HAVE YOU CONSIDERED BUYING A CHILDCARE BUSINESS?……………..
“More Australian families than ever are using childcare services, with nearly one million children in approved centres nationwide, a federal government report has found.
The latest Child Care Update, released on Sunday, showed more than 700,000 families were accessing childcare services in 15,000 centres.
An extra 22,400 children received child care in the year to June 2012, compared to the previous year, continuing a trend of strong growth.
Around a quarter of all Australian children aged up to 12 years were now in child care, a record amount, the report found.
“What we’re seeing is more children accessing childcare in more services than ever before in our nation’s history,” Early Childhood and Child Care Minister Kate Ellis said in a statement on Sunday.
“We’re creating a more flexible, affordable, accessible childcare system with higher quality standards and families around Australia are rightly taking advantage.”
The federal government had spent a record $20.6 billion in direct childcare assistance, and increased the rebate from 30 per cent to 50 per cent of out-of-pocket costs, she said.
Couples with children needed the flexibility and confidence to know they could go back to work without worrying they’d be priced out of the system.
But Ms Ellis said there were still problems around child care availability, with many parents unable to find a centre to take their kids.”
{Source AAP March 31, 2013 2:22PM}
Why you should buy a childcare business
- Individual childcare businesses are currently selling for 3.0 – 5 x net profit – one of the highest returns for any business.
- Childcare centre groups are selling for 5 to 6 x net profit which is getting close to Public Company sale multiple levels.
- Employee wages are relatively low compared to some other industries and usually the industry does not experience problems obtaining staff from Managers to Certificate III workers. Several HR agencies specialise in Childcare.
- In Australia over 50% of first time mothers re-enter the work force by the time their child reaches 1 year old, making childcare a necessity for the majority of parents with children under the age of 5 years.
- Government subsides – Centre’s can receive up to 80% of their fees direct from the Government. This can depend on location, size of the centre and income of parents.
- A 30 year old client, who built up a group of 19 centres (in Perth) over a period of 10 years, sold them in 2014 for $64 million.
- There are savings in numbers – once you reach around 5 centres+ – central administration can represent considerable savings in insurance, payroll, staff management, centre management (leases, marketing, advertising, cleaning, repairs & maintenance etc.).
- Administration work can also be handled from anywhere and by a team of people not necessarily associated with childcare.
- Opportunity to buy nationally outside of Perth and possibly manage from established administration base in Perth or elsewhere.
- Freehold centres are also available sometimes. Freehold can represent a saving both from a tax perspective and commercial rent. With interest rates at current record low levels the interest on a commercial loan usually works out cheaper than the equivalent in commercial rent costs. It also means any improvements to the Centre are adding to the commercial value of “your” property and not someone else’s. Opportunity for commercial gain on the property.
- Freehold ownership also means that when you want to sell your business you have far more control. You are not in the hands of a Managing Agent or landlord as to whether they will approve your buyer.
- Childcare centres are one of the few non-franchise businesses that Banks will lend on. The usual lend is 50% for a leasehold business and up to 70% of the overall cost for a Freehold centre. Links to recommended finance brokers and Bank Childcare specialists are available on my website.
- Currently many leasehold centres sell within weeks of coming on the market.
- Many other businesses can be linked, associated with Childcare.Sound secure investments.
- Finally they are sound secure investments.