6 minute read
CASE STUDY: FINANCE
Church Childcare | Walkertown
BY THE NUMBERS
Theressa Stephens built her child care business by following her heart and employing financial prudence. It has paid off for her family, students, staff and community.
Theressa Stephens stepped into the corporate world a few decades ago, using her Winston-Salem State University business degree to land jobs in banking and health insurance. While they made sense financially, they never made her happy. “So, I told my husband this is what I want for me,” she says. “I quit my job and started a career in child care.”
Stephens owns Church Childcare in the Winston-Salem suburb of Walkertown. She chose its name for specific reasons. “We’re believers of faith, and we wanted to be a representation of the church, and the church represents love,” she says. “We represent love to our community and to our staff and our students.”
Starting more than 20 years ago in the family home’s garage, Stephens has grown Church Childcare to serve more than 1,000 children at two Poindexter Street locations, the second of which opened in 2018. Her success is grounded in her experience and abilities. In high school, she helped her grandmother babysit. “She kept all the children in our neighborhood and was wellknown in the community,” she says. She’s quick with numbers, too, calculating percentages in her head and visualizing charts and spreadsheets. She can turn loans into profits, and she doesn’t mind working long hours.
Church Childcare began with four children. Its enrollment doubled when it became a licensed family home care provider. So, Stephens hired staff, and word spread further. “I couldn’t take these children fast enough,” she says. “My husband kind of managed the home, because there was such a demand and a wait list.”
A loan from Durham-based Self-Help Credit Union, whose specialty is working with traditionally underserved communities, allowed Stephens to expand her business at a different location, where enrollment increased to 12. She was ready for her own building by spring2004. “The initial plan was to get a loan, get a business plan then start building,” she says. “But construction was delayed because of winter.” When the building was finally ready, she had a month-old baby.“I had my infant in the office with me while we were enrolling students,” she says. “We went from 12 to 45 [students] in less than a year.”
Stephens needed to raise an initial investment of about $800,000 for her building. “We had to put down 10%, and the loan was a Small Business Loan for minorities,” she says. “And the bank put down 50% and the [U.S. Small Business Administration] 40%. Somehow, the community knew we were interested in building a child care center, and the loan officer found out about us, and there was a mutual connection.”
-Theressa Stephens
The loan is almost paid off. She has about 35 staff members — teachers, administrators, floaters and cooks. About 75% of the business’s revenue goes toward paying their salaries, she says. Then there are bills and utilities.
”It all goes back to what Stephens learned in banking. “I have an annual budget, and I use the basic Microsoft Excel,” she says. “I also have a monthly budget to look at what we need on a monthly basis. If we have leftover [money], I leave it in the bank for the next month. We have contracts with N.C. Pre-K and with HeadStart,so when they aren’t in session, I can pull from that for summer months.
Revenue is tied to tuition — $85 per week for after-school care, $172 per week for pre-K and $201 per week for infants. Annual September “slight increases” to those amounts were slated to take place. The COVID-19 pandemic dried up most of the business’s cash flow. “Our enrollment dropped overnight to 30% [of what it was],” Stephens says. “So, what that meant for us, with people working from home, they wanted to save money and bring their kids back when it was safer. And that was the private-pay parents. We didn’t know if we were going to be able to stay in business.”
Stephens received a $150,000 loan from the federal Paycheck Protection Program. It helped pay salaries, which retained teachers. “But some chose not to come back,” she says. “So, about a year and a half later, we’re building our staff back up to what we’re accustomed to. We do have some who have been with the organization 10 years, and they’re very dedicated. Some have been here 16 years, since we started this.”
Stephens budgets perks for her staff. She offers them a hospital policy through Aflac and a retirement fund. “And we do pay higher salaries than most [childcare] facilities,” she says. “We also have other incentives. We wash their car twice a month. We have Christmas bonuses.”
Stephens spent a day in Raleigh this past summer, when state lawmakers agreed to hear child care providers’ thoughts on increasing the rate for tuition reimbursement. The nonprofit North Carolina Justice Center says House Bill 574, which was re-referred to the Committee on Appropriations in May, would up that rate to child care providers that care for children who receive child care assistance. That money is intended to ensure working families have child care options as the pandemic continues and recovery begins.
Margins are slim for child care businesses, says the North Carolina Justice Center. Reimbursements and payments from parents are their primary sources of revenue. It says the situation is only worsening because child care costs are increasing, putting it out of reach for more parents, and state reimbursement rates don’t truly reflect the current cost of high-quality early education.
About 60% of Church Childcare’s students attend on scholarship. The balance is private pay. “And they all get quality services, whether it’s from [Department of Social Services] or N.C. Pre-K,” Stephens says. “So, in Raleigh, we said we are in a workforce crisis. We have been on the frontline the entire time and only closed our facility once, when they said COVID-19 was going to peak last year. And when we did, we sacrificed and paid our staff to work from home. So, they did training online, because they couldn’t do work.”
Stephens wants all childcare teachers to be paid well and feel good about their job. “You have to have compassion for your staff,” she says. “We can’t work if we don’t have our personal things in order. I advocate quite a bit throughout the state.” She recently hosted a retreat for her staff. “They were fed and showered with gifts,” she says. They even met with a health and wellness coach.
Stephens may expand her business again someday. But she’s in no rush. “I’m not bored,” she says. “No day is like any other. That’s what I love about it. I love that I have beautiful faces that greet me every morning. I love to watch them grow.” ■
