Business and financial planning

Guidance on how to have a good business plan and financial issues including tax, financial planning and invoicing.

Business planning

All businesses need to be well managed to be successful and sustainable. Businesses evolve and are constantly subject to change and progress.

Having a good business plan is essential for all early years and childcare providers. This will enable you to identify not only where you want your business to be but also how you are going to get there.

A business plan is a working document that should be re-visited at regular intervals and whenever any changes occur or are planned. It is also a document that will be used when approaching potential sources of funding.

The process of producing the plan is as important as the plan itself. It will tell everyone involved what needs to be done, why, when and by whom.

You should describe in detail the childcare services you will offer. Market research will help you to identify the potential gaps in the market and you will be able to decide exactly how you might tailor your services in the future. A SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is a useful tool to help you to decide on the detail of your operation.

The following fact sheets are free to access at your local library or via the West Sussex COBRA business database.

  • fact sheet BIF032 - choosing the right business legal structure
  • fact sheet BIF349 - an introduction to legal structures for 'not-for-profit' organisations

You can access 'Financial planning' and 'Developing a business plan' for early years and childcare providers training through the early years and childcare training and support programme.

See the leadership and management section of the early years and childcare training brochure.

Useful links

Financial planning

Running a childcare business can have ongoing fluctuations that you will need to continuously plan for. It is important to remain aware of the ongoing financial changes that affect an early years and childcare business such as Early Years Funded Entitlement rates, changes to minimum wage and rising costs for rent or hire and insurance premiums. These can all impact your financial forecasting.

We highly recommend you continue to review all your income and expenditure costs to reflect changes to ensure your business remains sustainable. It is important to remain aware of what your breakeven number is when forecasting and planning.

Your breakeven number provides a rough estimate of the number of children needed to meet expenditure. In order to calculate a more precise figure you would need to factor in variables such as staff ratios for different ages and different fee or funding rates.

An example calculation:

  • total expenditure for the year ÷ total weeks open = weekly expenditure
  • weekly expenditure ÷ hours open per week = hourly expenditure
  • hourly expenditure ÷ early years funded entitlement = number of children needed to meet hourly cost

The information below provides help and guidance on some of the key financial issues when running your business.

Invoicing, fees and debt

Financial monitoring

Tax

HM Revenue & Customs (HMRC) provides webinars for employees and employers on topics such as starting a business, employing people, National Insurance, corporation tax and charities.

Redundancy and exit costs

If you decided to close your business, you would need to consider the costs and plan for this. These would include redundancy costs, outstanding payments on premises, professional fees and advance payments from parents.

Where possible, we advise having contingency savings to cover these types of costs. If you are only making redundancies, GOV.UK has a redundancy payment calculator.

For further business and financial support, early years and childcare providers can request targeted support from the early years and childcare team.