Understanding the Financial Key Performance Indicators
Childcare Business owners & managers know that income minus costs equal profit or financial key performance. This is a pretty simple view of procedures. Understanding what makes up the key performance indicators for financial growth will help a childcare business owner or manager recognise where he or she should concentrate efforts for improvement.
Revenues are the monies that the childcare centre takes in for the products & services that are offered. Once the revenues are gathered, then it is time to deduct the costs of the business & calculate the profit. Keeping good records helps with this step.
The cost is anything that the childcare centre pays out for operations. This includes employee wages, supplies, insurance, repairs, & advertising. Any debt paid by the business goes into the category of cost. After costs are calculated, deduct from the revenues & what is left is the profit for the business.
The financial key performance indicators tell the childcare centre how well it is performing & gives insight into where cuts can be made. Analysing all the costs is an important step that a childcare centre should use frequently. It can be broken down into weekly, monthly & yearly increments.
The more frequent the analysis, the better equipped the childcare centre is to spotting trouble areas & fixing the issues involved. Spotting repairable issues & areas where waste can be cut is vital to keeping a centre afloat. Paying attention to the financial key performance indicators helps a business stay viable & avoid going bankrupt.
Owning & operating a childcare centre involves vigilance & a desire to see the business succeed. Financial key performance indicators are part of the tools a childcare centre should use faithfully. When these tools are used correctly, childcare centre owners & managers are providing the business with a detailed blueprint for the success of the business.
An example of some KPI may be:
- Average Daily Fee Per Place
- Average Occupancy
- Revenue per fee place ($)
- Labour cost per licence place ($)
- Labour as % of revenue (%)
- Rent as % of revenue (%)
- Direct Costs of proving services as a % of revenue
- Other costs as a % of revenues
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