Business Challenges: Part 1 - Let it flow

Just under a third (31 per cent) of nurseries went into deficit between January and July 2021, according to research from the University of Leeds. The survey of 821 nursery managers, published in February 2022, revealed significant financial challenges across the sector, which if not caused directly by the pandemic, were likely worsened by it.

Clearly the importance of balancing planned expenditure with predicted income has never been greater. ‘It is often cashflows that close businesses – money isn’t coming in at the right time, and it’s going out at the wrong time,’ says James Hempsall, director of consultancy Hempsall’s.

CHALLENGES

In recent years, cashflow has been impacted by shifts in demand, with falling occupancy rates over the pandemic period. Jo Morris, director of Playsteps Day Nursery in Swindon, says while the number of children needing places has not diminished, the amount of childcare needed has fallen. ‘Many want two or three days where they might have wanted five in the past.’ Soaring energy costs, increases to the National Minimum Wage and extra spend on cleaning products and other pandemic-related resources will also impact costs.