How to Sell Your Daycare Business – or Buy One

Is Your Daycare Business for Sale, or Are You Interested in Buying? Here's How.

The global market for child care services is expected to grow to $520 billion by 2022. So it may be the perfect time to jump into this industry. If you don’t want to build a brand new business from the ground up, you could purchase an existing daycare center. And if you’re already in this business and are looking to retire or explore other opportunities, you may be able to find some very interested buyers.

If you have a daycare business for sale, or want to buy one of your very own, here are some tips to help you succeed in this hot industry.

Daycare Business for Sale: Tips for Sellers

Get Your Financials in Order

Any potential buyer is going to want to know what your financials look like. What are your earnings? What are your expenses? You should already have access to this information. But many business owners need to get them a bit more organized in order for them to actually make sense to someone outside of your business. If needed, meet with a bookkeeper or financial analyst to help you get all of your numbers in order.

Clarify Your Enrollment Numbers

In addition to the money you’re bringing in, potential buyers will want to know what your customer base looks like. The simplest way to convey this is by clarifying full-time enrollment. This number takes both full-time and part-time students into account in a weighted way, so buyers can get a general idea.

Business Broker Molly Hanson of Baystate Business Brokers said in a phone interview with Small Business Trends, “Not every center owner keeps metrics like this, but full time enrollment is something that buyers are going to be very interested in.”

Upgrade Your Facility

The look of your facility can help you make a good first impression on potential buyers. And it’s even more important if you also happen to own the building. So before selling your business, a few very simple improvements may help.

Hanson says, “Paint goes a long way. If you’re going to be closed over a long weekend or holiday, schedule maintenance and have them add a fresh coat of paint, especially if you’re selling the real estate along with the center.”

Separate Yourself from the Business

It can be tough to sell a business when you’re integral to the day-to-day operations. It’s even more difficult in the child care industry where there are strict regulations and certifications in place for directors. If you want to make the selling process as easy as possible, it may be beneficial if you have someone else in charge of the daily operations.

Hanson explains, “Some centers are owner/director. Other centers have an owner and then a separate director in place. We see much more demand coming in from buyers for owner/non-director facilities.”

Even if you’re currently running an owner/director facility, it may be worthwhile to hire a separate director as you get ready to sell, or at least bring on an assistant director who can help to ease the transition.

Be Ready to Wait

Much of the actual selling process for a daycare facility is similar to how you’d sell any other business. But if you’re selling an owner/director facility, the buyer will need to be certified or licensed by your state’s Department of Education. So that process can add some time to the buying and selling process.

Daycare Business for Sale: Tips for Buyers

Familiarize Yourself with the Industry

The child care industry has additional licensing and certification requirements over other industries. So it’s not necessarily the best choice for someone who’s completely new to the industry. If you don’t have experience, do some research on the Department of Education’s requirements in your state so you understand exactly what you’re getting into.

Build a Relationship with Your Lender

Many business buyers use financing to come up with the cash for their purchase. Going through this process can be tough if you don’t have a lender you’re comfortable with. However, it can be a bit easier to navigate the requirements and get approved for the amount you need if you work with a financial institution that you have an existing relationship with and a lender who will explain everything clearly.

Have Some Faith

Due to the nature of a daycare business, it’s unlikely that you’ll be able to tour the facility while it’s actually in use or see what it’s like during pick-ups and drop-offs when you’re considering a potential daycare business for sale. You may need to show just a little bit of faith early in the process if the empty facility and enrollment numbers match what you’re looking for.

Do Your Research

However, you do get a due diligence period where you get to go over the details of the business before completing your purchase. This is your chance to get more specifics from the current owner and/or operator so you can make sure the business is right for you.

Hanson says, “By looking at the numbers over the years, you can get a good sense of the stability of the operations.”

Practice Patience

Hanson says, “A lot of times, the Department of Education basically dictates when you can close.”

Once you’ve gone through the early parts of the buying process with your broker, you’ll need to go through the certification process with your state’s education department. This can vary widely depending on your location and specific situation. And there’s not much you can do to speed it up. So make sure you build that buffer into your plans. And if you’re in a huge hurry to complete a business purchase, the daycare industry may not be for you.

Image: Depositphotos.com

This article, "How to Sell Your Daycare Business – or Buy One" was first published on Small Business Trends



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