Wanting to take over an established daycare centre

[Tash 0-12]

Hello everyone. 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. I can use any help you can give me, if you have or are in the process of doing this yourself. Should I be starting with a business plan first? I am in the process of putting together policies and procedures currently and researching the areas I am interested in.
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.

Thanks a bunch!

[Momof4]

Welcome to our forum. I'm not sure if you are asking the right people because most of us are running home daycares and for instance in Ontario we only have 5 children in our homes as a maximum. I can answer one question though. My profit is higher for infants than it is for older children because the parents send the food and bottles until they are old enough to eat the food I serve and drink from a sippy cup.

I'm always happy to help people with their policies and contracts and I'm sure lots of other caregivers will agree with me, but we like to help out after somebody has done all their research and done all the work themselves, then we can help you with the finer points.

Good luck with your new business venture.

[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!

[Tash 0-12]

Thank you both for your reply. I am looking in Ontario for a childcare centre right now. I am currently working in the GTA area, as an RECE/Director for 7 years now but wanting to get out of the big city, to a smaller city.
I am in the process of trying to get more information from the agent selling the centre to find out more details about the centre itself and will definitely look into how long it has been around and why they are selling it. Great advice!
I appreciate your information. It is nice to have a forum to talk to others in the same field about this.

I will look more into the adco website, but i noticed there is an annual fee. Is it worth the money to sign up for this site? or should i just check out the information that is available to the public?

Thanks again for your time and information!

[Inspired by Reggio]

I personally would check out the information that is available to the public on ADCO and perhaps try the 'contact us' page with some questions to see if they might have a mentor to answer some questions about viability and so forth before you actually paid and 'joined' .... I have not been a member myself but worked for two programs where the owners were active members.

Is the centre you are currently working in a 'private for profit centre' or 'not for profit' centre ... just wondering cause IME the Director in a non profit would have access to the actual 'books' in their entirety to have a true clear picture of the funding and expenses for making a business plan verses at least IME as the Director in a private for profit centre you do not tend to get to see the 'real picture' of the finances as they only give you access to what they feel you need to know to do your job ... aka your budget for wages is X per hour to divide between all your employees, your budget for food is X per child and your toy budget is X for this and so forth.

I know myself I had my eyes opened wide after working my first 10 years of my career in a 'non profit' which was awesome and I loved it however had hit the ceiling so to speak as the Director was not going anywhere anytime soon and I wanted/needed more challenges at the time than just an 'assistant' role but moving to the Private for profit sector to get a job in management there was a real eye opener to the differences out there between models ... IME there is no real 'profit' in this industry ... specially when the program is owned/operated by someone who does not have their RECE but is drawing a salary in a position that is not really 'needed' because they than have to hire an RECE to be the supervisor/director to meet the DNA requirements ... the budget you would be use to working with in a 'non profit' is not going to be there in the private sector as they do not have access to the same wage enhancement funding, health and safety, playground, literacy and other government grants and so forth but are basically working with the same 'what the market can bare fee' from fee paying clients and the same 'subsidy' grid as any other non profit centre and all the same rules for ratios and so forth ... which means that you have same basic 'revenue' but less $$ to cover expenses in order to be competitive in staff wages, program resources and so forth ... and while some private programs have active owners where they are at least supportive and there providing resources and support in their time and extra hands helping out there are others where the owner is 'absentee' and drawing a huge salary from the program but for little 'benefit' which than makes working in that environment even more stressful for the others making do with the 'less resources' so to speak!

My experience, at least in the city I was working in at the time, was that the 'private for profit models' were basically just the training ground for new ECE grads who took the jobs in order to gain enough experience in the field to apply for the first available non profit program position or in a Regional run daycare with the better wages, benefits and so forth that the private industry just could not offer ... so there was the constant turnover in the programs no matter how hard you were trying to be a 'good employer' and as a Director you lived in the constant 'stress' of recruitment and training mode and feeling short staffed and not sure about supply and demand of RECE in your region but in my old one there were not a lot to draw from in the first place so you often got pulled into program to cover while trying to still do your 'Director' job which meant very long hours cause you were often doing the Director administration things at night on your own time to stay on top ... it was not an 'easy' job for the amount of hours you were expected to work, the amount of responsibility held and the salary you could draw .... which is why I love working from home now and being my own boss and the reality is I do not make much 'less' now than I did in a management position but I have virtually no stress and just get to do all the fun stuff of this job

Another thing to consider as well while were are talking about staffing .... double check the area you are considering to relocating too for supply and demand of RECE because now not only is there the issue between working from private to non profit models to get 'better pay' there are many RECE moving into the school system for the Full Day Early Learning where they can make more $$ and only have to work 6 hours a day and 10 months a year with benefits and pension and all the other perks of the school board and Union ... and by 2015 the school boards will be recruiting many many more of us out of the 'childcare' field into the school board field as they hit full implementation of the programs across Ontario ... not sure if college enrollment is keeping up with the supply and demand for RECE staff and what will be left over for the 'centre' industry ~ I know in my area there was already a period last year where there were centre programs with closed classrooms because they could not find RECE to fill the positions and had to wait for the new grads to get out of school in May to be able to reopen the classrooms

Are you a member of either the Association Early Childhood Educators Ontario or the Coalition for Better Childcare .... IME while they are very 'non profit supporters' verses private for profit they are both awesome information /networking groups for staying in tune with the current challenges and trends being faced by the industry for both non profits and private for profit childcare sectors. ... if you are on FB you could search them and like their page. There is also the Canadian Childcare Federation which also keeps members updated to trends in the field?

What are your thoughts on the recent Modernizing Childcare in Ontario paper just released by the Ontario Government and Ministry of Education? Just wondering if some of the wording and long term goals and projections for the childcare field and funding formulas contained within that paper might influence your decision to be investing in a 'business' specially a for profit one if that is the model you are considering?

[Tash 0-12]

Yes i completely agree. Non-profit centres do just seem to be the first step for ECE's to get a bit of experience and then they move on to something bigger and better, and I personally cannot blame them. I was in the same boat. First I worked for a private for-profit and the "bosses" were barely there and it was poorly managed. Now I'm with a corporate for-profit centre where I do not see much of behind the scenes information. I am just the front line Director of one of their centres, who deals first hand with the parents and staff of my centre.

I am not currently a member but I will definitely look into those two groups. I found them both on FB so i will check them out more.

I am finding it very difficult to start opening a centre and wondering if it really is worth it. Like you said, by 2015 most ECE's will be in the school board as the Assistants in the kindergarten classrooms, so we will be starting to lack the proper teachers in our own classrooms. Such a difficult situation. It is also a lot of money to fork out of my own pocket and could take years to get out of the "red".

Based on the fact that you now have your own home daycare, do you make a decent amount from that? I know that as an ECE we do not necessarily rely on the money, as it is definitely not an industry to make a lot, but just curious.

[Inspired by Reggio]

Sent you a PM Tash!