Daycare closed

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Anon64
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Daycare closed

Post by Anon64 » Mon Mar 16, 2020 7:13 pm

My kids’ daycare closed for the coronavirus as a precaution. For those in a similar situation, is your daycare crediting or reimbursing any tuition? I obviously want the teachers to be paid but am not interested in seeing the owners keep the money particularly since they are not required to be closed. Mine is not crediting or reimbursing any amount (at least for now).

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ray.james
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Re: Daycare closed

Post by ray.james » Mon Mar 16, 2020 7:15 pm

Crediting for future use with no reimbursement.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939

ARoseByAnyOtherName
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Re: Daycare closed

Post by ARoseByAnyOtherName » Mon Mar 16, 2020 7:18 pm

Anon64 wrote:
Mon Mar 16, 2020 7:13 pm
My kids’ daycare closed for the coronavirus as a precaution. For those in a similar situation, is your daycare crediting or reimbursing any tuition? I obviously want the teachers to be paid but am not interested in seeing the owners keep the money particularly since they are not required to be closed. Mine is not crediting or reimbursing any amount (at least for now).
Our preschool isn’t reimbursing any tuition. I believe the teachers have a contract and that contract needs to be followed of course.

You may be in a different situation. Daycare is likely different.

Whatever you do please remember basic human decency. It is probably the right thing to do for the daycare to close. Depending on the size of the daycare the owners may not be rich. We are all in this together.

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dm200
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Re: Daycare closed

Post by dm200 » Mon Mar 16, 2020 7:19 pm

Anon64 wrote:
Mon Mar 16, 2020 7:13 pm
My kids’ daycare closed for the coronavirus as a precaution. For those in a similar situation, is your daycare crediting or reimbursing any tuition? I obviously want the teachers to be paid but am not interested in seeing the owners keep the money particularly since they are not required to be closed. Mine is not crediting or reimbursing any amount (at least for now).
Not in this situation, but I believe many jurisdictions (mine is) have temporarily liberalized rules for home daycare. There also might be some other parents that are not working their regular jobs because of this Corona Virus mess - and they might be willing to watch or take care of your children.

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TheGreyingDuke
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Re: Daycare closed

Post by TheGreyingDuke » Mon Mar 16, 2020 7:22 pm

dm200 wrote:
Mon Mar 16, 2020 7:19 pm
Not in this situation, but I believe many jurisdictions (mine is) have temporarily liberalized rules for home daycare. There also might be some other parents that are not working their regular jobs because of this Corona Virus mess - and they might be willing to watch or take care of your children.
Bad idea, kids need to be kept separated just like adults. I know this is an incredible hardship for many folks, we are on fulltime care of our grandkids these days.
"Every time I see an adult on a bicycle, I no longer despair for the future of the human race." H.G. Wells

ddurrett896
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Re: Daycare closed

Post by ddurrett896 » Mon Mar 16, 2020 7:37 pm

Mine sent packets of material home. Figured that was there way or saying we are keeping the tuition.

bgf
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Re: Daycare closed

Post by bgf » Mon Mar 16, 2020 7:46 pm

they are shut down beginning this week. we pay bimonthly. we wont pay for the second half of the month as they wont be providing daycare services. makes sense.

teachers are still getting paid thankfully.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

ARoseByAnyOtherName
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Re: Daycare closed

Post by ARoseByAnyOtherName » Mon Mar 16, 2020 8:09 pm

bgf wrote:
Mon Mar 16, 2020 7:46 pm
they are shut down beginning this week. we pay bimonthly. we wont pay for the second half of the month as they wont be providing daycare services. makes sense.

teachers are still getting paid thankfully.
How?

bgf
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Re: Daycare closed

Post by bgf » Mon Mar 16, 2020 8:13 pm

i dont know, but id guess its because its part of a nonprofit church. maybe they have funds to direct for emergencies like this. maybe they got a large donation. i dont know. all i know is for the next 2 weeks its closed and teachers are paid. after that, nothings been communicated.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

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simplesimon
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Re: Daycare closed

Post by simplesimon » Mon Mar 16, 2020 8:31 pm

We’re supposed to start daycare in April for our first baby. No clue yet what will happen but from talking to friends who use other daycares it’s the same story about having to pay.

tchoupitoulas
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Re: Daycare closed

Post by tchoupitoulas » Mon Mar 16, 2020 8:41 pm

Ours is closed for a month. They've announced that tuition will be optional for whatever period of time it's closed. I believe the right thing to do here is to keep paying as long as I'm still getting paid myself.

dukeblue219
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Re: Daycare closed

Post by dukeblue219 » Mon Mar 16, 2020 8:46 pm

Our youngest is (well, was) in a small in-home daycare with ~4 kids. They are not closing, but we're keeping him out anyway. We're not going to stop paying because A) we could lose our slot and B) it's just one lady and her mom, and we're not going to ruin a good relationship over this.

Our oldest, on the other hand, is at a pre-school with maybe a hundred kids. They are now closed and announced they will not be billing families while closed. They have not mentioned how the teachers will be compensated, but I'm going to ask around if any other parents have heard anything. I would hope there are arrangements being made, and if not, the parents would probably kick in something to at least help out the teachers a bit.

MathWizard
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Re: Daycare closed

Post by MathWizard » Mon Mar 16, 2020 8:54 pm

dukeblue219 wrote:
Mon Mar 16, 2020 8:46 pm
Our youngest is (well, was) in a small in-home daycare with ~4 kids. They are not closing, but we're keeping him out anyway. We're not going to stop paying because A) we could lose our slot and B) it's just one lady and her mom, and we're not going to ruin a good relationship over this.

Our oldest, on the other hand, is at a pre-school with maybe a hundred kids. They are now closed and announced they will not be billing families while closed. They have not mentioned how the teachers will be compensated, but I'm going to ask around if any other parents have heard anything. I would hope there are arrangements being made, and if not, the parents would probably kick in something to at least help out the teachers a bit.
Kudos for you.

I think this is wise.

In many cases, daycare providers do not make much, and assuming you have the resources, this will preserve a good relationship.

Were we in the same situation, we would do this as well.
There will be lots of disruptions, and those who are able to look long term will benefit, at least in relationships.

JuniorBH
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Re: Daycare closed

Post by JuniorBH » Mon Mar 16, 2020 8:59 pm

We're expecting our daycare likely will close within the next few weeks and I've contemplated how to handle this.

I suspect a large number of the employees are hourly and I doubt they will be getting paid. Combined with the reduction in overhead (i.e. food, service, utilities, etc), the majority of my payment would effectively be profit to the owners.

I'll likely have a transparent conversation with owner about it when the time comes. Agree with others; if they are going to keep paying employees, I'm fine to keep paying tuition. However, I'm not ok with paying tuition for a service we aren't getting just to watch that money flow directly to the owners. Perhaps there is a compromise somewhere in the middle, we shall see.

smitcat
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Re: Daycare closed

Post by smitcat » Tue Mar 17, 2020 7:40 am

JuniorBH wrote:
Mon Mar 16, 2020 8:59 pm
We're expecting our daycare likely will close within the next few weeks and I've contemplated how to handle this.

I suspect a large number of the employees are hourly and I doubt they will be getting paid. Combined with the reduction in overhead (i.e. food, service, utilities, etc), the majority of my payment would effectively be profit to the owners.

I'll likely have a transparent conversation with owner about it when the time comes. Agree with others; if they are going to keep paying employees, I'm fine to keep paying tuition. However, I'm not ok with paying tuition for a service we aren't getting just to watch that money flow directly to the owners. Perhaps there is a compromise somewhere in the middle, we shall see.

"I suspect a large number of the employees are hourly and I doubt they will be getting paid."
This is likely very true.

"Combined with the reduction in overhead (i.e. food, service, utilities, etc), the majority of my payment would effectively be profit to the owners."
This is not accurate - variable costs are not nearly enough to cover overhead costs at a moderate sized childcare center. A good approximation would be that about 50% of the payment will be needed to cover expenses before financing, taxes and owners draw.

ARoseByAnyOtherName
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Re: Daycare closed

Post by ARoseByAnyOtherName » Tue Mar 17, 2020 7:42 am

tchoupitoulas wrote:
Mon Mar 16, 2020 8:41 pm
Ours is closed for a month. They've announced that tuition will be optional for whatever period of time it's closed. I believe the right thing to do here is to keep paying as long as I'm still getting paid myself.
I agree with you, and thank you for doing this.

SilverGirl
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Re: Daycare closed

Post by SilverGirl » Tue Mar 17, 2020 9:34 am

I own a private preschool and we are contemplating the inevitable. I do plan to pay my staff provided parents pay me. I am thinking of charging 50 percent tuition during the closure and taking a loss. Trust me I will not make any profit at all. I have many other costs that will still need to be paid. This is a nightmare.

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8foot7
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Re: Daycare closed

Post by 8foot7 » Tue Mar 17, 2020 9:44 am

We pay on Fridays for the following week and no closure has been announced thus far. I hope that it is not.

With two of us at home working full-time jobs, in the event of a closure, we would need to re-deploy those funds to pay someone else (various teenagers in the neighborhood, most likely) to care for our children during the week, so we have decided that we will not be paying daycare tuition for a closed daycare that is not providing services.

Our local county last week had a water-boil advisory and the daycare was required to be closed for two days. We did not seek reimbursement for those days, nor have we sought reimbursement for weather closure days and training day closures. If they decided to close for a week I would probably pay that week as well as a courtesy gesture. However, a sustained cessation of service (multiple weeks at a time) would be different. I would expect that the hourly employees can go on unemployment for the period of the closure and I would hope the owners of the facility had emergency funds and lines of credit, same as all of us are expected to have.

One thing my wife and I discussed was, in the event of a closure, to offer a teacher the opportunity to work with us privately for the duration of the closure. Obviously this would be a cash-only deal and just for a limited time during the crisis, so not terribly concerned about paperwork, tax withholding, etc. [Direct goody-two-shoes comments to the refuse bin, we're talking less than $1,500 overall combined] Doesn't help all of them, but nothing's stopping the other parents from doing so.
Last edited by 8foot7 on Tue Mar 17, 2020 10:01 am, edited 3 times in total.

smitcat
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Re: Daycare closed

Post by smitcat » Tue Mar 17, 2020 9:48 am

SilverGirl wrote:
Tue Mar 17, 2020 9:34 am
I own a private preschool and we are contemplating the inevitable. I do plan to pay my staff provided parents pay me. I am thinking of charging 50 percent tuition during the closure and taking a loss. Trust me I will not make any profit at all. I have many other costs that will still need to be paid. This is a nightmare.
Agreed - if you do take in 50% tuition and everyone remains enrolled you will likely 'only' lose 10-20% for any closed months.
Then there are the facts that many will just disenroll and/or not pay so the losses will be much greater if you continue to pay staff.
Consider reviewing your insurance for sections on business interruption and/or forced closure due to health issues unrelated to your operations.

Thegame14
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Re: Daycare closed

Post by Thegame14 » Tue Mar 17, 2020 10:34 am

Anon64 wrote:
Mon Mar 16, 2020 7:13 pm
My kids’ daycare closed for the coronavirus as a precaution. For those in a similar situation, is your daycare crediting or reimbursing any tuition? I obviously want the teachers to be paid but am not interested in seeing the owners keep the money particularly since they are not required to be closed. Mine is not crediting or reimbursing any amount (at least for now).
We are fighting our daycares as well, they say since they have to pay their teachers still, they need my tuition to pay them. I said how does that make sense, I pay for march upfront for the entire month of service. I said if you don't refund me, then I expect a credit for future months, and I don't mind if they spread it out over a few months. I am waiting for them to reply.

daheld
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Re: Daycare closed

Post by daheld » Tue Mar 17, 2020 11:00 am

We got the email last night that our daycare would be closed until at least March 30. We will not be charged any tuition during this time.

I feel so bad for folks effected by this. This crisis in particular will directly effect folks who can least afford it.

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8foot7
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Re: Daycare closed

Post by 8foot7 » Tue Mar 17, 2020 11:06 am

It's tough to balance for sure but ultimately I have to look after my family first and not my service provider's employees. Where I can afford to be generous, I intend to be, but also I don't think a business should rely solely on the generosity of its customers for a bailout. We are indeed all in this together. We also all need to care for ourselves too. What a time.

I think we're learning that most businesses need to have 2-4 months' worth of operating cash at all times.

MangoMama
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Re: Daycare closed

Post by MangoMama » Tue Mar 17, 2020 11:42 am

This is one area where I'm not sure how to proceed. Our daycare has just sending activities and suggestions on lessons to give via email. No updates regarding how to tuition will be handled.

#1 - is payed through the summer already
#2 - we just payed for summer camp

And a couple days before they closed we wrote a check for 2020-2021 for both kids. We have until May 1st to cancel for a refund for summer camp and the following year. Problem is if we cancel for 2020-2021 it unlikely they will be able to return because of the waitlist.

We're thinking of maybe canceling summer camp and keeping them in for the next year, but there's a lot of money on the line.
Last edited by MangoMama on Tue Mar 17, 2020 11:47 am, edited 1 time in total.

smitcat
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Re: Daycare closed

Post by smitcat » Tue Mar 17, 2020 11:45 am

8foot7 wrote:
Tue Mar 17, 2020 11:06 am
It's tough to balance for sure but ultimately I have to look after my family first and not my service provider's employees. Where I can afford to be generous, I intend to be, but also I don't think a business should rely solely on the generosity of its customers for a bailout. We are indeed all in this together. We also all need to care for ourselves too. What a time.

I think we're learning that most businesses need to have 2-4 months' worth of operating cash at all times.
"I think we're learning that most businesses need to have 2-4 months' worth of operating cash at all times."
I am curious to know what you mean by 2-4 months of operating cash?

FI4LIFE
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Re: Daycare closed

Post by FI4LIFE » Tue Mar 17, 2020 11:55 am

My youngest goes to an in-home daycare and the owner is keeping the daycare open. I think only one child is attending. The rest are being kept home. I believe she is doing this so that she can still demand payment and probably would prefer everyone stay home. She is in a tough spot because her husband is also self-employed. If she chose to close I might try to negotiate something that both parties found reasonable.

We will continue to pay for a couple weeks and will revisit our plans in the near future. My job may require me to work some pretty intense hours in the next few weeks and we may need her to watch my other kids as well, if she's willing. My wife is also considering going out on FMLA. Everything is up in the air.

Beach
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Re: Daycare closed

Post by Beach » Tue Mar 17, 2020 12:04 pm

My kids are at a spring break gymnastics camp with only about 10 other kids. They are a small, independently run gymnastics school and are contemplating keeping the spring break camp going on indefinitely. I just received word that I can start working from home, but may keep them in there for half days as long as they are open to support the school and get some energy out of the kids.

riots_rus
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Re: Daycare closed

Post by riots_rus » Tue Mar 17, 2020 12:06 pm

Our daycare is remaining open, my wife is able to work from home so she's watching the kids and working from home. We pay $457 per week for both of them, with us pulling them out our rate is reduced 50%. I decided we will be giving the two teachers that primarily watch our kids a $100 check every week our kids are not there as I know they're probably struggling with financing/lack of hours.

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8foot7
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Re: Daycare closed

Post by 8foot7 » Tue Mar 17, 2020 12:19 pm

smitcat wrote:
Tue Mar 17, 2020 11:45 am
8foot7 wrote:
Tue Mar 17, 2020 11:06 am
It's tough to balance for sure but ultimately I have to look after my family first and not my service provider's employees. Where I can afford to be generous, I intend to be, but also I don't think a business should rely solely on the generosity of its customers for a bailout. We are indeed all in this together. We also all need to care for ourselves too. What a time.

I think we're learning that most businesses need to have 2-4 months' worth of operating cash at all times.
"I think we're learning that most businesses need to have 2-4 months' worth of operating cash at all times."
I am curious to know what you mean by 2-4 months of operating cash?
Well, in this case, I think a professional daycare with hundreds of students ought to
1. Determine median monthly operating expense based on historical financials
2. Keep 2-4x that amount as retained earnings aka a “business emergency fund”
That would mean that, as a daycare owner, at this point I could keep daycare lights on, rent or mortgage on facility current, staff paid (perhaps at reduced salary) from now until May, June, or even mid-July, which probably has us on the other side of this thing.

Hard for me to see why any business wouldn’t want to be able to bridge a few weeks of revenue.

ianferrel
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Re: Daycare closed

Post by ianferrel » Tue Mar 17, 2020 12:25 pm

Ours is scheduled to be closed until April 3, and no tuition refund (one of those weeks it was going to be closed for spring break anyway). I doubt they'll actually reopen in April, but we are moving in late April, so we were going to be finishing up there partway through April anyway.

It's the right thing to do and I don't begrudge them the lost tuition. They said that the teachers will still be working doing things like lesson plans and facilities improvements, and are required to be paid, so it's not like anyone is making outsize profits here. Everything sucks for a while and we're all going to have to take a hit and muddle through.

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bottlecap
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Re: Daycare closed

Post by bottlecap » Tue Mar 17, 2020 12:30 pm

The answer to this will depend on whatever contract you have with the day care.

If the contract doesn’t address it, you shouldn’t have to pay if they are not providing services. You are not the employer and have no obligation to pay their employees to stay home. Or do anything else but provide care.

Rest assured that if you could not work in this situation and they were still providing service, the daycare would still require you to pay or kick your kid out.

JT

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8foot7
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Re: Daycare closed

Post by 8foot7 » Tue Mar 17, 2020 12:38 pm

bottlecap wrote:
Tue Mar 17, 2020 12:30 pm


Rest assured that if you could not work in this situation and they were still providing service, the daycare would still require you to pay or kick your kid out.

Yup. +1 Precious little flexibility.

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simplesimon
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Re: Daycare closed

Post by simplesimon » Tue Mar 17, 2020 12:42 pm

Just spoke with our daycare over the phone. They are going to stay open until the government tells them to close. They expressed how many customers are people working the front lines (doctors, nurses, EMT's...this is Boston after all) who need support with childcare.

That said, we're scheduled to start April 1 with our three-month-old, but told us we could push back the start date if we wanted to. Neither my wife nor I work in the healthcare profession.

getthatmarshmallow
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Re: Daycare closed

Post by getthatmarshmallow » Tue Mar 17, 2020 12:45 pm

Ours has closed and hasn't said anything about the remainder of this term's contract.

wootwoot
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Re: Daycare closed

Post by wootwoot » Tue Mar 17, 2020 12:50 pm

Our daycare is still open and doesn't plan on closing unless the state mandates it. We're thankful since both of us work and taking care of young kids is a job in itself. If they close down I'm not sure how we will get anything done for work.

smitcat
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Re: Daycare closed

Post by smitcat » Tue Mar 17, 2020 1:08 pm

8foot7 wrote:
Tue Mar 17, 2020 12:19 pm
smitcat wrote:
Tue Mar 17, 2020 11:45 am
8foot7 wrote:
Tue Mar 17, 2020 11:06 am
It's tough to balance for sure but ultimately I have to look after my family first and not my service provider's employees. Where I can afford to be generous, I intend to be, but also I don't think a business should rely solely on the generosity of its customers for a bailout. We are indeed all in this together. We also all need to care for ourselves too. What a time.

I think we're learning that most businesses need to have 2-4 months' worth of operating cash at all times.
"I think we're learning that most businesses need to have 2-4 months' worth of operating cash at all times."
I am curious to know what you mean by 2-4 months of operating cash?
Well, in this case, I think a professional daycare with hundreds of students ought to
1. Determine median monthly operating expense based on historical financials
2. Keep 2-4x that amount as retained earnings aka a “business emergency fund”
That would mean that, as a daycare owner, at this point I could keep daycare lights on, rent or mortgage on facility current, staff paid (perhaps at reduced salary) from now until May, June, or even mid-July, which probably has us on the other side of this thing.

Hard for me to see why any business wouldn’t want to be able to bridge a few weeks of revenue.
Your posts have been very well thought out and reasonable - perhaps a few thoughts to add to this.
"I think a professional daycare with hundreds of students ought to"
That would be a moderate sized center from about 8,000 sq feet to 12,000 feet.
"1. Determine median monthly operating expense based on historical financials"
That could be approximately $125K.
"2. Keep 2-4x that amount as retained earnings aka a “business emergency fund”
That would make this number $250K to $500K.

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8foot7
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Re: Daycare closed

Post by 8foot7 » Tue Mar 17, 2020 1:36 pm

smitcat wrote:
Tue Mar 17, 2020 1:08 pm
8foot7 wrote:
Tue Mar 17, 2020 12:19 pm
smitcat wrote:
Tue Mar 17, 2020 11:45 am
8foot7 wrote:
Tue Mar 17, 2020 11:06 am
It's tough to balance for sure but ultimately I have to look after my family first and not my service provider's employees. Where I can afford to be generous, I intend to be, but also I don't think a business should rely solely on the generosity of its customers for a bailout. We are indeed all in this together. We also all need to care for ourselves too. What a time.

I think we're learning that most businesses need to have 2-4 months' worth of operating cash at all times.
"I think we're learning that most businesses need to have 2-4 months' worth of operating cash at all times."
I am curious to know what you mean by 2-4 months of operating cash?
Well, in this case, I think a professional daycare with hundreds of students ought to
1. Determine median monthly operating expense based on historical financials
2. Keep 2-4x that amount as retained earnings aka a “business emergency fund”
That would mean that, as a daycare owner, at this point I could keep daycare lights on, rent or mortgage on facility current, staff paid (perhaps at reduced salary) from now until May, June, or even mid-July, which probably has us on the other side of this thing.

Hard for me to see why any business wouldn’t want to be able to bridge a few weeks of revenue.
Your posts have been very well thought out and reasonable - perhaps a few thoughts to add to this.
"I think a professional daycare with hundreds of students ought to"
That would be a moderate sized center from about 8,000 sq feet to 12,000 feet.
"1. Determine median monthly operating expense based on historical financials"
That could be approximately $125K.
"2. Keep 2-4x that amount as retained earnings aka a “business emergency fund”
That would make this number $250K to $500K.
Perhaps so. Obviously you can't build that up quickly, nor can most individuals build up a six month emergency fund by snapping fingers.
Our local daycare makes us pay a $150 "registration fee" each year, which is generally a bogus name as it's just an additional yearly money grab. They have justified this with "we replaced the fake grass on the playground, bought new iPads for the classrooms," etc.
Perhaps you have 150 students (15 per room, 10 classes) and you increase the fee to $250 this year. That's $37,500. Maybe you then make $1,000 a week out of your budget a line item for building a reserve - now you're close to $100k. Or maybe you raise your rates by 2.5% and devote the difference. Do this for two years and you've got some reserve. Argue with my numbers, but the overall concept is clear. It'll take time, but most things worth doing do.
It's of course a lot of money, but if your business is doing $1.5 million a year in expenses, presumably more in revenue, I actually don't think a goal to set aside 10% of that as a reserve is that crazy an idea...

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simplesimon
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Re: Daycare closed

Post by simplesimon » Tue Mar 17, 2020 1:40 pm

Hopefully, the owner of the business put in enough capital as part of that reserve before it opened.

Definitely would be a requirement of a bank the business would have a line of credit with.

smitcat
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Re: Daycare closed

Post by smitcat » Tue Mar 17, 2020 1:44 pm

8foot7 wrote:
Tue Mar 17, 2020 1:36 pm
smitcat wrote:
Tue Mar 17, 2020 1:08 pm
8foot7 wrote:
Tue Mar 17, 2020 12:19 pm
smitcat wrote:
Tue Mar 17, 2020 11:45 am
8foot7 wrote:
Tue Mar 17, 2020 11:06 am
It's tough to balance for sure but ultimately I have to look after my family first and not my service provider's employees. Where I can afford to be generous, I intend to be, but also I don't think a business should rely solely on the generosity of its customers for a bailout. We are indeed all in this together. We also all need to care for ourselves too. What a time.

I think we're learning that most businesses need to have 2-4 months' worth of operating cash at all times.
"I think we're learning that most businesses need to have 2-4 months' worth of operating cash at all times."
I am curious to know what you mean by 2-4 months of operating cash?
Well, in this case, I think a professional daycare with hundreds of students ought to
1. Determine median monthly operating expense based on historical financials
2. Keep 2-4x that amount as retained earnings aka a “business emergency fund”
That would mean that, as a daycare owner, at this point I could keep daycare lights on, rent or mortgage on facility current, staff paid (perhaps at reduced salary) from now until May, June, or even mid-July, which probably has us on the other side of this thing.

Hard for me to see why any business wouldn’t want to be able to bridge a few weeks of revenue.
Your posts have been very well thought out and reasonable - perhaps a few thoughts to add to this.
"I think a professional daycare with hundreds of students ought to"
That would be a moderate sized center from about 8,000 sq feet to 12,000 feet.
"1. Determine median monthly operating expense based on historical financials"
That could be approximately $125K.
"2. Keep 2-4x that amount as retained earnings aka a “business emergency fund”
That would make this number $250K to $500K.
Perhaps so. Obviously you can't build that up quickly, nor can most individuals build up a six month emergency fund by snapping fingers.
Our local daycare makes us pay a $150 "registration fee" each year, which is generally a bogus name as it's just an additional yearly money grab. They have justified this with "we replaced the fake grass on the playground, bought new iPads for the classrooms," etc.
Perhaps you have 150 students (15 per room, 10 classes) and you increase the fee to $250 this year. That's $37,500. Maybe you then make $1,000 a week out of your budget a line item for building a reserve - now you're close to $100k. Or maybe you raise your rates by 2.5% and devote the difference. Do this for two years and you've got some reserve. Argue with my numbers, but the overall concept is clear. It'll take time, but most things worth doing do.
It's of course a lot of money, but if your business is doing $1.5 million a year in expenses, presumably more in revenue, I actually don't think a goal to set aside 10% of that as a reserve is that crazy an idea...
Once again just for discussions sake:
- $300,000 in cash will cost a small business about $40K per year
- raising the rates is always a hard thing to do

"It's of course a lot of money, but if your business is doing $1.5 million a year in expenses, presumably more in revenue, I actually don't think a goal to set aside 10% of that as a reserve is that crazy an idea..."
It is interesting to compare these small business's like: restaurants, hardware stores, cloths stores, package stores, gas stations , childcare centers , etc to much larger 'well' established enterprises. Considering that it may be reasonable for these small business to have larger reserves when we now know that major airlines and hotel chains do not is interesting.

smitcat
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Re: Daycare closed

Post by smitcat » Tue Mar 17, 2020 1:47 pm

simplesimon wrote:
Tue Mar 17, 2020 1:40 pm
Hopefully, the owner of the business put in enough capital as part of that reserve before it opened.

Definitely would be a requirement of a bank the business would have a line of credit with.
[/quote

The owner likely put in larger sums initially as cash injection typically along with a large loan.
Typically here would be no "larger" line of credit required or available.

MangoMama
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Re: Daycare closed

Post by MangoMama » Tue Mar 17, 2020 1:49 pm

Our contract has a Special Circumstances & Class Cancellation section that mentions pandemic specifically and says daycare may close at their discretion. The last sentence states "Parents agree that the tuition will be paid as set forth regardless of the occurrence of any special circumstances".

SO and I disagree on the best path forward. We're lucky in that one parent is SE and doesn't have to work, but we only have about 6 weeks to decide either way and request a refund for the summer session and 20-21 year. I think the summer might be a wash at this point. I can't see them starting back up normally on June 1. I'm also starting to think that maybe even in the Fall things won't be back to normal.

But if we cancel for the next school year (starts in Sept), we may be out of luck for the whole year because of the long waitlist. Currently in a holding pattern like everyone else.

Any thoughts or suggestions?

smitcat
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Re: Daycare closed

Post by smitcat » Tue Mar 17, 2020 2:24 pm

simplesimon wrote:
Tue Mar 17, 2020 1:40 pm
Hopefully, the owner of the business put in enough capital as part of that reserve before it opened.

Definitely would be a requirement of a bank the business would have a line of credit with.

The owner likely put in larger sums initially as cash injection typically along with a large loan.
Typically here would be no "larger" line of credit required or available.

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8foot7
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Re: Daycare closed

Post by 8foot7 » Tue Mar 17, 2020 2:40 pm

MangoMama wrote:
Tue Mar 17, 2020 1:49 pm
Our contract has a Special Circumstances & Class Cancellation section that mentions pandemic specifically and says daycare may close at their discretion. The last sentence states "Parents agree that the tuition will be paid as set forth regardless of the occurrence of any special circumstances".

SO and I disagree on the best path forward. We're lucky in that one parent is SE and doesn't have to work, but we only have about 6 weeks to decide either way and request a refund for the summer session and 20-21 year. I think the summer might be a wash at this point. I can't see them starting back up normally on June 1. I'm also starting to think that maybe even in the Fall things won't be back to normal.

But if we cancel for the next school year (starts in Sept), we may be out of luck for the whole year because of the long waitlist. Currently in a holding pattern like everyone else.

Any thoughts or suggestions?
I don’t have much advice for you other than to say you may want to attempt to negotiate with the provider.
You ultimately may need to pay up or find another place.

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8foot7
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Re: Daycare closed

Post by 8foot7 » Tue Mar 17, 2020 2:50 pm

smitcat wrote:
Tue Mar 17, 2020 1:44 pm


Once again just for discussions sake:
- $300,000 in cash will cost a small business about $40K per year
- raising the rates is always a hard thing to do

"It's of course a lot of money, but if your business is doing $1.5 million a year in expenses, presumably more in revenue, I actually don't think a goal to set aside 10% of that as a reserve is that crazy an idea..."
It is interesting to compare these small business's like: restaurants, hardware stores, cloths stores, package stores, gas stations , childcare centers , etc to much larger 'well' established enterprises. Considering that it may be reasonable for these small business to have larger reserves when we now know that major airlines and hotel chains do not is interesting.
Not sure where the cost of 300k in cash is coming from; I wouldn't assume I'd get much of a return on it but it's meant as insurance, not investment.
If you're referring to a cost-of-deposit at a bank, then I'd advise a new bank, or a corporate Schwab account with money in a money market fund.

Many folks will absorb relatively small increases in daycare cost. I know we have every year. I'm not saying hike rates by 10%, but an adjustment around inflation will generally not stifle childcare demand and most parents won't up-end trust and routines in their children if their weekly tuition goes up by $10.

So maybe $300,000 is too much. OK. Like I said, argue with my numbers. Perhaps having $100,000 and deferring your building loan payments makes sense in a crisis. But I fervently believe (and ran my business this way) that I need to be able to go three months without revenue. Maybe I make cuts to staff pay, maybe I work out something with my bank, maybe I do all of these things and more. But I think we should resist in general the idea that businesses should simply fold up shop if they go without revenue for a couple of weeks. It is not a responsible way to run a business, particularly one with employees.

As far as the large airlines etc not having cash, well, I think it's unconscionable and the management teams should all be fired. No joke.
The idea that the likes of United and American will run out of cash in weeks right now after a near-decade of billions of profit and free cash flow is simply unacceptable.
Last edited by 8foot7 on Tue Mar 17, 2020 2:54 pm, edited 1 time in total.

alfaspider
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Re: Daycare closed

Post by alfaspider » Tue Mar 17, 2020 2:52 pm

Ours has closed through the month with no communication about tuition. We pay monthly, so I expect some announcement about it before the end of the month. We are having to absorb the cost of alternate childcare arrangements (could be thoundands by the time this is said and done) because it is not feasible to work from home and take care of a 1 & 3 year old.

I'm of two minds on paying April if it does not operate. On one hand, if they are paying staff, I am happy to pay tuition as those folks get paid penuts for what they do. If they are not, I will be pretty miffed. It's a church-based daycare that has the same plant costs regardless of whether they are operating a daycare or not. It's likely a money maker for the church, as it costs considerably more than the for-profit daycare we used earlier (switched only due to location convenience).

WarAdmiral
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Re: Daycare closed

Post by WarAdmiral » Tue Mar 17, 2020 2:56 pm

Ours is officially open but they are not charging parents who decide to self-quarantine - we do have to pay the registration fee/enrollment fee again when we re-join so they keep our spot. FYI, ours is a weekly tuition daycare - it's a national chain.

smitcat
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Re: Daycare closed

Post by smitcat » Tue Mar 17, 2020 3:01 pm

8foot7 wrote:
Tue Mar 17, 2020 2:50 pm
smitcat wrote:
Tue Mar 17, 2020 1:44 pm


Once again just for discussions sake:
- $300,000 in cash will cost a small business about $40K per year
- raising the rates is always a hard thing to do

"It's of course a lot of money, but if your business is doing $1.5 million a year in expenses, presumably more in revenue, I actually don't think a goal to set aside 10% of that as a reserve is that crazy an idea..."
It is interesting to compare these small business's like: restaurants, hardware stores, cloths stores, package stores, gas stations , childcare centers , etc to much larger 'well' established enterprises. Considering that it may be reasonable for these small business to have larger reserves when we now know that major airlines and hotel chains do not is interesting.
Not sure where the cost of 300k in cash is coming from; I wouldn't assume I'd get much of a return on it but it's meant as insurance, not investment.
If you're referring to a cost-of-deposit at a bank, then I'd advise a new bank, or a corporate Schwab account with money in a money market fund.

Many folks will absorb relatively small increases in daycare cost. I know we have every year. I'm not saying hike rates by 10%, but an adjustment around inflation will generally not stifle childcare demand and most parents won't up-end trust and routines in their children if their weekly tuition goes up by $10.

So maybe $300,000 is too much. OK. Like I said, argue with my numbers. Perhaps having $100,000 and deferring your building loan payments makes sense in a crisis. But I fervently believe (and ran my business this way) that I need to be able to go three months without revenue. Maybe I make cuts to staff pay, maybe I work out something with my bank, maybe I do all of these things and more. But I think we should resist in general the idea that businesses should simply fold up shop if they go without revenue for a couple of weeks. It is not a responsible way to run a business, particularly one with employees.

As far as the large airlines etc not having cash, well, I think it's unconscionable and the management teams should all be fired. No joke.
The idea that the likes of United and American will run out of cash in weeks right now after a near-decade of billions of profit and free cash flow is simply unacceptable.
"Not sure where the cost of 300k in cash is coming from"
Typical SBA small business loan of about $300K.

"Many folks will absorb relatively small increases in daycare cost. I know we have every year. I'm not saying hike rates by 10%, but an adjustment around inflation will generally not stifle childcare demand and most parents won't up-end trust and routines in their children if their weekly tuition goes up by $10."
More competitive in many areas then you might think. Much more push back on prices most every year that we are aware of.

"As far as the large airlines etc not having cash, well, I think it's unconscionable and the management teams should all be fired. No joke.
What about some thoughts on hotels, travel companies, cruise lines, large store chains like Lowes and Home Depot , airports.
And on the small business side think about pizza places, restaurants, package stores, gas stations, ice cream stores, appliance stores , etc>
Would it be best to have all of them be cash heavy by about 3-4 months all throughout operations....

smitcat
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Re: Daycare closed

Post by smitcat » Tue Mar 17, 2020 3:03 pm

8foot7 wrote:
Tue Mar 17, 2020 2:50 pm
smitcat wrote:
Tue Mar 17, 2020 1:44 pm


Once again just for discussions sake:
- $300,000 in cash will cost a small business about $40K per year
- raising the rates is always a hard thing to do

"It's of course a lot of money, but if your business is doing $1.5 million a year in expenses, presumably more in revenue, I actually don't think a goal to set aside 10% of that as a reserve is that crazy an idea..."
It is interesting to compare these small business's like: restaurants, hardware stores, cloths stores, package stores, gas stations , childcare centers , etc to much larger 'well' established enterprises. Considering that it may be reasonable for these small business to have larger reserves when we now know that major airlines and hotel chains do not is interesting.
Not sure where the cost of 300k in cash is coming from; I wouldn't assume I'd get much of a return on it but it's meant as insurance, not investment.
If you're referring to a cost-of-deposit at a bank, then I'd advise a new bank, or a corporate Schwab account with money in a money market fund.

Many folks will absorb relatively small increases in daycare cost. I know we have every year. I'm not saying hike rates by 10%, but an adjustment around inflation will generally not stifle childcare demand and most parents won't up-end trust and routines in their children if their weekly tuition goes up by $10.

So maybe $300,000 is too much. OK. Like I said, argue with my numbers. Perhaps having $100,000 and deferring your building loan payments makes sense in a crisis. But I fervently believe (and ran my business this way) that I need to be able to go three months without revenue. Maybe I make cuts to staff pay, maybe I work out something with my bank, maybe I do all of these things and more. But I think we should resist in general the idea that businesses should simply fold up shop if they go without revenue for a couple of weeks. It is not a responsible way to run a business, particularly one with employees.

As far as the large airlines etc not having cash, well, I think it's unconscionable and the management teams should all be fired. No joke.
The idea that the likes of United and American will run out of cash in weeks right now after a near-decade of billions of profit and free cash flow is simply unacceptable.
"But I fervently believe (and ran my business this way) that I need to be able to go three months without revenue."
What business was this?

"But I think we should resist in general the idea that businesses should simply fold up shop if they go without revenue for a couple of weeks."
A couple of weeks is not a problem … we are speaking about a few months in this post.

Pikel
Posts: 158
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Re: Daycare closed

Post by Pikel » Tue Mar 17, 2020 3:13 pm

The daycare we use is closed for at least a month. They just sent two emails at once; first, no refunds for March and the second email was the bill for April.

Makes me think of "prisoners dilemma," in that being so aggressive might end up costing them more money than if they reduced tuition by half or so.

The other thing that kind of irks me is that they are owned by a private university that has a $1B endowment fund.

njdealguy
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Re: Daycare closed

Post by njdealguy » Tue Mar 17, 2020 3:21 pm

Our daycare isn't closing as the state hasn't required it yet (From my username hehe). It seems to me the goal of many daycare owners that a majority of parents do not send their kids while somehow remaining open so that refunds aren't demanded :)

SilverGirl
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Re: Daycare closed

Post by SilverGirl » Tue Mar 17, 2020 3:52 pm

smitcat wrote:
Tue Mar 17, 2020 9:48 am
SilverGirl wrote:
Tue Mar 17, 2020 9:34 am
I own a private preschool and we are contemplating the inevitable. I do plan to pay my staff provided parents pay me. I am thinking of charging 50 percent tuition during the closure and taking a loss. Trust me I will not make any profit at all. I have many other costs that will still need to be paid. This is a nightmare.
Agreed - if you do take in 50% tuition and everyone remains enrolled you will likely 'only' lose 10-20% for any closed months.
Then there are the facts that many will just disenroll and/or not pay so the losses will be much greater if you continue to pay staff.
Consider reviewing your insurance for sections on business interruption and/or forced closure due to health issues unrelated to your operations.
Thank you for the thoughts, our insurance has a clause and will not pay unless we are shut down for a confirmed case. Not helpful. We do plan to offer to coordinate services between our staff and enrolled families for care during any shortage, and families would just sign a liability waiver that we have them do normally when they get babysitting services. In this case the families would not pay us and we would not pay the staff.

Maybe this is not a good solution, we don't know, these are unchartered waters.

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