Childcare is an ongoing and increasingly costly challenge for parents. A nursery or childcare business can be a lifeline and, fortunately for you, it can come in many forms – more on that later.
Jump straight to the relevant section or read on for the full details on starting a day nursery business.
- Why start a day nursery business?
- Daycare and nursery growth trends
- Business opportunities for day nurseries
- Who else has started a day nursery business?
- Small business owner opinion
Statista figures show that full-time care, measured as being 50 hours a week, ranged from £285.31 a week for under twos in Great Britain, to £117.60 for three to four-year olds in England.
Childcare in Inner London, as you’d expect, was a lot more expensive than the rest of the country, with a part-time nursery place for under twos having a weekly cost of just over £199 a week, compared with £118.40 in Scotland.
On top of all of that, the government is rolling out its new childcare scheme for two-year-olds in England from April 2024 so this could be an ideal opportunity to start, especially if there aren’t many childcare providers in your area.
Why is starting a day nursery business a good idea?
Running a nursery is infinitely rewarding – and they are in high demand. In December 2023, Statista found that the number of childcare places provided by registered providers was sitting at 1.27 million. Meanwhile, the number of registered childminders in England was at 27,877 as of 2023. At the same time the average weekly cost of 25 hours of nursery care in Great Britain amounted to £148.63 a week for under twos, £144.01 for two-year-olds, and, in England, around £59.83 a week for three to four-year olds.
There is absolutely room for a more affordable alternative if you can fund it.
You will need to be prepared with the right documentation and qualifications. If you’re just running the business side, then you don’t need any childcare-specific documentation. Your staff will need to be fully qualified though. Ask them to do a DBS check and ask them to fill out a health form to outline any health conditions they may have. At least half of your staff should hold a level 2 Childcare qualification or higher.
Also be aware of different types of insurance you need: public liability, employers’ liability and professional indemnity. Business interruption insurance could very well get you out of a bind if you’re forced to close for a period of time due to a leak, for example.
Take note of the minimum staffing requirements.
0-2 year olds: one member of staff for every three children; 2-3 years old: one member of staff for every four children; 3-7 year olds: one member of staff for every eight children.
0-2 years old: 3.5 square metres per child, 2-3 years old: 2.5 square meters per child, 3-7 years: 2.3 square metres per child.
One final consideration – think about the needs of children and parents (things like free parking) when choosing a premises.
Day nursery growth trends
The government’s Department for Education says that 52 per cent of childcare places come from private group-based providers, followed by 22 per cent of school-based providers, 14 per cent by voluntary group-based providers and 12 per cent by childminders.
While the number of providers fell by 7 per cent between 2022 and 2023, the number of places only decreased by 2 per cent, according to figures from the House of Lords Library.
Flexibility is going to be essential in a hybrid working world where parents may only need your services on certain days of the week. As the cost-of-living crisis presses on, it’s still essential to provide affordable services, even alongside government provision.
The National Day Nurseries Association has found that for each child that is promised 15 hours of free childcare a week, the average nursery is underfunded by £2.31 per hour (or £1,317 per year)
Digital childcare is on the up and is going to be central in early years education. This could be in the form of web-based communications to help parents and carers understand what goes on at a nursery, virtual tours to show them around before they enrol their children, and digital security systems to put parents and carers at ease.
It’s also becoming more and more important to understand the needs of the parents/carers as well as the children. What is their typical parenting style, what are their values and what do the parent/carer’s working patterns look like?
What day nursery businesses can I start?
As we’ve mentioned, there are a few different avenues for daycare and related businesses.
First of all, childminding. This means you’d be a registered self-employed childcare professional and you can look after children in your own home. Anybody who lives with you or regularly works with you will need a Disclosure and Barring Service (DBS) check. This includes your partner, cleaner, housemates, lodgers and children over the age of 16.
The next step is to childproof your gaff. Depending on the age of the children you’re looking after, this could mean gates at the top and bottom of the stairs, keeping anything hazardous out of reach and putting child locks on cupboard doors. Register with Ofsted as a childminder if you’ll be looking after children for two or more hours a day who are up to the age of eight in your home or someone else’s home. You can register with a childminding agency if you’d rather.
On premise daycare is as it sounds. They tend to be open during business hours and cater to children between three months and five years. Some can be open to support parents who work outside regular business hours too, so take a look at the competition in the area and see if there’s a gap in demand that you can fill. Family.co has a list of grants that you can apply for.
If you’d prefer to go down the au pair/nanny route, you’ll be employed by parents or carers to care for children in the children’s own home. Responsibilities can include cooking, cleaning and taking the children on day trips. Au pairs must be aged 18-30 and you’ll be expected to do light housework and will be covered with room and board with some extra money.
Breakfast and after-school care – again, fairly self-explanatory. You’ll be providing care and support for children before and/or after school. If your out-of-school club is for children who are eight or younger, you’ll need to apply to Ofsted, though you still can apply if the children are nine and older. From there, decide which activities you want to provide at the out-of-school club such as sport, crafts or coding lessons.
Who has started a day nursery business?
Koru Kids is a nanny share platform where you can arrange long-term care or short-term care. Founder Rachel Carrell – a former health technology specialist – hails from New Zealand and now resides in North London. It was once she and her friends started having children that she realised how difficult childcare was, with friends unable to return to work or forced to make career choices they didn’t want to make: “Common options like nursery just don’t work for lots of families – either it’s not as individually attentive as you hoped for or you just missed the boat and didn’t get your name down prior to conception!” she said on the website. That’s what inspired her to create Koru Kids.
Bubble is an on-demand childcare platform for short and long-term care.
Marvellous Babysitting is a platform for short-term, flexible childcare provided by nannies trained in the prestigious Norland Place, London. Students study for a BA (Hons) in Early Year Development and Learning along with the Norland Diploma.
AI-powered childcare matchmaker, myTamarin, provides live-in, live out, short and long-term nannies. The business is named after Tamarin monkeys who parent in groups. Founder and CEO, Zarja Cibej, found that childcare was all about the children – and there was nothing to be said about her as an individual. The aim of myTamarin is to support parents and carers in the early stages of parenthood.
Small business owner opinion
We spoke to Assaf Ben Ezra, co-founder of Keren’s Nursery. The nursery was founded in 2004 and now has four branches in prime London locations, caring for up to 260 children in Hampstead Garden Suburb, Belsize Park, Holland Park and Wimbledon.
“The childcare business is hard work but extremely rewarding. Giving children the opportunity to grow into confident, independent and curious children is our passion. Due to the ever-rising demand for high quality childcare as parents are encouraged to return to work, now is an excellent time to open new nurseries.
“Our staff should have at least a Level 3 qualification in childcare, and they must be able to pass identity checks to obtain an Enhanced Disclosure and Barring check in order to join our team. We offer a supportive mentoring programme when staff join us, together with offering staff opportunities to develop professionally, such as studying to be a forest school leader or a special educational needs co-ordinator.
“Working with children is a highly responsible job as we mould the citizens of the future, it can be physically challenging and demanding but this is more than balanced by the privilege of seeing the joy and wonder on the children’s faces as they are introduced to new experiences.
“We face tremendous staffing challenges as working in education has become a less popular career choice as more opportunities for flexible and home working are available post pandemic.
“The new childcare scheme for extending financial support to all parents of two-year-old children from April has caused a great deal of questions from existing parents, and a high volume of enquiries from prospective parents. As a provider we are still waiting for instructions from Local Authorities as to how the system will work so we are unable to answer parents’ questions. However, it is clear that we will not be able to meet demand.
“Whilst running a daycare business is complicated and challenging, it is a uniquely rewarding experience. We are privileged to have supported generations of families through their child’s early years and supported them to make successful transitions to their next schools.”