Mythbusters CHILD CARE – THE BUSINESS MODEL

 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

Tuition Revenues Govt. Assistance Fund Raising Cash Flow Labor, Food, Supplies, Facility, Debt Service Cost Regulations, Vacancies, Quality THE VARIABLES Reserves

WagesTuition BUY LOW, SELL HIGH! NOT SO EASY

Cashflow All Costs Tuition FAILURE TO CASH FLOW MEANS TROUBLE

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

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)

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)

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)

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)

 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