Learning, Sharing, and Teaching > Entrepreneurship

Buying Existing Daycare Center

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SteadyDoinIt:
I've always heard/been told that daycare centers are printing money and are a wonderful investment, so I've done a little legwork in my area and have found two for sale.

A little background on them:

They are for sale individually or together by the same owner(s) who are motivated to sell because of a divorce. Their cash flow is roughly $110k with total revenues ~$300k and a down payment of a little more than half of revenues for each. They are both at about 90% enrollment, have 8 staff (6 ft, 2 pt) each, have directors that are willing to stick around, and have food programs. These owners are apparently absentee and still pick up a great paycheck. For all intents and purposes, these look like successful businesses from a layperson's point of view.

Before I get my head too involved in the possibilities, who has some background knowledge on these businesses? What are the potential headaches? Would more or less involvement increase cash flow at all? The biggest question: is there something that I'm missing here?

I'd love for any feedback and will check back to respond individually to whoever takes some time to shed light.

Thanks guys!

Shieldmaiden:
I'm afraid I can't be much help, but perhaps someone in the mini-mustachians sub thread can help shed light on this? There has to be at least a few mustachians who work in a daycare that watch that subforum.

LessIsLess:
Obviously make sure the numbers add up. 

Day care is quite sensitive to the economy, so when employment is good like right now, more parents have jobs.  But when the economy turns, parents stay home to watch their kids.  Not only that, they watch other people's kids, too.

If you want to buy, see if the owner would offer more owner financing so you won't be out a large chunk of cash.  At the same time, if you do have a chunk of cash, you may be able to negotiate a decent deal since it's a somewhat "distress sale."

FuzzyRunner:
I would check with your local daycare laws and see if you are going to want to maintain what is needed to stay up and running.  I have looked into starting daycare in my area and the local laws are ridiculous.  Luckily you probably have everything set up the way you need but every year you'll probably need to re-up your certifications, etc. every year.  You'll also want to make sure you're willing to keep up with the paperwork and reporting needed to maintain your certifications (eating schedules, medication documentation, etc.)

Check the businesses current policies and see if you are ok with keeping them or only changing them a little.  How are payments made, at what time, deposits needed, etc.  Big changes in how the business is run can lose customers. 

Have you checked reviews (google, yelp, etc.) on the current business?  Any staff members that aren't getting good reviews?

HipGnosis:
I read somewhere to be leery of sellers numbers.  Of most anything.

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