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Three solutions for childminders who fear losing business to the 30 hours problem

In September 2017, each childminder will have to decide for themselves whether to offer parents some or all of the 30 funded hours. With the new funding rates, some childminders will find themselves better off and that offering the 30 hours could even be a good business opportunity. But many childminders are worried that they will HAVE to offer funded hours, and at less than their current hourly rates, or risk losing business to nurseries and other childminders. The uncertainty of the hourly rate, poor communication from some local authorities and anxiety about planning ahead is making this a very stressful change for many childminders.

 

What should you do if you feel you HAVE to offer at least some of the funded hours? 

Not everyone feels they have a choice when it comes to offering the funded hours. Many childminders feel they will HAVE to offer the 30 hours or they will lose business to nurseries or other childminders who do. So if you are going to offer the 30 hours, here are three things you should consider:

 

 1. Look into how you can exploit the ‘top up loop hole’.

hobsons choice childminding service - childminding humourThe legislation is leaving a nice loop hole that you can and should exploit about “extra charges”. Many local authorities refuse to call them “top up charges”, but that is essentially what they are. For example, if you are currently charging £5 an hour and your local authority says it will pay you £4 an hour for funded children, then you should seriously consider charging parents £1 an hour directly for ‘activities, outings and food’ etc. so that you are not out of pocket. I’m sure with a bit of creativity you can work this loop hole to make sure you don’t end up worse off under the funding. You will have to be careful about how you phrase this because the extra charges are not supposed to be “compulsory” or “conditional on taking up the space”. But I do feel that these extra charges give you some flexibility around your hourly rate and could be applied creatively where needed.

 

2. Look into “blended care” and find a partner now

Lots of parents are expected to split their 30 hours between different carers, such as a pre-school and a childminder. The government thinks that lots of parents will want to do this, and it could be a good business opportunity for you if you grab it now. If you plan to offer “blended care”, then you should get in contact with your proposed partner as soon as possible. Check out some working models of how you might offer blended care on the 30 Hours Toolkit published by the Families and childcare Trust.

3. Consider putting your prices up on under 3s and after school care

While this sounds awful, it may be necessary and I know that some nurseries will make up the shortfall in their funding this way. Many nurseries charge more for baby rooms now because of the extra staff needed, so if nurseries will make up the funding shortfall by putting their prices up in their baby rooms, why shouldn’t childminders?  If you feel pushed into offering care at a lower rate than works for you, then this is certainly one option you could consider.

 

Approach this an opportunity not a threat

Really consider carefully whether you should do the funded places or not. Don’t just throw the idea out as impossible, or reluctantly take that pay cut and feel angry at the world. Make a business plan and work out how much this is likely to cost you (or benefit you) with realistic estimates of how many children you are likely to have on your books at any point in time.

It is also important that you talk to YOUR parents so you get a feeling for what they will be likely to do – will they stay with you even if they have to pay a “top up fee”, or will they run for the cheapest care option going?

The most important thing to remember over the next few months is to have the attitude that you are not going to let nurseries or other childminders steal your business. Don’t let yourself slip into the feeling of inevitability, that it is all somehow out of your control and the government is going to destroy your childminding business!  Every childminder is in a different situation so do be very careful not to pay too much attention to every horror story you read on Facebook which could be very different from what will be happening in your local authority. You can and will retain and even work all this change to your advantage, if you stay on top of the changes, plan ahead and keep a positive attitude.

 

Two articles from industry leaders with sensible 30 hours’ information

If you are worried about the introduction of the 30 hours – then have a read of these two articles which are the two best sources of sensible information I’ve read on the subject to date:

This article by Pacey will put your mind at ease about a lot of the rumours you might have heard, so read this, including the comments section.  It’s a good article and answers a lot of questions.

This article from Nursery World gives you information on the national funding formula minimum rate and what that means for childminders.

You might also want to read my blog about hourly rates and setting sensible pricing:

 

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Sign up for the free quarterly Childminding Best Practice Newsletter using the orange sign up box on my website and I will send you best practice ideas, childminding news, EYFS tips, outstanding ideas, stories from other childminders, arts and crafts project templates, new products, and links.

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About Kay Woods and Kids To Go

Kay Woods Kids To GoKay Woods has been writing and selling childminding resources through her company Kids To Go since 2008. Her products include the Ultimate Childminding Checklist, the Learning Journey Plus for planning, observation and assessment and best practice resources promoting diversity, safety and childminding in the great outdoors (Forest Childcare). She is the author of the Start Learning book set published by Tarquin and she writes the free quarterly Childminding Best Practice Newsletter.

Lots of places offer help to childminders. I provide solutions.

http://www.kidstogo.co.uk/childminders/childminding.html

If you pay peanuts, you get monkeys (for childminders)

I have always hated this expression from when my very first boss would use it. ‘If you pay peanuts, you get monkeys’ he’d say. The problem was, he DID pay peanuts. So every time he used the expression, he made me feel that was how he thought of me. He paid peanuts. He’d hired a monkey. Me.

 

Childminding pricesDon’t let parents pay you ‘peanuts’

Feeling that you are being paid peanuts is awful. Feeling undervalued in any job is demoralising, but when you are childminding it can feel doubly awful because you are the one who sets your own prices. It is not parents who are paying you peanuts. When you are self-employed, you are the one who decides what you are ‘worth’. You are no longer the victim of a horrible boss.  You have undervalued yourself. If you let these feelings go ignored you can end up resenting the parents, your partner, other childminders and ultimately the children you care for.

 

But how much is ‘peanuts’? What is a GOOD hourly rate for a childminder?

This is a difficult question because childminding hourly rates vary enormously across the country from as little as £3 per hour (per child) to as much as £7 an hour. If you are childminding in many parts of London, for example, then you may feel you are being paid peanuts if you are paid only £5 per hour, when that same hourly rate would put you near the top of the hourly price range in many other locations across the country.  So when you compare yourself to others, make sure it is to other childcare providers in YOUR area.

 

When you are just starting out, how should you decide a good hourly rate?

If you are new to childminding the best way to decide on an hourly rate is to look at what other childcare providers in your area charge. This will also give you a good idea about the ‘market’ in your area – in other words – what parents are looking for and what they are willing to pay. You should find out what both nurseries and childminders in your area charge per hour.  As well as looking at the prices, you should also look at what is offered for those services.

Here is an example. It’s actually a real example of how I decided my original hourly rate TEN years ago in Slough (home counties) where I was trying to set up my childminding business.

The very cheapest childcare in my area were childminders who charged between £3.50 and £4.50 per hour. Next on the scale were many mid-range nurseries that charged between £4.50 and £5.50 per hour. The services these nurseries and childminders advertised all seemed very standard. The “best” nursery in our area (with a waiting list) that took the children to swimming lessons, had Ofsted outstanding and cooked lunches on the premises charged £5.50 per hour. The most expensive childcare in the area was an outstanding childminder who had been childminding for 15 years from her farm location outside of the city. She charged a massive £6.50 per hour and always had a waiting list.

So, where I lived, it seemed reasonable that parents would be willing to pay somewhere between £3.50 and £6 per hour for childcare, depending on the type of service I decided to offer.

 

How do you decide on your ‘price point’?

Once you have the range of prices in your area, you then need to make a decision about how you want to fit in on this scale. You also need to consider your ‘market’. Do you have lots of parents willing to pay high end prices in your area?  Or do most people where you live want the cheapest childcare going?

Suppose you decide to become one of the most expensive childminders in your area? If so, you will be competing with the top nursery, nannies and other top childminders in your area. If you are going in at the ‘top end’ then what services are you going to offer to parents that will make your higher prices justifiable to them? How will you compete with the nursery that offers ‘swimming lessons’ or the ‘growing up on a farm’ experience offered by the top childminder? This is especially difficult if you are new to childminding as many top childminders and nurseries have years of experience and the reputation that goes with it, neither of which you have if you are new. One of the key benefits of deciding to offer a top end service is that you often attract parents who want longer hours for their children. So you get the added benefit of longer, contracted hours at a higher hourly rate. Getting rated ‘outstanding’ by Ofsted can be a huge benefit if you intend to go in at the ‘top end’ and there is no reason why you shouldn’t try to attract parents who are looking for ‘the best’ even if you are new as long as there are enough parents in your area looking for that service.

Alternately, you may decide to go in at the lowest cost end. You may want to try and offer cheap and no frills childcare – like Easyjet for parents!  Parents bring their own food and snacks and children can come and go flexibly. Many childminders who offer a low cost childminding service are happy to be flexible regarding hours and this suits and helps many parents enormously. The low cost business model for childminding can make it easy to attract many parents, especially parents who have low paid jobs themselves where they are making only marginally more per hour than they pay you to look after their child.  The downside is the lower rate, and the risk that taking children for five hour slots in a day can make it impossible to take on full timers.

Other childminders decide to go ‘middle of the road’ on their prices. Childminders who choose this option are not trying to compete with nurseries or nannies, or with childminders who offer low cost. If you go middle of the road with your prices then finding ways to stand out is crucial if you want to attract parents. You have to think very carefully about what makes your service unique.  If you are neither the cheapest, nor the best, why else should parents call you, instead of the next childminder on the list?

When I had to make this decision ten years ago now, I decided that I wanted to go ‘top end’ and offer a quality service. I couldn’t possibly compete with the childminder with 15 years’ experience who raised children on her farm. But I felt that by having all-inclusive prices, home-cooked meals and weekly outdoor ‘Forest Childcare’ outings, I could easily compete with the top nursery in our area. So I matched my hourly rate to theirs offering ‘all the benefits of a nursery but in a home environment’. That was my tagline. And it worked for me.

 

Are parents really looking for the “cheapest childcare”?

Don’t get me wrong. Many parents really do choose a childminder because it is the cheapest childcare can they find. But for the vast majority of parents, price is only one small factor in the decision. Parents will pay more for childcare if you give them a reason to. They will find money if you give them a reason to spend it. So don’t start off by assuming that the only way you will attract new parents is by undercutting the competition. Setting your prices too low can result in you regretting it later on by feeling undervalued for the work you do.

 

Low prices may actually put some people off

Many parents think that they are looking for cheap childcare. But really they are looking for ‘the best childcare they can afford’. Many parents (people) believe that if they pay more for something that it must be better. They may actually seek out higher hourly rates because they will feel that if they are paying more, then what they are getting must be better.

Recently I had to buy a new toaster. I walked up and down the rows of toasters in the shops horrified at the range of prices and weird and wonderful extras I could get for an appliance that I essentially wanted to be able to ‘heat bread reliably at breakfast’. Did I buy the cheapest toaster? Even though it did exactly that? No, because somehow I allowed myself to believe that some of the extras I was being offered might be worth it. But more importantly because when I looked at the cheapest toaster I thought to myself ‘what’s wrong with it?’ Why is it so cheap?  It must not be any good if they are selling it that cheaply. It will probably break in a year.

 

A parent who pays peanuts can get a childminder who feels underpaid and undervalued

Feeling respected is very important to people’s wellbeing. When you feel that you are being paid less than other childminders, this can seriously harm your enjoyment of the job. If other childminders in your area charge more than you, then think about the impression you are giving parents about the service you offer and consider putting your prices up.

Many childminders still charge the same fees per hour as they did 10 years ago. It is easy to say be brave and tell parents that you are putting your prices up. But this is so much easier said than done.

 

Give yourself a clause in your contract about reviewing your prices

If you are starting out, then make sure you put a clause into your contract that tells parents your prices are renewed annually at a certain date (1st April for example). Then it will come as less of a shock to parents that your prices are being reviewed and are going up. And you won’t feel guilty asking because it was in your agreement.

 

How to put your prices up if you don’t have a review clause in your contract

Putting your prices up takes a lot of nerve and you are right to feel nervous about it. You don’t want to upset families and drive them away. But you also don’t want to grow increasingly resentful of them (and their child) which can happen if you ignore your feelings.

If you look after just one family, then you may want to discuss your feelings regarding the pay rise with them and come to a mutually agreed amount. If you explain how you feel, perhaps in a letter, not in the morning as they are rushing to work, or when they are tired and their child is whingy at collection time, but when they can sit down and discuss this together, then you may all be able to come to an agreement that is reasonable and will keep everybody happy.

If there are multiple families involved then I wouldn’t ask their permission if I were you. Imagine if you were a nursery. Would a nursery send a letter home asking ‘look, I hope you don’t mind but I’m thinking of putting my prices up’ and it is demoralising to ‘ask them for a pay rise’ when you are self-employed. Just make the announcement like your nursery or any kids sports club would do. Parents will moan and groan, like you would do. But unless you are being unreasonable, they are very unlikely to actually leave you over a small price increase; they will most likely grumble, then do it, and then forget about it.

 

pile-of-peanutsDon’t feel like a monkey by offering your service for peanuts

I have carried that expression on with me throughout my life. When I left my first job I made a promise to myself never to work for someone who ‘paid peanuts’ again because it left me feeling very bad about myself, including when I started childminding and became my own boss. When you are not being paid what you feel you deserve for your work, it can really get you down. If this is you, it’s time to take the brave step of asking for the money you feel you are worth. Good luck!

 

Childminding Best Practice Newsletter

Sign up for the free quarterly Childminding Best Practice Newsletter using the orange sign up box on my website and I will send you best practice ideas, childminding news, EYFS tips, outstanding ideas, stories from other childminders, arts and crafts project templates, new products, and links.

http://www.kidstogo.co.uk/childminders/childminding.html

 

About Kay Woods and Kids To Go

Kay Woods Kids To GoKay Woods has been writing and selling childminding resources through her company Kids To Go since 2008. Her products include the Ultimate Childminding Checklist, the Learning Journey Plus for planning, observation and assessment and best practice resources promoting diversity, safety and childminding in the great outdoors (Forest Childcare). She is the author of the Start Learning book set published by Tarquin and she writes the free quarterly Childminding Best Practice Newsletter.

Lots of places offer help to childminders. I provide solutions.

http://www.kidstogo.co.uk/childminders/childminding.html

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