Taking over a nursery business

pigginsexy

Hi,

I wonder if someone can help. I am looking at taking over my sons nursery. However i dont know how to go about it or who to turn to.

Basically to cut a long story short, the nursery owners have upped and left with all us parents advanced payments for may. They had not paid the staff for April either.

I know it will take 6-8 weeks to get registered and get the previous owners off the registration but what else do i have to do/see etc.

I have £40,000 in savings which i am willing to use for the business until it is back on its feet etc. How do i go about this, can i just start up or what.

Anyones help would be much appreciated.

Thanks

Pennywise

The first person I'd be seeing before I did anything was a solicitor. You need to be absolutely clear about the legal aspects of what you are proposing. What right do you have to take over the premises/lease, equipment, customer base, employees? What liabilities are you taking on - i.e. outstanding wages and holiday entitlements to staff, lease on property, leases or loans on equipment, etc. You don't want to end up being out of pocket by taking on someone else's liabilities and don't want to risk being sued for taking the previous owners' business, equipment, goodwill etc. At the very least, you need to be making it absolutely clear to everyone involved that you are not taking over the business - you are starting a new business, so basically, liabilities for unpaid wages, advance fees, leases, etc remain with the old owners and not yourself. You need to enter into a new agreement to rent the premises and you need to be providing the equipment etc yourself. If you use the equipment owned by the previous owners, it could be regarded as theft. The old business is separate and has to be regarded as such. Staff and parents are owed money by the old business, not you, and should be taking their own legal advice to recover their losses from the owners. Why should you adopt responsibility for wages and advance fees - you'll be starting your own business in negative finances from day one and you don't need to. The receivers/liquidators/official receiver of the old business will want to recover assets to pay off debts, which means they'll want to sell the business and its assets - you can't just take them yourself!

Then you need to be taking advice as to the finances. You have to be doing forecasts and budgets to make sure that it is viable. Otherwise you risk blowing all your money for nothing. How do you know it is a viable profitable business? Doesn't sound as if the previous owners were successful if they just gave it up and ran! I am the accountant for a nursery and they are always struggling to keep up with wages increases, power and food increases, they barely make a living.

You'll have to contact the local authority - there will be rules and regulations as to staffing and ownership to adhere to - if you intend to work there, you'll need to be CRB checked and no doubt need childcare qualification as well as food hygiene and health & safety. Likewise if the local authority are paying for free child places etc., you'll have to apply through the proper channels.

So, basically, to start with, talk to a solicitor and talk to your local authority, then if you are legally able to take over the business, you need to be taking an accountants' advice as to whether to be a sole trader, partnership or limited company and to learn about employers PAYE & wages, VAT, taxation, etc. Business Link will probably also be worthwhile talking to. None of this is going to happen quickly - you're not going to be able to walk in and take over the nursery on Monday morning - it could take several weeks. Presumably the existing staff/manager will have already contacted the local authority to advise them of the situation - they may well take control in the interim.

Savvy_Sue

No argument with any of that, except that childcare facilities such as nurseries are now registered with Ofsted, not the local authority. So it would be worth talking to them.

pigginsexy

Thanks Pennywise. I have already started the process with the CSSIW, who are the regulators in Wales. I am not taking over the business as such. The staff have agreed to work for us and we will not be running it to take a profit. The idea is continuity for our children and the carers pay. Any money left over is to pay for the rent/heat/food etc. We have spoken to the Landlord and he does not have a problem with us having the premises.

We have all agreed (us parents and staff), parents are out of pocket by one months fees and the staff are out of pocket by one months wages. So we have agreed that we would be running at a loss for the first month (i.e we have already paid out and they are already one month wages behind). So by the time 1st june comes, they will have May's wages (i.e our June's fees). we will always be running one month behind, but eventually we will catch up. Any money left over after paying rent etc and salaries will be put back into the business for other things, like day trips out (hire of coaches etc and entrance fees). Obviously this is in a good couple of months time.

The CSSIW said that us parents dont need to be registered or CRB checked as we are only entering the premises to drop off our children and pick them up. We could start without these checks etc and start the process of the checks once we have started trading. The only reason the CSSIW have said it will take 6-8 weeks is we have to get the previous owners off the registration. The manager who is currently registered as well will be staying on to manage it. I dont have a clue about nursery management. Im an Office Manager and do all our accounts/paye etc as well, so can manage this part, but when it comes to everything else, forget it.

The other possiblity is to just start up a new nursery but in the same premises. How long would do you think this would take? As i said the Manager is already registered and all the staff are already CRB checked, so i would imagine it probably would not take as long as the other (above option).

Also does anyone know of any funding/grants we could possibly get to buy equipment etc. As you said using the other equipment is theft unless we approach them and buy it off them. I suppose approaching them to buy would be a good option, coz we could perhaps try to haggle and offset what they owe us and the staff?!?!

Your help is much appreciated

Savvy_Sue

Even if staff are currently CRB checked, if they start working for a new employer (ie you) then fresh checks must be carried out. That may take a few weeks.

Common sense says that there shouldn't be a problem, but you shouldn't be able to see the results of the previous checks: these were done for the previous employer and shouldn't be kept for more than 6 months.

The employees may have a copy of these checks, but that's not enough.

Even if you work through the period while you're applying for fresh checks, factor in the cost of a new CRB for each member of staff (I think it's £36 atm).

pigginsexy

Savvy_Sue wrote: »

Even if staff are currently CRB checked, if they start working for a new employer (ie you) then fresh checks must be carried out. That may take a few weeks.

Common sense says that there shouldn't be a problem, but you shouldn't be able to see the results of the previous checks: these were done for the previous employer and shouldn't be kept for more than 6 months.

The employees may have a copy of these checks, but that's not enough.

Even if you work through the period while you're applying for fresh checks, factor in the cost of a new CRB for each member of staff (I think it's £36 atm).

I didnt realise that you had to have new checks. How often do these have to be done? I thought it would be once!

I am really looking forward to this new venture. Its completely different for me and the other parents and we cannot wait to get stuck in and see some results.

I have really appreciated your help, thank you

Savvy_Sue

pigginsexy wrote: »

I didnt realise that you had to have new checks. How often do these have to be done? I thought it would be once!

How often? That's a good question. I've heard that in some situations they are carried out every SIX MONTHS, but I think most authorities would agree that is OTT. At work we are repeating checks first carried out 3 years ago, but we're not in a formal childcare setting. I don't know how often teachers have them repeated.

You have to remember that a CRB check is only as good as the day it is issued.

Next time you need to count sheep, have a look at the CRB website instead! BTW, you won't be able to apply yourselves to get the checks carried out, you will have to use an Umbrella Body. Shop around: some charge an additional fee (not unreasonably because they are doing some work for you and have very serious responsibilities!) but it varies!