Episode 214 – COVID-19 has put a lot of independent child care owners in a problematic position. In this episode, we talk to Amanda Munday, CEO and Founder of The Workaround, a co-working space that also offers quality child care. She talks about the challenges she’s facing with reopening her business and the financial reality of running a child care business during the pandemic.
So, where governments can support those spaces that would have been, but aren’t because of COVID , that would just take the pressure off of us, right? And now we’re facing not only trying to make sure that families are safe and that our staff are trained and we’ve got enough expenses to pay rent, but we’re trying to make sure that families return at all so that we don’t close.
Amanda, welcome to the Preschool Podcast!
It’s great to be back!
Yeah! We’ve got on the show today Amanda Munday. She’s the founder and CEO of an organization called The Workaround in Toronto, Canada. She’s also used to be part of our team at HiMama. So, we’re delighted to have her on the show and catch up with her. Let’s start off Amanda, learning a little bit about the Workaround and what it’s all about.
So, the Workaround is my answer to solving my own childcare problem. So, I took a co-working office space that has childcare on site. And what makes us unique – across all of North America, actually – is that the childcare on site is a full childcare center with registered early-childhood educators who are running a play-based learning curriculum onsite in the same building as the parents, but not in the same room as parents so that they can actually focus and get work done.
Cool, and what’s the response been from parents so far without model? And why do they choose to go to the Workaround versus some of the more call it traditional childcare options that are out there?
Yeah, so it was always so interesting to see who would come out to the Workaround because when I first started, I made the assumption that we would see tech employees and those who traditionally work at start-ups, anybody who you would imagine usually frequents co-working spaces, but the parent versions of those people who just need also childcare.
And what I learned really quickly is it’s actually not one industry that comes to the Workaround, but in fact what we see is all of the parents who need an alternative childcare model from the traditional nine-to-five, Monday-to-Friday. We see the entrepreneurs who, pre-COVID, were remote; maybe they weren’t working five days a week or maybe chose not to work all five days a week; part-time entrepreneurs and parents who were slowly transitioning back to the workforce after being on leave.
So, I have always said, “In the old world”, as I describe it, “We picked up everybody who was outside of the traditional childcare model but still needed some type of childcare.”
Yeah, that makes sense. So, like, more flexibility sounds like sort of a key part of it. And to your point, even in the “old normal”, let’s call it everybody… there’s more and more people that were looking for flexibility and certainly now. So, let’s talk about that. So, what does the Workaround look like, sort of pre-COVID-19 versus post-COVID-19? What’s changed for you?
What was always great about the Workaround pre-COVID-19 was that we were really, as you said, a flexible option for parents. So, the model before we were closed was drop-in care but drop-in and accessible. And that we normally saw the same families, but they weren’t locked into any sort of monthly or annual membership package or commitment really at all.
So, we had parents paying $65 for a half-day or a $100 for a full-day day pass. And what they could do was decide at the beginning of the month, “Alright, so I’ve got this big project and it looks like I’m going to need 14 working days, so I’ll purchase $1,400 day passes from you and I’ll work on-site and my child will be in the center with their friends.” Maybe the following month they’re heading on vacation for a week and they only need nine days. And it was total flexibility. And that allowed us to have many more families join the Workaround.
So, because we’re regulated for up to 15 children, that means if we have 15 unique children of 15 different families buying day passes, we could see up to 76 unique families in a week, which means, if you extrapolate that over a month, we had hundreds of families that were coming in to use the Workaround on any given month.
In fact, we opened in October 2018. And by March 2020 we had had 768 different families buy day passes from us in just quite two years since Workaround opened. So, we could tell there wasn’t a great demand for flexible, accessible and part time childcare.
And like so many other childhood institutions, in March 2020 we too were ordered closed by the province. Actually, we closed I think just four or five days before the province of Ontario ordered childcare centers closed.
And part of the reason why it was pretty easy for me to make the decision to close the Workaround childcare before we were ordered to was because our community was primarily remote workers and entrepreneurs and parents who were working on-site.
So, I knew we were dealing with essential workers or different workers who needed to be off-site and meet their children. So, [it was] easier in a lot of ways to make the decision to close. So, we did. And we were fully, 100% closed to the co-working and the childcare side through to July 2nd. So, the full four months.
I’m in the unlucky position that because I’m a for-profit, private childcare provider and I have 13,000 square feet of both office space and childcare, my rent continued to be charged the entire time. My rent is $18,000 a month so it’s not a small financial commitment. In fact, 90% of my fixed costs are rent and payroll for our teachers and fantastic staff.
So, even being closed, our revenue instantly dropped to 100. We paused all fees, regardless of whether they were recurring or numbers who had had unlimited membership packages, day passes – everything got paused. But our expenses continued.
And that partially influenced why it’s important to me to try to reopen as quickly as possible. The priority, of course, is to serve the families who we know have been struggling at home and locked in with their children and still needing to work and become full-time caregivers at home. And also, the business just can’t survive being closed. Our expenses never stopped.
And so what about on the childcare side? So, one of the things you mentioned was, you could have up to 15 children a day and it could be different children from day to day. That’s obviously not something that would fly as easily in this COVID-19 world. So, how have you adjusted to that?
Yeah, I mean, I’m sure all your listeners, anybody who’s had to navigate reopening, knows there’s just been a complete overhaul in the entire way we think about running a childcare offering.
So, on the public health side: so, we’re in East Toronto. Toronto Public House, when they announced stage two for us that childcare centers can reopen – and there’s a side point about they gave us a little notice to reopen, but we didn’t open in June when we were allowed to, we waited ‘til July.
A limit of 10 people in a classroom. So, not just 10 children, but 10 people including the teachers. And that screeners or support staff cannot enter the classroom and parents cannot enter the classroom. So, that means my old model as myself or our front desk staff covering breaks was no longer possible. So, I needed to hire and make sure I had three staff at all times in the classroom in order for breaks to be able to be covered so the teachers could take breaks, which means we’re down from 15 kids a day to seven children a day.
Now, the $100 full day or $65 dollar half day model doesn’t fly at all per the expenses because where we would have seen 15 or 76 families buying all kinds of different amount of day passes, now I can only have seven families. And it has to be the same seven families. And because we only have one classroom, we can only have one cohort.
So, this buying nine day passes or twelve day passes and use them when you want and will fill the gap of other families is gone. And I’m not honestly sure we’ll be able to bring it back anytime soon.
And what other dynamics are you seeing in the sort of supply-demand aspect of childcare right now? So, you’ve gone through this transition of your own with the Workaround and sort of changing the way you’re doing things. And I’m sure you’ve been seeing increases or decreases in demand for childcare spaces. Or maybe there’s different types of demand. What are you hearing and seeing?
This is where [my marketing background comes in]. At HiMama and in my whole life before starting the Workaround, I was a marketer by skill and trade. And so I’m very used to spending a lot of time understanding market demands and who our customers are and what services they value and what they want and looking at trends and whatnot.
And so in March, which was just four months ago – which feels of the lifetime and not yesterday – across North America, certainly in Toronto, across major urban centers, childcare had a supply issue. We had year-long wait lists, $1,000 for childcare. It’s incredibly difficult to secure a high-quality, full-time spot in Toronto and nearly impossible to secure that type of spot at an affordable rate for all of the complex reasons why childcare is expensive and places where rent is very expensive.
And so in a lot of ways, it’s quite maddening to reopen in July and see a complete overhaul of the market conditions that we saw in March. Now, we’ve reopened as of July 2nd. And even though I have seven full-time spots available, I’ve only been able to fill three.
And I was on a call just recently with private daycare owners across Ontario and there were 16 of us directors and owners in the call. And 100%, all 16 owners said they’re running with one or two children in a classroom. And their teachers are laid off. They have no idea how they’re going to cover their expenses. And they have no idea when the families are returning.
Add to that that we are supposed to hold the spots for existing families – that’s been the guidance from the Ministry of Education. And it introduces a completely new landscape for how to run a childcare center.
And from a business perspective of somebody running a for-profit enterprise with, of course, the social impact lens… I mean, when I started to Workaround, demand was never a question. It was never about, “Wow, do I think families need this,” or, “Do I think anyone would buy this?”
My challenges were always about, “How am I going to make sure I have the right price point in order to cover expenses? How can I make sure that we offer the best possible service to families who need part-time care?” Trying to figure out a model that made sense where I didn’t have examples go from. All of that work doesn’t apply when nobody’s returning to childcare.
And in your conversations, what do you think are the main drivers to that? Like, how much of it is parents are concerned about the risk of putting their children into childcare programs with COVID-19, versus maybe unemployment [being] up? So, they’re at home so they’re able to do it? Or are they doing other things? What do you think is driving that?
Yeah, I mean, believe me, like anything, I think we’re all searching for clarity on COVID-19 and why things are the way they are and what we can do to change it. And I do think there is a whole level of complexity [regarding] all of the examples you gave.
Yes, I think we’re seeing the job losses and unemployment. I think we’re seeing people be very cautious with spending. So, where there have been reports that retail spending and online spending has increased, that’s primarily for essential goods: the groceries and household items and cleaning supplies.
And while some expenses are down, so disposable income is up, childcare across the board is still an incredibly large expense for a family, especially if you have multiple children, especially if schools continue to be closed. So, I think families are being incredibly cautious with how they spend money now, not having the clarity on what’s going to happen in September, not knowing if we’re going to go into lockdown again.
Of course, I think there are some safety risks. I’ve certainly been able to mitigate a lot of that in some of the conversations with families. I mean, I only have three returning. I haven’t had any families who’ve called us, listen to our COVID-19 precautions, listened to our training, seen the way that we’ve changed the classroom and make a decision not to return based on safety.
I have had families call and ask if they can return to the part-time model that existed before. And then when I [say that] the only option now is full-time care, five days a week, they’ve said, “It’s just completely out of our budget.”
So, in my specific situation, one of the primary reasons why families aren’t returning is that the families who used to use the Workaround chose us because we weren’t full-time care. So, they would have never used us if we were only full-time, five days a week, $2,500 a day childcare.
And so we’ve had to pivot in order to survive. But those families who used us before just simply can’t afford it and they never could. As long as we’re full time, they’re not going to return.
And I do think when you’re looking at families of multiples, school being unclear, even if schools do return in Ontario – we’re just getting some breaking news about schools returning – the time that children will be in the classroom and also whether or not the safety protocols of the schools are being followed is impacting whether families can afford to put multiple children in care.
And so this has obviously impacted you from a financial perspective with the Workaround. There’s some government support available and it varies from one jurisdiction to the next. But what would you say would be beneficial for childcare programs in terms of the government support that would help you be effective and keep the doors open, frankly? Because some programs out there are really in a position where they may not be able to.
Yeah, I think we really need to get creative in how we look at support for childcare centers. And so I believe we need to look at it from both sides, both parent affordability and the sustainability of the childcare centers.
So, we need to look at, if parents can’t afford to put multiple children in centers or if the centers’ prices have to increase or costs are going up, then we need to be able to support at the parent level through larger subsidies. I mean, I received a government subsidy for my own children from the Ministry of Education, but it was $200. $200 isn’t going to go very far to supporting a childcare program. So, we need much more support, even if it’s in terms of a reimbursement on the family side.
And then on the childcare side, the wage subsidy that we have across Canada that reimburses wages up to 75%, depending on your revenue loss, is very helpful, of course, in covering our staff wages and those expenses. It doesn’t help me at all with rent.
We also need as childcare centers to be able to access subsidies for those spaces we can’t fill because we’re in this really tough position of trying to encourage families to return to keep the doors open. But if families don’t feel safe or confident yet – and consumer confidence hasn’t returned in terms of childcare – we can’t really fault families for that. I’m a parent of two small kids, and you [Ron] have kids. We can understand how hard it is to make that decision. And the last thing any family wants to know is their decision to keep their children home is the reason why a center is closed.
So, where governments can support those spaces that would have been full but aren’t because of COVID, it would just take the pressure off of us, right? And now we’re facing not only trying to make sure that families are safe and that our staff are trained and we’ve got enough expenses to pay rent, but we’re trying to make sure that families return at all so that we don’t close.
Yeah, because there is certainly a scenario where we’re back to a relatively normal state at some point, hopefully – we’re all crossing our fingers that comes sooner rather than later. But if a percentage of the childcare spaces are gone that were there previously, this supply of childcare that you were mentioning was already a big issue before COVID hit is just going to be that much worse.
Yeah, I think we really need to think about the ways in which we look at care programing. There’s been lots of comments and conversations around long-term care homes and what the pandemic has done to highlight the inadequacies in long-term care facilities and the lack of funding and the lack of staff support in order to make sure that our elderly are kept safe and secure in their homes and their living residences.
We need to think the same way about childcare. And that if we’re not setting up these infrastructures and these service providers to be able to withstand something like a global pandemic, to be able to access emergency support, it’s going to be very difficult to survive.
And I think what’s hard is that, in a lot of ways, as a business owner, I feel lumped in with other non-essential businesses – retail businesses, restaurants, right – where I’m supposed to be accessing the same support as all the other brick-and-mortar [businesses] on Main Street. And I’m by no means saying that those businesses aren’t important and that our dry cleaners and our hair salons are not part of our community.
But we’re childcare. And without childcare, employment is at risk; wages are at risk. And so we need to really think about how we support all childcare, not just non-profit, not just city-run, but all home providers, private providers, community centers, before-and-after care, because all of those services together are keeping people employed. And if we can’t afford to keep up, to stay open, the spots will be gone.
Yeah, I think that’s a good way to put it. And just really around it being is a systemic issue. And the analogy with the long-term care I think is spot-on, just in terms of that and also the points around it being essential for the economy to run. You need childcare and it is different from other businesses in that respect. So, I think very, very good points there.
What’s next for you? Wrapping things up, how are you feeling about the future? Any advice for other childcare owners, directors out there, parents? We’re all looking for advice and to come in together on this.
Yeah, I mean, I think we’re all being invited now to get innovative on this. And so there’s some very good conversations around micro-schools and home pods and lots of pros and cons about alternative care models.
But what is interesting about the alternative care models is, what those models are saying is, that the current outlook for COVID-19 and childcare is problematic. And so we’re seeing families starting to get really creative with how they’re going to work and have their children cared for.
And so I think we should start to pool these resources together, if we’re seeing that, just like we’re looking at other countries and how they’re battling COVID-19 infection rates. We need to just continue to share information as childcare providers across sectors, across nonprofit and for-profit and small versus large.
It’s not the time to hold best practices to your chest. If there’s a micro-pod and co-working model that somebody is playing with that sounds like it might be interesting, that there are many other interested parties who would like to know, if there are creative revenue ideas for childcare centers who can find alternative ways to keep families engaged with their centers.
We need to just I think level up the information sharing and the transparency so that we can benefit because we’re not competing against each other right now. And we’re all struggling regardless of US, Canada infection rates, by county, by province. We’re all seeing this issue. So, I would just say more transparency, more information sharing really will help all of us.
Awesome. Amanda, if our listeners want to get in touch with you or learn more about the Workaround, where can they go to do that or get more information?
Yeah, head over to www.TheWorkaround.ca. Or you can find it us Instagram at @The.Workaround. Or I’m on Twitter all the time ranting about all of this and so you can find me there, too.
Amanda, always a pleasure to catch up with you. Thank you so much for taking the time to join us on the Preschool Podcast!
Thanks so much, Ron!