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When you think nurseries and the early years, you probably wouldn't associate that data analysis.
But as it turns out, a bit of clever thinking about your enrolment numbers can help you boost your occupancy, and increase the revenue at your nursery setting.
See, by properly understanding past and future occupancy data, you can optimise your staffing and reduce your daily overheads considerably. What’s more, knowing when and where your occupancy dips is the first stage of getting more bums on seats. Or at least the classroom carpet.
And the good news is, this is easier to do than you might think. It starts with putting a bit more nuance into the way we think about nursery occupancy, and getting used to a concept called full-time equivalent, or FTE. As we'll get into, this simple formula is an important first step into finding blind spots in your enrolment numbers, and extra spaces where you can bring in more revenue.
Let's take a look at why a bit of data smarts can go a long way in boosting your enrolment, and giving you the occupancy rate you're after.
Many nurseries still choose to manage their occupancy data using ‘numbers on roll’, and this is a problem.
Why? Well, let's explain it with an example.
Let’s say my favourite ice cream place measured their sales for each month purely based on how many different customers they had, just like you would with numbers on roll. But they wouldn’t have very realistic statistics from this — because each of these customers could have visited multiple times, or bought vastly different amounts of ice cream. This sort of data is critical to understanding your revenue, but it's not so easy to see when you're collecting data with this numbers on roll perspective.
The point is, it can be misleading to assume that each individual customer acts the same, or produces the same amount of revenue for you. This is the risk of counting with numbers on roll, as it can leave you with an inaccurate picture of how much business you're truly doing.
So what's all this talk of ice creams got to do with your nursery? Well, by only keeping numbers on roll, you wind up with a similar problem as this ice cream shop. Each child at your nursery might not be there for the same amount of hours. If we're only doing a head count, we don't get an accurate picture of our total occupancy.
Let’s say you have 50 places at your setting and 50 children on roll. At first glance, this might seem like you're fully booked. But if each of those children is only in two and half days a week, you’re actually only at 50% occupancy, as those 'seats' are empty for the rest of the day. That’s a whole lot of missed revenue.
So let's move beyond numbers on roll, and see how we can grasp this situation to really maximise our occupancy.
FTE stands for full-time equivalent, and you'll often see this figure expressed as a fraction or a percentage. In the simplest terms, it displays your occupancy rate as the amount of available hours you've booked, compared to the total amount of hours you could offer. Instead of doing a 'head count,' like we would with numbers on roll, we're thinking of our occupancy in terms of hours of care we can provide.
Instead of one seat, or full day of care, it's eight hours of care. That way, we can really get into detail and see where we might have some empty spots to fill. All you need to work it out it is your registers, a calculator and a spreadsheet — or, a nifty bit of software like Famly.
Let's do another example. Suppose you run a small setting, where you have space for 10 children and operate 8 hours a day. To have full occupancy, you'd need 10 children who are there full-time, or you could have 20 children who are there 4 hours a day. Of course, what’s more likely is that you’ll have a mixture of the two.
Here's how to crunch the numbers. We'll focus on the scale of a single day of care.
This is just to show how calculating your FTE helps you find blind spots where you can book more children. Even if your 10 spots are filled, your full-time equivalent of care hours might still have some extra room. If you’re able to break down the figures session by session, day by day, you’re in an even stronger position. This way you’re able to optimise revenue, by seeing where your quiet periods are, and which rooms and ages have more space.
All in, you can now optimise your marketing and awareness to push your occupancy rate much closer to your real full capacity.
Now that we have a better idea of how to understand your occupancy, what can we actually do with all this data?
The best thing about past occupancy data is that you already have it ready to use from your registers and your child plans. In a perfect world, it’s better to work off a plan here rather than a register, as you can look at vacant places rather than just attendance records, including holidays and sickness.
The best thing about having records going back in time is that you can make comparisons year on year. Are there certain times of the year that are always quiet? Many nurseries are quiet towards the end of summer as pupils prepare to move onto big school, for example. Most nurseries tend to be quieter on Mondays and Fridays too.
Once you have this kind of understanding of your own childcare centre, and you can prove that it’s happening year on year, you can start to work out why it’s happening. Importantly, this keeps you prepared for that same time next year, and leaves you with enough understanding to do something about it.
Suppose you've found some opportunities to book extra enrolments. Here are a few things you could do:
As you get closer to 100% occupancy rate, reports show that the cost per contact hour also reduces, as certain fixed costs like the premises don’t actually increase per child.
While understanding past data can be useful, projecting your occupancy rate going forward is where the real benefit lies. It's one thing to know what happened — but it's even better to know what will happen.
This goes beyond FTE, and toward more advanced methods of using your data to boost enrolments. By accurately projecting based on plans rather than just predicting using past data, you have a much more precise framework to work around. Yes, it can be slightly more difficult to collect this data, but it’s worth it.
For one, you can cross reference these plans against your necessary staff to child ratios and you’re able to much more accurately deploy your part-time staff to avoid unnecessary overstaffing. As this Ofsted report from 2015 shows, staffing is by far the highest cost in nurseries, and with a complete overview of your own occupancy, you can look to reduce overstaffing that sends these costs through the roof.
Early childhood platforms like Famly include forecasting tools that automatically analyse your data, and generate these projections for you.
These forecasts can give you a clear insight into things like:
When you’re able to know things like that, you can start to plan your budget months in advance. This can make for huge peace of mind, and help you make sure your child care program’s finances are secure and healthy for the future.
Please note: here at Famly we love sharing creative activities for you to try with the children at your setting, but you know them best. Take the time to consider adaptions you might need to make so these activities are accessible and developmentally appropriate for the children you work with. Just as you ordinarily would, conduct risk assessments for your children and your setting before undertaking new activities, and ensure you and your staff are following your own health and safety guidelines.