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Published byConor Lison Modified over 9 years ago
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Mythbusters CHILD CARE – THE BUSINESS MODEL
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Tuition Competitive Affordability Wage Rates Recruitment and Retention Operational cost Facility Cost Ownership/Debt load Rental rates Vacancy Rates Workforce and capacity VARIABLES TO ACCOUNT FOR
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Tuition Revenues Govt. Assistance Fund Raising Cash Flow Labor, Food, Supplies, Facility, Debt Service Cost Regulations, Vacancies, Quality THE VARIABLES Reserves
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WagesTuition BUY LOW, SELL HIGH! NOT SO EASY
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Cashflow All Costs Tuition FAILURE TO CASH FLOW MEANS TROUBLE
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INCOMEVARIABLES$$$$$$$ $ TuitionCompetition vs. Cash Flow$848,850 FundraisingPrivate vs. Public$ 12,000 Govt. AssistanceMeans Testing Gross Revenues THIS LOOKS EASY! CASH FLOW DONE! EXPENSES SalariesWage Rates$626,938 Food and Milk$ 79,300 FacilityRent/Debt, Maintenance, General$ 36,000 Supplies & Other$ 40,300 Total Expenses$782,538 Net Income Salaries $16/$12; Occ. 95%; rate $185 $ 78,312
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INCOMEVARIABLES$$$$$$$ $ TuitionCompetition vs. Cash Flow$726,210 FundraisingPrivate vs. Public$ 12,000 Govt. AssistanceMeans Testing Gross Revenues WHAT ABOUT VACANCY LEVELS? EXPENSES SalariesWage Rates$626,938 Food and Milk$ 79,300 FacilityRent/Debt, Maintenance, General$ 36,000 Supplies & Other$ 40,300 Total Expenses$782,538 Net Income Salaries $16/$12; Occ. 80%; rate $185 $(44,328)
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INCOMEVARIABLES$$$$$$$ $ TuitionCompetition vs. Cash Flow$726,210 FundraisingPrivate vs. Public$ 12,000 Govt. AssistanceMeans Testing Gross Revenues WHAT ABOUT WAGES? EXPENSES SalariesWage Rates$736,204 Food and Milk$ 79,300 FacilityRent/Debt, Maintenance, General$ 36,000 Supplies & Other$ 40,300 Total Expenses$891,804 Net Income Salaries $18/$15; Occ. 80%; rate $185 $(153,594)
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INCOMEVARIABLES$$$$$$$ $ TuitionCompetition vs. Cash Flow$788,940 FundraisingPrivate vs. Public$ 12,000 Govt. AssistanceMeans Testing Gross Revenues WHAT ABOUT TUITION RATES? EXPENSES SalariesWage Rates$736,204 Food and Milk$ 79,300 FacilityRent/Debt, Maintenance, General$ 36,000 Supplies & Other$ 40,300 Total Expenses$891,804 Net Income Salaries $18/$15; Occ. 80%; rate $200 $ (90,864)
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INCOMEVARIABLES$$$$$$$ $ TuitionCompetition vs. Cash Flow$159,000 FundraisingPrivate vs. Public Govt. AssistanceMeans Testing Gross Revenues REAL LIFE EXAMPLE EXPENSES SalariesWage Rates$128,000 Food and Milk$ 14,750 FacilityRent/Debt, Maintenance, General$ 10,260 Supplies & Other$ 7,985 Total Expenses$160,995 Net Income$ (1,995)
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What should drive the business plan? Market tuition Cost What about facility costs? Rent Debt service What about workforce? Primary cost Recruitment Retention DRIVING THE BUSINESS MODEL
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