Making your childcare business a success

The executive summary is usually contained on a single sheet of paper at the front of your business plan – it summarises what you intend to do, plus why, when and how. It should also be interesting enough to draw the reader in! But as the summary page captures the essence of the whole document, it needs careful thought and should be written last of all, when all other sections have been completed. If you don't do this, there's a risk that the summary won't match up with the rest of your plan.

It's a good idea, too, to have someone not familiar with your project to read the executive summary – and the whole plan, if possible – and give constructive criticism.

This short section, usually not more than a single page, sets out your overall aims and more detailed objectives. The relationship between the two is that to achieve your aims, you must first achieve your various objectives.

For instance, your aim might be: 'To offer the highest standard of daycare for children aged 0-5 in Southampton through an inclusive, affordable and appropriate service for local communities.'

Your objectives might include:

• Quality assurance scheme for services
• Offering reserved places for children in most need
• Providing emergency places for children in acute need or at risk
• Operating on a not-for-profit basis, while ensuring the sustainability of services
• Delivering flexible care that meets the needs of families and children

It's useful to set the scene for the business plan by describing what your project/business is now, perhaps, or who you are, what your experience is and why you want to do what you are proposing. Don't go into too much detail here on future plans however, as the executive summary and main plan will cover them in full.

As an example, you might say:

'Ours is a voluntary project that has been running a successful pre-school in Southampton for the past 15 years. Although our current services are well used and valued, we have recognised the need to develop additional early education places that offer wraparound services to working families within our local community based upon research undertaken and demand from parents.

Our organisation has a constitution and operates on a not-for-profit basis. As we develop these new services our management committee will take on more liabilities. We are considering, therefore, limiting this liability by 'incorporating', that is, becoming a company limited by guarantee, through registration with Companies House and adoption of the charity's Model Memorandum and Articles of Association.

The existing voluntary management committee and staff are committed to developing this new project on the East side of the City, and aim to have the new services up and running by April.

Our existing pre-school offers early education for 10 sessions a week. We will retain this service, but also want to extend our services by providing a second group offering five early education and extended childcare sessions each week, for a further 26 children. Based upon our experience and knowledge, we believe this service will be of the highest quality and valued by our local communities.'

This section of your business plan is one of the most important – it's where you need to demonstrate the need or demand for your new services. This might include statistical information such as the growth in population and live births, the increasing number of employers and rising employment in the area, or the level of lone parenthood or types of deprivation.

But what you include will depend on the services you want to offer. For instance, there's no point saying you want to develop services for full-fee or profit-making places if you're in the middle of nowhere and families can't get to you. And if you give statistical information, you should also give references, i.e. you should state where you got your information from. You could also attach detailed information as an appendix. We will cover appendices in a later stage of 'writing a business plan'.

Examples

Here's an example of statistical research:

'There is a rising birth rate in our catchment area – rising from 423 live births in 2004 to 670 in 2005 (ref. 1). There is also a predicted steady rise in employment, with six per cent unemployed in 2004, set to decrease to 4.7 per cent in 2005 (ref 2). This demonstrates a growing need for daycare for parents and/or families either returning to work or taking up work locally.'

Reference source: (1) Health information on live births, PCT, 2005; (2) Employment Service and DSS reports, 2005.

Always put reference sources at the foot of the page, so they don't interrupt the flow of your writing and, possibly, the reader's understanding of your evidence.

Other examples of need/demand are evidence of parents requesting wraparound services, and figures showing how full other local facilities are. In presenting information on need, you must be specific about the area you intend to target. There's no point telling the reader how little daycare there is in Hedge End, for example, if you plan to develop services in Millbrook. This might seem obvious, but it's remarkable how many projects make simple mistakes in this part of their business plan.

Southampton childcare audit and gaps analysis

In common with many local authorities, it has always been the practice in Southampton to gather information to inform the planning and development of childcare in the city. The Childcare Act 2006 formalises this process, and requires local authorities to undertake a thorough ‘Sufficiency Assessment’ every three years, and to update this information regularly in the interim periods. The information in this audit was collected between April and August 2013. It was collected from a variety of sources:

• Ofsted
• Inland Revenue
• Childcare providers
• Consultation
• Users of the Children and Young People's Information Service
• Index of Multiple Deprivation
• Southampton Universities Hospital Trust
• Southampton City Primary Care Trust
• Education Support and Planning Services
• Community Safety
• Property Development
• Children and Families
• Day Care Trust

As mentioned elsewhere, you will need to report on your competitors – that is, existing projects or those planning to run similar services to yours. Your chances of success will be greater if your project will be significantly different from existing ones, or if you can demonstrate that demand is outstripping supply in the area.

Summarise here the information you have collected on the differences between projects, and on levels of demand and supply. For example, if there's already a provider offering wraparound services in your area, but it only opens twice a week and you have evidence that there's a need for services everyday, set this out here.

Remember, too, that the reader might not be familiar with your area or the childcare situation, so be clear and concise. You could also attach detailed information as an appendix.

A simple 'SWOT' analysis will help you and the reader see the strengths and weaknesses of your project, as well as the opportunities and threats you should bear in mind. Generally, strengths and weaknesses occur inside your project, while threats and opportunities are found outside.

For example, the strengths of a pre-school might include its long standing, strong reputation, and experienced local staff. A weakness might be the high rate of turnover among volunteer parents and management committee members. A growth in demand due to a new housing development would be a clear opportunity, and the arrival of another daycare provider in the area would be a potential threat.

A SWOT analysis might read, for example:

Strengths

• Strong reputation
• Experienced, local staff
• Long standing

Weaknesses

• High turnover among volunteers and committee members

Opportunities

• New housing development nearby

Threats

• New daycare setting up nearby

A question for you: how are you going to get people to purchase, or to sign up for, what you're offering? Whether you're a private or voluntary provider, you'll have a certain set of customers you want to attract, and you need to set out here exactly how you plan to attract them.

There is more information about marketing your service.

Promotion

There are many ways to promote your new services, including leaflets, newspaper advertisements and posters. But there are lots of alternatives, too, which are often more effective and much cheaper.

Publicity

Working with the media (that is, newspapers, journals, local magazines, radio and even television) can be very effective. Developing contacts within the media often results in positive coverage of your services, and you should say here how you intend to work with the media to generate publicity. This might involve writing and targeting press releases, or maybe even developing a comprehensive advertising strategy.

As you work on promotion and publicity, consider the unique selling points (USPs) of your business. What makes your service different from other projects? It might be organic food for children, for instance, or a nappy service, or sponsored trips to a conservation zoo each year. The more USPs your business has, the more reasons parents and carers have for choosing you. Once you've listed your USPs, consider how you can best communicate them – through the press, through advertising or, best of all, by word of mouth.

Consider, too, how you will relate to families and children, if they don't find your services attractive, you won't have a business to run! Ask children, parents and carers what they like and dislike about what you offer, and whether they have any ideas for new or improved features. You can't be all things to all people, of course, but you can and should be committed to listening to other people's ideas.

The new services

Give a summary here of the new services you want to develop. You've already set out the need for the services and said how you will promote and market them, so by now your reader should be eager to find out more.

Be enthusiastic and clear, but above all be realistic and never promise things you can't deliver. If there's something you would like to offer – on site toy library, say – but you can't offer yet, say exactly that. If you stretch the credibility of your project, your readers' faith in you will rapidly disappear. Even if this plan is for your own use and you have lots of ideas for the future, be clear and honest about what you can deliver and when.

Premises

You will need to include something in your plan about the premises you intend to use. If these are existing premises, then say how they will be suitable for the new services, or how you intend to improve them so that they become suitable.

If you plan to use new premises at a new site, give their location and other details such as size, layout and availability. Again, say how they are or will be suitable for the services you are proposing. If you have lots of information to present here, it might be best not to overwhelm the reader, but instead to include the information in an appendix.

People and resources

The success of a business is almost always down to the people who work with and for it, whether paid staff or volunteers. Most funders, for instance, want to know the strength and experience of the team involved before they will lend any money. You can have the best ideas and research in the world, but without the right people to turn your ideas into reality, you will have nothing.

Give a brief summary here of the people who are or will be involved. For example, you might already have a strong team, but lack someone experienced in managing the refurbishment of your new premises. In this case, say how you will overcome this weakness. If you refer to an outside company, don’t just give their name, but explain that you've seen their work on similar projects and are happy with it, and that their costs are reasonable.

If you are applying for a grant, however, you might have to go through a competitive tendering process to find the best builder and architect. If so, you should still refer to companies you are familiar with, as examples of the type of organisations available to help you.

Don't include CVs or mini-biographies here, as it will distract your reader. Instead include such information under an appendix, and refer the reader to it.

It's a good idea to include a risk assessment either in your business plan or as an appendix. A risk assessment simply sets out how you will deal with things that might go wrong.

For example, if you want to offer services for children aged between three and 10, but there's a risk of not getting Ofsted registration in time, you might decide to offer services for eight-year-olds and upwards as a start, while waiting for registration for the younger children.

Another example might be an organisation which relies to a large extent on its chairperson, say, who is experienced in project management. In this case, you might consider recruiting a 'shadow' chairperson to work alongside the existing one, so developments don’t get delayed if the existing chairperson decides to retire or go away on holiday for a considerable time.

This part of your business plan is one of the most important - many lenders and grant-givers will read the executive summary and then turn straight to the finances. They know all too well that any organisation whose figures don't add up is destined to fail.

This section of your business plan should include:

• a budget (including capital and revenue costs)
• a cash flow forecast
• a profit and loss account
• a balance sheet

The Action Plan should include timelines (commonly known as Critical path analysis) indicating what is going to happen, when, and who will be responsible for the action.

For example, renting new premises, refurbishing the premises, recruiting new staff, buying equipment and marketing your services can't sensibly happen at the same time. By working out how long these and other phases of your project will take, and then putting them in the necessary sequence, you can see whether you need to reassess your proposed timescale, for instance, or to employ extra staff.

You don't have to include a critical path analysis in your business plan, but carrying one out is always a good idea. You can include it in the body of the plan, or attach it as an appendix.

An appendix is simply a document, attached to a business plan, which offers additional, more detailed information to that given in the body of the plan.

Be careful, though, how many appendices you attach to your plan. Too few will leave the reader with unanswered questions, but if you fill umpteen appendices with irrelevant information, you will lose the reader's interest.

Generally, the things you should include are:

• Detailed evidence of the research you mention in the plan – if there is too much to include, say that it is available on demand
• Mini-biographies of the people involved
• A location and site plan, or a photograph, of your current or future premises
• A list of the equipment you need to buy, including prices and stocklists 
• Support or endorsements – letters of support from the local school, college or social services, for instance, or a summary of comments made by users, (a) on your existing services, and/or (b) on their support for any new services.