How to start a day nursery

/ Posted By - Bradleys Accountants / Categories - Advice for Small Businesses

Day nurseries have increasingly become paramount in today’s world, with more parents entering the workforce. However, day nurseries have faced their share of challenges over the last two years because of the pandemic, which may make people think twice about deciding to set up one as their own business.

During the initial lockdown, for instance, nurseries were only allowed to look after the children of frontline workers. Then there were disruptions whenever someone from the staff tested positive for COVID-19 or was around someone who tested positive and had to be isolated for two weeks at a time.

As a consequence of all this, many day nurseries simply could not afford to operate and pay staff members, which is why they had to shut down partially or entirely. However, things are recovering and will get even better in the longer term.

If you are genuinely committed to working with children and imparting high-quality early education, there is nothing quite as fulfilling as running a day nursery.

That is why we have put together this handy guide on the nitty-gritty of starting a day nursery of your own, including how to chalk up a business plan, whom to hire and how to build a brand that parents trust. Check it out:

1. Do your market research

Before taking the plunge, decide whether starting a day nursery now will be profitable. One important element to consider is that a reliable childcare option like a day nursery is invaluable for both paid and government subsidised parents.

However, the subsidised hourly rate is usually only between £4 and £6 depending on government borough and the child’s age. If your nursery has only government-funded parents, it may struggle to meet its financial and legal obligations.

Alternatively, if you live in a city with a high ratio of working parents needing childcare, there is a massive opportunity for you to start a day care nursery. How many are already operating in the area you are considering starting your business? Is there sufficient demand? You could do this simply by calling them and checking what their waiting lists are like.

Even today, mothers still tend to take on the main parenting role but about 78% of mothers between the ages of 25 and 34 are working now, compared to just 50% in the 1970s.

A reliable childcare option like a day nursery is invaluable for these mothers, as they need not put their careers on hold to look after their children.

2. See whether you are qualified enough for the job

If you are simply planning to run the business side of things and leave the teaching to others, you do not really need any special qualifications to start a day nursery. However, if you plan to teach or supervise, the rules may be different.

For example, a nursery manager will need to have a nursery-related qualification, about one to two years of supervisory experience and at least two years of nursery nurse experience.

Our experience tells us that the more successful nurseries belong to owners who have a level 3 qualification in childcare to run their business. When it comes to having enough staff to supervise the children, they can include themselves or provide cover during staff sickness rather than relying on nursery staff agency providers.

3. Decide what type of nursery you want to start

You can choose to start either a private nursery or a non-profit nursery. The rules and regulations you have to adhere to are the same either way. However additional reporting requirements will apply if the organisation is a registered charity.

The only difference is that the proceeds of the non-profit nursery go back into the community centre or charitable organisation you are a part of, while a private nursery runs just like any other business with shareholders and dividends or drawings if unincorporated.

You should also decide whether you want to start completely from scratch or join a franchise. The franchise group will help with the daycare’s resources, which means you do not have to scramble to get starting funds, but then they will also be taking a share of the profits.

4. Look into the costs

The cost of setting up a day nursery can vary greatly depending on where you are located and the size of premises you choose, as well as the operational decisions you take. For instance, you can outsource all your branding and marketing to a professional agency or go your own way.

You could also choose to buy high-quality secondhand equipment rather than brand-new equipment. Look into staffing, utilities and maintenance costs as well, as these vary greatly by location. However, since you will be taking care of young children, we recommend hiring the best professionals even if it is a little more expensive.

5. Get your licenses and regulations in place

While individual regulations may vary depending on whether you are in England, Scotland, Northern Ireland or Wales, you will need to register your day nursery with your country’s regulator and meet Early Years Foundation Stage (EYFS) standards before you do so.

You will also need to get DBS checks and health checks done. Here are some of the other things you will need to cover:

    • A comprehensive day nursery insurance cover is a must, including public liability insurance, employer’s liability insurance, professional indemnity insurance and commercial property insurance, as well as a business interruption insurance to cover you in case you need to close the nursery for a short period, such as in the event of a lockdown.

    • There are food safety regulations you will need to abide by for the meals and snacks you serve to children. The Food Standards Agency (FSA) has a set of hygiene regulations for cooking and storing foods designed specifically for childminders.

    • Have a clear health and safety policy in place, including maintenance, risk assessments, evacuation plans, fire safety, injury reporting and the storage of any hazardous items.

    • There are some strict staffing regulations for the number of people you will need to hire depending on the age group of the children at the day nursery. For example, for children up to two years of age, you need one staff member for every three children.

For those between two and three years of age, you need one staff member for every four children. And for those between three and seven years of age, you need one staff member for every eight children.

Plus, at least half of your staff members will need to hold a level two nursery qualification or higher. Make sure you do not falter here.

6. Find suitable premises

There are several factors you will want to keep in mind when choosing a location for your day nursery. These include:

    • Whether parking is available
    • Whether it is well connected by transport
    • Whether there are competing nurseries nearby
    • Whether there is enough space for a playground outside
    • Whether it comes with adequate room to install all necessary facilities
    • Whether it is in a safe neighbourhood area with plenty of families around

There are also some legal space requirements you will have to adhere to. You need 3.5 square metres of space per child for children up to two years of age. Between two and three years of age, you need 2.5 square metres per child.

And between three and seven years of age, you need 2.3 square metres per child. Once you’ve zoomed in on a location, talk to an architect about how much it will cost to have the space converted into a day nursery.

7. Prepare a business plan

Now that you have gone over all the details and know what it takes to build a day nursery, it is time to create a business plan. This helps you stay on track and is also necessary when you are looking for funding, as the lender will want to see where their money is going.

It also helps you stay on budget at every step. If you are not quite sure how to go about a business plan, you can hire a consultant to do it for you.

8. Hire a knowledgeable accountant

You are not getting into the nursery business because you love numbers. You want to spend time providing the best possible education and care for the children. You must hire an accountant you can rely on so that you are not bogged down doing payroll or managing books.

You need to set up adequate accounting procedures for daycare. Bradleys Accountants, for instance, specialises in accounting for daycare nurseries and helps businesses stay on top of their tax and bookkeeping deadlines.

9. Build your brand and market properly

Your brand is what conveys your story and convinces parents to send their children to your day nursery. Branding and marketing, therefore, are crucial steps.

Hire a branding consultant who can convert your vision and mission into marketable pieces of content like blogs, logos, websites, uniforms and so on. Your website is particularly important, as every prospective parent will look you up online before considering you.

Website builders are available if you want to set yours up from scratch. You could work with a professional web designer who will create something just for you and rope in copywriters to make your website content SEO-friendly and up to scratch.

Over to you

We hope this guide was helpful, and you now have all the information you need to start your day nursery. Working with children is deeply rewarding, and as long as you follow all the rules and recommendations, you will be embarking on one of the most fulfilling ventures of your life. Good luck!

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