare business has left over after everything has been paid for.
So if I drew it out, it would look like this:
It's pretty simple right? Well in reality yes it is, but what gets most people messed up, is that they have no idea what their expenses are monthly, they have no control over their revenue, and profit is something that they are not even trying to reach each month.
As a business you have to be profiting. PERIOD.
You have to have ways you can increase your revenue and decrease your expenses. And for those of you who know me, you know I am always talking about childcare business automation and the importance of having an AUTOMATED system in place to ensure you are increasing, building and maintaining your enrollment numbers 365 days a year!
The more you are able to grow your revenue and decrease your expenses (whether that is saving costs on something as simple as light bulbs, or paying off your centers mortgage) this is where you begin to have a business that is function like a true business.
And for those of you who are reading and you operate a Family daycare, this applies to you as well.
So how do you know if you are profiting?
Well the first thing you are going to need is a plain budget. But the easiest way to do a quick look, is to check your business bank account statement.
And let me stop here to say that you should have a business checking account, that is not mixed with your personal account. Most people know this, but just in case there is someone out there who doesn't, I wanted to make that clear.
So check last month's business bank statement, and look at the ending balance. Your ending balance is what you profited for that month. Now this is only going to be accurate, if you are using your business bank account correctly, ensuring that all income that is deposited into that account is from your childcare business sales, and all expenses are childcare business expenses. And this does not include taxes. You should have a separate account for any taxes.
If that number is a positive, then you are doing Good! If it's negative, then you should really be concerned about your childcare business, and if you don't get this number to turn into a positive, eventually you will simply go out of business.
I had someone leave a comment on a Facebook ad I was running and this person said "Let's just keep doing what we are doing because we love it, and let's STOP talking about MONEY."
Here is the thing about that: If we just keep doing what we do because we love it, everyone is going to suffer, because if you have no money left over at the end of each month to
1). Put back into your program and
2). Ensure that you yourself is making a living and making the money you personally desire, then this is a set up for burn out, frustration and not have a quality childcare program, business or life.
I say do what we love, and let's profit financially as well! Because when your business profits financially, this flows into so many other areas of profit for not only the children and families, but for your own family as well.
Did you know that you can gain access to my ENTIRE ONLINE CAMPUS where I show you how to COMPLETELY AUTOMATE your childcare business through step by step video trainings. Joining the "Run it Like a CEO" Group Coaching Academy allows you to INJECT childcare business automation into your childcare business, so you can not only ensure quality in your program, but a quality of work-life balance for yourself! Click here to join us over in the Academy!