KPIs are financial and operational metrics we use to track the efficiency and financial health of a business. For daycare companies, there are a number of specific KPIs business owners use to monitor and improve their daycare business’ performance.
From attendance, Full-time Equivalency, customer acquisition cost, etc. this article discusses some of the most important KPIs daycare businesses should track. Let’s dive in!
1. Average daily attendance (ADA)
ADA is the number of children that attended your daycare on average per day.
To track the KPI, you have to record daily attendance for a given period (a month for example) and then divide the total by # of days your daycare is opened in a month:
Average daily attendance (ADA) = Total monthly attendance / # of days
For instance, if you operated for 20 days and the total monthly attendance was 620, then:
Average daily attendance (ADA) = 620 / 20 = 31 children per day
2. Children to staff ratio
This one is rather simple, yet it’s one of the most important KPIs to track for daycare businesses as it impacts both your operations, the quality of care you provide to the children and your profitability.
On average, a good ratio is anywhere between 4 to 5 depending on the age of the children you’re taking care of.
Children to staff ratio = # children / # staff
For example, if your daycare has 30 children and 6 full-time caregivers:
Children to staff ratio = 30 / 6 = 5
3. Churn rate
Churn rate is the rate at which your daycare is losing children and their parents as customers. Calculating this KPI enables you to track your ability to retain children in your daycare, from one period (e.g. a quarter or a year) to another.
Most importantly, churn rate typically goes hand in hand with customer satisfaction: if the children you are taking care of and their parents are happy, churn rate will be lower.
Churn rate = Children who left / average # of children
For instance, your daycare took care of 60 children on average over the past quarter, and 12 of them have left your daycare facility, churn rate is:
Churn rate = 12 / 60 = 20%
4. Employee retention rate
Another important retention (or churn) metric, but this time for your employees. Employee retention rate is the percentage of employees you are able to keep from one period to another.
Indeed, unlike very few other businesses, your caregivers and any employees in direct contact with the children have a very important role in the quality of care you provide. As such, a high employee retention rate often means a better level of care, as there is little turnover.
In addition to quality of care, training and hiring employees is costly. Therefore, you’ll save money if you can keep your employees as long as possible.
Employee retention rate =
# of employees retained / # of employees at the start of the period
For instance, if at the start of the year you had 20 employees and 2 of them left within the year, then employee retention rate is:
Employee retention rate = 18 / 20 = 90%
5. Full-time equivalency
This is an important KPI to track for daycare businesses because it helps you understand if the business is maximizing the limited schedule capacity to have as many full-time children as possible.
In addition, the FTE ratio helps the business analyze strengths and weaknesses in current scheduling and enrolment procedures and gives insight into the staff and resources necessary to cover daily operations.
Full-time equivalency =
total hours attended by children / # of available full-time hours
For instance, if a daycare has 60 registered children whereby:
- 32 attend part-time (10 hours a week on average)
- 28 attend full-time (30 hours a week on average)
Assuming the daycare can take care of 60 children full-time (30 hours a week), FTE is:
Full-time equivalency = 32 x 10 + 30 x 30 / ( 60 x 30 ) = 67%
6. Customer acquisition cost (CAC)
CAC is a common metric across various businesses, including daycare. Customer acquisition cost tracks the amount of money you spend on average to bring new children to the daycare.
Often this is a metric that people overlook at the early stages of the business, but it is important to track it once your daycare expands. It is the amount of money the business spends to get new families enrolled in the daycare.
Tracking the KPI will enable you to both price your services properly and not spend too much either on sales & marketing. CAC should be calculated over a period of time (a year for example):
CAC = sales & marketing costs / # of new children
If, during a quarter you spent $5,000 in marketing costs and signed up 20 new children to the daycare, then:
CAC = $5,000 / 20 = $250
In other words, you spend $250 on average to sign up one children. That’s the total sales & marketing cost for your to attract parents to your facility, and sign up.
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