Work matters: Business Development - Stay in credit

I am frequently surprised at how little management information some nursery managers, and indeed, owners, have at their fingertips on a daily basis.

I looked at a setting that was for sale a couple of years ago and although I was speaking to the owner, she looked completely blank when I asked her for a copy of her balance sheet. Everyone needs a good accountant and/or bookkeeper, but it is vital that whoever runs the business can put their finger on the important figures when required.

I fully appreciate that many people in the early years sector see administration as a necessary evil, with children quite rightly at the centre of everything they do. However, a message that I have repeated many times within The Old Station Nursery Group is that if we can't measure what we do, we can't manage it and if we can't manage it, we can't guarantee the success of the business. Without a sound business model, we cannot continue to provide a quality environment for the children.

Every nursery needs to have some good key performance indicators, which the manager feels comfortable with and can use to 'take the temperature' of their business on a regular basis. These indicators will vary, of course, depending on the size and complexity of your operation, but I like to make sure that I know daily what the cash-in-the-bank figure is, and that on a Monday morning I have the occupancy figures from the previous week for each of our nurseries. This allows me to have an instant feel for how each site is doing and alerts me to any major trends.

Within the nurseries, each manager must be aware of the revenue they have generated each month, as well as the major cost - that of staff salaries. I know it is not popular, but to reinforce this I will not hesitate to pick up the phone on the first of the month and ask any one of the managers what their invoicing total is for the month and what their forecasted salaries are for the same period.

Even the least financially astute should be able to keep these figures at their fingertips, and you may like to convert this into a percentage, to show the salaries as a percentage of the revenue. Again, what is a 'good' percentage will vary according to your setting, but if on your records you colour-code the percentage bands as red, amber and green, you will instantly be able to judge whether the nursery is on track for the month. Hopefully, you can adjust hours or boost occupancy if the figure is in the 'red' category.

Anything which helps you to measure the performance of the major aspects of your business will help you to steer in the right direction - and as the recent winter weather has proved, it is all too easy to skid off and end up in a ditch!

Next month's business development column will be written by Karen Walker, director of The Children's Place