Considerations when opening additional locations
Now that vaccines are available for everyone over the age of 16 in America, it is only a matter of time until Corona Virus is behind us. With many states having reopened and starting to lift indoor capacity restrictions, businesses are hoping things return to normal, at least the business that survived. There is a good chance a few day care centers in your area have shut their doors for good, this could provide a great opportunity to expand your business by adding an additional location/s. When you are ready to consider expansion, make sure you have the basics in order before you start to invest your own time and money.
1. You will want to have a documented, well-organized set of SOPs (standard operating procedures). These SOPs are important for the operation of your current locations as well as future locations. Any one center can tarnish a brand name, to ensure consistency across centers, well documented procedures are a must as you begin to expand your schools.
2. You will need to decide how you want to expand. Do you want to build new facilities? Do you want to buy operating centers or schools? Do you want to buy your competition? Do you want to buy struggling centers for less money and fix them? Do you want to buy schools at the top of their game? Do you want to diversify the demographic you currently serve? Do you want to diversify so you aren’t so dependent upon a large employer in your area? These are the types of questions you need to ask yourself when searching for a new facility.
3. Have a well-organized business plan for yourself, the bankers and private equity firms who will likely fund your expansion. In addition, by aligning yourself with a strong buy-side advisor, they can help you structure your business plan as well as help identify target opportunities if you decide to pursue an existing facility.
4. Unless you can fund the project yourself, you are going to need financing. By getting pre-qualified for the financing you’ll need, this will help you realistically see what you are able to afford and ensures no surprises from the bank when you want to make an offer. Find a seasoned banker with experience in the early education industry and they will be a great asset for you through the transaction.
5. One of the most important topics of consideration when opening a new school is the labor market, know your labor market. Finding good teachers and directors is always a challenge. Make sure you have access to these people especially if you are considering building facilities from the ground up.
6. Always be prepared for changes to the economic environment. When everything is going well, it is very easy to feel like things will continue. Make sure you are measured and deliberate in your expansion plans. It’s not difficult to do when you plan ahead, but can be very difficult to do when you’re caught by surprise.
7. Assemble a team of strong professionals to help you through the process. Engage your CPA, attorney and other necessary professionals in your planning process. Determine if your CPA and attorney have experience in these matters. You will want to find a CPA and attorney with M&A experience, ideally in the early education industry. A good team is better than a good leader alone.
From all of us at SchoolWise Partners, we hope you find this information helpful and feel free to reach out with any questions. If you have plans to expand or in the early stages of planning, we are here to help! Contact us at info@schoolwisepartners.com or give us a call at 305.646.9970. We look forward to helping you achieve your financial goals.