A bird in the hand is worth two in the bush

If you decide to not sell your childcare center now and instead decide to exit your business later…

Remember that A bird in the hand is worth two in the bush. So, … in other words, a buyer will value any changes that you make that better your business instead of giving the potential buyers the “opportunity to better the business”.

Increase Prices. The opportunity for a buyer to increase prices to the level charged by other competitors is not worth as much as if you successfully increase prices. The reason day care centers charge less then competitors is because with an increase, there is a real risk that the decrease in enrollment

Reduce Labor. Once the children in a room gets to the level for one teacher to leave, have that teacher leave. Do not have them on the clock for another 30 minutes. This can cut labor expenses.

Space Allocation. Once successful childcare operator I know evaluated the capacity of each room and the space allocation of each. He determined that each Georgia PreK program contributed about $20,000 each year to cover overhead expenses. He was to able to inexpensively reconfigure his space to fit one more Georgia PK into his facility without effecting the effective capacity of the other rooms.

Playground. If putting down wood chips costs $1,000 per year, and can increase enrollment by one child, it is worth it.

Improve the Center’s Initial Impression. Some of the items that create a negative first impression by a buyer are: the ceiling and walls are covered by old tape used to put up children art, paint rooms, and center has a lingering diaper smell. This could involve inexpensive things.

Financial record is poor conditions. Clean financial statements. You may have expensed your “vacations” and your meals because your CPA told you that you could if you did a certain minimal amount of business

Increase the ability of a buyer to get a loan to buy your business. The last two years of Income tax returns are the most important to a bank To provide the most loan, banks will want to see at least two years of good

All of these action items are done with successful childcare centers where the Owner is very involved in the business.

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