The first three to five years are usually the most critical periods of early childhood education. At this stage, content development are related to mental, physical, intellectual and emotional aspects, including curiosity, the formation of character, personality, cognition, language and also sociability.
This period is known as preschool. As it deals with very young children, there are a lot of details that preschool owners must pay attention every day, but there are also a lot to be considered if they are thinking of selling their preschool businesses to interested buyers.
It’s not a surprise that a preschool is a very complicated business to run, so that may be one of the key reasons why owners want to sell it. Regardless, they must know how to value their businesses if they are going to give up from it.
In the next topics you will learn exactly how to do that.
What is your Preschool business worth?
Show potential buyers how a preschool can be a profitable and rewarding business. However, like any other businesses, it is necessary to consider some strategies in order to achieve success.
While in the selling process, inform interested buyers what reputation your preschool has inside the community. Your business value is directly related to this aspect.
The first step to determine the value is to decide what will be included in the sale. You are selling the business and the customer bases already exists? Or is the preschool about to close down? The whole experience and efforts engaged in the preschool now will add value to the business, so make sure that you are charging a price for the property and all that relates to the business itself.
- What are the sales?
- What is the profit?
- What are the growth trends?
- What is driving new sales and is that sustainable?
- What channels do new customers come from and what is the breakdown of each channel?
- What is your market position?
- Is your Location favorable?
- How reliant is the business on the owner?
- What systems and processes are in place to run the business?
What makes a business worth more?
Before setting your asking price, you also must take into account some important factors such as competitiveness, staff, curriculum and educational programs.
For example, if the school has a curriculum or unique educational program, its value will higher than a school without these attributes, credentials and accolades collected over the years.
Having a team trained in additional courses of health and safety also values the business.
- Predictable key drivers of new sales
- Stable or growing traffic from diversified sources
- Established suppliers of inventory with backup suppliers in place
- Traffic stats
- High percentage of repeat visitors and repeat sales
- Clean legal history
- Brand with trademark, copyright or legal concerns
- Documented systems and processes
- Growth potential
What does the average Preschool business sell for?
There has been 127 preschool sales in the last ten years in the United States. As average sales price was more than $717k in this period, with an average multiple rate at almost 4, it can be assumed that a preschool is a very profitable business, especially because profit owners usually take from the sale is almost four times higher than total gross income.
What is the most frequent deal size?
The fact above is also confirmed by most frequent deal size, as it is $500k. It means that most of preschools that have been sold in the past decade were negotiated at half million dollars, a little bit smaller than average sales price, which is normally higher as well.
Is the Preschool Market Getting Bigger?
Not exactly, but it’s not possible to say that it is getting smaller as well. As it happens in most business cases, preschool market is living a different but still very good moment for sales.
It’s true that 2015 was not the best year for preschools, as 2008 and 2013 were for example, but you are willing to sell it right now, you may get a very good deal. It all depends on how you value your business.
Are bigger businesses worth more?
Usually the bigger the preschool the higher will be its value. It is pretty much what happens in all businesses, but there are few exceptions.
But it follows a very logical way of thinking: the most owners have invested in their preschools, the higher will probably be the profit they will take from the sale, especially if they have ran the business with responsibility.
What states have the most business deals?
Are you wondering where the most deals were made throughout the country, or if your state has a hot market to sell fast? As you can see if you are located in California, Texas, New Jersey or Florida, you may get a lot more offers than if you are in Tennessee or Ohio. But sometimes you can overcome the low number of deals with investors or competitors looking to enter a specific new area, and get lucky with an offer!
Why would you sell in the first place?
The reason to sell always varies from each person. Maybe you are looking for new challenges, businesses and opportunities, or you just want to enjoy your family and retire. Although it can seem tempting to get your hard worked cash, make sure that you are clear on the motives so you don’t regret afterwards.
How long will it take to sell your business?
If you have read all the necessary steps to understand your valuation, and think you have focused on all the topics that make your company worth more, it is maybe time to start the process. Selling your business is a long-term process, and doesn’t happen overnight. Usually companies sell in 12 months, but you can also see deals getting closed in 6 to 9 months depending on the opportunity.
What is the process of selling your business?
This step by step process will help you get less confused when you make sure you are ready and confident to let go of your business, and perform a nice and positive sell. Many entrepreneurs forget about a step, or just don’t have the right guidance to know all the stages necessary and get lost through the process. Don’t forget to go through all of these, and if you have any questions, comment at the end of the article or contact us for more help.
Who will buy your business?
If you are wondering about the buyers that can be interested in your Preschool, don’t worry, there are many options and possibilities. From First Time entrepreneurs, to businessmen interested in new opportunities, the chances are that in the preschool industry it may likely be a person who already had a store in the field.
There has been 127 preschool sales in the past ten years in the United States, and they were estimated in more than $700k, with almost four times more profit than what they had in gross income.
If you know how to value your business you may get a very good deal, close to most frequent deal size, set at $500k.
If you want to start accelerating your buyout process, fill out our free valuation form and get your business valued today! Leave your comments on any doubts or feedback, we are glad to hear your thoughts.