Expert help
It pays to take professional advice and read widely before you start up a nursery.
Consultancies
* Sandra Brouet, a childcare development consultant, runs Childcare Plus, Unit 11, First Floor West, Universal House, 88-94 Wentworth Street, London E1 7SA, tel: 020 7247 6338, info@starting upchildcare.co.uk, www.startingupchildcare.co.uk.
* Busy Bees, as well as owning a network of nurseries, can help develop facilities either in partnership or on behalf of large companies: The ROM Building, Easter Avenue, Litchfield, Staffs WS13 6RN, tel: 0870 380 6614.
* The children's house consultancy can advise on all aspects of starting and running a nursery: Station Road, Stallingborough, north-east Lincolnshire DN41 8AJ, tel: 01472 504891, consultancy@the childrenshouse.org.uk, www.thechildrenshouse.org.uk.
* Childcare Partners has expertise in helping employers decide on childcare strategy, particularly in the area of partnership schemes with local communities: Buffer Bears, Head Office, The Hospitium, Valpy Street, Reading RG1 1AR, tel: 0118 950 3200.
* Mark Dudek is a specialist advisor on all aspects of the early years environment: 4 Westbourne Grove Mews, London W11 2RU, tel: 020 7792 1984, www.educationdesign.co.uk.
* POPITS can provide assistance with Ofsted nursery procedures and standards: 25 Rockington Way, Crowborough, East Sussex TM6 2NJ, tel: 01892 664526.
* Trio Childcare Connections can help with getting a nursery started, Ofsted problems etc: Newburn Centre, Newburn Crescent, Swindon SN1 5ES, tel: 01793 514422.
* Noel Quinn, is a training and management consultant company that can support the development of your nursery business: 83 Cubbington Road, Leamington Spa, Warwickshire, CV32 7AQ, tel: 01926 420340, info@noel quinn.co.uk.
Childcare and professional organisations
* Kids' Club Network, Bellerive House, 3 Muirfield Crescent, London E14 9SZ, tel: 020 7512 2112, www.kidsclubs.co.uk.
* National Day Nurseries Association, Oak House, Woodvale Road, Brighouse, West Yorkshire, tel: 0870 774 4244, www.ndna.org.uk.
* The Pre-school Learning Alliance, 69 Kings Cross Road, London WC1X 9LL, tel: 020 7833 0991, www.pre-school. org.uk.
* Scottish Independent Nurseries Association, Hyde Park Business Centre, 60 Mollins Burn Street, Glasgow G21 4SF, tel: 0141 557 3040, www.sinascotland.com.
Publications
* Nursery World, priced 1.30 a week, includes news, regular management features and curriculum guidance (subscription hotline, tel: 0870 444 8628), www.nurseryworld.co.uk.
* Starting a Nursery - A practical guide for early years professionals by Martin Pace (Nursery World, 8.99, tel: 0870 444 8633).
* Starting a Day Nursery resource pack (National Day Nurseries Association, 15, tel: 0870 774 4244).
* Starting a Pre-school factsheet, included in the group membership pack (Pre-school Learning Alliance, tel: 020 7833 0991).
* Starting and Running a Nursery - the business of early years care by Helen Jameson and Madelaine Watson (Nelson Thornes, 18, tel: 01242 267268).
* Building for Young Children by Mark Dudek (Education Design, 10, tel: 020 7792 1984).
Market research
You will need to demonstrate that you have conducted market research if you are to gain funding to set up your nursery. Market research is to show that the area you have chosen has enough children to support your nursery, will enable you to charge a high enough fee and will enable you to fill your nursery quickly enough and stay full so you can make a profit. Research will also help define the service you are to offer.
* Look around the area for evidence of young families - primary schools, children's shops.
* Your local Early Years Development and Childcare Partnership (EYDCP)/Children's Information Service (CIS) are a good source of information.
* Contact major employers to establish whether they have a need to provide childcare for their employees.
* Prepare a questionnaire and conduct a survey of what age of children people have, where they live and what childcare they use. This helps gauge demand and publicise your nursery.
* Research your competition to establish whether the nurseries are full and what services they offer.
Contacts
* CACI is a market research company: Kensington Village, Avonmore Road, London W14 8TS, tel: 020 7602 6000.
* Childcare Link can provide details of your local CIS, tel: 08000 960 296, www.childcarelink.gov. uk.
* Experian is a market research company: Garden Floor, Bain House, 16 Connaught Place, London W2 2EP, tel: 020 7664 1157.
Business plan
Your business plan should include:
* Executive summary - include key objectives, financial objectives, level of funding needed.
* Sector analysis - a brief explanation of the nursery marketplace.
* Market analysis - your market research.
* Operational plan - your business objectives and how you expect to achieve them, ethos, opening hours, age groups and so on.
* Management team - outline staff identified and recruitment plans.
* Implementation plan - what you will do during start-up including securing premises, recruitment, marketing.
* Financial information - predictions about how your nursery will develop financially.
* Appendices - the back-up for your financial data, any relevant press cuttings, management CVs, market size data.
* Banks, or your EYDCP business support officer, can often provide business plan formats for reference.
Funding
Types of funding
There are two types of funding:
* Debt (or loan capital), which you borrow from a lender such as a high street bank, and
* Equity, which means selling a share of your business to a business partner, even though it has not yet begun trading.
Most businesses usually operate with a mix of debt and equity.
Sources of funding
Debt:
The easiest and quickest source is through family and friends. If you know someone with enough capital, do not be afraid to discuss your proposal.
They may expect a share in the business, in which case it will become equity funding.
A bank may be able to consider a loan if you already have some capital or assets of your own, or if you have taken on an equity partner.
Even if you have no capital, it is useful to see your bank manager for advice on loan schemes available to business start-ups such as the Government Loan Guarantee Scheme.
Grants are another source of business funding, but the sources are very few. If you are aged under 30, the Prince's Youth Business Trust is a good place to start enquiring and your local Learning and Skills Council may also offer advice on how to source low-cost or free money.
Equity:
A new business is unlikely to attract venture capital, so the best source of equity finance is a 'business angel'. This may be someone with business experience and money to invest who is keen to get involved in a profitable business. They may want to work with the business on a part-time basis, bringing valuable skills with them.
Business angels listen out for potential investments through a network of contacts and, for a fee, you should be able to access that network through either the local Learning Skills Council, Business Link, or through a number of private agencies called financial intermediaries (fees range from around Pounds 500 upwards). You can access these organisations through your local authority, local chamber of commerce or your accountant.
Business angels who have worked in similar sectors to childcare, such as healthcare or hotels, may be the most easily persuaded to see the benefits of investing in a nursery, as profit margins are likely to be similar.
Pros and cons
Debt:
* The lender weighs up possible return against risk. You will be expected to put up some of the capital (for example by offering a charge on your home).
* Once you have entered into a loan agreement, you must meet repayments, irrespective of whether the nursery is making a profit.
* You retain ownership of the nursery and therefore the value of the business when you come to sell it, rather than sharing this with a partner.
You will also have a greater say in decision making.
* Debt is quicker to implement as a lender's decision is based on financial criteria, not on building up a working relationship.
Equity:
* You will only be required to pay back your funder out of profits, giving your business greater security.
* Your partner is likely to get involved in the business, which may bring new skills. If you have a mix of equity and debt, your lender may feel more comfortable with your partner's skills on board.
* You will be surrendering some of the eventual profits of the business.
* You will also be giving up some control of the running of the company and will need to work with your partner for the benefit of the business.
* Having equity funds from a partner can sometimes be a help in securing further finance from other partners or lenders.
Contacts
* Abbey National Business provides commercial mortgages and loans, tel: 0800 3280210, www.anbusiness.com.
* Armada Finance provides asset funding, tel: 01392 431171.
* BDO Stoy Hayward is a financial advisor for growing businesses, 8 Baker Street, London W1U 3LL, tel: 020 7486 5888, www.bdo.co.uk.
* GR Patrick & Co (Finance), is a nursery finance specialist, tel: 020 8336 0030.
* The Royal Bank of Scotland has a team specialising in the nursery sector, tel: 0800 521607.
Buying a nursery
Whether you are buying land or a building, converting a building or erecting a modular construction, you must acquire planning consent from the local authority. Ofsted will not agree to registration until provided with evidence that planning permission is in place or that it is not required.
Sales agents
Companies specialising in the sale of nurseries and schools include:
* AH Lansley, 111 Oxford Road, Reading, Berkshire RG1 7UH, tel: 0118 959 0271.
* Christie and Co, 50 Victoria Street, London SW1H 0NW, tel: 020 7227 0700, www.christie.com.
* Dowling Kerr, 98 Huddersfield Road, Holmfirth, West Yorkshire HD9 3AX, tel: 01484 681314, www.dk-business.com.
* National School Transfer, Tilshead House, Tilshead, Salisbury, Wiltshire SP3 4RX, tel: 01980 621251, www.national schooltransfer.com.
* School Transfer Consultants, Haydon Cross, Dale Road, Southfleet, Kent DA13 9NX, tel: 01474 833150, www.school transfer.co.uk.
Independent valuers
The following understand the childcare sector and are recognised by most institutions:
* FPD Savills, 25 Finsbury Circus, London EC2M 7EE, tel: 020 7499 8644, www.fpdsavills.co.uk.
* Matthews and Goodman, Dorland House, 14-16 Regent Street, London SW1Y 4PH, tel: 020 7747 8847, www.matthews-goodman.co.uk.
* Pinders, Pinders House, Milton Keynes, Bucks MK9 1DS, tel: 01908 350500, www.pinders.co.uk.
* Taylors, Court House, Mill Court, Featherstone Road, Wolverton Mill, Milton Keynes, Bucks MK12 5QS tel: 01908 226611, www.tbsv.co.uk.
Modular building suppliers
* Adroit Modular Buildings, tel: 0800 115544, www.adroitmodular. com.
* Deckhouse UK provides a design and construction service for timber-framed buildings, tel: 020 7350 2345, www.deckhouse. com.
* Elliott Group, tel: 01543 404040, www.elliott-group.co.uk.
* Globalmobile, tel: 01892 722733.
* Homelodge Buildings, tel: 01962 881480, www.homelodge.co.uk.
* Portakabin, tel: 01904 611655, www.portakabin.co.uk.
* Rovacabin, tel: 01865 337200, www.sgb.co.uk.
* Securaccom, tel: 01285 850011, www.securaccom.co.uk.
* Speaks Building Systems, tel: 01422 353022.
* Sure Steps, tel: 07850 622726.
* Terrapin, tel: 01908 270900, www.terrapin-ltd.co.uk.
* Tingdene Homes, tel: 01933 225157, www.tingdene.co.uk.
* Wernick Buildings, tel: 01792 321222, www.wernick.co.uk.
* Wraith Accommodation, tel: 01427 711238, www.wraith accommodation.co.uk.
Architects
Architects experienced in designing nurseries include:
* Birds Portchmouth Russum Architects, Unit 11, Union Wharf, 23 Wenlock Road, London N1 7SB, tel: 020 7253 8205, www.BirdsPortchmouthRussum. com.
* Cottrell & Vermeulen Architecture, 1b Iliffe Street, London SE17 3LJ, tel: 020 7708 2567, www.CottrellandVermeulen. co.uk.
* Dominic Burns Associates (architects, planning supervisors and project managers), 544a Bearwood Road, Smethwick, Bearwood, West Midlands B66 4BT, tel: 0121 429 7711, www.db-assocs.co.uk.
* dsdha, 8 Iliffe Yard, London SE17 3QA, tel: 020 7703 3555, www.dsdha.co.uk.
* Education Design, 4 Westbourne Grove Mews, London W11 2RU, tel: 020 7792 1984, www.educationdesign.co.uk.
* Panter Hudspith Architects, 235 Southwark Bridge Road, London SE1 6NP, tel: 020 7407 2786, www.panterhudspith. com.
Builders
The Federation of Master Builders can recommend builders:
* Gordon Fisher House, 14-15 Great James Street, London WC1N 3DP, tel: 020 7242 7583, www.fmb.org.uk.
Legislation
Care Standards
There is now one set of national care standards in England, the Care Standards Act 2000, that are enforced by the Early Years Directorate, run by Ofsted. The Act makes requirements such as space per child, staff ratios and administration.
There are four aspects to the regulation of daycare for children under eight:
* Registration: The registration process involves checks on you, your premises, and any people who look after children with you or live or work on the premises.
* Inspection: After you are registered an Ofsted childcare inspector will check the quality of your daycare provision every year. The inspector will write a report and send a copy to you so that you can make it available to parents.
* Investigation: An Ofsted childcare inspector may carry out an investigation to check that you meet the national standards and other requirements.
* Enforcement: Ofsted can take action if you do not meet the national standards and other requirements.
Before you are registered you will have to demonstrate to Ofsted that:
* Every person looking after children on the premises is suitable to look after children under the age of eight.
* Every person living or working on the premises is suitable to be in regular contact with children under the age of eight.
* The premises are suitable, having regard to their condition and the appropriateness of any equipment and to any other factor connected with the situation, construction or size of the premises.
* You comply with the National Standards, regulations and any conditions imposed by Ofsted.
You can obtain copies of the National Standards from DfES Publications, tel: 0845 6022260 or www.standards.dfes.gov.uk and Guidance to the National Standards from Ofsted, tel: 0700 2637833 or www.ofsted.gov.uk/publications.
The Care Standards Act 2000 is available from the Stationery Office, tel: 0870 600 5522, www.hmso. gov.uk. For Scotland, contact the Care Commission, see below.
Contacts
* Care Commission, Compass House, 11 Riverside Drive, Dundee DD1 4NY, tel: 01382 207100, www.carecommission.com.
* Department for Education and Skills (DfES), Sanctuary Buildings, Great Smith Street, London SW1P 3BT, tel: 020 7925 5000, www.dfes. gov.uk.
* Management Advisory can provide advice for nurseries on policies and procedures: 5-8 Edward Centre, The Horsefair, Hinckley, Leicestershire LE10 0AN, tel: 01455 444222, www.managementadvisory.net.
* Ofsted, 90 Union Street, London SE1 0FS. Registration helpline, tel: 0845 601 4771 (your call will be directed to your local regional centre), www.ofsted.gov.uk.
* POPITS can offer assistance with Ofsted nursery procedures and standards: 25 Rockington Way, Crowborough, East Sussex TM6 2NJ, tel: 01892 664526.
Employers' responsibilities
Terms of employment
* Employment Act 2002.
* Employment Protection (Consolidation) Act 1978.
* Trade Union Reform & Employment Rights Act 1993.
* Working Time Regulations 1998.
Advertising/Recruitment
* Sex Discrimination Act 1975.
* Race Relations Act 1976.
* Disability Discrimination Act 1995.
Pay
* Equal Pay Act 1970.
* National Minimum Wage 1999.
Further advice
* The Arbitration, Conciliation and Advisory Service produces guides on employer responsibilities, tel: 0870 242 9090, www.acas.org.uk.
* www.businesslink.org, or phone its helpline on 0845 600 9006.
* The Chartered Institute of Personnel and Development has a legal advice line, for members, tel: 0870 5561251. For membership information, tel: 020 8263 3310, www.cipd.co.uk.
Premises
Regulations
* Unitary Development Plan.
* The Fire Precautions Act 1971.
* Health and Safety at Work Act 1974.
* Management of Health and Safety at Work Regulations 1992.
* Health and Safety (First Aid) Regulations 1981.
* The Reporting of Injuries, Death, Diseases and Dangerous Occurrences Regulations 1981.
* The Electricity at Work Act 1989.
* The Food Safety Act 1990.
Further advice
Take advice from your local planning authority, Ofsted officer, fire officer, environmental health officer and EYDCP.
Policies
To meet the National Standards these should include:
Organisation
* An operational plan.
* Procedure for lost or uncollected children.
* Registration system for children and staff.
Care, learning and play
* Children's activities to develop emotional, physical, social and intellectual capabilities.
Safety
* Risk assessment.
* Record of visitors.
* Fire and emergency procedures.
* Fire safety records and certificates.
* Operational policy for outings.
* Vehicle records including insurance and a list of approved drivers.
Health
* Administration of medication.
* Prior parental consent to administer medicines and for emergency treatment.
* Accidents and first aid.
* Health and hygiene statement.
* Sick children policy.
Food and drink
* Diet - records for individual children's dietary needs.
Equal opportunities
* Equal opportunities and anti-discriminatory policy.
Special needs
* Written policy on special needs.
Behaviour
* Policy on behaviour management.
* Incident record.
Working in partnership with parents and carers
* Admissions policy.
* Complaints procedure.
* Activities provided for children.
* Contract with parents.
Child protection
* Child protection policy.
Insurance
* Country Mutual, tel: 01204 525279.
* Kiddicare/PoundGates, tel: 01473 216 406.
* Morton Michel, tel: 020 8768 6700.
* Sweet William Nursery Insurance, tel: 01708 855141.
Equipment
Make a list of the essentials, using the reminders below, and set a budget - you'll need at least 10,000 to 15,000 for a 40-place nursery.
For more information see Nursery World's supplement Nursery Equipment, which is published three times a year.
Checklist
* Arts and crafts: paint, paper, glue, safety scissors.
* Modelling materials: craft tables, easels, overalls, drying racks for paintings.
* Book corner: books, seating, display shelving/storage.
* Construction: traditional wooden bricks, plastic blocks, Popoids and gear systems.
* Display: pinboard, display shelves, fabric calendar.
* Games and puzzles: shape sorters, play trays, jigsaws, simple board games, memory games.
* ICT: consider a computer, digital camera or roamer.
* Music: tape recorders, rainstick, drum, maracas, xylophone.
* Outdoor play: climbing frames and swings, pop-up tent/den-making equipment, ride-on or push-along toys, safe surfacing.
* Role play: home corner furniture, smaller props, such as a cash till, telephones, dressing-up clothes.
* Sand and water: raised sandpit, water table, buckets, spades, boats, jugs, funnels.
* Small world: dolls and accessories, teddies and soft toys, miniature people sets, animals, building, vehicles.
* Toys for babies and toddlers: fabric books, ring stacker, push-along toys, rattles and teething rings, playmats, mobiles.
Equipment suppliers
General
* Addguards, tel: 00353 128 00106.
* Asco, tel: 0113 2707070.
* Early Learning Centre Direct, tel: 08705 352352.
* Eibe UK, tel: 01483 813834.
* Galt, tel: 08702 424477.
* Hope, tel: 08702 414400.
* M&S Mercantile, tel: 0161 236 4616.
* NES Arnold, tel: 0870 6000 192.
* Orchard Toys, tel: 0115 937 3547.
* Philip and Tacey, tel: 01264 332171.
* Step by Step, tel: 0845 300 1089.
* TP Activity Toys, tel: 01299 827728.
* Wesco, tel: 0115 9862126.
* The Whole Kaboodle, tel: 01773 828000.
Art and crafts
* Art2Go, tel: 01843 292333.
* Berol, tel: 01553 761221.
* The Consortium, tel: 01225 777333.
* Crayola, tel: 01234 360 201.
Children's books
* Letterbox Library specialises in positive image multicultural books, tel: 020 7503 4801.
* Milet publishes dual-language books, tel: 020 7603 5477.
* National Literacy Trust provides information on early years reading, tel: 020 7828 2435.
* Walker Books, tel: 020 7793 0909.
Professional books
* David Fulton, tel: 020 8996 3610.
* Heinemann, tel: 01865 474000.
* Hodder, tel: 0235 400400.
* Nelson Thornes, tel: 01242 267100.
* Open University Press, tel: 01280 823388.
* Paul Chapman, tel: 020 7330 1234.
* RoutledgeFalmer (Taylor & Francis) , tel: 01264 343071.
Management software
* BabyTech specialises in nursery management software, tel: 0870 4441330.
* Coldharbour Systems provides financial administration systems, tel: 01275 850500.
* Datamove, tel: 01162 375017.
* Parenta designs nursery websites, tel: 0870 747 9066.
* Rio Computers specialises in nursery management systems, tel: 0116 272 0742.
Music
* Kindescope, tel: 01623 861157.
* Music Education Supplies, tel: 020 8770 3866.
* Out of the Ark Music, tel: 01932 232250.
Play equipment/furniture
* Active Learning, tel: 0115 960 6111.
* Community Playthings, tel: 0800 387 457.
* Cost Cutters, tel: 0121 2447070.
* E-Niko, tel: 01768 210121.
* Little Tikes Commercial, tel: 01704 833123.
* Park Leisure, tel: 0115 937 4441.
* Sherwood Industries, tel: 01623 792151.
* Sovereign Playground Equipment, tel: 01702 291129.
* Timberkids, tel: 01288 353527.
* Timberline, tel: 01246 454484.
* Wicksteed Leisure, tel: 01536 517028.
Play surfaces
* Charles Lawrence Surfaces, tel: 01636 610777.
* Happy Landings, tel: 01280 822949.
* Smith Brothers, tel: 023 9238 7198.
Role play
* Charlie Crow Costumes, tel: 01782 417133.
* J and M Toys, tel: 01274 599314.
* Let's Pretend, tel: 02890 438428.
* Multirole, tel: 01422 886589.
* Three Bears Playthings, tel: 01669 620315.
Uniforms
* Grahame Gardner, tel: 0116 255 6326.
Staff
Preparing to recruit
Using your business plan, decide how many children you seek to enrol in the first months of the nursery's life.
Next, consulting the Care Standards Act 2000, decide how many people you will need to employ initially and what their qualifications should be.
Draw up job descriptions (duties and responsibilities to be undertaken) and person specifications (characteristics such as qualifications, experience and skills) and compose the job ads.
Job advertisements can be placed in the sector's specialist publications, eg Nursery World, national and local press and local Jobcentre Plus.
Appointing a manager
Appoint your manager first. Under the Care Standards Act 2000 the minimum experience is two years in a daycare setting plus a Level 3 qualification appropriate to the post. A manager needs proven managerial, communication and leadership skills.
Selecting your team
* Recruit downwards allowing senior staff to help select so you build a cohesive team.
* Pay attention to equal opportunities - treat candidates equally without regard to gender, race, national or ethnic origin or marital status. You must ensure no applicant is discriminated against because of physical disability, age, religion, sexual orientation, trade union, family or care commitments.
* Ask applicants the same questions so that when you compare candidates you are objective and can demonstrate that you treated everyone equally.
* Limit the interview panel to, at the most, three people to avoid intimidating applicants.
* Use the job description to determine the essential requirements. Some interviewers keep a score sheet, ticking off each applicant's possession of attributes so they can compare candidates.
* Invite candidates in to the nursery to see how they interact with children and staff members.
Recruitment agencies include:
* Beresford Blake Thomas, tel: 0870 6000 892.
* Capita, tel: 0800 731 6873.
* CG Recruitment, tel: 01344 761 901.
* Firstpoint Healthcare, tel: 08457 23 24 25.
* Marylebone, tel: 020 7727 2743.
* Pertemps Solutions, tel: 020 8690 9010.
* TimePlan, tel: 0800 3588040.
Curriculum
* Learning and Teaching Scotland, 74 Victoria Crescent Road, Glasgow G12 9JN, tel: 08700 100 297, www.ltscotland. org.uk.
* Qualifications and Curriculum Authority, 83 Piccadilly, London W1J 8QA, tel: 020 7509 5556, www.qca.org.uk.
* The Scottish Qualifications Authority, Hanover House, 24 Douglas Street, Glasgow G2 7NQ, tel: 0141 242 2214, www.sqa.org.uk.
Books
Managing Your Curriculum by Ruth Andreski and Sarah Nicholls (Nursery World, 8.99, tel: 0870 444 8633).
Inclusion in this directory does not necessarily imply recommendation.
Case study Market research
Claire Chapman aims to open Gambrelle Day Care in Wickham Market, Suffolk in January:
'I am a mother of four children, aged 19 and 17 years, 18 months and two months old. I have been a registered childminder for the past year and started to realise the local demand for childcare when parents kept asking whether I could care for their children. The phone calls inspired me to look into the feasibility of building an extension on to our house and opening a nursery in it.
'I started by doing informal research through my childminder work - chatting to parents at the school gates and talking to other childminders.
I then took advice from my local Early Years Development and Childcare Partnership and childcare development officer at Suffolk ACRE, who are contracted by the local council to develop new childcare places across the county. They were encouraging and provided demographics that showed there was a high birth rate locally.
'My older daughter is training to be a nursery nurse and was able to get information from her placements in local private nurseries. By phoning nurseries myself I encouragingly found many had waiting lists. I also enquired about their number of places, who gets priority, opening hours and fees.
'I aim to offer the same fees as the local nurseries because I want to provide an additional service, not under-cut anybody.
'Most of the local nurseries are open from 9am until 3pm. I know what it is like to be a working mother and want to attract working parents by opening from 8am until 6pm to accommodate working days. Other selling points are that the nursery will be family run, that my young children will attend and that children will have access to an indoor swimming pool.
'Having successfully obtained a start-up grant from the New Opportunities Fund, the nursery is due to open in January, but I have already started to market it by leafleting local schools. I have put an advert in the Yellow Pages and a website is under construction that will link to the Childcare Information Service website.
'The nursery's prominent location, just off the A12 roundabout, will help catch the commuter market. I'm liaising with the council about whether the nursery can sponsor the roundabout and I will put a sign outside the nursery to attract passing business.
The children that I care for will move into the nursery when it is open and I already have a growing list of other interested parents.'
Case study Buying a nursery
Paul Foster, managing director of Dunmar Nurseries, acquired the 50-place Sunny Corner Nursery School in King's Heath, Birmingham in July:
'Our nursery group has an expansion strategy that includes new builds and acquisitions. From a financial perspective, starting a nursery from scratch has cash-flow implications because it takes about two years to fill. Buying a good, operational nursery means it will deliver immediate profit.
'We have good contacts with nursery agents, such as Christie & Co and Dowling Kerr, and they let us know when nurseries become available in areas of interest. Sunny Corner attracted our attention because we wanted to establish more of a presence in the West Midlands.
'The acquisition took six months - from our first seeing the nursery to getting an offer accepted, going through the legal process and receiving Ofsted approval. It is important for a business to apply to Ofsted as soon as possible to avoid delays.
'We initially looked at how long the nursery had been established and occupancy levels. Once happy with financial aspects we checked the building and investigated the location to ensure the demographics could continue to support the nursery, and checked competition.
'Initially we discreetly met the owner, who wanted to retire, outside nursery hours. Once we had agreement we visited during trading hours to check procedure standards and a couple of people visited as prospective parents to get a feel for the nursery.
'Ensuring we keep staff and parents happy is key to buying a nursery. Once we had exchanged contracts we gave staff a booklet explaining who we are and answering common questions, including job security and impact on contracts and training. Salaries were reviewed in April, but we will review them again in October to bring procedure in line with the rest of the group. We will also introduce contributory pensions.
'We then met staff in small groups so that we could talk in person. Once we'd completed the purchase we took everyone to a local pub so that they could see the human side of us.
'We've learnt that parents have as many worries as staff so we issued a newsletter a few days before the handover and booklets dealing with parents' main concerns, such as fee levels and changes to resources or routines. We held a social evening in the nursery for the parents and all the staff came too, which provided an opportunity for everyone to talk.
'After a month we held a staff review meeting to explain changes and review procedures. We deliberately keep changes to a minimum and any alterations are introduced gradually.
'We will continue to monitor how the nursery is managed. Our sensitive approach has worked well and we have had a good reaction from staff and parents since we bought the nursery.'
Case study Building a nursery
Nursery owner Linda Duly oversaw the building of Cuddles Day Nursery in Parkstone, Dorset:
'I believe parents like to know that a nursery has been specifically designed for the under-fives, so building one from scratch is a good selling point.
'We already have a purpose-built nursery and returned to the builder we'd used when we won a tender put out by Poole Early Years Development and Childcare Partnership to open a 66-place nursery and 25-place creche.
'When originally looking for a builder we made sure we chose a top-quality one by looking at other buildings he'd done, checking he was reputable and stuck closely to the timescale. We employed an architect recommended by the builder.
'The land was allocated by the Borough of Poole but local residents were initially unhappy with a nursery being built on the site and we encountered problems obtaining planning permission. Residents raised worries about light and noise pollution but, after a public meeting, approval was given.
'We've learnt that nothing ever goes smoothly. When the builders dug down to lay foundations they uncovered a large hole, that put work back four weeks and cost 70,000 to remedy. Luckily we were able to secure additional funding to address this difficulty.
'We discussed our building requirements in detail with the architect. The nursery is designed on one level so all children have direct access to outdoor play areas. We were able to specify everything, such as having the milk kitchen and sleeping room directly accessible from both baby rooms.
'The nursery has low-level windows so the children can look outside and there is under-floor heating because children spend the majority of their time playing on the floor and it removes the need for radiators.
'It is difficult to visualise everything on paper, but we had a good working relationship with the builders and actually changed where walls were positioned as work progressed.
'The building took just six months to complete, and was ready for opening on 1 September. The project only went slightly over budget because we moderately changed the plans. The actual building cost 249,000 and the outdoor play area and furniture cost an additional 50,000 each.'
Case study Gaining funding
Working parents Aileen Stevens-Smith and Garry Smith are opening Cowboys & Angels in Warrington in January:
'We own an 18th-century chapel in Warrington centre, a growing town with many businesses. We let the building as offices until the lease expired last month.
'There are no town centre nurseries and, by approaching local large employers, we confirmed a demand for childcare. We also investigated the 32 nurseries in Warrington to acquire their number of places, waiting lists and fees.
'We compiled a business plan including our market research, main priorities and targets. An experienced nursery manager helped estimate staff and equipment costs. We worked out that we needed around 140,000 funding.
'We approached various lenders but they only offered 60 to 70 per cent of the finance required because they would only loan money against a bricks and mortar valuation. It was a "Catch 22" - we needed the additional funding to get started but most lenders will only loan against a going concern.
'The project came to a financial standstill. But we knew we had a good business plan so we took another view and approached a certified bank valuer. She looked at the building and our business plan and concluded it was a viable business. Her report gave an unbiased opinion of the nursery for us to approach banks with. It verified that the church was worth 425,000, once refurbished the value would increase to 525,000 and once operational the business would be worth 825,000.
'The valuer also gave details of specialist lenders and we approached three with our business plan and valuer's report. Now all three banks couldn't do enough to help us. They looked at the business as it was then, the business with Ofsted approval and the business when trading. It showed that when the business was a going concern the value would go up. We decided to go with Royal Bank of Scotland who put in place a smart finance loan and overdraft facility. This gave us more than enough to open the nursery, with the possibility of more if required.
'We have allowed for the nursery to take 18 months to fill but with its strong location and a marketing campaign it will possibly only take 12 months.'
Case study Recruiting staff
Minihome nursery in Stoke Newington, north London opened in April. Company director Billie Chan explains her recruitment strategy
'Thankfully I knew an experienced nursery manager who came on board when I set up the nursery. She was able to help with the various procedures and recruitment. I'd not run a nursery before so it was good to put it in the hands of someone with first-hand knowledge.
'For the rest of the team, I advertised in Nursery World, the local newspaper and also through Jobcentre Plus. In light of the recruitment crisis, I was amazed to receive about 80 responses. Unfortunately, the majority of applications from Jobcentre Plus went straight on the "no" pile, although there were a few gems hidden among the unsuitable candidates.
'The nursery manager and I wrote a job specification, sifted through applications, and interviewed 30 candidates for the ten vacancies. We wanted to employ experienced people to form a strong staff core because the nursery was a new venture. Along with previous experience, we asked candidates to display their knowledge of a range of areas including child development, key worker systems, the Children Act and awareness of health and safety issues. We specifically looked for people who could communicate with adults as well as children and had good writing and presentation skills.
'Sadly, we lost some of the original staff team because the nursery opening was delayed for three months while we awaited Ofsted approval. Since opening the nursery we have had to employ more staff as the numbers of children have grown. Now, before the formal interview, we ask candidates to work in a supervised environment with the children.
'I believe much of the private sector pay staff appallingly so I based pay scales on public sector wages. Nursery assistants, qualified to at least an NVQ2, are paid 13,600 for a 35-hour week. Nursery nurses, at NVQ3 or above, receive 16,300 and the deputy, with previous managerial and supervisory responsibility, is paid 19,000.
'The staff started a week before the nursery officially opened. We held induction days to help them gel, which included team-building exercises, discussions about the ethos of the nursery, health and safety issues and how to conduct observations.
'The nursery manager is holding monthly supervisions with each staff member so any issues can be raised and career development discussed. We hope this will help to continue building a cohesive and happy team.'
