Business Planning – An essential tool for Early Years settings
- Sally Gridley
- Sep 10
- 3 min read
Running an early years setting whether a nursery, preschool, or childminding business, requires more than just a passion for children’s learning and development.
Behind the scenes, effective planning is crucial for long term sustainability and growth. A well-structured business plan is not just a document for investors or regulators; it’s a practical tool that guides decision-making, helps manage resources, and ensures long-term success.
Here are some of the key benefits of having a business plan in place in your early years setting:
1. Clear Financial Planning and Budgeting
You usually operate with very tight margins, so having a budget is essential. A business plan helps you:
Forecast income and expenditure.
Plan for seasonal fluctuations in attendance.
Allocate resources effectively (e.g., staffing, equipment, training, and supplies).
By setting realistic budgets, you can avoid overspending and ensure your setting remains financially healthy. Get a copy of my Three Year Business Plan here
2. Managing Cash Flow
Cash flow is the lifeblood of any small business. In early years settings, delays in funding payments or fluctuating enrolment can cause strain. A business plan helps you:
Track when money is coming in (e.g., government funding, parental fees).
Anticipate when larger or annual outgoings occur (e.g., rent, insurance, staff wages, utility bills).
Put strategies in place to maintain healthy cash flow, such as flexible payment options for parents or building a financial reserve.
This foresight prevents financial shortfalls that could disrupt the running of your setting.
3. Meeting Charity Commission Requirements
For settings that operate as charities, there are additional responsibilities.
The Charity Commission requires trustees to have procedures in place to manage financial risks, (get my charity financial controls policy here) including:
Assessing the financial health of the organisation.
Monitoring income and expenditure against the business plan.
Ensuring that funds are used appropriately and in line with charitable aims.
A business plan provides the structure needed to demonstrate compliance, showing that the trustees are managing resources responsibly and planning for long-term sustainability. Regular monitoring of finances also provides reassurance to regulators, funders, potential new trustees and parents that the organisation is well-run.
4. Identifying Risks Early
Every business faces risks, from staff turnover to changes in government funding.
A business plan encourages you to:
Assess potential challenges.
Develop contingency plans (e.g., recruiting bank staff to cover absences).
Stay prepared for external changes, such as shifts in local demographics or economic conditions.
By identifying risks early, you can take proactive measures rather than reacting under pressure.
5. Spotting Opportunities for Growth
A business plan isn’t just about avoiding pitfalls—it’s also about spotting opportunities. For example:
Expanding services (e.g., offering wraparound care, holiday clubs, or SEN support).
Building partnerships with schools, local authorities, or community organisations.
Exploring new funding streams or grants.
By regularly reviewing your business plan, you’ll stay open to opportunities that align with your vision.
6. Supporting Staff and Stakeholders
A clear business plan provides a roadmap that staff, managers, trustees, and even parents can understand. It:
Clarifies the setting’s goals and values.
Demonstrates to staff and trustees that the business is secure and forward-thinking.
Shows parents and stakeholders that their children are in a well-managed, sustainable environment.
This transparency builds trust and engagement across your community.
7. Staying Compliant and Accountable
Regulators and funders often ask for evidence of sustainable planning. A solid business plan:
Helps meet local authority requirements.
Demonstrates accountability when applying for grants or loans.
Provides the framework for monitoring financial performance and reporting, which is especially vital for charities under the Charity Commission’s rules.
This boosts your credibility as a professional and compliant provider.
Final Thoughts
Running your early years setting involves balancing your passion for childcare with the realities of running a business. A business plan acts as a compass, keeping you on track financially, preparing you for risks, ensuring compliance with charity regulations, and helping you grow sustainably.
Whether you’re just starting out or looking to strengthen your existing provision, taking the time to create and regularly update your business plan will give you confidence and clarity, ensuring your setting thrives for years to come.
To help I provide a Three Year Business Plan template and if business planning is new or scares the living daylights out of you I also provide a ‘Knowing your Numbers’ workshop where we go through the template in detail together. To register your interest for the next workshop click here.
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