Today’s childcare market has a valuation of over £5 billion, and as average nursery fees are increasing by around 6% per year, and occupancy rates are also rising to around 75%, it’s clear this sector is experiencing positive growth.
With this in mind, it may be the ideal time for selling your nursery business. So, what should you know about this type of sale? Here are a few pointers in a handy guide.
Valuing The Business
If you’re the owner of the physical premises, you have to choose if you’re going to opt for a lease arrangement or are prepared for selling the freehold. Financial institutions are prepared to lend a buyer as much as three-quarters of the property’s value against freehold nursery premises. If there is a slow market, however, arranging for a lease with your interested buyer could be a better option.
Both parties have to be in agreement with regard to the terms and its length will impact the final valuation figure. All fittings, equipment, and fixtures that will be included must be listed and each item’s current market value must be established so the valuation can be as accurate as possible. Any repairs required must also be carried out before listing the business for sale.
The success of the business also impacts the valuation. If you have high profit margins and a lot of repeat business, your valuation figure will be higher. A larger capacity rate also affects the price. If your nursery already has a skilled team on board, selling it with that team included may be an excellent asset for the new owner.
Marketing Your Nursery
Online advertising is an excellent way of reaching out to prospective buyers nationwide. If your premises are in a village or small town, finding a purchaser via word-of-mouth or via a listing in regional or local publications may also be possible.
Industry specific trade publications and magazines can be contacted to ask them to advertise the sale too, as well as speaking to contacts that you’ve made during your time in the industry as there could be leads within your existing network.
Keeping the standards of the nursery high at all times and maintaining a strong work ethos during the selling process is vital. If standards drop, it’s harder to find a purchaser to buy your struggling nursery at an attractive price.
Maintaining a good reputation locally is also paramount as buyers will need to view the most up-to-date OFSTED report as part of their process of due diligence. The brand identity and client base of the business, as well as both employee and customer satisfaction are key factors when it comes to ensuring an ongoing good reputation.
Any entrepreneur with an interest in purchasing the nursery is going to carry out research into the other childcare businesses that exist in the nearby area. Compare your services, reputation, occupancy, and rates with those of your competitors so you can show prospective buyers there are plenty of potential customers in the local area.