How to start a nursery

It's no easy route to riches, but if you love working with kids then setting up a nursery could be for you - here we cover how to open a nursery...

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First things first. To open a nursery, you need to check out the competition. To help you, your local council will have a list of all registered childcare providers. As well as checking out existing nurseries, look at playgroups, mother and toddler groups – anything that will be your competition. And don’t forget that might include nannies.

Creating a business plan to open a nursery

Kate Willink, founder of The Wooden Horse in Easingwold, explains that she and her business partner spent six months simply writing the business plan before starting a nursery. She used the local library, the council and the internet to find useful background information on the area, the average wage and even figures for how many children go to nurseries in the county. Armed with demographics, customer profiles and a financial projection for the first 12 months, her business loan was quickly approved by Barclays.

You can download your free business plan template here.

Market research you should undertake before starting a nursery business

Find out whether there is a market for another nursery business. A census can tell you local birth rates, the number of nursery-age children and the general economics of any particular area. Not only will this give you information on how many children there are but it should allow you to build a profile of your typical customer and gauge whether there will be demand if you start a nursery business.

You should also think about how many children you want to look after in your nursery as this will affect the property, staff and pricing. If this is your first venture in starting a nursery, don’t try and compete with the chains that offer places for over 100 children. But to be viable, you will probably need to have at least 25-30 places for your nursery or creche.

Once you have looked at the competition and defined your ideal customer, you should start to get a feel for what to charge for your nursery business. Prices will vary across the country; the average cost of part-time (25 hours a week) care for children under two years old is currently around £110 a week nationwide, while in inner London it is more than £140 a week – average figures for your region can be found here. The price will also vary according to how old the children are, as it costs more to look after babies than toddlers.

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See if you can get a Start Up Loan to help you start a business idea
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But like any business, it will take time to set up a nursery. Your business plan should allow some time before parents are beating a path to your door.

It will probably take at least a year before you are full and it can be hard going on the way, says Ilana King of Blooming Babies Day Nursery in Stamford-le-Hope, Essex. “I assumed that the children would come in at a steady rate but that isn’t the way it happened. We had a very long period with very few children and then a huge influx.”

For detailed advice and guides to conduct market research for your nursery business click here.

The good news is that you don’t have to hire all the staff until your nursery fills up and there are flexible finance packages available – for example, loans with capital repayment holidays.