Child Care Owner

Using Your Brain to Keep Cool Under Pressure

Holly Elissa Bruno — Fri, 11 Feb 2011 04:01:11 +0000

Teachers Babysitting

Holly Elissa Bruno — Sun, 23 Jan 2011 20:57:56 +0000

Preventing Negativity

Holly Elissa Bruno — Sun, 23 Jan 2011 20:56:13 +0000

Giving Employee References

Holly Elissa Bruno — Sun, 23 Jan 2011 20:41:49 +0000

Small Business Sales Pick Up

Donna Dailey — Wed, 12 Jan 2011 03:06:40 +0000

BizBuySell, the largest internet business for sale listing site reports that entrepreneurs found it easier to sell their business in 2010 but they probably sold for a lower price. The number of U.S. small businesses sold, as reported by business brokers, on online small business marketplace BizBuySell.com increased 3% in 2010 compared to a year earlier. But the median price of small businesses that sold fell 6.3%, to $150,000 from $160,000 the year prior, according to BizBuySell. Key valuation metrics also fell slightly with the average revenue multiple down 2.1% and the average cash flow multiple down 0.6%.

“In 2010, we saw more deals getting done,” said Mike Handelsman, group general manager of BizBuySell.com, in a written statement. “One of the key drivers for that growth was that business sellers were more realistic about their business valuations.”

“While access to financing for business acquisitions began to loosen up in the second half of 2010, it remains difficult for many business buyers to get the financing necessary to purchase a company,” Handelsman said.

That’s one reason small businesses sold for less in 2010, he said.

Looking forward, BizBuySell expects more small businesses to be sold in 2011 as the economy recovers and baby boomers look to cash out before retirement.

Banks loosening credit will be key to business sales picking up steam. ”It’s very simple,” said Handelsman. “When credit is more readily available, the wheels of business succession will start to turn again. Until then, we can expect a moderate recovery in the business-for-sale marketplace.”

What is the take away for child care owners? If you want to sell your child care business in 2011 it will need to be priced correctly. And, financing will remain tight so be prepared to provide some owner financing to get the deal done.

Donna S. Dailey

Solutions4ChildCare

www.solutions4childcare.com

“Helping People Buy and Sell Child Care Businesses” – If you are thinking about selling your child care business in 2011, give us a call – free initial consultation – no obligation – confidential. 336-617-3181

Maryland Child Care Demographics

ChildCareOwner — Sat, 01 Jan 2011 00:12:42 +0000

When planning a new child care business or the expansion of existing center, one of the key factors to consider is demographics. Not just general demographics but those that are specific to child care.

Here is an excellent example of child care specific demographics:

Maryland Family Network, Inc. (MFN), as operator of the Statewide Child Care Resource Network, has prepared the Child Care Demographics Maryland Report series for those interested in child care trends across the state. The series includes reports for the State, for each of Maryland’s 23 counties and the City of Baltimore.

http://www.mdchildcare.org/mdcfc/pdfs/demographics.pdf

Surviving, Thrive and Maximize

Donna Dailey — Fri, 31 Dec 2010 21:28:08 +0000

In this presentation, we look at how you, as a child care owner, can survive this economic downturn.

We’ll cover steps that you can implement in your child care business today that will make a difference to your bottom line.

This is a three part recorded presentation with workbooks for note taking and future reference. Please begin by clicking on the link to download the workbook for printing. Then, click to begin the presentation.

Survive Thrive and Maximize Part I Handout

Survive, Thrive and Maximize Part I – Presentation

Often in slow economic times, surviving until things pickup is the focus. But, in addition to being in a “survival

mode” child care owners must also take steps to position they business to not just survive but to thrive. In Part II we will cover things for you to do today to start positioning your child care business to not just survive but thrive.

Survive Thrive and Maximize Part II Handout

Survive Thrive and Maximize Part II – Presentati on

A thriving child care business should not only provide a living for the owner but also be improving in value each year. At some point, most child care businesses will be sold. It is at the point-of-sale, the child care owner should receive the monetary rewards of having developed a child care business that provides for more than just a living but a great return of their years of financial investment and time.

In Part III we will discuss the key components of business value and how you can improve the value of your child care business.

Survive Thrive and Maximize Part III Handout

Survive, Thrive and Maximize Part III Presentation

Working with Child Care Businesses – Solutions4ChildCare

Donna Dailey — Wed, 29 Dec 2010 04:44:25 +0000

Donna speaks with Kris Murray about the founding of Solutions4ChildCare and the services provided.

Topics of Discussion:

Listen to Podcast – Interview Part I

Part I

Working with child care owners to create a succession plan.
Business Enhancement Plans to help maximize the value of child care businesses.
Preparing a child care business for sale.
Structuring the business transfer to provide the best tax benefits for the child care business seller.
Effectively working with a business broker to price and market your child care business.
Key things that a new child care entrepreneur should consider prior to buying an existing child care business.
Steps to starting a child care business.
Market research to conduct while planning a new child care business.
Do the demographics support the business plan and a new child care business in the community? Do the demographics support the type child care center you would like to operate.
Lack of research and planning often results in loss of money and failure.
The basic three options for getting started – start from scratch – buy an child care center in operation – buy a franchise child care concepts.
Key considerations – your budget – demographics – what your community will support.
Owning vs. leasing real property to decrease the startup costs.
The good and bad of real property leases for child care.

Common Child Care Seller Questions

ChildCareOwner — Tue, 28 Dec 2010 03:29:36 +0000

How long will it take to sell my child care business?

It generally takes, about a year and sometimes longer to sell most child care businesses. Some child care businesses will take longer to sell, while others will sell in a shorter period of time. The sooner you have all the information needed to begin the marketing process, the shorter the time period should be. It is also important that the business be priced properly right from the start. Some sellers overprice their business thinking they can always decrease the price later. This theory often “backfires,” because buyers often refuse to look at an overpriced business. Also, it has been shown that the amount of the down payment may be the key ingredient to a quick sale. The lower the down payment the buyer has to put down, the better. A down payment of more than 30 percent of the asking price will increase the time necessary to achieve a successful sale. A reasonable down payment also tells a potential buyer that the seller has confidence in the business’s ability to make the payments and its continued success.

Why Is Seller Financing So Important To The Sale Of My Child Care Business?

Surveys have shown that a seller, demanding all cash, receives on average only about 70 percent of their asking price, while sellers who accept terms receive on average 80 percent or more of their asking price. In most cases, child care businesses that are listed for all cash do not sell. With reasonable terms, however, the chances of selling increase dramatically and the time period from listing to sale greatly decreases. Most sellers are unaware of how much interest they can receive by financing the sale of their business. In some cases it can greatly increase the amount received. And, again, it tells the buyer that the seller has enough confidence that the business can, indeed, pay for itself.

What Happens When There is a Buyer for My Child Care Business?

When a buyer is sufficiently interested in your business, he or she should, submit a written offer. An offer will usually have one or more contingencies i.e., review of your financial records, ability to obtain a new lease for the building, documentation of current and historical enrollments and or other pertinent details of the business.

At first review, you may not be pleased with a particular offer; however, it is important to look at it carefully. It may be lacking in some areas, but it might also have some pluses to seriously consider. There is an old adage that says, “The first offer is generally the best one the seller will receive.” This does not mean that you should accept the first, or any offer — just that all offers should be looked at carefully. There is no guarantee that the second, third, or fourth offer will be better than the first. If a buyer puts forth the effort to submit a written, you should take the time to read all the pages, note points of agreement and disagreement and make a counter-offer.

When you and the buyer are in agreement, both of you should work diligently to provide the lender and all advisors the information necessary to expedite the due diligence process and preparation for closing. After the completion of due diligence and removal of all contingencies the attorneys will draft the necessary documents for closing. The closing is merely a meeting where you and the buyer sign all the documents necessary to legally transfer the business. The buyer is given the keys to the business and you receive the funds for the sale of your child care business.

What Can I Do To Help Sell My Child Care Business?

A buyer will want up-to-date financial information. If you use accountants, you can work with them on making current information available. Always keeping accurate in house enrollment data and financial information is of the utmost importance. If you are using an attorney, make sure he or she is familiar with the business closing process, the child care license laws of your particular state and has the time to prepare the documents for the closing. Time is of the essence – every day that passes from the time of agreement to the closing the less likely the transaction will close. As things drag on and closing is pushed and rescheduled, buyers get nervous and “cold feet”. Do you part, be organized, provide requested information in a timely manner, and be in contact with your accountant and attorney at least every couple of days until the transaction is closed.

What Can Business Brokers Do – And, What Can’t They Do?

Business brokers are the professionals who facilitate the successful sale of businesses. It is important that you understand just what a professional business broker can do — as well as what they can’t. They can help you decide how to price your business and how to structure the sale so it makes sense for everyone — you and the buyer. They can find the right buyer for your business, work with you and the buyer in negotiating, and every step of the way until the transaction is successfully closed. They can also help the buyer in all the details of the child care business buying and new licensure process.

However, business broker is not a magician who can sell an overpriced business or unprofitable child care business. Most businesses are saleable if priced and structured properly. The amount of the down payment you are willing to accept, along with the terms of the seller financing, can greatly influence not only the ultimate selling price, but also the success of the sale itself.

Retaining a business broker to assist you with the marketing and sale of your child care business may require some time and research. Most business brokers do not specialize in the child care industry. In fact, most business brokers list and sale all kinds of businesses and thus often have little detailed knowledge of any particular type of business. Child Care businesses are certainly unique in many ways one being state regulation and licensure. Therefore, for best results you should retain a business broker that has experience selling child care businesses in your state. Finding such a business broker may not be easy depending on the state you operate in and the number of business brokers practicing in your area. However, an experience child care business broker can make the difference between selling your business for a fair price – giving it away – and not selling it at all. Should you not be able to locate a business broker that specializes in child care, at least make sure that the broker you choose has extensive experience in selling businesses and is willing to put forth the time and effort to understand your state child care laws, regulations, and transfer licensing steps.

Download – Common Child Care Seller Questions

Financial Planning for 2011

ChildCareOwner — Tue, 28 Dec 2010 00:12:18 +0000

It’s almost the New Year! If you have not already reviewed your financials for 2010 and made your child care budget for 2011, now is the time.

Please download Child Care Owner’s handy Excel Spreadsheet and input your financial information for 2009 and 2010. Once you have two years of historical financial information in a spreadsheet, it is easier to spot areas of overspending and problems. It is also easier to plan expense-by-expense for 2011.

You should input various values for your 2011 budgeted items with the focus being to provide quality child care and make a profit. Things to consider:

How much will a tuition adjustment increase annual gross revenues?
Are you getting as much reimbursement from the CACFP – Federal Food Program as you should?
Are you making or losing money with all or some fundraisers?
Is your labor costs + taxes + employee benefits within normal operating ratios? Do you have too many employees? Are your teacher/child ratios too low? Do you need to rearrange your classrooms to reduce your labor costs?
Evaluate every expense and brainstorm at least five ways to save money for every expense category.
Are you making the necessary repairs and ongoing maintenance to keep your child care facility in good condition? Deferred maintenance and repairs often cost more in the long term.
Are you spending enough time and money on marketing?