Is Buying An Existing Daycare Centre The Best Option?

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Once you’ve decided that daycare is the business for you, you need to decide how you intend to do it. There are a few options which you can adopt to start up your daycare centre.

1. Brand new start up

You can consider setting up your daycare centre from scratch. You’ll need to do a lot of homework and put in a lot of effort and hard work in the preparatory stages such as getting a location, planning the layout of your daycare centre, oversee the renovations, furnish your daycare centre, etc. The process can be very time consuming but if you are a very meticulous, resourceful and organized person, doing this yourself can save you a lot of money. There are a host of websites which can equip you with the essential information and resources to get you started.

2. Buying over an existing daycare centre

You’ll probably save on a lot of time and planning as compared to a brand new start up. However, there are other concerns which you need to take note of. First, you need to ensure that the condition of the existing daycare centre is in good or satisfactory condition; not just the physical outlook but the business operations as well. Take a good look at the condition of the premises (are minor renovations required?), the state of the company assets (is it reusable?), assess the location (is it ideal?), ask to look at the accounts and the lease agreement, etc.

You’ll also need to examine the financial statement of the business to assess the financial health of the business; how is the existing daycare business doing, is enrolment stable or shrinking. That will help you to determine how much you are willing to offer.

Take some time of get to know their customers better. Survey their customers to understand them better. Find out if the parents are happy with the current services that are being provided. What is the reason(s) their children are still enrolled in the present daycare centre?

Gather as much information as possible about their competitors. Find how many daycare facilities are there within a 500 meters from them. Know what are their charges and preferably how many children they are caring for. Are they successful? What sort of value-added services do they provide which you need to take note of.

You’ll also need to ensure that all the legal aspects such as contracts, agreement, licenses, creditors, etc can be easily resolved.

3. Buying a Franchise

Alternatively, you can consider buying a franchise from a daycare franchisor. There numerous benefits which can be gained from purchasing a daycare franchise as opposed to a brand new start up or purchasing an existing business. For example, The chances of success, although not guaranteed, are good as the daycare franchisor would have established a set of proven practices and operations. Training will be provided and as a result of the transfer of management expertise, the learning curve of running a daycare centre will be significantly shorter.

You will also make significant savings on items such as cost of developing a curriculum and marketing which is usually assume by the franchisor and spilt amongst all the franchisees.

However, there can be some disadvantages in purchasing a franchise such as the prohibitive franchise fee, lack of flexibility in operations or lack of support from the franchisor. In addition, there is a possibility that the promotional programs rolled out by the franchisor might not be suitable for your local market.

In conclusion, which option will clearly depend on what you are looking for in the business and the amount of time and resources that you have. If you are short on funds but are willing to put in the hours, a brand new startup is best for you. If you are less of a risk taker, taking over an existing daycare centre or purchasing a daycare franchise will most likely suit you, depending on how much resources you have and how much freedom you are expecting.

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