Ways to Increase the Market Value of Your Childcare Centre
So, you have decided that it is time to bring your most valuable asset, your childcare centre, to market. While there could be a myriad of reasons that brought you to this decision, it is important for you to be aware of how to maximize your centre’s value and know how to best position your centre long before selling it. As such, even if you are not considering putting your centre up for sale, it is important to know the value of your centre at all times in case the unexpected happens to avoid any loss of money or value to your centre.
Increasing Your Centre’s Profits
One of the most basic ways to increase the value of your childcare centre is to increase your centre’s profits. And the two basic ways to do that is:
- Increase revenue by adding more children or increase revenue per child,
- Reducing expenses such as labour costs and overhead expenses like credit card fees, insurance, toys etc.
The longer increased profits are shown on financial statements, the higher the value of your centre, which leads to an increase of potential buyers. In short, this means more money for you, the seller.
Getting the Most Out of Selling Your Centre
To get the most out of selling your centre:
- It should be sold to an outsider – generally speaking, they normally have the ability to pay more.
- You should document the value of the centre so potential buyers know its strengths and weaknesses.
- Have more than one potential buyer.
Documenting the Value of Your Centre
When documenting the value of your centre, here are some points that you should consider when positioning your centre:
- What makes your centre unique?
- Is there anything special about your location?
- How do you compare to your competitors?
- Your management arrangements, staff and costs;
- Your relationship with the parents of the children in your care;
- The value of your centre’s services and curriculum;
- The value of your equipment, furniture, facilities, toys etc;
- Is there room for improvement? What is the additional investment needed?
- What is the expected growth rate?
External Factors Affecting Your Centre’s Value
There are other external factors that could affect the value of your centre as well, and as a seller, you should be well aware of these factors in order to find the ideal time to sell your centre.
- Shifts in economy: Is there a recession that may negatively affect your centre?
- Shifts in demographics: Have your target demographics moved elsewhere?
- Centre maintenance: Will your centre require major renovations in the coming years?
- Other options: Is selling your centre outright the only way to go about it?
It is vital for you to be prepared and be knowledgeable about your centre’s value and the external factors that could affect those values. You need to be able to answer critical questions both verbally and in writing as potential buyers may be put off by a lack of preparation or a lack of confidence when you are positioning your centre.
If it all seems rather daunting, consider hiring professionals such as Childcare Concepts that understand the specifics of childcare centre valuations, regulations and contract negotiations to assist you. Contact us at Childcare Concepts