The central challenge for the childcare industry is having the resources to move children through a continuum of learning and care that will prepare them for the 21st century as learners to earners and engaged citizens with equal opportunity to participate in society. To that end, especially considering populations in marginalized communities, the first challenge is that childcare programs lack financial viability or soundness because they depend on fees often barely enough to cover costs. This may be due to inadequate government subsidy reimbursements or disruptions in such payments; the inability of families to pay for the true cost of quality childcare or default on subsidy co-payments; fluctuating markets and economic conditions along with the rising cost of goods and services and flat revenues.
BLI is all about problem solving and developing business strategies by understanding and working through complex issues. The class size versus revenues versus wages is a complex conversation that cannot be engaged in until the childcare business owner or operator can identify these factors, scrutinize the impact, and forecast scenarios that include variances in these, as well as the cost and benefit of accreditation.
A second challenge that impacts the industry is that childcare business owners tend to enter the market as educators and assume ownership as a secondary role. In most instances they have no formal business training.
With only limited business skills, these operators do not know how to leverage the resources they have, maximize current assets, or develop new ones. Without forecasting skills, many have no formal budgets, cash flow analyses, or business plans to map a
strategy for success. Moreover, the introduction of technology in the marketplace leaves veteran childcare owners and operators at a disadvantage as it relates to marketing their programs and communicating with customers and stakeholders.
Thirdly, the most dramatic impact is reflected in employee retention and turnover rates. Children suffer from high teacher turnover rate. Childcare teaching positions offer low pay with few benefits. Stagnant low wages with little opportunity for wage advancement from minimum to living wage with benefits impacts a primary female workforce, who in many instances are also heads of household.
This is a national crisis. An April 26, 2019 article in Pacific Standard by Elise Franchino states, “Currently, child-care workers’ salaries are abysmal: Most early childhood teachers earn around $11 per hour, with pay variances for roles, qualifications, and location. More than half of child-care workers rely on public assistance. And yet, despite workers’ low pay, labor costs remain one of the highest costs to child-care providers, at around 65 percent of operational costs.”
Childcare industry owners must make hard choices regarding salaries, especially with minimum wage increases on the horizon. BLI considers the lack of long-term wage increase or opportunity for wage advancement as the toughest barrier to maintaining and growing a young, well-educated childcare workforce. Those individuals who do advance and acquire professional credentials such as associate and bachelor’s degrees will inevitably trickle out of the childcare workforce into the public / private K-12 school system where they may secure higher wages and benefits. This, as well as the current and future retirement of employees, leaves a growing industry with a shrinking workforce.
Furthermore, another part of the challenge is that childcare small business owners and operators often don’t understand the provisions in the Fair Labor Standards Act (FLSA), the requirements for harassment policies, at-will employment status, Family Medical Leave Act (FLMA), and other laws including policies regarding job classifications and common violations.
The second largest expense in the business of center-based childcare is real estate. The challenge is that starting with lease negotiations and renewals, many small business childcare owners and operators do not understand tenant – landlord relationships, lease entitlements, and maximum use of square footage as it relates to classroom size and projected ratios. They do not have the skills to negotiate with landlords or vendors, which puts stress on the bottom line and reduces the financial resources necessary to deliver quality programs.
Finally, it is decidedly challenging that decision-making in the industry has been relegated to agencies and legislators rather than cultivated by the small business owners and operators themselves, who can be powerful economic assets. It should be noted that in some municipalities, childcare businesses are the primary employers in their communities, driving the local economy.
The BLI curriculum, V’locity, addresses these challenges by offering coursework in the most pertinent business concepts related to the field of childcare in a language that is easily understood. It directly guides Master Class participants as they acquire the knowledge and skills to set both short-term and long-term business goals and to develop an individualized business document that includes strategic planning and goal setting.
Challenge 1: Childcare programs often lack Financial Viability: “Understanding where you are financially and where you need to be.” In order to impact bottom line profitability, BLI’s learning content includes operating budgets, cash flows, balance sheets, and income statements to forecast revenue and expenses and to make adjustments when necessary. The Excel spreadsheets designed specifically for the childcare industry by BLI and SCORE lay out operating budgets, classroom size, student-teacher ratios, and teacher salaries. Starting with current operation scenarios, participants are able to project new scenarios that are more fiscally responsible, including the costs and benefits of accreditation.
Using a SWOT analysis, participants clarify business strengths, weaknesses, opportunities, and threats. They may test tuition increases, salary increases, and programming initiatives that increase revenue. With the Wells Fargo competitive intelligence analysis tool, participants are able to clarify population demographics, identify childcare competitors, and learn about pricing and salary averages. Once identified, plans will build on strengths and opportunities and directly address challenges and threats with specificity.
The curriculum addresses how to determine working capital needs based on clarifying goals and forecasting associated revenues and expenses. Topics include credit options, and how to “clean up” credit. In order to secure working capital, BLI graduates may take additional sessions in the BLI micro-loan preparedness program. This is an opportunity to re-enter the credit market, if necessary. Participants receive additional help in the loan application process.
Challenge 2: Childcare owners and operators need to acquire a wide range of business skills to deal with the complexity of the childcare business model:
The BLI program includes a series of workshops that sets the stage for sequential learning in a way that guides the participants to move from an educator’s mindset to that of a business operator. They are not only learning skills, but the ability to adopt a different perspective. From the first session, individual “purpose” is a benchmark that is established and then communicated through course material on Mission, Vision and Values. These essential components are defined by the participant in preparation for the development of a business plan.
Challenge 3: Staff turnover and lack of clarity in employment practices have a negative impact on the quality of a program, affecting the children served.
Human Resource development is a critical component of the BLI Master Class Series and alumni programming. During the coursework, the challenge of employee retention is addressed starting with recruitment techniques, interview strategies – legal and illegal job interview questions, state and federal labor law requirements, job offer letters, termination and employee handbooks. Retention is impacted by culture and the “employee” experience. Topics include creating an employee ecosystem where employees benefit from each other’s success as well as the success of the business. Working with one another creates a high-performance workplace.
To further address this challenge, BLI seeks to determine whether the “talent pool” attrition issue can be mitigated if talented educated young adults, as well as experienced administrators and educators, were able to forge a pathway into the industry as owners or operators by acquiring the necessary business skills along with proper business planning, support, and a realistic growth strategy. As such, our curriculum addresses startups and BLI welcomes participants who are furthering their education and would consider a future as a childcare operator. The community partnerships with SCORE and lenders such as Wells Fargo, Partners for Self Employment, Black Business Investment Fund and ACCION can give these people an opportunity to learn how to position themselves for bank, SBA, or micro loans. In the BLI program, they can create a new business proposal and work with these agencies to become ‘bank ready.” These relationships with lending partners also bring capital into the childcare market for expansion, accreditation, real estate purchases, and other education or capital costs.
Challenge 4: Poor decisions made during lease negotiations, renewals, or property purchases have a profound and lasting effect on a program’s bottom line.
The second largest expense for childcare center business is real estate. Many owners do not use a real estate agent and start out with leases that have not been negotiated favorably on behalf of the owner. The V’locity workshop on real estate does a deep dive into how the landlord, and realtors representing the landlord, make decisions as well as how the lessee’s real estate needs can be determined. The session includes the types of leases; what should be included and what is normally excluded; the economics of a lease; site considerations; property valuation; and a timeline for lease renewals.
It also spotlights the use of square footage. In the workshop, owners consider the future benefits of owning versus leasing. Many owners do not know the benefit of accreditation regarding waiver of real estate taxes as well as local government funds that are available for improvements.
Challenge 5: The childcare industry at large lacks empowerment .
BLI encourages its participants and alumni to engage in advocacy for the childcare industry. Following a BLI advocacy training workshop, BLI Alumni participated at the Florida Chamber Learners to Earners Conference. Alumni participants serve as members of the ELC Board of Directors. Others have met with legislators and influencers in a direct dialogue to advocate for themselves as small business owners, operators, or administrators in the childcare industry. Throughout the program, BLI utilizes instructional strategies to cultivate the comfort level of its participants to speak to a room of their peers and other stakeholders, to dress professionally, and to willingly stand up to share their stories with others. At various sessions, there are visiting community leaders, government officials, and other influential people who are willing to engage in unfiltered conversations with the participants, allowing them to have their voices heard and encouraging them to continue to do so.
V’Locity is an intense accelerated course that does a deep dive into budgeting, forecasting, marketing, sales, real estate, and human resources. BLI’s innovative teaching strategy for V’locity is founded on the principles of adult learning – a healthy respect for real-world experiences and opportunities for reflection and to share back. The program relies on our partners, highly credentialed corporate subject matter experts who volunteer their time to present and share their talents giving participants the opportunity to interact with business professionals who have current real-world experience with the subject matter they are presenting. Upon completion of V’locity Master Class Series and the submission of a business plan, participants graduate and enter the BLI alumni program. Our Alumni Institutes offer full-day business and leadership training at no cost to the graduate. The graduate also receives CEUs for any alumni session or BLI conference attended. These more advanced courses are offered throughout the year on a variety of subject matter. Alumni may attend as many sessions as they like over as many years as they like.