Undoubtedly, the primary hurdle confronting UK nurseries presently revolves around recruitment. Shortfalls of dedicated, qualified early years professionals have led to the closure of numerous providers. Between 2021 and 2022, the UK witnessed a decline of 4,000 childcare companies. However, there is a glimmer of hope with government subsidies set to alleviate some of the pressure on businesses this year. Starting September, the average hourly rate paid to providers will see a 30% increase to approximately £8 per hour. This initiative aligns with Whitehall's ambition of extending 30 hours of free childcare support per week for toddlers by 2025. While the support is modest, coupled with escalating energy costs and economic uncertainties, it presents both challenges and opportunities for new day nurseries. Despite the challenges, there exists a burgeoning demand for such services, and astute entrepreneurs who can offer affordable provisions to parents stand to prosper. For instance, Tiney.co, a childminder startup, has witnessed a remarkable 150% growth since 2022. This article serves as a comprehensive guide for crafting a nursery business plan, covering essential aspects such as staff qualifications and experience, selecting suitable premises, and establishing your nursery brand.

Starting a day nursery: a step-by-step guide

Step 1: Assess Your Decision

Before diving in, ensure that starting a day nursery aligns with your goals, passion, and capabilities.

Step 2: Obtain Qualifications and Experience

Ensure you possess the necessary qualifications and experience in early childhood education or management to successfully run a day nursery.

Step 3: Determine the Type of Day Nursery

Decide on the specific type of day nursery you want to establish, considering factors like age groups served, educational approach, and services offered.

Step 4: Evaluate Financial Viability

Conduct thorough financial analysis to determine if your day nursery venture is financially viable. Assess startup costs, ongoing expenses, and potential revenue streams.

Step 5: Understand Regulations and Legal Requirements

Research and understand the regulations and legal requirements governing day nurseries in your area, including licensing, health and safety standards, and staffing ratios.

Step 6: Explore Business Premises

Research and explore potential business premises for your day nursery, considering factors such as location, size, layout, and accessibility.

Step 7: Develop a Comprehensive Business Plan

Create a detailed business plan outlining your nursery's objectives, target market, services offered, marketing strategies, financial projections, and operational plan.

Step 8: Establish Your Nursery Brand

Develop a strong brand identity for your day nursery, including a name, logo, and visual identity that reflects your values and appeals to your target audience.

Step 9: Complete Your Checklist

Before opening your day nursery, ensure you have completed all necessary tasks and obtained required permits, licenses, and certifications. Review your checklist to ensure nothing is overlooked.

Is Now the Right Time to Start a Day Nursery?

Attitudes towards work and childcare have shifted significantly in recent years. The Institute of Fiscal Studies reports a substantial increase in the employment rate among mothers aged 25-34, rising from 50% in the 1970s to 78% today.

Government initiatives, such as free education and childcare for two-year-olds, as well as 15 or 30 free hours of childcare for three to four-year-olds, have facilitated parents' ability to maintain employment during early parenthood.

Statistics reveal that 69% of mothers consider reliable childcare essential for their return to work, with 40% emphasizing the importance of good quality childcare. These trends underscore the favorable climate for starting a day nursery, one that could have a significant impact on the local community.

Amy Catlow, Director of Publishing at a prominent London marketing firm and mother of two, attests to the value of nursery attendance for her daughters:

"Both of my daughters attend a local children's centre nursery. The social education is fantastic, and they are excited to go every day. They spend their days in large, well-equipped playrooms, interacting with a diverse group of children their own age and engaging with a wide variety of toys. I appreciate the nurturing environment provided by the nursery staff, which has contributed to my children's confidence and social skills."

The landscape for starting a nursery has also become more favorable. While the industry remains heavily regulated, recent changes in building use categories have simplified the process of finding suitable premises. The government's efforts to revitalize struggling high streets, coupled with the impact of Covid-19, have facilitated the conversion of retail, restaurant, and office spaces into day nursery facilities without the need for a change of use application.

Considering these factors, the question remains: Do you have what it takes to start a nursery?

Possessing the Right Qualifications and Experience

When contemplating the establishment of a nursery, particularly if your role will involve overseeing its operations rather than direct involvement in teaching and day-to-day management, formal qualifications and experience are not strictly required.

However, familiarizing yourself with the intricacies of business ownership is advisable if you intend to operate from behind the scenes. Conversely, if your aspirations involve direct interaction with the children, specific qualifications and experience become necessary.

For instance, a nursery manager typically must have served as a nursery nurse for a minimum of two years, held a supervisory position for one to two years, and obtained a relevant nursery qualification. To better understand the career progression pathway in early years, you may refer to City and Guilds' Early Years Career Progression Pathway to discern the suitable route for initiating and managing a day nursery.

Types of Day Nurseries

Day nurseries come in three primary forms:

1. Private: These are independently owned day nurseries operated for profit.

2. Not-for-profit: Typically associated with community centers or religious organizations, these day nurseries operate with a focus on community service rather than profit.

3. State-funded: Attached to schools, these nurseries receive funding from the government.

This article concentrates on the establishment of private and independently owned day nurseries, as well as not-for-profit nurseries.

Distinguishing between private/independently owned and not-for-profit nurseries reveals minimal disparity. Regardless of profit motive, adherence to the same regulatory standards is requisite.

The main distinction lies in the allocation of profits. Not-for-profit nurseries reinvest all earnings into the organization, whether it be a religious community or community center. Conversely, private day nurseries operate for profit, allowing shareholders to receive dividends akin to any other business venture.

Choosing between independent operation and franchising poses another significant decision. Each option carries its own advantages and drawbacks, necessitating careful consideration.

Determining the Cost of Starting a Day Nursery

Once you've decided on the type of day nursery you intend to establish—whether it's a private venture or a community-run not-for-profit endeavor—the next crucial consideration is the initial setup costs.

Pinpointing the precise expenditure required to launch a day nursery proves challenging, given the multitude of variables influencing costs. Factors such as the anticipated number of children to be accommodated, the dimensions of your premises, and the equipment to be installed all play pivotal roles in determining expenses.

For instance, Stone Eden Nursery, a franchise group, offers a useful breakdown of costs for a standard 32-place setup:

Breakdown of Initial Costs for Setting Up a Day Nursery:

1. IT and Office Equipment: Approximately £5,000

2. Standard Equipment and Furniture: Approximately £30,000

3. Playground Equipment and Surfacing: Approximately £5,000

4. Professional Kitchen: Approximately £23,000

5. Risk Assessments: Approximately £250

6. Initial Stock: Approximately £850

7. Corporate Setup and Inspections: Approximately £1,000

8. Corporate Identity, Uniforms, and Signage: Approximately £3,000

9. Marketing: Approximately £3,500

10. Initial Internal and Third-Party Training: Approximately £5,000

Total before VAT: Approximately £76,600

While the initial setup costs may appear steep, starting a nursery can often be accomplished for less than the estimated figures. Flexibility in outsourcing marketing efforts and considering the necessity of brand new equipment can significantly reduce expenses. 

Moreover, existing nurseries with proven profitability are available for purchase, offering a ready-made solution. Listings on platforms like daynurseries.co.uk showcase profitable day nurseries with 54 spaces, priced from around £50,000.

In addition to setup costs, it's essential to factor in ongoing expenses, including:

1. Premises rental cost, which varies based on location and square footage.

2. Staffing costs, with the average nursery salary standing at approximately £21,000.

3. Utilities costs, encompassing local council tax rates, water, gas, and electricity charges.

4. Insurance expenses to ensure comprehensive coverage.

5. Cleaning costs for maintaining hygiene standards across the nursery and food preparation areas.

Licensing and regulations 

For day nurseries this vary depending on the location within the UK, encompassing England, Wales, Scotland, or Northern Ireland. However, certain core regulations remain consistent across regions.

1. **Registering your day nursery:** Regardless of location, registration with the country's specific regulator is mandatory. Compliance with the Early Years Foundation Stage (EYFS) framework standards is essential before approaching the relevant authority. Regulators include:

   - For England: Ofsted (Office for Standards in Education)

   - For Wales: CSSIW (Care and Social Services Inspectorate Wales)

   - For Scotland: The Care Inspectorate

   - For Northern Ireland: Health and Social Services Board (HSSB)

2. **Day nursery insurance cover:** Adequate insurance coverage is crucial, including:

   - Public liability insurance

   - Employer’s liability insurance

   - Professional indemnity insurance

   - Commercial property insurance

   Policies should extend to cover staff and children off-premises, such as during nursery trips. Considering business interruption insurance is advisable for potential closures.

3. **Food safety and hygiene:** Compliance with food safety standards, with staff holding relevant qualifications per the Food Standards Agency (FSA) guidelines. Utilizing resources like the FSA's "Safer food, better businesses pack for childminders" ensures adherence to hygiene regulations specific to day nursery food handling.

4. **Health and safety requirements:** Strict adherence to health and safety protocols is necessary, including:

   - Conducting risk assessments

   - Implementing fire safety measures and evacuation procedures

   - Reporting injuries

   - Maintaining facilities and handling hazardous substances appropriately

5. **Staffing regulations:** Compliance with staffing regulations is essential, ensuring the presence of a sufficient number of qualified staff per child. Staffing requirements entail specific qualifications and ratios per regulatory standards.

Finding a Location

Acquiring the appropriate premises for your day nursery is a critical step in the process. Understanding the regulatory requirements regarding space per child is essential:

- 0-2 years: 3.5 square meters per child

- 2-3 years: 2.5 square meters per child

- 3-7 years: 2.3 square meters per child

While government initiatives facilitate the conversion of existing buildings, several considerations should guide your choice of premises:

1. Location: Ensure it caters to your target market and assess the demand for nurseries in the area.

2. Accessibility: Evaluate parking availability, transportation links, and safety of the neighborhood.

3. Outdoor space: Verify if there's ample space for a playground.

4. Facilities: Assess the potential for installing necessary amenities like toilets and changing rooms.

Once a suitable building is identified, consulting with an early years architect can provide insights into conversion costs, aiding in financial planning and loan acquisition.

Making a Detailed Plan

Crafting a comprehensive business plan is essential for the success of your day nursery venture. This plan will serve as your roadmap, guiding you through budgeting, staying on track, and securing crucial funding.

Dedicate ample time to developing your business plan, as a detailed outline will instill confidence in potential lenders. A mere list of notes won't suffice; rather, compile a thorough dossier of information.

For guidance on what your business plan should encompass, consult resources such as the Startups guide to creating a business plan. This resource will provide invaluable insights into structuring your plan effectively.

Create your Brand

Developing your day nursery brand goes beyond mere aesthetics; it encompasses the essence of your business and how you communicate with your audience. From parent interactions to teaching methodologies, your branding must encapsulate your entire ethos.

Crafting a brand from scratch can be challenging, so consider consulting with a branding expert to translate your vision into a tangible identity. Once established, ensure consistency across all touchpoints, including communications, websites, premises, uniforms, and policies.

To increase brand awareness, leverage social media and websites; however, be mindful of regulations regarding posting images of attending children online. Obtain parental consent, refrain from naming children, and establish clear social media policies.

According to marketing professionals, social media is invaluable for fostering community engagement. Positive discussions about your nursery can significantly impact demand for your services.

Creating a nursery website can be cost-effective using platforms like Squarespace or Wix, offering templates tailored for local businesses. Alternatively, invest in a website designer for a customized solution. Collaborating with copywriting agencies ensures optimized content for search engines, enhancing your online visibility. Additionally, consider setting up a professional business email for streamlined communication and enhanced credibility.

Final Checklist

Starting a day nursery requires careful consideration and planning. Here's a concise checklist to guide you through the process:

1. Determine your role in the nursery: Decide if you'll be actively managing the nursery or solely investing in its operation. If management is your aim, ensure you have the necessary experience and qualifications.

2. Choose the type of nursery: Decide if you'll run an independent nursery, support a community center or religious group, or join an established franchise.

3. Assess financial viability: Evaluate all costs involved, including setup expenses, branding, and operational funds. Consider securing a business loan based on your financial needs.

4. Understand regulations: Familiarize yourself with regulatory requirements, building standards, and staffing ratios. Determine the necessary facilities based on the number of children you plan to accommodate.

5. Develop a comprehensive business plan: Outline your nursery's mission, target market, staffing structure, financial projections, and revenue generation strategies.

6. Secure a suitable location: Identify buildings that meet space requirements and have the potential for essential facilities like kitchens and restrooms.

7. Establish your brand: Create a distinct brand identity through logos, messaging, and marketing materials. Utilize social media and websites to promote your nursery and engage with potential families.