Advice - Starting a Childcare Worker Recruitment/Staffing Business

addicted on 27/03/2024 - 23:20
Last edited 27/03/2024 - 23:29 by 1 other user

Hi all, we are a family based in Sydney. Wife works as an Early Childhood Teacher in childcare sector and has got a pretty good knowledge and experience about the industry and can easily evaluate calibre of potential candidates. I work in IT and am good with system, documentation and planning. We were thinking to start a staffing agency in childcare niche. With the high turnover that this industry witnesses, and ratio requirements of educator to children, there is continuous demand for casual staff. I was preparing a plan for this potential business and wanted to get your valuable inputs please. I am confused about two aspects and if someone could help me out with these questions please:

  • What kind of website/software/CRM we would require. I would imagine if we send shift workers to a childcare centre, there would be timesheet/invoices sent over to the childcare centre. I was looking online and saw products like Zoho CRM, Jobadder and manatal.com. Or do I really require them at the outset?

  • What kind of margins the staffing operators charge e.g. a casual childcare diploma educator might get $31/hour for her shift, what would the staffing agency charge for it?

  • Also, what kind of software I should be using to issue contract letters to the shift workers who onboard with us? How do I get template for the contract covering their award rates and entitlements?

I know asking for a lot but every little bit helps.

Thanks!

Education & Work Childcare

Comments

  • jv on 27/03/2024 - 23:28
    +6

    Sorry, can't provide you free consulting services here..

    • addicted on 28/03/2024 - 09:50
      -1

      Not trying to cut corners, was just in initial phase and was trying to open myself to other thoughts as well and see if I am missing something.

  • brendanm on 27/03/2024 - 23:28
    +2

    Good thing no one else has thought to do this.

  • Pcosmic on 27/03/2024 - 23:34
    +8

    If you have to ask, you're probably not ready

  • AustriaBargain on 28/03/2024 - 00:02
    +3

    You're asking the very first step basics of a business plan. If you have a lot of money saved then you could hire someone with management experience in this kind of business and let them tell you how it all works with the view of them managing the business for you. It'll save you years of research and trial and error but if the business fails you just wasted a lot of money. You'd have to offer a lot for someone to gamble a year of their own career to help build your business.

  • elgrande on 28/03/2024 - 05:08
    1. Excel
    2. Tree fiddy
    3. Word
  • joka on 28/03/2024 - 06:29

    I am surprised you’re not asking us to also help you calculate their total weekly hours based on their daily worked hours.

  • JIMB0 on 28/03/2024 - 07:12

    casual childcare diploma educator might get $31/hour for her shift

    So you're only hiring women?

  • sharka on 28/03/2024 - 07:50
    +3

    Starting a staffing agency in the childcare niche sounds like a promising venture, especially given your and your wife's combined expertise in the early childhood education sector and IT/systems planning. To address your questions, let's break down the aspects of website/software/CRM, margin considerations for staffing operators, and software for issuing contract letters, including considerations for contract templates.

    Website/Software/CRM Requirements
    At the Outset: Initially, you may not need a highly sophisticated system. However, a basic CRM (Customer Relationship Management) system can help you manage your relationships with both childcare centers and staff efficiently. Tools like Zoho CRM are versatile and can grow with your business, offering features for managing contacts, communications, and tasks. They also integrate well with other Zoho products or third-party apps for accounting, timesheets, and invoicing.

    Specialized Staffing Software: As you noted, platforms like Jobadder and Manatal are designed with recruitment in mind, offering features that streamline the recruitment process, including job posting, applicant tracking, and placement management. These may become more relevant as your business grows and your needs become more complex.

    Invoicing and Timesheet Management: Look for software that can handle timesheets and invoicing seamlessly. Many CRMs and staffing software offer this functionality or integrate well with systems that do. QuickBooks, Xero, and similar accounting software often have timesheet functionalities or integrate with apps that specialize in timesheets and can generate invoices based on hours logged.

    Margins for Staffing Operators
    Determining Margins: Margins can vary widely based on the industry, location, and services offered. In the staffing industry, a markup of 25% to 100% on the pay rate is common. For example, if you pay a childcare diploma educator $31/hour, the charge to the childcare center might be anywhere from $38.75 to $62/hour. The specific margin would depend on your operating costs, the competitive landscape, and the value you provide. Research local competitors to gauge standard markups in your area.

    Considerations for Setting Rates: Include overhead costs (office space, software subscriptions, staff salaries for your agency, insurance), the quality of service you're offering, and any unique value propositions that justify your rates.

    Software for Issuing Contract Letters and Templates
    Contract Management Software: For creating and managing contracts, consider software like DocuSign, HelloSign, or even Adobe Sign. These platforms often have template libraries that you can customize to your needs, including contract letters that cover award rates and entitlements.

    Template for Contracts: You can start with generic contract templates from these platforms and customize them to include specifics related to the childcare industry, such as award rates, work hours, and entitlements. It may be wise to consult with a legal professional specializing in employment law to ensure your contracts are compliant with local regulations and industry standards.

    Customization and Legal Compliance: Given the legal complexities surrounding employment contracts, especially concerning award rates and entitlements, getting legal advice to customize your contract templates is essential. This ensures they are compliant with local laws and industry standards, providing protection for your business, the educators, and the childcare centers you serve.

    • sharka on 28/03/2024 - 07:52

      A few extra things to consider

      Regulatory Requirements: Ensure you're familiar with and comply with all local and national regulations related to staffing agencies and the childcare industry. This may include licenses specific to employment agencies and any certifications required to place staff in childcare settings.

      Insurance: Look into obtaining comprehensive insurance coverage, including liability insurance and, possibly, workers' compensation, depending on the legal requirements in your area.

      Background Checks: Establish a thorough vetting process for all staff, including background checks, verification of qualifications, and reference checks. In the childcare sector, trust and safety are paramount, so rigorous checks are essential.

      Training and Development: Consider offering or mandating specific training sessions for your staff to ensure they meet the high standards expected by childcare centers. This could include first aid, child protection training, and ongoing professional development.

      Unique Value Proposition (UVP): Clearly define what sets your agency apart from competitors. This could be your expertise in the childcare sector, exceptional customer service, or the quality and reliability of the staff you provide.

      Digital Marketing: Develop a strong online presence through a professional website, social media, and other digital marketing efforts to reach both childcare centers in need of staff and potential employees.

      Start-up Costs and Capital: Ensure you have a clear understanding of the start-up costs and have adequate capital or financing in place. This includes software subscriptions, marketing, insurance, and any office space or equipment you might need.

      Cash Flow Management: Staffing agencies often face cash flow challenges, particularly in the early stages. Plan how you will manage cash flow, considering the delay between paying employees and receiving payments from clients.

      Networking: Build strong relationships with both childcare centers and childcare professionals. Your network will be a crucial factor in your success, providing you with both clients and candidates.

      Feedback Loop: Establish a process for collecting feedback from both the childcare centers you serve and the staff you place. This feedback will be invaluable for continuous improvement.

    • addicted on 28/03/2024 - 09:51

      Really appreciate the helpful comment Sharka, noted all the points!

    • jksk13 on 28/03/2024 - 16:59
      +5

      Thanks ChatGPT!

  • holdenmg on 28/03/2024 - 08:11
    +2

    Guide to starting a business
    https://business.gov.au/guide/starting

  • netjock on 28/03/2024 - 09:02
    +3

    Wife works as an Early Childhood Teacher in childcare sector and has got a pretty good knowledge and experience about the industry and can easily evaluate calibre of potential candidates.

    She should really know what the agencies are charging and be able to work out the margin. It is a fundamental part of the viability of your business.

    I work in IT and am good with system, documentation and planning.

    It really doesn't sound like it given the questions you are asking.

    CRM - I'd suggest as per above use spreadsheets for now until you have say 10 casuals you are sending out. Your other half should really have asked those questions of the casuals and spied on the contract rates that is being paid.

    It is also easy to ask guided questions to experts in the field such as staff room conversations with the admin staff to figure out how the admin and accounts payable process works for casuals.

    Could you please do that rather than asking us because it just shows not enough thought has gone into it.

    I run a business consultancy and I would have drawn out those answers making a few phone calls and buying a few coffees being an agreeable conversationalist.

    You might also want to find out why there is such a high turnover. Not enough people entering the industry and pay is going up. Or job satisfaction is low and people are leaving the industry. No point trying to do a staffing agency if there is no staff to supply. That is like trying to sell dog food in an area people prefer cats or being a car dealer when there is a shortage of car production. You get the idea. Sometimes it is a supply issue not a demand issue.

  • pizzip on 28/03/2024 - 09:13

    With the high turnover that this industry witnesses, and ratio requirements of educator to children, there is continuous demand for casual staff.

    Why would any worker use an agency (I assume you will be taking a cut of their wages like labour hire firms do), when they can basically walk into any child centre and get a job on the spot assuming they are qualified and experienced.

    • JDMcarfan on 28/03/2024 - 11:41

      If OP isn't already thinking this, then they should, but I think they're more leaning on the casual (think substitute teacher) market for childcare workers.
      By filling in for childcare centres on a daily needs' basis, workers can free up flexibility in their schedule and make more money as they'd charge a premium for ad-hoc work.
      OP's company would effectively keep a book of indivudas on the roster of multiple centres and basically air-task them to wherever their needed. They could then offer competitive pay offer whilst making a healthy margin, by charging the centre a premium on normal rates for the casual workers for the security of meeting worker supply when demand is volatile (or perm staff call sick)

  • Dollar General on 28/03/2024 - 09:43

    So most of the large 30+ ELC’s have many side businesses that correlate to running ELC’s & most of these are ELC recruiting businesses. They recruit and place them in their own centres. Some offer training courses to get money from governments for providing the training.

    You will not only have a lot of competition, but some ELC’s may never recruit from your business

  • mini2 on 28/03/2024 - 10:44
    +1

    You need an accountant. You haven't even sussed out how much that body will cost you and its associated costs.

    I assume you'll be a body shop, swinging your candidates at these ELC and then charging them by the hour.

    You probably need someone with an actual HR background and a salesperson too, to sell your firm to the ELC, who's likely to be doing recruitment in-house. Or they could've just find bodies themselves, sweet talk them into become independent contractor and use Hnry to sort out their pay.

    I'm surprised your wife hasn't told you that a lot of recruitments are done via word of mouth to people they know either already here or back home.

    Good luck with your endeavours.

  • Aust on 29/03/2024 - 00:24
    +1

    Budget for a 5 figure insurance premium before the decimal point for public liability as your effectively labour hire.
    Dont forget your workers compensation also.

  • simplystu on 29/03/2024 - 12:12

    @addicted

    e.g. a casual childcare diploma educator might get $31/hour

    Casual + childcare == majority are on more than $31/hour (WA) … looking at closer to $35-$36/hr
    Imagine over east would be similar (East coast == EVERYTHING is more expensive).

    By reading your OP … sounds like you have ALOT more legwork to do before even considering such an idea.
    YET - as you said, wife works in childcare sector + you are IT.

  • WreckTangle on 30/03/2024 - 16:18

    The childcare sector can be quite precarious. Even ABC learning couldn't make it work, and imploded.

  • freefall101 on 01/04/2024 - 01:50

    I've worked in finance, systems and management at staffing/recruitment companies for most of the past decade. This post made my brain hurt in ways no amount of chocolate can fix.

    All I can say is, please don't. The most you can expect is unpaid workers and unhappy customers. The worst is lawsuits.

    • addicted on 01/04/2024 - 16:59

      Hey freefall, I am trying to understand what made you say that 😅 Was it my lack of knowledge and lack of due diligence as other posters attributed? Or it was a general commentary about the sector given your vast experience in the sector?

      • freefall101 on 01/04/2024 - 19:14

        It was both your lack of knowledge and due diligence, really. Your wife can vet candidates in an industry where vetting candidates isn't the problem (it's the supply of employees) and you work in IT but need advice on which system to use. That's not a good start. You know nothing about staffing but are starting a staffing company, how do you think that'll work out?

        Staffing is low margin. You need to interview, do police, background and visa checks, be able to payroll them, pay the ATO, payroll tax, workcover. And you need contracts with customers for people to go to. You usually need to payroll people before you collect your invoices from customers, so it takes upfront capital.

        Where I worked it usually took over a million dollars of revenue to pay each employee just to break even on that employee. To make money either you have amazing connections to scale up quickly or cut corners and screw someone over.

        • addicted on 01/04/2024 - 19:45

          Sure, understand your point thanks for explaining

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