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Case Study: EEBC's effect on child care business sustainability

Updated: Oct 31, 2022



The child care industry in Hampton Roads has been fragile for years, with ever-increasing issues impacting early child preparedness for school as well as the parents' ability to work and successfully participate in the economic viability of the region.


This case study is based on interviews with Jim Carroll, former director of the Hampton Roads Small Business Center, which provides the Early Education Business Program (EEBP), and Barb Lito, GrowSmart coordinator, Virginia Beach GrowSmart,

Department of Economic Development, which provides financial support for the Hampton Roads EEBP program, which was the first one in Virginia.



 

What Roadblocks Create Issues with the Child Care Industry in Hampton Roads?

Like many across the country, our region has experienced challenges in young children's readiness for kindergarten and their parents’ access to quality education and early child care so they can work. Without going too many years back, both pre-pandemic and our current state, child care businesses have lagged behind many other industries in having a sustainable business model. 


Overall, these barriers continue to limit quality education outcomes and the development of a long-term sustainable small business model for this industry:

  • Time-consuming and cumbersome federal, state, and local regulations                                 

  • Shrinking child care slots needed to support pandemic recovery workforce needs. 

  • Haphazard school readiness for successful school pathways 

  • Challenges in hiring qualified employees and paying the compensation required for retention.

  • The complexity of cost-structure with tight business and profit margins

  • Lack of administrative resources for child care center owners to focus on quality education.

Additionally, the impact on our economy is significant. According to Carroll, we have four congressional districts in our region, of which 93% are small businesses with 500,000 jobs in our workforce and a payroll budget of $21 million a year. 


“Without having the early child care available, affordable, and trustworthy, you are not going to have 500,000 people in the workplace, Carroll explains. “People have to know their progeny are being well looked after while they are working.”

That doesn’t even take into consideration the hundreds of workers needed in the larger companies in the region. Who do they want to hire? Young people, those who have young children. In addition to being a problem for the child care program owners and directors, and our region’s workforce supply needs, consider the children and their development. According to Lito, a cohort of concerned Virginia Beach leaders were seeing that many young children were not ready to learn. When they started Ready to Learn in the Virginia Beach libraries in2003, one quarter of children starting kindergarten in the city did not meet entry benchmarks. People who owned child care centers and home day care had a heart for educating children, but did not have business training, which was keeping many of them from building a quality program. Getting a slow start would impact their success in school for years and could limit their ability to thrive in the workplace.


Today, the pandemic has slowed the progress we all anticipated. In nearly every region, city by city, many child care centers closed and most suffered from having to reduce their capacity. Staffing continued to be a problem. However, due to some highly effective developments, there are some positive results from the pandemic. 


 

How the Child Care Industry is Making Headway: Solutions to Support the Needs Even During a Difficult Economic Recovery

Sometimes it takes a disaster to realize just how prepared you have been! In Hampton Roads, many of the child care centers and home-based programs have actually improved and fared well during the past year by looking to such businesses as Early Education Business Consultants (EEBC) and other child care champions to assist owners to build quality education child care programs and a sustainable business model. According to Virginia Beach Smart Start data, from Fall 2020 to Fall 2021, Virginia Beach child care centers moved from 75% meeting the kindergarten readiness benchmarks to 81% in spite of all the challenges the pandemic gave them.


Why? There is not just one reason, but Lito thinks many were much better prepared to deal with the pandemic because of the owners and directors who participated in the Early Education Business Program, managed by EEBC which began in 2010.


The Early Education Business Program began when Jim Carroll along EEBC’s owner, Lauren Small, Jenefer Snyder, who at the time was the Grow Smart coordinator, and Jerry Stewart,  the former Workforce Development Director for Virginia Beach Economic Development met after Jerry was approached by the city to discuss a real need in the community. The City’s research showed that having affordable and quality child care is critical to economic development. Jerry pulled in Jim as the SBDC does this kind of work as a matter of course. Over lunch, they talked about how the child care programs needed to focus on both the back of the house and the forefront of the house. Jim recognized that there had to be a tangible result of improvement in the child care programs’ level of quality. 


“Evaluating the back of the house was easy, ‘did your sales go up, did costs go down, are you still in business, did you make a profit,’ those metrics would be easy to define, but for the front end, what would that look like?” Carroll asked. Small, who has specialized in the early child care industry for years, would bring to the discussion the accreditation process, how others had developed those metrics, as well as the other front-end pieces. 


Small and her team did a thorough analysis, collecting data on a first cohort of child care centers. EEBC dug deep into the current status and issues in the back of the house, and everything on the front end. It was not enough to tackle only one side of the house, but everything from operations to onsite signage has to have equal attention. Instead of just telling the child care center owners what they needed to do, EEBC had them do the work, while being there for them, every step of the way. 

“I walked into the training room one day, and everyone was working on their websites with electrical cords running throughout the room," explained Carroll. “I felt like Indiana Jones when he falls into the pit of snakes. They were actually doing the websites right there in the room.”

The Early Education Business Program is an 8-week training program involving education and hands-on application for a wide range of essentials needed to build a sustainable business model. Weekly topics for ten child care center owners who build ongoing supportive relationships covers small business management, digital marketing strategies, human resources management and staffing, data-driven decision-making, and child care management software, all broken down using best learning practices and building on each subsequent session. EEBC provides experienced coaching for everything from automation and technology implementation to guidance for marketing, employee retention and financial forecasting. 


What makes the program unique according to Carroll, is that everything is laid out in bite-size tasks, which can easily be addressed and measured. According to Lito, the relationship does not end after one 8-week training session. Some of these owners come back for additional sessions and services. 


Another important aspect of the “how-to” is funding and structure of programs which can redefine the early child care industry. In 2010, the Virginia Early Childhood Foundation stood up for Smart Beginnings to help localities invest in the solution. Many localities started, but Virginia Beach in the Hampton Roads region is the only one which has continued on this level. Virginia Beach is the last to launch kindergarten throughout the school system, yet the foresight to move forward for the long-term with early education is due to a clear understanding of the connection with economic development. In 2020/2011, the city moved the initiative into the Economic Development Department and rebranded it as Grow Smart, making a stronger business connection due to the innovative thinking of Marcy Sims, the director of the Virginia Beach Public Library at the time.


“They wanted to elevate the importance of these early years, as we know if children have a solid foundation in those first five years, we set them up for their successful future lifestyles,” said Lito. This is what makes us unique.” 


 

Outcomes: The Obvious and the Long-Term Impact

Even the first graduation of the Early Education Business Program brought insights to the forefront. As Small started her presentation, with total transparency, she shared how much the program was a learning experience for her, from now recognizing than even a child’s biting was a form of education and that if you want to talk to someone in this business, you can’t reach them in the morning. You must wait until nap time. The program was a journey for Small and her team as well as the owners of the child care centers. 


The City of Virginia Beach submitted the program to the International Economic Development, and the EEBP was recognized as the most innovative program for the year in the country. Carroll believes the outcomes are the result of two conditions: Working with these small businesses requires simultaneously working both the back end and the front end of the business and an understanding that the EEBP addresses a major need in the community impacting our workforce and economic development.

Some of the initial outcomes are significant in moving the child care centers toward a business model that will ensure sustainability.

For example, one center took completely manual systems of student enrollment, waitlist management, billing and tuition collection to full online automation saving the owner/director 20 hours a week in time. Another center has had two perfect state licensing inspections in a row since participating in the Early Education Business Program. Additionally, another center has reduced their accounts receivable by 14%. The program has also assisted the owners with increasing their access to staffing and building morale with their personnel. 

When the child care cohort realized that the pandemic wasn’t just a two week “done and over,” Jane Glasgow with EVMS 9-5, Small, Lito and others quickly started connecting the child care centers with area financial organizations like TowneBank and others to assist the owners to work through the paperwork to apply for the Cares Act funding and the PPP. With support of EEBC who could quickly pull or assist to identify financial reports, the Center owners could meet the criteria needed to apply. 


“We know we increased the centers’ sustainability when we look at statewide figures during that period where child care operation levels were at 30% while ours were at 60%,’ explained Lito. “It was an aha moment for us, realizing that our investment in early child care was paying off.”

Another outcome from the EEBP during the pandemic has been in several participants having their automation and other technical systems in place so they could be in a position to not only remain operational but also pivot to serve new needs. For example, in Virginia Beach, between Fall 2020 to Fall 2021, the city grew approximately 800 spots for additional children to enroll, two centers expanded to serve school-age children, which was critical as parents struggled with virtual learning, and if they had work shifts which started in the afternoon, they had a place to take their children. 


As we engage more child care centers in the EEBP and other resources such as Child Care Aware of Virginia, and Ready Region Southeastern Initiative, we anticipate significant changes to the way child care centers and home-based programs are considered a sustainable and successful component of both educating children and building a strong workforce. The long-term investment from our cities and businesses will ensure that we continue to focus on obstacles like wages, benefits, and continuing leadership education.

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