|
NOW UPDATED FOR 2006!
The most recent benchmarking data for Child Care Centres is now available, both in print and in downloadable PDF format, with your purchase of the Child Care Centres Business Benchmarking Guide. (NOTE: 2006 updates not yet available in online HTML subscription version of this guide - please call MAUS Sales Centre on 1 300 300 586 for further info.)
This Small Business Profile presents the results of a survey of Child Care Centres for the financial years up to June 30, 2004. The survey was based on 34 businesses.
The prevalence of either single-parent or double-income households pushes the demand for child-care and pre-school places. Even with strong demand, there is still great pressure on delivering top quality care within a controlled cost structure.
One of the key cost challenges is to earn enough revenue from a centre's fixed costs: occupancy costs (whether interest and operating costs on a freehold building, or rent on a leased site), and equipment too. A core of full-time staff can be supplemented by more flexible arrangements with casuals or part-timers, to help keep this equation in balance.
Larger revenue or a larger facility can make it easier to operate at a profit (or at least not at a loss!), and the freehold vs leasehold debate is important in the overall profit mix. This guide provides answers in these key areas.
Survey Results
These are the results of a survey of child care centres. These results should not be considered to be representative of all child care centres in Australia. However, they will allow business owners to identify strengths and weaknesses in the ability of their business to generate revenue, control expenses and earn sufficient profits. This is done by identifying these elements of business performance and comparing them with benchmark performance levels currently being achieved by the sample of businesses in this survey.
Most of the child care centres in our survey were from the eastern states of Australia. New South Wales was the most heavily represented area, while there were no firms located in Tasmania, South Australia or the Northern Territory in our sample.
Businesses from capital city suburban areas and major regional cities (eg Newcastle, Geelong) represented 42% of the entire group, with the other 58% of businesses located in smaller or larger rural/coastal towns. Almost 53% of businesses owned their premises.
The following table will give you a snapshot of the variance in results found in your industry for various Key Performance Indicators (KPIs). Each KPI (shown in rows) should be considered independently of each other. For example, a business with a high percentage gross profit would not normally also have a high relative percentage of their income spent on wages.
For each KPI, the table shows the average, high and low results found in the business surveyed. The KPIs should not be 'added together' under the high and low columns as they do not necessarily relate to the same business.
The KPIs show the 4th highest and 4th lowest actual result for each performance indicator. The range of values shown therefore covers the middle 75% of reported results.
| Indicator | Average | Low | High |
|---|
| Total Income | $363,271 | $108,182 | $609,721 | | Consumable Items & Educational Resources | 3.78% | 0.97% | 6.17% | | Staff on costs | 3.94% | 2.21% | 5.16% | | Rent on Premises ~ | 9.50% | 5.45% | 15.03% | | Food & Drink | 1.89% | 0.00% | 5.04% | | Other Depreciation, Lease and Hire Purchase | 2.17% | 0.20% | 5.17% | | Interest, Bank Charges, etc | 2.11% | 0.41% | 5.67% | | Net Profit (bos*) | 17.93% | 9.58% | 35.75% | | Net Profit Margin after Owners' Notional
Salary # | 3.23% | -21.57% | 14.68% | | Subsidies Received as a Percentage of Total
Income | 44.00% | 2.00% | 75.00% | | Operating Hours per Week | 55 | 50 | 58 | | Weeks Centre Open per Year | 51 | 48 | 52 | | Maximum Enrolments at Any One Time | 53 | 29 | 75 | | Children @ 30 June per Person | 5.8 | 5.3 | 8.0 |
*(bos) before owners' salaries and benefits #including owners' notional wage of $20 per hour ~ based on just the firms which pay a rent expense
So, how does your firm 'stack up' against these averages? These results will give you an idea of where your business falls in relation to the sample and give you a better understanding of your relative strengths and weaknesses.
The remaining expense items each represented less than 3% of total income on average; however some businesses reported some larger results for such items as:
- Other Occupancy Costs of up to 6.32%;
- Repairs, Maintenance, Hire of Plant & Equipment of up to 5.68%;
- Vehicle Operating Costs of up to 7.07%;
- All Other Expenses of up to 8.61%.
To summarise this, larger businesses had:
- Higher net profit margins, after allowing for the ownersapos; wage;
- Higher staffing costs, in part reflecting fewer children per staff member. However the higher personnel productivity in the larger Centres means that apos;more wage costapos; is not a problem;
- Lower non-salary overheads;
- More revenue per enrolled child;
- Higher levels of ownersapos; equity relative to total assets.
The more profitable businesses:
- Were larger, on average
- Had better personnel productivity
- Had lower non-salary overheads
- Had relatively more employees, and fewer owners, so that profits were divided between fewer owners
- Had a higher apos;occupancyapos; factor.
| 
