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Daycare Center and Family Home Forum>Home Daycare Income Frustratingly Inconsistent Please Help
gwpierce 12:49 AM 11-19-2017
Any advice would be greatly appreciated and thank you. My wife has run a daycare out of our home for almost 4 years. I recently quit my job due to medical reasons and decided to stay home to help grow the childcare. We've added a few kids to increase our income, but it's been a slow process. We are very flexible and only charge for the days the kids are actually with us. We watch 9 kids total. 6 of the 9 kids are not coming like the parents said they would and this is hurting our income big time. When we meet the parents, one of the things we discuss, of course, is our fees and we budget as such before they start, but it's not working out with kids not coming when the parents said they would. It's everything from grandma wants them today, or a baby's daddy now wants them every other week, or a friend wants to watch them. We understand grandmas have a right to watch their grandchildren, but it's killing us financially and it happens every week. For example, if everyone came as agreed upon, our income would be $600 per week, but we average $200-$300 a week. It's that bad and we can't pay bills. We never know what our income will be from week to week. We had one little girl 4 days a week for 2 years, but we now watch her 1 day a week or not at all since mom has a new friend that watches the little girl, so she uses as whenever she feels like it. If the parent's followed through with what they agreed on we would be able to meet our budget. We want to be nice and flexible with the families, but this is how we make a living and it's very serious. We just can't get ahead and we are broke. We take 1 step forward and 3 steps backward over and over again. We love these children and their families, but we are stressed and frustrated to the max, about to panic because we can't pay the mortgage. We are wondering if we are too nice with how we charge and should charge a flat rate every week whether they use us or not, but we really don't want to do that. Sorry for the rant and thanks for listening.
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nannyde 05:57 AM 11-19-2017
Originally Posted by gwpierce:
Any advice would be greatly appreciated and thank you. My wife has run a daycare out of our home for almost 4 years. I recently quit my job due to medical reasons and decided to stay home to help grow the childcare. We've added a few kids to increase our income, but it's been a slow process. We are very flexible and only charge for the days the kids are actually with us. We watch 9 kids total. 6 of the 9 kids are not coming like the parents said they would and this is hurting our income big time. When we meet the parents, one of the things we discuss, of course, is our fees and we budget as such before they start, but it's not working out with kids not coming when the parents said they would. It's everything from grandma wants them today, or a baby's daddy now wants them every other week, or a friend wants to watch them. We understand grandmas have a right to watch their grandchildren, but it's killing us financially and it happens every week. For example, if everyone came as agreed upon, our income would be $600 per week, but we average $200-$300 a week. It's that bad and we can't pay bills. We never know what our income will be from week to week. We had one little girl 4 days a week for 2 years, but we now watch her 1 day a week or not at all since mom has a new friend that watches the little girl, so she uses as whenever she feels like it. If the parent's followed through with what they agreed on we would be able to meet our budget. We want to be nice and flexible with the families, but this is how we make a living and it's very serious. We just can't get ahead and we are broke. We take 1 step forward and 3 steps backward over and over again. We love these children and their families, but we are stressed and frustrated to the max, about to panic because we can't pay the mortgage. We are wondering if we are too nice with how we charge and should charge a flat rate every week whether they use us or not, but we really don't want to do that. Sorry for the rant and thanks for listening.
The definition of "flexible" or "flexibility" in child care is "loose money". Go through your post and substitute "loose money" with each time you say flexible.

Many providers attempt the business model you have but quit or go broke and quit because they can't make a living doing what is REALLY drop in care at a fifth of the weekly rate per day.

If you are going to do drop in care then charge drop in care rates per day. Charge it for every day they use even if they actually do show for a full week.

You need to offer to them that they play a flat weekly rate or they pay a drop in rate. The drop in rate should be between 1.25 to 1.5 x the daily rate (one fifth of the weekly rate). The 1.25 x should be for the three days or more kids. Look at this Center's breakdown of half days all the way to five days per week.

http://generationnextia.com/new-page-1/

Here's mine from 2013 that models a minimum of three days per week and a sliding scale of fees based on a max of nine days and departure time.

http://www.nanshouse.com/fees.htm

When you switch to a flat weekly rate or a daily rate that is higher than what they are paying you will loose clients. There are parents out there who will only go with pay by the day providers that are cheap. As soon as the provider goes broke or changes the fee structure they just leave and find another.

There are parents who have their kids in tons of daycares before kindergarten by doing this. Their kid may have to switch daycares a lot but by Kindergarten they have pulled off cheap child care compared to the ones who pay a flat weekly rate. Over the years, as you can see by your income loss, it's many many thousands of dollars difference. Some providers believe this is bad for the kid but when it comes to the kids parents money it is excellent.

My concern is that you have this great deal and you still aren't at capacity. With nine kids at 600 a week if everyone came.... I'm hoping most of those kids are part timers not full timers. If they are full timers your rates are very low.

I don't know where you live though.

It's just a business model that doesn't work for the provider but it is excellent for the parents. You tried it and it doesn't work for you. Time to switch over. If you charge drop in you do NOT guarantee a slot and you don't allow ANY switching of schedules. They need to give you their schedule for the upcoming week... pay for it in ADVANCE... and no switching days. If they don't come one day you don't credit it towards another.

Good luck. Maybe some providers can come along and help you with whatever is causing you to have to do this system and still not be at the capacity you want. I advise going through the archives here all the way back to the first post available and start READING every thread that has ten or more posts to it. Read it backwards to present day. This will teach you more about how to do daycare than any book on the market. Your situation comes up a lot so you will see many threads with this.
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Josiegirl 06:24 AM 11-19-2017
What is your local market like? Flexible means convenient, easy, cheap for parents. But it means losing lots of income for you. If you truly want to make a go of this financially, PLEASE change things around to what YOU need for it to work. Do you network with other local providers, so that you have an idea of what's going on with all of them? Try to do that because it will make you feel more confident taking control of your business. I've been doing this 30+ years and it's been years of learning experiences, even up to the current day. Last year, attending a network meeting, providers were discussing how much they charged. I was dumbfounded. Why? Because I found out I was charging $20+ less than everyone else!! I was so out-of-the-loop because providers aren't supposed to discuss fees. And we're not even talking about centers which are charging $75 more than in-home providers. So what I did was increase my rates by $5 a week, every 6 months, until I hit everybody else's fees. New dcfs automatically get charged my new rates.
If your state regulations are near what mine are, I can have 6 FT dck, with 4 SA(PT during school year but FT during vacations) dcks on top of that. If I only took a dck here or there, it ruins my FT opportunities so I'd make much less and, like you, would NOT be able to pay my bills. DO NOT let yourself become less important than your dcfs; do what works for you!! I bet if you had just 2 FT dcks, you'd make as much as you do with all this schedule changing you have to do.
Good luck!!!
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AmyKidsCo 01:01 PM 11-19-2017
The thing is, parents will always, always, always do what's best for them. Even if they nod their heads that they understand this is your livelihood. Even if they say they're planning to bring their child 4 days a week. When push comes to shove, they'll do what's best for them.

I can't blame them - we all do it. We shop the store that
has the sale, buy the brand we have a coupon for, stay all night to get the Black Friday deals. (Not me personally but many people.)

Your best bet is to start charging by opening and contract. If they want a full time opening available to them they need to pay full time. If they contract for 4 days they pay for 4 days and if they have to pay for 4 days I'll bet the child will come 4 days.

There's other ways to be flexible - Blackcat has a great fee structure where parents get a discount for picking up early. I offer occasional late pick ups without a fee.

Good luck!
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Snowmom 02:00 PM 11-19-2017
As long as you continue to use the 'pay what you use' fee structure, you will always lose money.

The best thing you can do: read through the history of posts here. There is an abundance of knowledge here that will help you restructure and be profitable.
But yes, the first you change is the fee structure! They pay for the guaranteed position in your daycare, not for the time they actually use you or in this case; don't use you.
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storybookending 04:16 PM 11-19-2017
How many children are you able to take with the two of you? Are calls coming in and you having to turn away business due to the current children having such unreliable schedules? Are your rates comparable to that in your area?

When I first started 1.5 years ago I did the same thing as you and didnít charge for the time the children were not in care. 4 of my 6 children are on this contract and I cringe thinking about the money I lose every week, one family with 2 kids never attends Mondays so thatís income loss on two kids for one day every single week.

As new families have come in I have changed how I structure things and every child enrolled from here on out will be charged based on enrollement, not attendance with a weekly flat rate. They pay me 10 holidays and they get 10 days for absenses for whatever reason whether illness or vacations. They know this up front.

You could change your policies for all new children if you can afford to wait it out. I think that is what I am planning on sticking with, yes I am losing income on 4 of my 6 children currently but I am still able to pay my bills with money to spare, which is what is important.

You could start by raising your daily rates slightly and hope to not lose anyone if more money now is what you are seeking.

You could advertise for full time spaces with a new contract and as you garnish interest terminate the contracts of your current families. If I were you and I chose to go this route I would line up a client that wants the full time space and then terminate the child with the least reliable schedule first. Tell the family you are unable to accommodate drop in/part time schedules and offer them the newer full time rate. If they leave youíll still be making more money by replacing them with the full time client and if they take the bait and pay for the spot then move on to the family with the next most unpredictable schedule and work from there. Slowly you should be able to get your business to where you want it.

I agree with the previous posters on reading through old threads, I do it all the time. So much useful information.
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amberrose3dg 04:50 AM 11-20-2017
You need to charge for the spot asap and not for when they are there. Of course they will have someone to always watch them and use daycare as a backup. I get 5 of those calls a day wanting a special. It might take you a little time to fill those spots with families that will respect your rules but it is worth it and you will know how much income you have each week.
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DaveA 05:00 AM 11-20-2017
Originally Posted by storybookending:
You could advertise for full time spaces with a new contract and as you garnish interest terminate the contracts of your current families. If I were you and I chose to go this route I would line up a client that wants the full time space and then terminate the child with the least reliable schedule first. Tell the family you are unable to accommodate drop in/part time schedules and offer them the newer full time rate. If they leave youíll still be making more money by replacing them with the full time client and if they take the bait and pay for the spot then move on to the family with the next most unpredictable schedule and work from there. Slowly you should be able to get your business to where you want it.
I would go this route ASAP.

Like the other posters said- you need to be charging for enrollment not attendance. If you're wanting consistency full time enrollments should be your priority.
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amberrose3dg 05:17 AM 11-20-2017
I just want to point out a few things.
1. The main reason 99% of daycares that stay in business charge for the spot is because of what you are going through.
2. We plan to have X amount of children each day and that means supplies, food, crafts etc..that are purchased for those children. Not only are you losing money on the spot you are probably losing money on purchases also.
3.Better "clientele"- changing your charging structure will weed out the bargain "Shoppers". Sorry if it sounds rough but it is true. The families like that are really hard to please and will most likely be your biggest headaches.
4.As several have suggested. I would advertise find one or two families to start that are willing to abide by these rules. Once they are in place give notice to your most inconsistent ones. Offer them the to sign a new contract and terminate and replace as needed.
The way I see you do not have a real contract as they are only paying for it as they use it. You have a right to terminate services.
I do not know any businesses that can operate on a guess who basis.
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Mom2Two 02:48 PM 11-20-2017
So I'm one that does charge by attendance, but what you are describing would be hard to deal with for sure. I haven't had too much of that happen to me.

How many are you licensed for? If you are licensed with 16 with your wife, maybe you could change up your policies a bit for the next families you enroll. If you still want to be a bit flexible, you could limit how many "freebies" you give in each pay period. So for example, if I were to do that, I might say that I only charge for attendance, but there's a limit on 5 days each month. And for some people, even that much would be a lot of unpaid days. Some might say only one or two.

I personally want to keep my flexibility for now, but that's a lot because I am licensed for eight, but I don't really want eight children here most days. So while I do have nine enrolled, I typically have 5-6 here each day.
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Blackcat31 03:39 PM 11-20-2017
Originally Posted by Mom2Two:
So I'm one that does charge by attendance, but what you are describing would be hard to deal with for sure. I haven't had too much of that happen to me.

How many are you licensed for? If you are licensed with 16 with your wife, maybe you could change up your policies a bit for the next families you enroll. If you still want to be a bit flexible, you could limit how many "freebies" you give in each pay period. So for example, if I were to do that, I might say that I only charge for attendance, but there's a limit on 5 days each month. And for some people, even that much would be a lot of unpaid days. Some might say only one or two.

I personally want to keep my flexibility for now, but that's a lot because I am licensed for eight, but I don't really want eight children here most days. So while I do have nine enrolled, I typically have 5-6 here each day.
Are you the sole income for your family?
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Mom2Two 03:41 PM 11-20-2017
Actually, now that I think of it, one of my part-time families started becoming unbearable part-time this Fall. The mom had told me several different versions of what their routine would be, and it got beyond what I could live with.

I ended up making a new contract with a minimum fee for every two weeks. It was low but it was what I could live with. That way I could still give that flexibility, but if they fell below that amount in that two week billing period, I just added on a "minimum charge" fee to bring it up to my minimum total. If they had fees for not bringing supplies or policy violations, I added those fees on top of the minimum care charge.
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Mom2Two 03:45 PM 11-20-2017
Originally Posted by Blackcat31:
Are you the sole income for your family?
Not following why the question. I'm not the sole provider but we do need my income.

As I said, I have more kids enrolled than what I actually want, so the flexibility works for me. Also, most of my families haven't done what OP describes--just the one that I mentioned above, and I went to the minimum care fee.

It doesn't work as well during the holidays though.
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Blackcat31 04:03 PM 11-20-2017
Originally Posted by Mom2Two:
Not following why the question. I'm not the sole provider but we do need my income.

As I said, I have more kids enrolled than what I actually want, so the flexibility works for me. Also, most of my families haven't done what OP describes--just the one that I mentioned above, and I went to the minimum care fee.

It doesn't work as well during the holidays though.
Most providers I know that operate on a "pay for use only" option aren't the only income for their family.
If you were, I was going to press you to spill your secret to budgeting and finances....
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ChelseaB 05:02 AM 11-21-2017
Agree with everyone else. The option I offer for my families is this:
FT families may choose their flat rate based on tiered rates (i.e. 2 and older: M-F, 7am to 4 is $100; to 5 is $105; to 6 is $110)
Or PT families may choose their rate based on the tiered rate, too. Of course, itís anywhere from $5 to $15 more per day, depending on the circumstances. But where I offer that flexibility, it is also a rate that is due every single week. They need 3 days/week? As long as Iím willing to accommodate that because it fills my schedule adequately, I will do so. But they will pay for all 3 days regardless!
I did what youíre doing ó maybe 6 months in, I switched it. I only lured in the daycare jumpers and non-quality clients who did not respect me nor my business. You can offer OPTIONS, which, in my experience, the good clients appreciate. But you can only do so in the capacity that makes your business profitable/to meet your needs.
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Tags:daycare, drop in care rates, frustrating, income, rate structures
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