It’s no secret that working in childcare can be fraught with potential pitfalls. You must keep abreast of ever-shifting school standards and restrictions, such as the fact that teaching religion in your daycare automatically excludes you from receiving government funds. You need to deal with the day-to-day details of your business, such as collecting payment, accounting and marketing. What’s more, the sanitation regulations of most states require you to submit to an inspection at least twice a year.

If you’re just starting out, you may find it difficult to take sick days. In fact, extended bouts of illness will have a direct affect on your bottom line, and can send your customers scampering off to the competition. As time goes by, you’ll expose yourself to more potential pathogens than the average person. At the same time, you are expected to keep the environment as free of disease-causing agents as possible to protect the children under your care.

For many, these potential issues are outweighed by the advantages of the business model, such as the tax breaks on offer, and the motivated and ever-growing customer base.

But imagine: It’s a busy Monday morning. You’ve been reviewing your business budget for the month, and you're following up with a disgruntled parent, and thinking about running a mock inspection. You have to make sure your facility is clean and in good repair. Sure, the mock inspection will help you avoid fines and a sub-par inspection score. But there are so many moving parts.

Then your phone rings. You reach for it. Surely this is good news. It isn’t. One of your employees just called in sick. You freeze. Your chest tightens. Your temples pulse.

So Many Moving Parts

Sometimes, it can seem as if a smooth-running business is a forbidden fruit. It doesn’t need to be that way, and you don’t need to feel powerless. How do you wrangle all these elements so that you can run an efficient, profitable operation? One essential piece of this puzzle is this:

The tried-and-true SWOT analysis. A SWOT analysis is a simple, but powerful process through which you can identify your strengths, weaknesses, opportunities and, perhaps crucially, any potential threats you may be facing.

An ongoing SWOT analysis will help you outperform your competition, so that you can easily do the following: Easily pass inspections; retain customers; resolve issues among employees; and, head off potential issues before they become bigger.

This type of analysis is a form of strategic planning, and it provides you with a snapshot of your current state. When conducting a SWOT analysis, try to view issues from the perspective of your current and potential clients. Great planning starts with understanding where you are today.

The Anatomy of SWOT Analysis

On paper, a SWOT analysis consists of a two-by-two table, one box for each of the four components. The process is fairly straightforward and consists of four elements: strengths, weaknesses, opportunities and threats. To get a handle on this, you can mentally group them into two components: internal factors and external factors.

Internal factors -- your strengths and weaknesses -- are those factors that are under your control. Your strengths may include a recognizable name brand, a long list of testimonials from happy clients, a knack for dealing with troublesome children, a growing client base or a spacious facility. Weaknesses, on the other hand, can be anything from difficult employees, poor accounting skills, legal issues or a facility that is very close to a busy road.

External factors are your opportunities and potential threats, and these are not under your direct control. Threats and opportunities often take more digging to get at than strengths and weaknesses do. Yet being aware of potential opportunities is key and is one reason that you should do this exercise every few months. Opportunities come in many forms, and you may need to do some brainstorming here. In particular, you should look for any opportunities to take advantage of a strengthening economy or an influx of younger residents in your area.

Threats come in many forms as well. Look out for anything that could jeopardize inspections, such as aging equipment or careless employees. You will also want to review your insurance coverage as well as your adherence to zoning ordinances and employment laws. Note that these last two can change year-to-year. Additionally, you should gather data from as many sources as you can. This includes, but is not limited to, employees and customers.

Putting This Data to Use

Once you’ve completed the SWOT analysis, you will have an overhead view of your situation as it is right now. Take a look at your four categories. In general, this is what you want to do:

  • Strengths: Build on them
  • Weaknesses: Shore them up
  • Opportunities: Invest in them
  • Threats: Monitor them 

In particular, pay attention to any where your weaknesses intersect with potential threats. For instance, if you’ve come to realize that you are overly friendly with employees, recognize that employee theft is always a threat -- and that you may be at greater risk.

With this tool, you can now systematically analyze your current business situation. Your strengths are your source of competitive advantage. Your weaknesses, areas in need of improvement, are where you should focus your operational and people resources. Your opportunities are growth goals. Finally, threats are targets you must monitor.