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How to set up a nursery

Working parents need someone to take care of their pre-school children. Nurseries provide that care.

Running a nursery may not be for everyone. Children are demanding, so are their parents – and so are the rules and regulations that you must work to. But if you have patience and a passion for working with children, running a nursery could be a rewarding business for you.

“I come from a large family, and looking after young children seems to have come naturally to me. So a nursery was the natural choice for a business.”

What qualifications do you need to open a nursery?

You don’t need to have any childcare or nursery qualifications to open a nursery, as long as your staff meet the criteria set down by the government and maintained by local authorities.

However, if you plan on managing the nursery yourself and being involved in its everyday running, you will need childcare qualifications and experience. The manager of a nursery must have at least two years experience as a qualified nursery nurse, 1-2 years experience in a supervisory role, and a relevant nursery qualification.

Everyone who works for you must be ‘suitable’ to look after children. That means they’ll have had the appropriate police checks. At least half of your staff will need to hold a minimum level 2 qualification for a day-care setting.

“There is much more to looking after children than following an instinct. I got the qualifications I needed at the start of my career. Setting up a business was the next step.

What profits can you make?

There are profits to be made from running a nursery, but you will need to work hard to make real money.

To work out how much profit you could make, first check how much other nurseries in your area charge. Then work out how many children you will have in your care and how much they will be paying.

The numbers in your care can fluctuate throughout the year, and you are likely to have fewer children at the start of the school year in September. All 3 and 4-year olds are eligible for up to 30 hours a week free childcare. You’ll get a payment from the government to cover this at a rate of £4.30. But this does not have to cover snacks and meals, or activities like trips out.

Some of the costs involved will include:

  • Staff costs
  • Rent - or the cost of buying your premises
  • Utilities - water and electricity
  • Cleaning 
  • Insurance
  • Toys and craft materials
  • Your salary.

Make sure that the income you expect to make is higher than the total costs – and allow a margin for unexpected expenses.

“You won’t get rich running a nursery, although, if you love children you may very well love operating a nursery business.”

Finding the staff you need

The number of staff you need to employ will depend on the number of children you have in your care. The National Standards for Day Care and Childminding regulations (2003) demand:

  • For children aged up to 2 years: 1 member of staff for every three children
  • Children aged 2-3 years: 1 member of staff for every four children
  • Children aged from 3-7 years: 1 member of staff for every eight children

You can advertise for staff in your local paper or on a dedicated website for nursery staff. You should then use the government's early years qualifications tool to check if someone’s qualifications allow them to work in an early years setting.

All members of staff will need to undertake full Health and Safety training and induction in Child Protection procedure within a week of starting working for you.

If you’re preparing food or drinks for the children you’ll also need to pay very close attention to food safety. You are obliged to have a written food safety management system in place. This could include such things as monitoring and recording fridge and freezer temperatures daily as well as ensuring that any staff who handle food have the full training to avoid contamination and deliver food safety.

As the manager, you will be responsible for developing and maintaining your nursery’s food safety management system, so you will need to have the appropriate training yourself.

“Cleanliness is essential. You don’t want a nursery full of young children with bad tummies. Getting the proper training can really help.”

Finding premises

It is feasible to set up in your own home if you have the room. You’ll need to apply for planning permission, and if local residents aren’t keen, the permission may not be granted. However, in practice, your home is unlikely to be the most suitable option. You will need plenty of space, and some special facilities. The National Standards for Day Care and Childminding regulations state that you need to provide at least one hand wash-basin with hot and cold water for every ten children over the age of 2 years old.

Need help with the costs of setting up a nursery? at Rangewell we have specialists in the sector who can provide the help you need

You may need to look at potential premises in your area and location should come first. You need to ask if the proposed venue is conveniently near to plenty of family homes which could provide your customer base. Look to ensure that there is easy parking for staff and for parents to drop off and pick up. Is it close to a bus route? Some children will be dropped off on the way to work - or by parents already on a school run for older children.

Is there safe outside space? And is there enough space for your projected numbers?  Guidelines require:

  • Up to 2 years old: 3.5 square metres per child
  • Aged 2-3 years: 2.5 square metres per child
  • Aged from 3-7 years: 2.3 square metres per child

Remember, your premises must be ‘safe and secure’. You will need secure doors as well as fire escape provisions.  

“You can’t run a nursery just anywhere. Mothers want to bring their little ones to somewhere that looks clean and bright, is safe and, above all, fun. Open space if you can get it - but plenty of space is a must.”

Registering your nursery

You will need to register your nursery business and, to be approved, you need to meet national standards. You must be aged 18 years or older and have the right to work in the UK. You must also undergo a Disclosure and Barring Services (DBS) check. Bear in mind that you can apply as an individual or as an organisation.

If you care for children aged under three years old, you’ll need to apply for the Early Years Register. If you only have children older than three years old, apply for the Childcare Register.

The cost of registration depends on the type of childcare you offer and whether you are applying for the Early Years Register, The Childcare Register or both. The maximum cost to apply for both is currently £220, although this figure could change.

Insurance

No matter how well-trained your staff are and how strictly you follow health and safety procedures, things can go wrong. The costs could be ruinous – you must have insurance to help you manage the costs and protect your livelihood.

You will need several different types of cover:

  • Employer’s liability - this is a legal essential if you employ staff. It pays your legal fees if a member of the team is hurt or their property damaged
  • Public liability - this will pay your legal costs in the event of injury to a member of the public including the children you look after
  • Commercial property insurance - this covers your premises against fire, flood or theft and should include your contents too
  • Loss of Registration insurance and Business interruption insurance - this pays out if your business is forced to close for a period of time, for any reason
  • Personal Accident cover - if your business relies on you, personal accident cover will ensure you’ll be compensated if you have an accident and can’t work

“Nobody expects things to go wrong, but they can, and do, and you can be in trouble if you don't have the cover you need.”

What about the costs?

The set-up costs to start a nursery can vary, but it's worth remembering that all costs are likely to be higher in a busy city area than they are in a rural location.  

Equipment will also need to be paid for. Younger children may need beds. Older children will need a large variety of toys to keep them occupied. 

There are high costs to deal with, and profits may not be spectacular - but because the nursery business is always in demand, it can be relatively easy to get the funding you need. A call to Rangewell might be the first step to arranging it 

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