Plan your Childcare business - plan your exit.

Plan your Childcare business, plan your exit

You may be just starting up your Childcare business with the excitement of new projects and development of things such as the brand, systems, products and other operational detail. One detail often overlooked at this early stage is how you will exit the business when the time comes to move on.

Even before an entrepreneur starts a business, they need to know when, and how, to get out of it. Having an exit plan in place is not an indication of your lack of confidence in being a success, on the contrary, building your business with the “end in mind” will ensure you achieve the ultimate goal in business which is to sell and reap the rewards for what you have created.

You only get to sell your Childcare business once. For many it will be the largest sale they make in a lifetime, it is critical to get it right and to do this the earlier you plan it the better.

There are several ways you can exit your company: you can sell it which is the most common approach for small to medium sized business. You may pass the reins to another family member or have an employee buy-out over time.

The sad alternative to these options which we see too often is the business simply closing the doors as there has been no plan, it has not traded profitably or a buyer cannot be found for the business. This is the least financially rewarding options but also has a high emotional impact on an owner who has put their life and soul into a business, often over many years to just see the doors close.

The worst business exit strategy of all, but sadly most common, is for an owner to continue to run the business until they wake up one morning knowing they just can’t do it anymore. They start desperately seeking an exit getting a business broker in to see what the “Market Value “ is and taking whatever they can get . The outcome is usually much less than they could have achieved if they had planned the exit strategy while they still had the passion for the business. To avoid this situation a solid business plan and exit strategy is important to achieve the best possible outcome.

Key attributes of your Childcare business to achieve a smooth exit will include things such as:

Business Plan
A written business plan does not have to be a lengthy document but needs to give you the key performance indicators for your business the Goals, Vision and Action plan will lead you to successful outcomes. Without a plan is like driving without a map.

Documented operating systems
Fully documented business systems help with streamlining your business, creating efficiency and ensure staff are easily trained. Having systems that a new owner can take over and manage with a seemless transition will improve the final sale price

Make yourself redundant
If you are a key person in your business, develop systems and staff to replace you. A good test for any business owner – Can you take 4 weeks holiday and the business run without you?  If not you have more work to do on your management system!

Financial Management systems
Money is the lifeblood of your business. Having financial management systems that you understand and can report from any time, day or night is key to knowing your profitability and performance against the business plan.  Know your numbers so you can drive your business plan.

Team up with professionals
To really drive your business and achieve a good exit team up with professionals who can help guide you and how you run your business. A good team will include accountants, solicitor, business broker and financial advisors. Get them involved in your planning and use their expertise to optimise your exit from the business when the time comes.

Run your business so that if you received an irresistible offer today, you would be confident that the buyer's due diligence would unearth nothing that would cause them to withdraw it. Once or twice a year, look at your business as though you were interested in purchasing it.  When you look with buyers eyes you may be surprised with what you see and make changes that will ensure a fantastic exit when the time comes!

Linda Harley
Childcare Specialist