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How to Buy a Nursery

We take a look at the profitable and rewarding childcare sector in Canada

There is currently a shortage of childcare services in Canada, with more and more families depending on day-care services as female employment levels rise. Now is a perfect time for entrepreneurs to buy a nursery, however, it is certainly not a business for the faint-hearted.

Do your research

There are more than 39,000 child day-care services in Canada, with around 4,000 in Quebec; 2,085 in Ontario; and 1,305 in British Columbia. Total revenue can range from $30,000 to $5,000,000, with an average revenue of around $168,200.

A high number of nurseries are profitable, with more than 93% of SMEs running a lucrative business in the childcare sector.

Despite this being a money-spinning business, you should have other reasons for wanting to work in the industry, such as a desire to educate and care for children and toddlers.

It is important to know what competition there is in the area, be aware of any other nurseries and find out what services they offer.

Before buying a nursery, make sure there is a demand in the area and research the local demographic and family trends.

You should also determine what type of childcare business you intend to operate. The size of the business will determine how many children you can cater for. You should have an idea of what age groups you intend to care for; how many hours are you willing to work each day; will you have the facilities in place to look after children with special needs?

Industry regulations

It is important to find out what licences and regulations apply to your business; each state will have

their own policies and permit requirements at federal, provincial and municipal levels of government.

There are some common licences, permits and regulations for starting a child day-care service that will apply to all nurseries, including home-based business. All childcare entrepreneurs will need a license if you are caring for more than two children under the age of two, including your own children.

Business owners will also need a license if caring for more than five children over the age of two, including your own children under the age of six. It is also important for childcare operators to meet health, safety and caregiver training standards for each province.

The Ministry of Education and the Child Care Quality Assurance and Licensing department will have regional offices that entrepreneurs can contact to ensure they have all the correct licensing requirements in place before starting up a nursery business.

Franchise vs independent business

When you are considering what childcare business to buy, you should first decide whether you what to go down the franchise route or buy an independent business. Each option has pros and cons that all entrepreneurs should seriously consider before making a decision.

Opting to buy a franchise means you can operate under a recognised brand which has a proven track record of success, reducing the risk and initial investment costs. Reputation is key to encouraging new parents to use your childcare services, and owning a franchise means people know what level of care to expect from your business. If customers already know the brand it can be easier to gain their trust.

However, when operating as a franchisee you must follow the infrastructures and procedures that are set in place by the parent company, which can restrict the more creative entrepreneur. You will have less control over the services you provide in your nursery business, and franchisees will also need to pay a percentage of their total revenue to the parent company.

Operating as an independent business gives entrepreneurs full freedom and control to set your own rules and services; however, you should ensure these are in line with the education and childcare standards that are set by industry regulators.

There can be more risk involved when buying an independent business, but you will not need to pay any fees or royalties when operating your business.

When looking to buy any business, you should review their current figures and financials from the last three years to find out how the business is performing.

You should also research what kind of reputation the nursery has in the area if the business is run down then be prepared to spend money on rebranding and remarketing their company once you take it over.

Financial support

How do you intend to buy your nursery business; do you have the funds in place to buy the business outright? Or will you be using money from the sale of another asset to fund your new business venture?

For those entrepreneurs who don’t have the full capital in place to buy a business, there are government financing options that you may be eligible for. However, it is important to note there are not many grants or schemes specifically for those in the childcare sector.

Contact your local licensing office or Small Business Association (SBA) for more detailed information on how best to finance your business opportunity. There may also be initiatives available through local women’s organisations to help female entrepreneurs or aboriginal business development schemes for entrepreneurs of Canadian aboriginal heritage.

For entrepreneurs who don’t qualify for these government initiatives, a few states offer special loan programs, which have been developed to help child careers access immediate funds at an affordable rate, such as Washington and Oregon’s Cascadia Child Care Fund.



Krystena Griffin

About the author

Krystena Griffin writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.

@Be_TheBoss

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