So what’s best, Buy or start a new child care. Most buyers also tend to think that buying a business would cost more than starting a brand new facility from scratch. That may be true for some other types of businesses, but it’s usually not the case when starting a brand new school or a child care center.
Most of the times, buying an existing child care or school is less risky. Here are some of the reasons to consider:
When you buy an existing child care or any school, you take over an operation that has a track record. Usually the last three years of financial statements are provided to the buyer for analysis. The buyer will also analyze the needs of the school if any, short term and intermediate goals and based on that, the buyer could make an informed decision and make predictions. A start-up business on the other hand, must rely on spreadsheets with projections that cannot be supported.
Permits and licensing
Licensing requirements and permits could create unexpected delays before opening the doors of a new facility. Although the license and most of types of accreditation are not transferable, the buyer and seller usually get into an agreement so the new owner can operate while the new license is being process.
Good employees are not easy to find. This is an important advantage when buying an existing facility; the employees are already there. The new owner will have the opportunity to keep some or all of those employees, and make any other necessary changes.
Another important consideration when opening a brand new facility is that there is no other choice but to hire teachers and other personnel before even opening the doors, without having kids enrolled.
SBA loans are available for start ups as well as business acquisitions, however it’s easier to get financing when buy an existing business. Bankers and investors generally feel more comfortable dealing with a business that already has a proven track record.
Not all established schools qualify to be financed. Schools that have been established for less than 2 years is one example.