{"id":501,"date":"2010-04-04T17:22:29","date_gmt":"2010-04-04T21:22:29","guid":{"rendered":"http:\/\/www.solutions4childcare.com\/index\/archives\/501"},"modified":"2020-08-25T22:52:47","modified_gmt":"2020-08-26T02:52:47","slug":"understanding-break-even-in-your-child-care-business","status":"publish","type":"post","link":"https:\/\/www.solutions4childcare.com\/index\/understanding-break-even-in-your-child-care-business\/","title":{"rendered":"Understanding Break-Even in Your Child Care Business"},"content":{"rendered":"

\"table<\/a>Understanding Break-Even<\/strong><\/p>\n

Break-even is the minimal amount of income\/revenue a child care center must earn to cover all expenses without losing money or making money.\u00a0 Therefore, all income above the break-even point would be profits.<\/p>\n

To calculate your center\u2019s break-even, add up all of the operating expenses for a month, i.e. labor, supplies, rent, insurance, etc.\u00a0 The total expense number should be divided by 4.33 to determine a weekly break-even.<\/p>\n

Example:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0All operating expenses for one month = $50,000 (monthly break-even)<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $ 50,000 (operating expenses)<\/span>\u00a0\u00a0 = $ 11,547 (weekly break-even)<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.33\u00a0\u00a0\u00a0 (weekly)<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

You would also want to calculate the enrollment needed to break-even.\u00a0 For example, if your average weekly rate is $ 100.00 x 4.33 = $ 433.00 monthly<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/strong>$ 50,000 (operating expenses)<\/span><\/strong> = 115.47 break-even enrollment<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $ 433.00 (monthly average rate)<\/strong><\/p>\n

In order to break-even, your daily enrollment would need to be approximately 116 children.\u00a0 With an enrollment of 116 you would not lose money, but you would not make a profit.\u00a0 Of course, the goal of a business is to make a profit.\u00a0 The break-even point is a variable number and can increase and decrease based on operating expenses.\u00a0 You should calculate your break-even at least once every quarter.\u00a0 Knowing your break-even can assist you with:<\/p>\n