Childcare Nursery - Anyone operate in this business?
Discussion
I am looking to invest in a local nursery (purpose built facility for about 50 kids). Currently ran as a charity with both a tired manager and equally tired group of trustees.
Great setting, great staff, however consistently poor financial performance. I feel I know how to improve. Turnover is close to £500k year. P&L often negative, propped up by reserves earnt historically. Would keep all staff and run from a distance. There appears to be lots of other businesses out there struggling/failing, so growing by acquisitions shouldn’t be a problem!
Is anyone in this business I could run some ideas past?
Great setting, great staff, however consistently poor financial performance. I feel I know how to improve. Turnover is close to £500k year. P&L often negative, propped up by reserves earnt historically. Would keep all staff and run from a distance. There appears to be lots of other businesses out there struggling/failing, so growing by acquisitions shouldn’t be a problem!
Is anyone in this business I could run some ideas past?
abph said:
pomp1 said:
Just no.
It’s a nightmare. I know I do it.
Happy to email you….
Can you drop me a PM, I’d like to chat...It’s a nightmare. I know I do it.
Happy to email you….
Similar to care homes I suppose, you look at what the residents pay in fees and on the face of it, it looks like a license to print money but the reality must be very different as they seem to be closing down all over the place.
I'm intrigued by this also, not because I want to invest etc, but the nursery chain that we use is buying up properties at quite a rate - and these are properties in expensive bits of town, and they in some cases are old private schools (see here - https://nfamilyclub.com/n-balham) that need to be totally refitted, to buy that, and fit it must cost way into the 7 figures. And they've done 3 or 4 in the last year alone, the most recent on Highgate High St, again, hardly the cheapest part of town going. Someone must have vastly deep pockets, or it does make a lot of money...?
okgo said:
I'm intrigued by this also, not because I want to invest etc, but the nursery chain that we use is buying up properties at quite a rate - and these are properties in expensive bits of town, and they in some cases are old private schools (see here - https://nfamilyclub.com/n-balham) that need to be totally refitted, to buy that, and fit it must cost way into the 7 figures. And they've done 3 or 4 in the last year alone, the most recent on Highgate High St, again, hardly the cheapest part of town going. Someone must have vastly deep pockets, or it does make a lot of money...?
OK, I know it's London, but their £90/£100 per day charge, plus extra for outside of core hours, is around 2x what a provincial nursery would be charging. The funded hours for 3 & 4yr olds must be horrible for them, even though they'll be averaging them over the year.
Sheepshanks said:
OK, I know it's London, but their £90/£100 per day charge, plus extra for outside of core hours, is around 2x what a provincial nursery would be charging.
The funded hours for 3 & 4yr olds must be horrible for them, even though they'll be averaging them over the year.
I get that, but the buildings they are buying must be costing many times what they would outside of London, and they have to pay a higher wage I'd have thought, suspect a lot of people don't qualify for 30 hours but yes it must have an effect. I've just been surprised by the pace of expansion, and also the calbre of buildings they're taking on and totally refitting. The funded hours for 3 & 4yr olds must be horrible for them, even though they'll be averaging them over the year.
hyphen said:
Will it. Pretty sure they pay min wage, and most kids will leave earlier than 5 so many staff won't be full time?
I guess it depends why the kids are there but f parents are working they're not generally going to be picking up by 5. The local ones I know do 7.30AM to 6PM and the one linked to above is 7-7.Even at min wage, 8-6 is 50 hours per week so they often work split days, and it's not a job where you could take an hour for lunch - unless a whole bunch of other staff arrive. Staff ratios are very high for younger kids,
Holidays / sickness / pension / training / employers NI etc etc . Some supervision. A Manager.
okgo said:
Sheepshanks said:
OK, I know it's London, but their £90/£100 per day charge, plus extra for outside of core hours, is around 2x what a provincial nursery would be charging.
The funded hours for 3 & 4yr olds must be horrible for them, even though they'll be averaging them over the year.
I get that, but the buildings they are buying must be costing many times what they would outside of London, and they have to pay a higher wage I'd have thought, suspect a lot of people don't qualify for 30 hours but yes it must have an effect. I've just been surprised by the pace of expansion, and also the calbre of buildings they're taking on and totally refitting. The funded hours for 3 & 4yr olds must be horrible for them, even though they'll be averaging them over the year.
Nurseries do make money, some more than others but it’s not something that can be run from a far. The ones that do that go downhill very quickly.
hyphen said:
Rather complicated!
Is that £21 a day in food? Sounds a lot?
What are the additional charges?
Why the discretionary discount?
They always overcomplicate it. And then you have to unpick it to find out how they're getting you to subsidise the places of the kids that are only there for the 30 hours as the Government isn't paying £7.71 an hour.Is that £21 a day in food? Sounds a lot?
What are the additional charges?
Why the discretionary discount?
paulrockliffe said:
hyphen said:
Rather complicated!
Is that £21 a day in food? Sounds a lot?
What are the additional charges?
Why the discretionary discount?
They always overcomplicate it. And then you have to unpick it to find out how they're getting you to subsidise the places of the kids that are only there for the 30 hours as the Government isn't paying £7.71 an hour.Is that £21 a day in food? Sounds a lot?
What are the additional charges?
Why the discretionary discount?
Comparatively for the same, I’d charge £425 a month for 4 days with 30 hours funding.
abph said:
I am looking to invest in a local nursery (purpose built facility for about 50 kids). Currently ran as a charity with both a tired manager and equally tired group of trustees.
Great setting, great staff, however consistently poor financial performance. I feel I know how to improve. Turnover is close to £500k year. P&L often negative, propped up by reserves earnt historically. Would keep all staff and run from a distance. There appears to be lots of other businesses out there struggling/failing, so growing by acquisitions shouldn’t be a problem!
Is anyone in this business I could run some ideas past?
ran this past the mrs ( works in early years education ) - She went off on a right proper rant.... but the gist of it was - you've answered your own question.. Theres a reason that so many are struggling. Great setting, great staff, however consistently poor financial performance. I feel I know how to improve. Turnover is close to £500k year. P&L often negative, propped up by reserves earnt historically. Would keep all staff and run from a distance. There appears to be lots of other businesses out there struggling/failing, so growing by acquisitions shouldn’t be a problem!
Is anyone in this business I could run some ideas past?
From a general business POV - running something like this " from a distance " is the red flag for me. If you don't know exactly whats happening on the floor then you'll get taken for a ride by the staff. 100%.
Thank you all for your contribution. I believe I have replied to all...
Fair comment re the management from a distance. I will not be owner manager, instead retaining the existing management structure, and will be going into business with the the current manager (and face of operation). We have identified areas where she can spend her time far more effectively- They have little in the way of strategy and spend too much time on unproductive tasks.
Sheepshanks said:
The staff costs for 50 kids and long nursery days could be nudging that £500K.
Staff costs inc pension contributions etc circa £375k (2019 accounts)PurpleFox said:
Keep the thread updated too if you can, I am intrigued.... as someone who has paid nursery fees for two kids and done the fag packet calculations for the number of kids to staff on minimum wage, it's hard to see why it's not profitable. I know it's not easy, the owners of the Nursery my two went to were very hard working, the opposite end from 'manage from afar'.
Similar to care homes I suppose, you look at what the residents pay in fees and on the face of it, it looks like a license to print money but the reality must be very different as they seem to be closing down all over the place.
I will certainly try. Its a good job I don't smoke Similar to care homes I suppose, you look at what the residents pay in fees and on the face of it, it looks like a license to print money but the reality must be very different as they seem to be closing down all over the place.
okgo said:
I'm intrigued by this also, not because I want to invest etc, but the nursery chain that we use is buying up properties at quite a rate - and these are properties in expensive bits of town, and they in some cases are old private schools (see here - https://nfamilyclub.com/n-balham) that need to be totally refitted, to buy that, and fit it must cost way into the 7 figures. And they've done 3 or 4 in the last year alone, the most recent on Highgate High St, again, hardly the cheapest part of town going. Someone must have vastly deep pockets, or it does make a lot of money...?
I guess owners want to sell to private equity when earnings reach a certain level!pomp1 said:
I’d expect wage costs to be 60% of turnover. Maximum
2019 accounts show circa 90%!Nurburgsingh said:
ran this past the mrs ( works in early years education ) - She went off on a right proper rant.... but the gist of it was - you've answered your own question.. Theres a reason that so many are struggling.
From a general business POV - running something like this " from a distance " is the red flag for me. If you don't know exactly whats happening on the floor then you'll get taken for a ride by the staff. 100%.
What does she believe the reason is for her current setting to be struggling? From a general business POV - running something like this " from a distance " is the red flag for me. If you don't know exactly whats happening on the floor then you'll get taken for a ride by the staff. 100%.
Fair comment re the management from a distance. I will not be owner manager, instead retaining the existing management structure, and will be going into business with the the current manager (and face of operation). We have identified areas where she can spend her time far more effectively- They have little in the way of strategy and spend too much time on unproductive tasks.
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