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9 Replies Last post: Apr 23, 2008 3:01 PM by ODF2004

Looking at buying into a preschool business...need advice

Oct 12, 2007 10:53 AM

dq1205 2 posts since
Oct 12, 2007

My post was deleted since they thought it was advertising. I just copied the information on the business oppt. I am looking at to get opinions from the forum, not trying to sell anything, so I am going to try it another way. We are just looking for advice to make a decision on partnering with this company.

We've been looking at a business that's a fully operational preschool. The sellers are not business brokers, but experienced PRESCHOOL OPERATORS with three profitable centers already in place . They are trying to build a small chain of 6 to 10 preschools (daycare's) by setting up individuals in their own preschool (daycare) business. We will receive full training and ongoing support from them. It will be a mutually profitable franchise-like relationship but without the big franchise fees and monthly royalties.

All of their preschool/ daycare sites are located in either upscale shopping plazas or in freestanding buildings. They do not require us to have child care experience since we will be part of the support system of a mini chain, and the personal day-to-day help from seasoned operators.

The price of $175,000 is for a fully equipped, remodeled and licensed preschool according to all government agencies' requirements, ready to enroll children. We will still need to come up with 25k to lease the space and the rent is approx. $8,500 per month. The capacity of the center is for 52 -56 children. The seller has handed us a business plan, marketing plan and financial forecast for the next 5 years, and has already secured the retail space. We have given him a $1,000 deposit to secure the space.

The next step is to review the lease and sign the contract. We are talking to an accountant and a lawyer. So do you think is necessary that both of them look at all of our documents. Does the price sound fair to you ? or should we look into trying to see how much we would spend setting up everything on our own ? We have no business or childcare experience, and thought this would be the best way to go into this business. I am in the process of getting certified so that I can work in the center full time.

Thank you in advance for any advice we can give us.
Regards,
Deborah

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peace4me 2 posts since
Oct 12, 2007

1. Re: Looking at buying into a preschool business...need advice Oct 12, 2007 11:00 AM

Hi, Several years ago I decided to purchase a beauty salon without prior salon or business/retail owner experience. While I was provided with financial records of the company and had access to conversations with the previous owner, I still ended up with a business that was not making money. I did have an accountant and a lawyer look at all the records and business plan, however, they did not have experience with that type of industry. I would strongly suggest that you try and find an accountant and a lawyer who have dealt with this industry before. I would also suggest that you talk to a broker. In the end, I went to sell my business and found a broker who was experienced with this industry and knew far more than the attorney or accountant did in terms of what to look for. Just some advice from my personal experience.

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DomainDiva 1,731 posts since
Oct 10, 2007

2. Re: Looking at buying into a preschool business...need advice Oct 12, 2007 12:04 PM

You have no experience in early childhood education, or childcare? You are going to get a certificate to manage 50+ children?

It seems to me that this is being approached from a financial standpoint. Capacity for 52-56 children? How many workers are you planning on hiring? Will you offer early drop off (like 0530) and late pick up 7-8PM?

Not trying to be a wet blanket here but you are planning on getting into a business that could pose serious liability if you are not totally prepared. Parents can be your worst nightmare if something does go wrong. Support system from a mini chain?

With no business or childcare experience and no early childhood degree you may want to think more about this particular venture. I would serioulsy question the 'franchisees' motives and whether that person actually had the best needs of the children as their first priority in wanting to sell a care center to inexperienced people. ( I say this because Steak & Shake will NOT sell a franchise to anyone that does not have restaurant experience..and they require a minimum number of years in the business and references as well......this is an example of a franchisor having requirements to own one of their business units).

That's just me. I raised three and have seven grandkids.

By all means...go into business but know your business before you go into that business even if you rely on others for legal and financial advice.

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dq1205 2 posts since
Oct 12, 2007

3. Re: Looking at buying into a preschool business...need advice Oct 12, 2007 2:13 PM

in response to: DomainDiva

Diva, thank you for the advice.

I understand your point on not having the childhood education experience although I have a 14 and 9 year old girls so hopefully that should give me a few pointers , but I really love children and have been comtemplating getting a degree in Education for the past 5 years.

My plan is to get my Director Credentials (see below) :

Part I - all child care personnel are required to https://training01-dcf.myflorida.gov/dcf/cct/facility.html#Complete the following 30-clock-hours which are divided into five training courses:

Child Care Facility Rules and Regulations
Health, Safety, and Nutrition
Identifying and Reporting Child Abuse and Neglect
Child Growth and Development
Behavioral Observation and Screening

Part II - all child care personnel are required to https://training01-dcf.myflorida.gov/dcf/cct/facility.html#Complete 10-clock-hours of training from the following courses:

Infant and Toddler Appropriate Practices (10 hours)
Pre-School Appropriate Practices (10 hours)
School-Age Appropriate Practices (10 hours)
Special Needs Appropriate Practices (10 hours)
Early Literacy for Children Age Birth to Three (5 hours - online)
Basic Guidance and Discipline (5 hours - online)
Computer Technology in the Early Childhood Classroom (5 hours - online)
Early Childhood Computer Learning Centers (5 hours - online), or
Emergent Literacy for Voluntary Pre-Kindergarten (VPK) Instructors (5 hours - online).

5-clock-hour (or .5 Continue Education Units) https://training01-dcf.myflorida.gov/dcf/cct/literacy.html, within 1 year of employment 10-clock-hours of https://training01-dcf.myflorida.gov/cclpolicy/FormsandApplications/FSP5268.pdf training completed between July 1 and June 30 each year

and use mine and my husbands, business degrees and administrative experience (me 15 years, him about 12, supervisor and manager roles) to learn to run the business form a administrative point and for me to continue my early childhood education studies until I can get my degree, kind of like a hands on learning experience.

We are looking at hiring 5-to 6 certified pre-school teachers. I would have to work in one of the sellers daycare's for at least 4 weeks (paid) to get a handle on running the business and the day to day.We are looking to have a long term relationship with them in everything from developing curriculums, marketing , staffing, etc.

If at the end of the day I feel I am not qualified to be the Director of the center, we would hire a Director and we would stay behind the scenes in managing the business as owners.

We have been in talks for the last 4 months with the sellers, and they have always been up front with us, (so far).
The sellers are a husband and wife team, she is a Teacher/Registered Nurse/Dietician with more than 15 years experiance and he takes care of all the administration of the daycare's and he has been involved in owning businesses for the last 25 years. She has put together a wonderful curriculum for all 3 schools and we visited two of the centers and were very impressed. They have afterschool care and summer camp, VPK and other federal programs.

I really feel like this is something I could do and have a passion for and it's not everyday that a successful business owner is willing to part with their proven formula. Do you think that would be enough ??

Thanks again for the advice.

Deborah

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DomainDiva 1,731 posts since
Oct 10, 2007

4. Re: Looking at buying into a preschool business...need advice Oct 12, 2007 3:36 PM

in response to: dq1205

My APOLOGIES!!!! I completely misread your post!

Your post read to me as though you were very young and had no children, and did not include any additional extra education above a certificate.

So being a MOM already you know whats in store and this is not something you are looking at as just a business venture.

Reading your response its obvious that you are prepared and are expecting to go the extra mile. If it were me I would keep the top spot and surround myself with superior people and rely on their expertise and advice.

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LUCKIEST 7,926 posts since
Aug 6, 2007

5. Re: Looking at buying into a preschool business...need advice Oct 15, 2007 12:17 PM

Deborah, Thanks for sharing so much about your plans to buy a preschool.
You say that you have no business or childcare experience, so why do you want to
start by buying this franchise??. (I am not being negative)
How long before you are certified??
It is great that the seller has given you a business plan, a marketing plan and a
5 year forecast. Do you have the FUNDS??
Anybody going into business should have an Accountant, a Lawyer and an Insurance Agent.
The question is "does the price sound fair to you and your accountant"
It is your money and you have seen the 5 year plan.
How long will it take to sign up the 50 or so children?? And what are the numbers
the first few months when you have signed up less children??
Good luck, LUCKIEST

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bizconsultant 74 posts since
Apr 1, 2008

6. Re: Looking at buying into a preschool business...need advice Apr 2, 2008 11:57 AM

We offer free business valuations if you would like to find out if the asking price is fair and if you have the resources to make it perfom at least to the industry average. Contact me at ajones@abcsolutions.cjb,net if interested in getting the questionaire for it.

Also, you may want to check out a great resource for startup businesses which is our Build A Business WORKShop, which can help you with not just resources but actually doing the things you need to do initially tomake your business successful. Go to www.buildabusinessworkshop.com

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cajawahar 22 posts since
Mar 7, 2008

7. Re: Looking at buying into a preschool business...need advice Apr 2, 2008 6:58 PM

dear first do you have prepared a project scope
then analyse the leese, if profitable go straight

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dr_chughtai 13 posts since
Apr 23, 2008

8. Re: Looking at buying into a preschool business...need advice Apr 23, 2008 2:45 PM

<str<br />I believe this is an excellent business opportunity. As you stated that you are trying to get certification and that will certainly enhance the professional capability in managing and teaching. The terms and condition are very attractive. I wish you good luck in your business endeavor+

Dr. Gul M. Chughtai
215-722-2435

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ODF2004 4 posts since
Apr 23, 2008

9. Re: Looking at buying into a preschool business...need advice Apr 23, 2008 3:01 PM

in response to: peace4me

As a commercial lender I would absolutly allow both your accountant and attorney look things over. especially your attorney. As far as the price they are offering...keep in mind all business's are or should be income producing. When an individual or company attempts to purchase a business we determine the value of the business mostly on the amount of revenue generated and not so much on the equipment. I am not sure, if the person will retain the space and if there is no real estate for collateral then I would certairnly consider the option of doing it yourself even if its just a method by which you can compare.

On the positve side if there is an enrollment of 50 or more students then that could be a great start.

Also remember...you can always have the business appraised by a professional.
Jody L. Phillips

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