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Starting a Day Care Center
Assuming you can obtain the appropriate licenses and meet the state requirements you can start a Child Care business or a Day Care Center. Or you could buy an existing business with its in place clientele. The second choice can be better if a fair price can be reached and you can keep the existing clients. On the other hand if you have a potential customer base that is just waiting for you to open your doors, you would be far better off if you can start the business in your own facility. The cost of buying an existing business can be far higher than if you start one from the beginning. The big advantage is having a clientele from the get-go. The problem is how do you guarantee that the base of customers will stay with you when you buy the company. This is the real value of an existing company.
The opportunity that is available to a Day Care Center is very high these days, as more and more Mothers are working outside of the home. They need someone to watch their child or children. This need is growing every year, as more and more families become two income families. This demand is making Day Care Centers a scarce resource and there is a need in many cities for more quality centers. This growing demand makes starting a center a truly good idea also.
Check out with a business broker
A business broker will probably know what is available in your area and at what price. On the Internet you can find other brokers and maybe get more of a feel for what the existing care centers are selling for. If they have ever sold one or been a party to buying one, they may know some of the requirements to own and run a Day Care Center. A good business broker is a good source for information and details about a Child Care Center.
It is often a very good idea to have a business broker on your side when looking to buy a business. They are aware of what the market will bare and the businesses that are ready to be moved quickly if the offer is solid. They may know a great deal about the business if they have sold one like it before. In any event they can get answers to just about any question you can come up with.
An experienced broker can be invaluable in finding the best deal and terms for you. This service can be worth far more than what it will cost in commissions or advisory fees. If they do not know the legal requirements in this case, they will know exactly where to find them.
Money needed Money found
It is not unusual for a buyer to need money to complete the deal. Many buyers get the needed money from the old owner who carries back some paper on the sale. Others borrow it from friends and family. Some get it from banks and others get it from other loan sources. There are businesses that advertise on the Internet that they will make business loans of this type. There are several places a buyer with good credit can find money to complete the purchase of a successful business. A profitable business is a terrific asset as it has real value plus it generates cash flow. This is why the Internet companies will make loans to facilitate the purchase of a solid business.
If you get money from the owner you will probably need to pay a higher price for the company. The price goes down for cash and up for partial cash.
A start-up may be the answer
A start-up care center is much cheaper to start since you will not be paying for the customers of the existing business. But you will have to advertise to let Mothers in your area know that you are open for taking on new children. Since there is a demand for businesses like this, you will probably be able to get a good start once you are open for business. You must make sure that you meet all of the requirements of your state for this type of business. These requirements are fairly stringent in most states. But you must make sure you meet them, as the fines for not doing it are substantial. The equipment needed for this business is not that costly and can be purchased as needed. The first problem after deciding where to run your business from is finding customer’s that need your service. This is a deeply oriented customer business. People are very careful with their children and you need to make them feel very comfortable that your company will care for them as they would themselves.
If you buy another person’s care center
You need to be sure that the clients will stay with you and become your clients. You will pay for cash flow when you buy an existing business. Just make sure it stays with you for a specific period of time. This can be put in the contract and would affect the price for the existing business. Also the business would be more valuable if it could be easily expanded. These are just two factors that should be looked at very carefully when buying a business in this category. Make sure the cash flow will easily cover any loans needed to make the purchase. What would the cost of help be and is it hard to find. Ask the business broker if there are other factors that you should be aware of in this field.
Also ask the owner if he would share with you any ideas he has to increase the business and make it more profitable. All information that you do not know will help you make a better decision about buying and running the business. Remember you will be dealing with Mothers and their closest love, their children.
Conclusions
This business type is in serious demand by families looking for quality places to put their children. They need to be safe and well run by people who like and care about children. If this is you, this business may be exactly what you are looking for. If you have the money you can look into buying an existing business or you can start your own from the beginning. Either way the treatment of existing customers will generate more clients if you get good referrals. Excellent care of your clients children will help you obtain replacements and new clients by recommendations. There are many ways to gain more money in this business. You can offer extended hours or have a larger place that can handle more children. You may need more help, but the math will make this an easy decision.
Longer hours will mean more help, but this may be worthwhile if you can get added money for the extended hours. Teaching numbers and letters can be a plus benefit that is worth more to some parents. The ability to make the children happy with their environment will go along way toward keeping the parents happy with your service.
About the Author
Bill Henthorn formerly was principal broker and owner of a resort / commercial real estate brokerage in Honolulu which specialized in representing sellers in transactions up to $50MM.He currently serves as the marketing director of http://www.acquireo.com