Wanting to take over an established daycare centre

[Inspired by Reggio]

Welcome to the forum Tash.

Sharing the province you are located in might help more people know how to help you as the rules are so vastly different between our various provinces between 'regulated' childcare and 'unregulated' childcare options and so forth.

I have spent the past 25 years in the Early Years field working in both the regulated industry from the front line right up into administration where I helped to open up two centres. However most recently am working from home in the self regulated option because it became evident that this is the most viable option for me to achieve work life balance ... IME the centre industry can be VERY demanding both emotionally and physically and for not much more profit than one can make at home being self employed!!

I am new here and am seriously considering taking over a pre-existing daycare as it seems to be the cheapest and less of a head-ache to do so, rather than re-zoning a new building etc.

First question I would want to ask is WHY the current business owner is selling their business ... if it is a viable, profit making business than why are they getting out of it?

In Ontario for example my concern would be that there are many privately owned centre based programs across our province that have been closing because the introduction of Full Day Early Learning in our province has resulted in the loss of the '4 year old and up age group' to the school system and this is the age group whose ratios actually allowed for 'profit' to be made in the business and they cannot balance their budgets to continue offering childcare as a result at least not without raising market value infant and toddler fees to a rate that would make them too high to compete with parents just hiring a 'nanny' instead!

Also beware of how 'old' the program is and how that might affect its ability to make TODAY'S bilaw codes for fire, accessibility and so forth. My SIL bought an existing childcare program years back and it was a challenging nightmare and cost her way more than anticipated ....turns out they were allowed to have many things 'overlooked' in their program under a 'grandfather clause' with the Day Nursery Act and City Bilaws where the rules had 'changed' over the business's lifetime but the centre was exempt from those rules because it was 'already in business' ... however when she bought it and went to take over the license they made her 'upgrade' to be complaint with all those bilaws because as a new owner the 'grandfathered' issue no longer applied and she had to bring everything up to new codes before she could even open under her new business name ... so she lost all the clients the existing business head cause parents could not 'wait' and had to find alternative childcare which meant she had no REVENUE to draw from in order to make the upgrades and when she finally opened she had NO clients anyway ... so if you are choosing to buy an existing program make sure it is up to code before putting in an offer and that the license will be transferable with no 'disruption' in service!

Should I be starting with a business plan first?

YES indeed ... a business plan in any industry is an absolutely a must ... most businesses that fail due so because they did not properly research the expenses and costs associated with that business or the supply and demand in the area they want to do business and create a realistic business plan. You need to know that your plan is viable over 2, 5, 10 years and so forth to be able to turn enough profit to cover your expenses while still ensuring a viable wage for yourself ... if buying an already existing business I would be wanting to see the last at least 5 if not longer years of books as well to get a good idea of the expenses and profits!

...Also, is there a specific reason why a lot of people do not offer infant care? I know the profit is less with infants, however I think it is a great way to get parents and their child/ren into your centre initially. Let me know your thoughts.

Again not sure your province or the rules for it but will answer based on Ontario cause that is where my first hand knowledge lies ... the challenge in infant care in a 'regulated' setting is that they require the most 'staffing' because they have the lowest ratio of 1:3 and you are never allowed to alter that so you need to hire additional staff to cover lunch and breaks and so forth in addition they take up the most square footage because they require separate space for sleeping unlike the older age groups .... typically in a regulated centre infant programs are not just 'less profit' they actually COST money to offer meaning there is no profit in them but rather they run in the red Finally challenge being that with the extended maternity leave in most provinces being 12 months in length 'infants' are only really in the program for about 4 months now before being graduated to a toddler room ... so it is a lot of expense and trouble for such a short term program so many centres just choose to omit that age group and have their programs start at the 'toddler age' of 18 months and than, at least in Ontario, they can apply for special permission to have no more than 20% of their toddler program be from the 'infant' age range so they can enroll a couple 14 or 15 months olds if need be to keep their toddler programs full!

Most centres who choose to offer infant programs do so either because they are 'non profit' organizations and they are not needing to make a profit off the program and if the demand is high enough in their community to they can easily cover the 'loss' of the infant programs by their older preschool and school age programs being run .... and even if they are privately for profit run they may offer a 'small' infant program option as you mentioned 'to get clients into the program and fill their toddler programs which than fill their older preschool programs' where they can offset the loss they are making on those few infant spots.

In an unregulated home childcare setting a space is basically a space because providers can have any age group of children they feel comfortable with having and they do not have to have additional square footage devoted to them and so forth ... and as mentioned infants can actually cost the provider 'less' in this setting than an older child in this setting if they require the parent to provide all the food and supplies for said infant that they do not for older children. In regulated home childcare settings infant spaces typically still have the premium fee because the spaces are limited for them and a provider could be loosing income once they reach their 'two children under two' maximum and therefore charge an additional fee for that age group to make up for that and so forth.

If you are in Ontario I might suggest that you try contacting the Association for Daycare Operators of Ontario ~ they are a network group that might have resources and support on the current climate of Ontario Childcare and if it is wise to be entering into the industry at this particular time! If you are not in Ontario they might be able to point you into the direction of a similar support group for other provinces?

http://www.adco-o.on.ca/

http://www.adco-o.on.ca/

Good luck in your decision!