Ten Tips to Maximizing the Value of Your Child Care Business
Whether you plan to turn your child care business over to a family member some day, or plan to sell your business at some point in the
near future or are planning to personally operate your business for many years to come, you should be striving to increase the value of your business every year. Below are ten tips to start implementing:
1. Keep very organized, detailed financial information. You should have an up to date profit and loss statement and balance sheet for every year and possibly each quarter for larger centers.
2. Know your operation ratios. What percent of revenues are your salaries and wages, supply costs, rent, or mortgage cost? Your operation ratios should compare favorably to industry averages for centers similar in size to yours.
3. High labor costs are frequently one of the major financial problems in a child care business. A good rule of thumb is 45% to 50% of gross revenues.
4. Make sure your Policies and Procedures Manual is well written, and up to date.
5. Have a well written, up to date Employee Handbook.
6. A stable, motivated, high morale management team adds value as do long term teachers.
7. Diligently work toward meeting all education requirements for yourself and your employees.
8. Providing free or substantially reduced care for the children of friends, family, and employees can decrease business value. Some discounts are only fair and aid in employee retention but this should be reevaluated and monitored closely on an ongoing basis.
9. Keep your facility well maintained – interior and exterior – deferred maintenance is costly – repair /replace broken furniture, toys, worn items – a fresh coat of paint and clean, shiny floors make a good impression.
10. If your enrollment is currently 80% or less of your licensure, implement a marketing program to increase enrollment. Strive to have a long waiting list at all times.
