With an estimated 856,238 daycare centers in the United States, and with an annual growth rate of approximately one percent, this makes purchasing a daycare center a solid business investment. However, several different steps must be taken for you to purchase an existing childcare facility. If only there was a way to get all of this information in one place, so you can get a jump on purchasing your daycare center. Luckily for you, there is…
There are a few steps that you need to know when purchasing a daycare center. They are as follows:
- Ensure that you have enough funds on hand for the purchase, as well as any renovations or repairs the building may need.
- Make sure that you obtain the proper licenses; meet any regulations, and pay any applicable fees.
- The daycare you are buying must meet certain facility standards.
- Safety inspections must be conducted in your building to ensure the safety of the children.
- Your daycare must comply with standards set by the Americans with Disabilities Act.
Are My Funds In Order?
First and foremost, when you are planning to purchase a daycare center, you must make sure that your funds are in order. You will also need to be aware of your options if you need outside financing. Some of these options may include loans, investment groups, or private investors. However, if you are seeking a bank loan, you may be required to have a substantial down payment. The downside to having investors backing your purchase is that you will need to share your profits with them, although they will not require you to provide them with a down payment.
The average startup cost for a daycare center is between $10,000 and $50,000, but you will not have to worry about startup costs if you are buying an existing childcare facility. Still, you can expect an estimated cost of as much as $55,000 for renovations and repairs to the building where your daycare is located. You can also expect to spend slightly less than $5,000 on equipment. Let’s not forget about general maintenance costs for your building, and other operating expenses such as staff salary, insurance, and overhead expenses. There are plenty of expenses involved in purchasing a daycare. Be prepared.
Do I Have the Proper Licenses?
As is the case with any other business, there are going to be licenses you will need. There are also going to be regulations mandated by state and local governments to which you must adhere. There may also be some fees associated with buying a daycare center. You will need to do your research to find out what is specific to your state, as most of these requirements are determined on a state-by-state basis. Some states will require you to have a simple business license to own and operate a daycare, while there may be additional licenses and certifications you need for other states.
Remember that if you are buying more than one daycare, each center will need its license. Another thing that you should keep in mind when you are purchasing a daycare center is that the business license that the previous owner acquired is non-transferable. You will have to get a new business license after buying your childcare facility. If you have any questions or concerns about which licenses you need, or if you are unsure of the regulations that are in place in your state, the website childcare.gov can provide you with all of the information you need to make an informed decision regarding purchasing a daycare.
Learn how to get funding for your childcare business.
Does The Daycare Meet Facility Standards?
While you may be buying a daycare because you want to care for children and ensure that they are safe and happy, owning a childcare facility isn’t all fun and games. There are certain facility standards that your daycare center must meet. Again, these are standards that are enforced by the state where your daycare is located. However, many of these standards are universal. I would strongly recommend checking with your state and local government to make sure that you are meeting these standards. Failure to comply may result in financial penalties, and possibly the suspension of your business license.
Home-based daycares do not need to abide by some of these regulations. However, if you are purchasing a daycare center that is located in a free-standing building, some regulations determine the number of children your center is allowed to have at one time. According to the Houston Chronicle, one facility standard states that indoor areas provide 35 square feet of space for each child. This increases to 75 square feet for outdoor areas. Outdoor areas must be enclosed in a 4-foot-high fence. You will also need at least one toilet and sink for every 15 children in your care. Infants have separate rules concerning their care. The daycare you are purchasing must comply with all state-specific regulations for plumbing, telephones, ramps, and access equipment.
Is My Daycare Safe?
Of course, the biggest concern that you will have as a daycare owner is regarding the safety of the children who are in your care. Their safety should always be a priority, and there will be inspections conducted in your center that will ensure the safety of these children. A few of the items which are included in these inspections are fire protection, sanitation, health standards, and other government-regulated safety protocols. Your state will have laws in place that mandate the levels of furnishings, fire equipment, and facility designs to which your daycare must comply. You should be aware of all of these things before buying a daycare center.
For the safety of the children in your care, some laws state that background checks must be done on all of your employees, as well as yourself. This ensures that your daycare center does not employ people with criminal records, especially those with child-related offenses. Once your employees have passed their background checks and have been hired, they will then participate in a state-required orientation. Annual safety training will also be required of all daycare employees. Your state will also determine which insurance you will need to carry, as well as the minimum amount of insurance you will need.
Does My Center Comply With the Americans With Disabilities Act?
The Americans With Disabilities Act ensures that adequate provisions and modifications are made to buildings such as daycare centers that make them accessible to those who have handicaps or physical limitations. As a daycare owner, I do not doubt that you are going to encounter at least a few children with handicaps or physical limitations. You will not only want to make them feel welcomed, but the law also dictates that this must be done. Failure to comply will result in a substantial financial penalty, and may also force you to close your center until all modifications have been made.
There is something else you should consider when buying a daycare. The children you care for may not be the only people who may need accommodations. Their parents may have physical handicaps as well. Not having the proper accommodation is not only against the law, but it is also insulting. This could also be a poor business decision for two reasons. I have already informed you of the severe financial penalties that you will face for non-compliance, but it can also result in parents choosing a different childcare provider for their children.
Buying an existing daycare center can be a wise business decision, and can also provide you with the opportunity to earn a living doing something that you enjoy. Before you take the plunge, you will first need to make sure that your finances are in order, and educate yourself regarding your financing options. Next. you will need to make sure that you have the proper licenses, permits, and certifications required by your state. You must also adhere to any state-mandated regulations. There are also going to be facility standards that your daycare center must meet., as well as ensuring that your center is safe. While some of these regulations are determined by your state, many are universal. Finally, your daycare must comply with the Americans with Disabilities Act. Once you have completed all of these steps, it’s time to embark on the journey into childcare.
Should I buy into a daycare franchise, or should I purchase a standalone daycare? The answer to this question depends on how much work you want to put into your childcare facility. Buying into an existing franchise ensures that most of the major decisions which must be made have already been established. The only decision you have to make is who you are going to hire. Starting a standalone daycare means that you will have to put in much more work, but you get the satisfaction of knowing that you built your business from the ground up.
What type of equipment will my daycare need? There are certain things that your daycare is going to need, and equipment is going to be one of the most important decisions you need to make. The minimum amount of equipment you will need is tables and chairs; cots or mats; a computer with daycare-specific software; cribs with mattresses; changing tables, and educational toys. If you want to separate your daycare from other centers, you can also purchase computers with learning software, as well as outdoor playground equipment.
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
To learn more on how to start your own daycare checkout my startup course and documents here.
Meet Shawn Chun: Entrepreneur and Childcare Business Fan.
I’m a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online daycare business resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a childcare business owner, I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Daycare Business Boss: I want to help childcare business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.