the business of child care

Strong business management is one key to maintaining quality care and financial sustainability. The Business of Child Care library contains articles and tools that support best business practices for boards, directors, and staff.

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Jump down to:

cash flow management
managing cash flow in times of uncertainty
per-child cost analysis
financial management
accounting practices
iron triangle
self-assessment tool
know the laws
board governance


The most effective way to keep your center on track financially is by creating and using a budget. In the day-to-day work of running the center, it’s easy to lose sight of the big picture. Your budget can help you monitor the direction and performance of your center, and provide opportunities to make corrections quickly and successfully.

Building the budget is the first step. Learning how to use it is the second. These resources will help you do both.

A slide presentation about budgeting fundamentals and how to use them to inform financial management decisions.
Test your understanding of budget fundamentals by developing a budget for ABC Child Care Center.

ABC Child Care Activity

ABC Child Care Center Worksheet

ABC worksheet answer key
Explore an important tool for monitoring a center’s budget performance and making informed financial management decisions.
A planning resource, particularly for nonprofit centers, providing systematic guidance and a budget development timeline. Useful for nonprofits that develop their budgets with committees and/or a board of directors. Created by Mason and Rich, P.A., and made available through the Nonprofit Assistance Fund.

cash flow management

Paying attention to cash flow can help keep your center out of financial hot water. It’s important to understand and regularly monitor key metrics including cash on hand, receivables, and payables.

A slide presentation about cash flow fundamentals, best practices, and forecasting.
A video of the Managing Cash Flow for Smarter Financial Decision Making webinar.
A monthly cash flow spreadsheet modified from a resource provided from First Children’s Finance.

Use the weekly template if you would like to more-frequently and more-proactively monitor cash flow.
Create a cash flow worksheet for ABC Child Care Center and forecast its cash flow as its financial circumstances shift.

Interactive Cash Flow Activity

managing cash flow in times of uncertainty

Video of a webinar created for child care providers on Managing Cash Flow in Times of Uncertainty. Click on the links below to download worksheets that will help you calculate your own cash flow.

13-week cash flow -- Analysis master

13-week cash flow -- Learning is fun

13-week cash flow -- Learning is fun -- Board decisions

A slide presentation about cash flow fundamentals, best practices, and forecasting.
A video of the Managing Cash Flow for Smarter Financial Decision Making webinar.
A monthly cash flow spreadsheet modified from a resource provided from First Children’s Finance.

Use the weekly template if you would like to more-frequently and -proactively monitor cash flow.
Create a cash flow worksheet for ABC Child Care Center and forecast its cash flow as its financial circumstances shift.

Interactive Cash Flow Activity

per-child cost analysis

If you could set fees as high as you need to, running an ECE center would be a lot easier. But some factors are beyond a center director’s control. A financially viable center’s revenues must cover its per-child cost.

These resources will help you manage the factors you can control, and answer questions like:

  1. What determines per-child cost?
  2. What is the per-child cost per program/classroom?
  3. What cost factors can you and should you control? How do full enrollment and collections impact per-child cost?

financial management

General financial management is an assessment of the skill level of the people managing your finances and the methods they use to track financial information.

A center should ensure that leaders and staff have the skills and training needed to implement financial management best practices and technology, as well as policies that ensure consistency and compliance.

The following are resources for nonprofit centers wishing to improve their general financial management practices.

360 Degrees of Financial Literacy, a free service of the nation’s Certified Public Accountants, promotes financial education among small businesses and individuals. The site is useful for directors for early education and child care centers.

The National Council for Nonprofits provides excellent advice on how to raise the financial literacy of a nonprofit board of directors, including de-mystifying important financial reports, providing literacy training, and making sure volunteers understand their role as fiduciaries for the center’s assets.

NonprofitNext an online resource of the N.H. Center for Nonprofits (NHCN) should be a go-to guide for nonprofit early learning centers looking for financial management best practices, policies and procedures, and advice. NHCN membership is required. NHCN is also an ideal source for professional development for a nonprofit’s leadership, board, and financial staff.

Opportunities Exchange offers Financial Management Toolkits for home-based and center-based providers.
QuickBooks is the most commonly used program, and online and desktop versions are available. QuickBooks’ popularity means it is easier to find training (sometimes free), as well as employees and accounting professionals who are familiar with the software.

There are also other accounting software options. Business magazines annually rank accounting software for small businesses. Check out the most recent reviews from and PC Magazine.

Child Care Exchange offers advice on purchasing child care industry management software in its Child Care Center Management Software Buying Guide. Typically, child care management (CCM) software programs don’t include the full financial functionality of an accounting software. However, if your center is small enough, this might be a more affordable and effective option, as CCM software includes other useful modules that support electronic enrollment management, staff scheduling, etc.

Here is a list of popular programs:

Childcare CRM

Day Care Works



accounting practices

An important accounting component, checks and balances, or internal controls, ensure a level of transparency and accountability in a center’s financial management. This is particularly important in a nonprofit, but also relevant to a for-profit business that is answerable to employees for the level of its compensation, to parents for the price of its service, and to partners and investors who have an interest in its success.

Additionally, internal controls protect the center when multiple employees are collecting or handling money.

Below is a selection of relevant websites and related articles for all centers wishing to assess and improve internal controls.

New Hampshire Center for Nonprofits members will find excellent resources on establishing internal controls through the center’s resource website, NonprofitNext.

Related articles

Best Practices for Nonprofit Internal Controls: Enhancing Your Internal Control Environment by the staff of Clifton Larson Allen.

Preventing Fraud and Embezzlement in Your Nonprofit Organization by Venable LLP.

Recommended Actions in Response to the Incident of Fraud in a New Hampshire Nonprofit, an advisory memo by Kim Votta Consulting, is also a useful resource.

iron triangle

The Iron Triangle represents a trinity of practices that are the foundation for sustainable financial management in early childhood education: enrollment management, collections, and fee setting based on a center’s per-child cost.

When seeking to balance their budgets, early childhood program directors typically focus on the rate—the price charged to parents or received as reimbursement from government. While rates are important, income is also profoundly influenced by enrollment and fee collection. All three factors must be understood and monitored for financial sustainability.

The articles below expand on The Iron Triangle and its importance in managing a financially successful early learning program.

The Iron Triangle: A Simple Formula for Financial Policy in ECE Programs by Louise Stoney is an introduction to the pillars of The Iron Triangle.

Using Metrics to Drive Quality and Sustainability in Early Care and Education Programs by Louise Stoney and Libbie Poppick highlights the significant performance metrics and key measures of financial health in an ECE center, and how measuring financial performance can improve quality and influence policy.

The Per-Child Cost Analysis presentation contains tools and resources that help centers understand and calculate their per-child costs.

REINVENT vs. REBUILD: Let’s Fix the Child Care System by Louise Stoney envisions child care in a post-COVID world.

The Business Side of Early Care and Education by Louise Stoney and Blythe Robinson.

self-assessment tool

Assessments are a practical way to evaluate core business and management practices. Effective tools can help a program director identify their operations’ strengths and areas in need of improvement.

Assess current business management practices at your center and create a business improvement work plan. The exercise takes about 60 minutes to complete.
This document includes a scoring summary for the tool, an evaluation, and pre- and post-assessment questionnaires.
Practice before you jump in! Help Sally, the ABC Early Learning Center’s fearless leader, use her assessment to make some important decisions.
Once you’ve completed the assessment, review the Resource Guide for guidance and resources that support effective business administration in early childhood education centers. It is most useful when used in conjunction with the self-assessment, but can be used by itself.

If you’d like to dig deeper into business and administration assessment, consider the Program Administration Scale by Paula Bloom and Teri N. Talan. It was designed to measure the leadership and management practices of center-based early childhood programs.

know the laws

Child care and early education businesses are  regulated differently in every state, so it’s important to know your state’s laws, as well as federal laws, that govern employment, child welfare, and general business practices.

The following resources will help assess the level of legal risk at your center and provide guidance on using insurance as a tool to protect your business.

A slide presentation to help you create a productive, legal, and safe workplace.
A questionnaire to help you identify potential areas of legal concern in your business.
Criteria to Establish an Employee or Independent Contractor, by the N.H. Dept. of Labor.

How to Stay Off the Department Of Labor’s Radar Screen, by Sheehan Phinney law firm.

New Employee Checklist of the N.H. Dept. of Labor, to help ensure you are staying legal with new hires.

Request for Payment of Wages Other than Weekly, a form provided by the N.H. Dept. of Labor to allow you to request to pay wages other than weekly.

Worker’s Comp Fact Sheet, from the N.H. Dept. of Labor.

What Should I Look For in an Insurance Policy? by DCI Insurance, Inc., provides an overview of the types of coverage available to your business and why they might matter to you.

human resources

An effective human resources program includes relevant personnel policies that are consistently implemented, a creative and thoughtful recruitment plan, and ongoing constructive performance evaluation. You also need to provide and a safe and productive workplace. It takes a lot of work to make this all happen!

The following resources will reinforce your leadership skills and improve your understanding about laws and best practices in human resources.

board governance

Nonprofits are typically organized for a community benefit and led by boards of directors. Governance describes the board’s role in determining the center’s long-term direction, implementing policies and activities to achieve objectives, complying with legal requirements, and ensuring accountability to those with an interest or stake in the nonprofit.

To have good governance, the board should contain diversity of skill and experience while being representative of the center’s client base, needs, and mission. The board should also be self-reflective and able to adapt to meet the needs of the center in an evolving regulatory and economic climate.

Below is a selection of relevant websites with resources for nonprofit centers wishing to excel in board governance.

The bimonthly newsletter of the Nonprofits Insurance Alliance Group, a group of cooperative 501(c)(3) nonprofit insurance organizations providing liability insurance and risk management resources, as well as practical and insightful articles from a spectrum of contributors in nonprofit management and leadership.
BoardSource’s national index of nonprofit board practices with data and insights from board chairs and nonprofit executives about board composition, practices, performance and culture. Updated annually.
McKinsey & Company offers a Board Self-Assessment Tool to help nonprofit boards assess their effectiveness in multiple aspects of governance.
Reference tool for directors, trustees, officers and executive directors of NH charitable organizations. It describes the legal duties of directors and the common challenges encountered in governing nonprofits, as well as links to forms and materials of interest.

Funding for Business of Child Care provided in part by the New Hampshire Charitable Foundation, Neil and Louise Tillotson Fund of the New Hampshire Charitable Foundation, Norwin and Elizabeth Bean Foundation, Jack and Dorothy Byrne Foundation, Couch Family Foundation, Cogswell Benevolent Trust, and the New Hampshire Women’s Foundation.

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