Poised For Action: Preparing Your Education Business For Sale
Maybe selling your early education business is the last thing on your mind. Maybe it’s in the back of your mind as you watch increased investment in the industry. Or maybe it’s the first thing on your mind when you arrive Monday morning and three staff members have called in sick. Wherever you may be in your business cycle, opportunities are best acted on when you operate like a company that is poised for action.
Get your schoolhouse in order now by following a few of our tried-and-true tips below:
Keep financial statements current and accurate. Two to three years of financial history is usually requested by buyers as well as tuition schedules, enrollment by classroom, and individual payroll statistics including position, pay rate and length of service. Also, make sure to have your owner expenses (i.e. cell phone, personal auto, conferences, travel, insurance, etc.) separate so they are easily distinguishable.
Maintain a healthy expense percentage to gross revenue by setting operational expenses within industry standards (ask us about our benchmark OR attend our next THRIVE Workshop) and focusing on staff costs.
Consider the number of staff with free or reduced childcare, vacation and holiday policies, late payment and registration fees, etc. and make sure this is manageable financially. Most buyers will work hard to keep staff benefits and policies consistent the first 6-12 months, so these are crucial to tighten up before selling.
Set your tuition rates either at or slightly higher than your competition to position yourself at the top of the market. And don’t hesitate to raise tuition 3-5% each year.
Invest in maintenance and safety issue fixes and consider cosmetic changes like a fresh coat of paint or a top up of mulch. Don’t bother with major renovations and capital purchases, such as playgrounds and vehicles, as they rarely return their investment in the short run.
Consider adding supplemental or collaborative programs that bring in additional revenue like the USDA food program, a Head Start or business collaboration, or an infant or afterschool program.
Manage your turnover. Buyers want to know there is a loyal Director in place and staff is stable and able to run smoothly without your presence.
When opportunity knocks, answer!
Many aspects of selling can be rewarding — from financial incentives for yourself to growth opportunities and increased benefits for your staff. It’s always beneficial to consider your choices and cash in on any available opportunities. And the more prepared you are to take action, the more positive your experience will be!
If you want to learn more about how HINGE Advisors can support you in beginning your selling process, contact our team at info@hingeadvisors.com.