04 November 2024
On Monday 2nd December we hosted Supercharge your nursery finances with Lucy Lewin, who took us through heaps of what she’d learned from 15 years of nursery management and running the Profitable Nursery Academy.
We couldn’t possibly list it all, which is why you can still download the recording if you head to our webinar web page. But for our favourite ten moments, read on!
10 things we learned from Lucy Lewin:
1. Pride Magazine smells amazing
This sounds like a strange one, but it came with a very important point. Lucy loves Pride magazines, and used it as a marketing tool for her nursery Little Angels (Uppingham) for a long time. Longer than she should have, however, as despite it looking (and smelling) fantastic, it didn’t result in any new parents coming in.
“Kelsey, my nursery manager, had to have a difficult conversation with me and bring to my attention that not once had anybody ever mentioned that they had seen our advert in this magazine”
Wherever you market your nursery and nursery, make sure that you can track it and it’s working. Give it 90 days, and if you can’t see who’s come from it, consider moving onto something else. Follow your head, not your heart.
2. A little energy saving can go further than you think
Just because you’ve inherited a building doesn’t mean you have to keep everything it came with. Case in point: Lucy’s nursery is based in an old cinema, and that cinema used fluorescent strip lighting to keep everything brightly lit.
Lucy discovered that those lights were an energy-guzzling nightmare, and added to that they created an unnatural lighting environment for the kids. So she swapped to something warmer, and more energy-friendly, and the kids loved it.
And she saved £700 a year on electricity. Everyone wins!
3. Look like experts
Running a good nursery isn’t just about the children in your setting. It’s also about the parents, both those with children booked in and those who might. For everyone, you want to look like you know what you’re doing, and that’s why a newsletter can help.
Lucy’s nursery sent a sporadic email out to subscribers whether they were nursery parents or not, and ultimately converted a parent that has discounted Little Angels for being too expensive. But by showing value, they showed their worth, and earned a paying customer for their trouble.
“[A prospective parent] learnt more about childcare, how to save money paying for it and more about development from us, who she hadn't chosen, than the setting that she was currently with. And she signed up with us”
4. It’s not impossible to offer free sessions
‘Free’ will forever be the buzzword that lights up the happy centre in people’s brains, and if you can find a way to use that in your setting it’s sure to make someone’s day. So where could you offer it?
For Lucy and her nursery, it’s through her referral network, where parents who sign up/send through new parents gain access to free extra sessions. Maintaining complete control over when those sessions are taken, ratios are kept optimised without wasting staff time (and payroll spend), and parents are incentivised to get chatting about their nursery.
If you’ve got a setting that’s worth shouting about, make sure your parents are shouting about it!
5. The difference between consumable, resource, and toys and equipment
- Consumable: short shelf life
- Toys & Equipment: tables and stuff that last for ages
- Resource: things that sit in the middle – anything made of cardboard or gets lost like sand in the sandpit
The reason for breaking these down and knowing which is which is you can more accurately track and refine your spending. Consumables will be frequent expenses, toys and equipment maybe once a year (if that, depending on how well they’re made), and resource perhaps once a month or quarter.
Do that audit well, and you can even get down to a cost per room or per age group. With this you can fine tune, and more importantly explain, your charges to parents.
6. There’s a magic cost ratio
You want to pay your team well for services rendered – this much is known. But what you might not know at the drop of a hat is how much this outgoing impacts your net income.
Gather together your monthly staff costs (salary, national insurance, pension contributions etc.), multiply that sum by 100, then divide by your monthly income. The result is ratio of staff spend to income, and you should be aiming for something like 50%. Anything above that and you’re creeping into inefficiency – 70% and above is a red flag that your business isn’t sustainable.
Lucy found herself at 85% before making the change to charge what she needed for the business to survive. And just look at her now!
7. Get to work (with others)
Your nursery is a place of magic and learning, warmth and friendship. But at it’s most basic, it’s a building with heating and a good amount of indoor space for activities. What else could the local community use it for?
Lucy works with local childminders to offer emergency care (staff permitting) for other parents when the childminder is unwell/unavailable. She also lets them come and use the space for messy play or other activities – under contract of course.
Consider getting a yoga class, talking therapy group or other low-impact institution into your space when you’re not using it at weekend or at night, if you have the right to do so. A little extra income can go a long way, and it can even become a kind of advertising for your setting.
8. Ask your parents how they heard about you
We spoke about marketing in point number 1, but what we didn’t go into is how you track it. Digital marketing is one thing – if you’ve got site analytics and a clever enquiry form you can see in a snap where your traffic is coming from. But what if they phone you?
Get used to asking (and getting your walkaround-givers to ask) ‘How did you hear about us?’ can do wonders for pinpointing – you guessed it – how parents heard about your nursery. If a particular answer keeps coming up, that’s where you need to focus your efforts.
And if a marketing activity you’re spending on isn’t coming up at all, optimise it or bin it.
9. Price increases are fine if they’re expected
“One of the things that unanimously parents said to me when I had that difficult conversation with them back in 2019, around the fact that I needed to be charging £60 a day when I was currently charging £45, is all of them said to me they would rather a regular fee increase that was set in their contract that happened at the same time every year than they would sporadic pricing.”
You’re doing no-one any favours if you delay your price increases until the last possible minute. Sure parents might have saved some money for a while, but you’ll have made loss after loss and the price will have to jump up even higher than it would have when you first became aware of the problem.
At Lucy’s nursery she bakes in a contractual price increase every September: the current Retail Price Index plus 2%. Parents are happy they know what’s coming, and Lucy can focus her attention on other external factors that might affect the business.
10. Your local authority are people too
Everyone makes mistakes, and that includes you and your local authority. And the best way to counteract it is have your own way of tracking funding, grants and whatever else the local authority give and owe you so everyone can be on the same page.
“By having that fail safe check and balance and my own spreadsheet[…] I can make sure that when the remittance advice comes in, everything balances. And there have been months where there have been discrepancies […] usually a human input error at the local authority end”
To add further context, this was usually around the Early Years Pupil Premium, so if you’ve got children to claim that for, keep an eye on it.
And those ten things are just a taste of everything Lucy spoke about in our webinar. We’ll have another webinar coming in the next few months, but if you’d like to see the webinar for yourself, simply head to our webinar page and fill in our form and we’ll send you the recording!
