How To Buy A Nursery
One of the co-founders of The School Transfer Company recalls his experience of setting up a new nursery from scratch, and offers some advice for those looking to do the same…
- by Peers Carter
A dozen or so years ago, I saw a building in Gravesend that had once been an old farmhouse and thought it would make a perfect day nursery.
There was just something about the way the front door, set within a Gothic arch, welcomed you into a special, homely place. I also knew that the building had a big back garden, which is unusual in a town. The building belonged to the Mormon Church, and they wanted to sell it in order to expand.
The building was to be sold by ‘Sealed Tender’. This, it turned out, was nothing to do with fillet steak in a plastic bag; rather, it meant you just had to make your best offer and hope for the best. I therefore spent half the night before working out what I thought everyone else might bid – and then bid £501 more. Fortunately, mine was the winning bid. By £501…
Taking the plunge
Apart from the fact that the building was beautiful, what else led me to embark on this venture?
Well, we already owned a small independent school just up the road, and both it and soon-to-be nursery were situated quite near to the town centre and railway station – ideal for working mums and dads dropping off their children for the day. And because it had previously been a church, the building already had ‘D1 User’ – the essential Planning Designation anyone must have in order to run a nursery, a school or any other institutional enterprise. We simply had to apply for a change of D1 use from church to day nursery, which was far easier than trying to obtain D1 User for, say, a house. The next step was for us to apply for what was then Day Nursery Registration from Ofsted. This was a long time ago now – 12 years – and I sincerely hope the process has changed since. At the time, the experience was a complete nightmare. Ofsted lost our registration forms no fewer than three times.
By then we were committed, having already spent a lot of money on converting the building to nursery use and hiring a full staff ready to take in small children – all without being allowed to open and actually get any fees in. Had we been newcomers, this would have broken us. Ofsted never answered any questions about responsibility or compensation… So the first lessons here are: allow for everything to cost far more than you expect, and to take far more time than you could possibly imagine. If you then do hit problems as we did, at least you’ll have been prepared for it. Don’t try to do anything on a tight budget, and don’t rely on promises from Ofsted, builders, decorators or indeed anyone else, because at least one of them is bound to let you down, sadly!
Two approaches
Starting from scratch Of course, setting up your own day nursery has a number of advantages. You get to select all your own staff. You can configure the nursery exactly as you want to. You can create your own image and ethos for the business, and market it in the way you wish.
We decided, for example, that every room in the nursery setting should have one complete wall painted as a mural depicting a different scene. The African veldt; The Lake District; the seaside at Broadstairs; the sky at night, complete with little green spacemen for the Baby Sleep room – all charming scenes with lots of things for children to discover and help them exercise their imaginations. We designed our own logo and adopted the strapline ‘Intelligent Daycare’, based on the way our focus was on the child, not merely the convenience of the staff. If, for instance, a child was full of beans at doze time, he or she could go and play in the garden under supervision, rather than be made to lie down. Allowances could also be made if a child was hungry or not hungry. Buying a business The alternative – buying a business that someone else has already established and run for a number of years – also has a number of advantages. The necessary planning permission will have been secured. You will already have a full complement of staff. And most important of all, you will have money coming in from the very day you become the owner. All of that adds up to a lot less risk, compared with starting from scratch. But there are a few disadvantages too. You may find once you start running the business that you’re not completely happy with all the staff – and that some of them will be less than entirely happy with you. This may be for no other reason than the fact that you’re simply not the old owner and have no relationship with them!
You may also find that you don’t like the way the nursery is run, that it’s inefficient in terms of its budgeting or cash flow, and perhaps wasteful when it comes to resources. Some nursery practitioners will constantly ask for new things that they then decide they don’t want after six months – and some owners will fail to control this! And, of course, you will be inheriting someone else’s name, brand and management style. These may be excellent, but the chances of them according with everything you think and feel is minimal. You’ll probably have to be prepared to make changes, some of which may be unpopular.
Aiming high
Whether you start from scratch or buy, what size of nursery should you take on? Well, a lot will obviously depend upon your budget and the amount of energy you have – but with one eye on selling the nursery on at some point in the future, I would advise investing in the biggest nursery you can afford.
Nursery groups are the quickest, best-resourced and easiest people to sell to, but will not normally look at anything with fewer than 50 places – 70 or more is usually preferable. They are national organisations and will typically look at any large nursery in an urban area, but a note of caution – they can be very tough to deal with, so you’ll likely need good advice and help (which STC is happy to provide). If you have a smaller nursery, such as a 24-place setting in a church hall, the only potential buyers will likely be from the local area, which presents risks of ‘fishing’, information leaks, problems with funding and uncertain deadlines. It’s worth thinking about whether you will be able to pass on your business before you start. Of course, if you have limited budget, you may not have that luxury and have to just hope for the best. Another thing to consider before embarking upon any new nursery project is the amount of ‘free’ time the government claims it will ‘give’ to parents. The government is planning to increase this from 15 hours per week to 30 for all nurseries as of September 2017, but many providers feel that the money the government intends to pay settings to finance these hours barely meet their costs, let alone generate any profit. Oh, and nurseries now have to contribute to all their staff’s pensions too… With around 90% of day nurseries still small and held in private hands, all this represents something of a threat to the livelihoods of thousands of less-than-hard-nosed nursery practitioners. But if you are determined to run your own nursery and have a clear vision for how it will work, then good on you – and the very best of good fortune!
Be prepared
Whether you’re looking to buy an existing business or set up your own, keep the following points in mind…
• Make sure you can obtain D1 planning permission for any nursery business or suitable premises you buy; if you don’t have this, you cannot legally run a nursery there
• If you’re buying an existing business, have a look round as a parent first, if you can
• Trust your first impressions of a business or premises; they’re usually reliable
• Do your sums – it may be hard to make a living from a nursery with fewer than 50 places
• Think about the potential – how could you improve, expand or transform the nursery you’re looking to buy?
• It’s sensible to think about your eventual exit before you enter into a purchase
• What’s the local competition? If you’re purchasing an existing nursery, why is the setting doing badly or well?
• Operating a nursery can be very satisfying and rewarding, but it takes a lot of hard work. Do you like children? Do you like hard work?
Since 1986, The School Transfer Company has specialised in the sale of nurseries and schools. It acts carefully and confidentially, gets to know its sellers and buyers well and ensures that the best prices are paid while minimising the amount of disruption caused.
The company’s founders, Peers and Susan Carter, ran their own school and day nursery in Kent for many years. For more information, visit schooltransfer.co.uk
