How to start a day nursery

Without doubt, the biggest challenge currently facing UK nurseries is recruitment. Shortages of passionate, qualified early years professionals have forced many providers to close. Between 2021 and 2022, the number of childcare companies in the UK dropped by 4,000.

Thankfully, government subsidies will help to ease pressure on businesses this year. From September, the average hourly rate paid to providers will increase by 30% to around £8 per hour. This is to support Whitehall’s goal of offering 30 hours of free childcare support per week for toddlers by 2025.

The support is lightweight. Combined with rising energy bills and a poor economy, it’s an uncertain time to start a day nursery. But it’s also a golden opportunity if done right.

Demand for the service remains has never been higher, and savvy business-starters who can offer an affordable provision to parents will hit the jackpot. By example, childminder startup, Tiney.co has experienced 150% growth since 2022.

This article will give you everything you need for a nursery business plan. Read on to learn about the qualifications and experience your staff will need, how to choose a premises, and building your nursery brand.

Should you start a day nursery now?

Attitudes have changed towards working and bringing up children. According to the Institute of Fiscal studies, 78% of mothers aged 25-34 are now in employment, compared to just 50% in the 1970s.

Undoubtedly, government schemes – including free education and childcare for two year olds, and 15 or 30 free hours of childcare for three to four year olds – are helping parents to continue working through early years parenthood.

Figures also show that 69% of mothers believe that reliable childcare is their ticket back to work, with 40% believing good quality childcare is the key – even more reason why now is a great time to start a day nursery. And to start one that’ll cause waves in the community, too.

Amy Catlow is the director of publishing at a large marketing firm in London. She has two young daughters in nursery and explains to us just how valuable it is for them to attend:

It’s not just the demand for high quality care that’s changing. While starting a nursery is still heavily regulated with licenses, laws, and qualification standards, finding a premises has just become easier.

With Covid-19 laying waste to the struggling high streets, the government has accelerated its overhaul of the building use category system, enabling people to convert retail, restaurant and even office units into day nursery space without the need to apply for change of use .

So, do you have what it takes to start a nursery?

Having the right qualifications and experience

Technically, you don’t need to have any qualifications or experience to start a nursery if your intent is to run it as your business, rather than be involved in the teaching and day to day management of the nursery.

It’s always good to clue yourself up on the ins and outs of owning a business if you’re going to remain behind the scenes. However, if you do intend to get directly involved with teaching the children, there are some qualifications and experience you’ll need to have.

For example, the manager of a nursery needs to have been a nursery nurse for at least two years, have held a supervisory role for one to two years, and hold a relevant nursery qualification. Take a look at this early years career progression pathway by City and Guilds to see which route you may need to take to start and manage a day nursery.

Different types of day nursery

There are three types of day nursery.

• Private – a privately or independently owned day nursery
• Not-for-profit – a day nursery usually attached to a community centre or religious organisation
• State-funded – attached to a school

This article will focus purely on starting private and independently owned day nurseries and not-for-profit nurseries.

So what’s the difference between a private and independently owned nursery and a not-for-profit nursery?

Actually – not much. Whether you’re starting a nursery to turn a profit or to give back to the community, you’ll need to adhere to the same rules and regulations when it comes to standards.

The only difference is running a day nursery on a not-for-profit basis means all of the profits go back into the organisation that runs it – be it a religious community or community centre.

Private day nurseries run on a profit basis with shareholders being able to take dividends – just like with any other regular business.

Going out on your own or franchising

You’ll also need to decide whether you want to go out on your own or become part of a franchise. There are pros and cons to both. Let’s have a quick look:

Starting a day nursery costs

So you know whether you’re going to start a private day nursery or a community run not-for-profit nursery. But how much is it going to cost to set it all up?

Well, it’s almost impossible to tell you exactly how much a day nursery will cost to set up, as the price is dependent on so many factors, including how many children you’re planning on catering to, the size of your premises, and the equipment you’re looking to install.

Stone Eden Nursery is a franchise group and has a helpful breakdown of costs for a typical 32 place set up:

While this may seem expensive, it’s likely that you’d be able to start a nursery for much less. For example, you can choose whether or not it’s necessary to outsource marketing, or whether it’s necessary to install brand new equipment.

According to the listings on daynurseries.co.uk, you can actually purchase an up and running, profitable day nursery with 54 spaces from around £50,000.

In addition to the set up costs, you’ll need to look at on-going costs, too. This will include:

• Premises rental cost – dependent on area and square footage
• Staffing costs – the average nursery salary is around £21,000
• Utilities cost – check local council tax rates, water, and gas and electric rates
• Insurance – make sure you’re fully covered
• Cleaning – the cost of cleaners for the nursery and food preparation areas

Day nursery licenses and regulations

The regulations, licenses, and legal cover that you require for starting a day nursery differ depending on whether you’re going to be based in England, Wales, Scotland, or Northern Ireland.

But there are some core regulations that stay the same. These are:

Registering your day nursery 

No matter where you’re starting your day nursery in the UK, you’ll need to register your day nursery with your country’s specific regulator. And you must make sure that your nursery meets the standards of the Early Years Foundation Stage (EYFS) framework before you approach the relevant authority.

It’s best to take a look at the registration process for your country early on, as there’s usually some pre-registration boxes to be ticked, including DBS checks and health checks.

The regulators for the different UK countries are:

For England – this is Ofsted (Office For Standards in Education). Take a look at the Ofsted nursery registration page for more information

For Wales – this is CSSIW (Care and Social Services Inspectorate Wales). Take a look at the gov.uk page on starting a nursery in Wales for more information

For Scotland – this is the Care Inspectorate. Take a look at the Care Inspectorate nursery registration page for more information

For Northern Ireland – this is the Health and Social Services Board (HSSB). Take a look at the gov.uk page on day care registration in Northern Ireland for more information

Taking out the relevant day nursery insurance cover

You’ll also need to make sure you’re fully covered for things like public liability and sickness.

The full list includes:

• Public liability insurance – to cover the cost of possible injury or sickness happening to the public while on your premises
• Employer’s liability insurance – to cover the cost of injury and sickness happening to staff while on premises
• Professional indemnity insurance – to cover you if you give out the wrong advice to parents or children
• Commercial property insurance – to cover the your property in the event of flooding, fire, and theft

You should make sure that your insurance policies cover staff and children away from the nursery, too – in the event of a nursery trip.

It may also be a good idea to look at business interruption insurance, which will cover you if your business has to close for a certain period of time.

Food safety and hygiene

Adhering to food safety and hygiene standards is essential. If you’re responsible for managing your day nursery’s food handling and preparation, you’ll need to have qualifications as noted by the Food Standards Agency (FSA).

In fact, the FSA goes one step further in helping you to adhere to the specific requirements with its Safer food, better businesses pack for childminders. It’ll tell you all about the necessary hygiene regulations needed for storing, cooking, and chilling food in a day nursery context.

Health and safety requirements

There are strict health and safety requirements that you’ll need to adhere to, too. And you’ll need to put a health and safety policy in place to demonstrate how you’ll conduct things like:

• Risk assessments
• Fire safety and risk
• Reporting injuries
• Evacuation procedures
• Maintenance
• Storing and handling hazardous substances

Staffing regulations

There are some pretty strict regulations that you need to follow when it comes to staffing. Not only does there need to be a certain number of staff present per child, there also needs to be a specific number of staff with specific qualifications. Here’s what we know:

Finding a day nursery premises

So you know roughly how many places you plan to offer. Now it’s time to consider your day nursery premises.

As it happens, there are some strict rules around that, too. Here are the square metres of space you’re required to have per child according to age.

While the government has undoubtedly made it easier for prospective day nursery owners to find and convert an existing building, there is a checklist that you should follow when looking for the right property. 

When choosing a day nursery building, consider the following:

• Is it in an area that covers your target market (are there plenty of family homes or lots of schools)?
• Is there a demand for another nursery? Are existing nurseries in the area full?
• Is the nursery going to be attached to a community centre or religious community and will it be nearby?
• Is there parking outside or nearby?
• What are the transport links like?
• Does it offer reasonable outside space for a playground?
• Is it in a safe neighbourhood?
• Is there the potential to install all the necessary facilities, including toilets and changing rooms

Once you’ve found a building that fits the bill, consider consulting an early years architect to see how much it’ll cost to convert it into a day nursery. You’ll then have a better idea of how much you’ll need to borrow from a lender.

Coming up with a business plan

So now you know how much you need to consider before you can even start planning your day nursery business. If you fit the bill, or you’re prepared to do what it takes to fit the bill, now’s the time to create an in-depth business plan.

A business plan will help you to stay on track, remain in budget, and secure that all important funding.

It’s worth spending time on your business plan – a few notes on a piece of paper really won’t suffice. It’s good to walk into a business loan meeting with an entire folder of information so you can really instil confidence in your prospective lender.

To learn more about what a business plan should include, check out the Startups guide to creating a business plan.

Building your day nursery brand

Branding is more than just a logo and a colour scheme. It’s how you want to project your business to your audience. From the way you communicate with parents to choosing your preferred teaching methods, your branding must embody your entire business.

To build a brand from scratch is hard. It’s best to sit down with a branding consultant, who’ll be able to turn your vision into something real. You’ll then be able to emulate your branding across your communications, website, building, uniform, and policies.

Once you have your brand, it’s time to build brand awareness – that’s where social media and websites come in handy. There are, however, rules and regulations around posting images featuring the children that attend your day nursery online.

These include:

• You must get permission from the parent to take a picture of the child
• You can’t name the child on your social media or website
• You must communicate a clear policy with the parents – eg. no tagging on Facebook

According to marketing experts, social media is an essential tool to building a community. If you can get people having positive public discussions about your day nursery, it’ll undoubtedly have a good impact on the demand for your spaces.

Creating a day nursery website

Creating a day nursery website can be as cheap or as expensive as you wish, with website builders including Squarespace and Wix offering attractive local business templates for as little as £15/month. All you need is high resolution images of your nursery and quality content.

Alternatively, you can work with a website designer, who’ll create your day nursery website for you. Website designers can be expensive but are a good option if you don’t have much free time or don’t feel comfortable enough creating your own.

Often, a website designer will work with copywriting agencies, meaning you won’t need to worry about creating your own content. And all of the content will be optimised for search engines, so you’ll have a better chance of ranking higher on Google.

Check out our page on creating a business website for more information. You might also want to create a business email while you’re at it, this can help with communication and is a strong trust signal.

Starting a day nursery: the checklist

So there you have it. It’s safe to say that a day nursery isn’t the easiest of businesses to start but there are shortcuts in the forms of buying an existing nursery or approaching a franchise group. 

To recap, here’s a list of the steps you’ll need to take when thinking about starting a day nursery:

1. Decide on whether you’re running a day nursery as a business or whether you want to be involved in the day-to-day management. If you want to be involved in the day-to-day management, you’ll need to have nursery experience and qualifications.
2. Decide on the type of day nursery you’re looking to start. Are you starting one to help fund a local community centre or religious group? Do you want to be completely independent, or would you rather become part of an established brand (franchisee)?
3. Look at all the costs involved to see whether it’s financially viable – that’ll give you an idea of the kind of business loan you’re looking at, too. Don’t forget that in addition to set up costs, and brand establishment, you’ll need cash in the bank for salaries.
4. Take a look at the rules and regulations involved. That’ll give you an idea of the type of building you’re going to need and the level of work that may need to be carried out on it. Work out how many staff members you need for the number of places offered.
5. Come up with a business plan that covers everything you’ve had to consider so far, including justifying the need for the nursery, why you’re qualified to start one, how many places you want to give, staff costs, and how you’re going to make money.
6. Once you’ve secured financial investment, take a look at suitable buildings within your desired area. Make sure they have the required square footage, and the potential to install essentials like a kitchen, toilet, and changing space.
7. Build a brand and start creating conversation around your day nursery. Get on social media, build a website, and start spreading the reasons why parents should be entrusting their children into your care.