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Most business owners have a large portion of their net worth tied up in their business. The same is true for the owners of child care businesses. It is estimated that their business represents 50% to 80% of their net worth. Child Care owners are often planning to fund a substantial portion of their retirement from the proceeds of selling their child care business. Therefore, understanding the current value of their child care business is an important part of business exit planning. Learning Objectives The primary objective is of this learning module is to gain a better understanding of what makes a child care business more or less valuable. And the basic steps to calculating a price range for your child care business. Content: Business Valuation and Analysis 1. Personal Wealth and Child Care Business Value 2. Survey Indications and Statics 3. Why Buyer Buy Child Care Businesses 4. Level and Risk and Impact on Child Care Business Value 5. Business Reliance on Owner vs. Management Team and Impact on Value 6. Child Care Business Transfer Success Rates – Positive Impact of Planning 7. How Child Care Businesses are Valued 8. Steps to Valuing a Child Care Business 9. Increasing the Value of a Child Care Business 10. What Increases and Decreases Child Care Business Valuation Multiples

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COVID-19 has disturbed many things in the Child Care Industry.  As child care owners begin to recover from being closed and lower enrollments, many are starting to refocus on the future. Before COVID-19, many child care owners had their Exit Strategy in place and looked forward to the day they planned to retire. Now, child care owners are asking, “What adjustments do I need to make to my Exit Strategy?” Most wonder how much their child care business is worth and how long it will take to rebuild their business and its value.

Although there is an increased interest in Exit Planning due to COVID-19, Child Care Owners should always be involved in the strategic planning of their exit from their child care business. This Exit Planning Roadmap will provide in-depth information, actionable steps, and guidance to help you prepare for your exit from your child care business and, equally importantly, prepare for life after exiting your business.

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Open to access this content

Most business owners have a large portion of their net worth tied up in their business. The same is true for the owners of child care businesses. It is estimated that their business represents 50% to 80% of their net worth. Child Care owners are often planning to fund a substantial portion of their retirement from the proceeds of selling their child care business. Therefore, understanding the current value of their child care business is an important part of implementing changes designed to increase its value.

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No child care business owner wants to consider or discuss the likelihood of a recession. However, good and bad economic times are part of normal economic cycles. Not counting the steep but very brief economic downturn during the COVID pandemic, the last recession in the U.S. was from December 2007 to June 2009 – often referred to as the “Great Recession.” Like most economic downturns that last 18 months to two years, the Great recession lasted about 18 months. The severity, not the length of the Great Recession, caused substantial disruption and loss for individuals and most businesses.  The child care industry experienced low enrollments and financial loss due to low enrollments and parents’ high unemployment. At this point, few economists predict the next recession will be as bad as the Great Recession. Given the current state of the childcare industry is much different than in 2007, the impact of the next recession on the childcare industry may be quite different than previous recessions. No one can predict with 100% certainty. However, preparing your child care business for a recession can make all the difference. As we like to say, “Be Optimistic But Be Prepared.”

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The balance sheet is a fundamental financial statement that provides a snapshot of a childcare business's financial position at a specific time. It outlines the company's assets, liabilities, and shareholders' equity, offering valuable insights into the business's financial health and stability. Understanding the balance sheet is crucial for childcare business owners and managers to make informed business and financial decisions.