How To Reduce or Control Expenses In Your Childcare (Part 2 of 2) 

This is part two of a 2 part series on controlling expenses in your childcare. If you have not read part 1, you can read it here.

4.  Organize and shop to keep food supplies cost below 6% of Gross Revenue.   Food costs can normally be kept below 4% while feeding the children well.  The supplies (plates, napkins, plastic ware, cups…etc.) associated with food can be purchased for 2% of Gross Revenue.  Beyond the obvious task of shopping at the wholesale clubs, try the following:
a.  Look for area organizations that connect entrepreneurs for greater purchasing power with local stores.
b.  Review organizations that you may already belong to as some of these organizations may have this type of benefit for you, but it isn’t listed as the primary benefit of the organization.
c.  Shop on-line for non-perishable items
d.  Form your own group to assist in buying in bulk.  The group only need have the common interest.  It does not have to be made solely of early education companies.

5.  Keep the cost of utilities under 3% of Gross Revenue.  While there is less flexibility in shopping utilities, there are ways to control these costs.
a.  Where the option exists, shop utility providers against one and another.
b.  Take advantage of discounts for early payment.
c.  When appropriate, open the windows and turn-off the heat or air conditioning.
d.  If you pay for snow removal, get bids for the work once a year as bids for this type of work can change materially season to season.

6.  Balance your advertising cost with effectiveness.  The best advertising expense is when a cost of zero meets an enrollment of 100%.  Very few centers or schools ever see this balance, but it does happen in cases where schools have proven themselves to so many people that they enjoy a waiting list of people hoping to enroll their children.  The first requirement is to enroll the first child and the first parent.  Then, repeat the process until free word-of-mouth advertising does the work for you.  Until that time, the more typical business world requires that your company spends advertising dollars.  In spite of the fact that it isn’t always easy, remember to track your advertising dollars so you can tell where you are over and under spending.  For example:  If you spend an additional $10,000 on direct mail, but it only yields $20,000 in revenues and $5,000 in new profits, then you will be better served to spend those dollars elsewhere.  While this example is mathematically simple, it isn’t always easy to see the diminishing margin of return for advertising dollars.  The key is to never coast.  Constantly review and adjust your advertising mix so you can continue moving toward the best advertising expense…where zero meets 100%.

What are some things you do to control expenses?

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