To think someone MUST be profiting from private nurseries?

Nope as I said they may well have been paying themselves a salary as well however in that tax year paying a larger salary and smaller dividend would be a bit daft as far as tax efficiency goes. So if I were a shareholder in that business I would have been taking a very low wage and a huge dividend to get as much money as I could. My hunch would be they are on around 80k between dividend and salary. Which is a large income, especially compared to their low wage staff. But not large enough for the stress of a business like that with so much responsibility and regulation.

My friend's husband bought an independent nursery (as a 50:50 partnership with a friend at the beginning of the year). I was telling her that it's difficult business, saying the same thing as people here - high costs, government funding etc...but she didn't seem too worried.

She said his take home after expenses, tax etc is expected to be circa £200k according to last year's accounts.

I bet the landlord is making a killing.

Of course they are making a lot ! My SIL runs a nursery and is doing extremely well, I think that people like to assume all nurseries struggle and a lot don’t.

The government pay up to 85% of childcare costs if you’re on UC. They pay rent too for those on UC but there’s so much hatred to claimants getting seemingly huge amounts but in reality it’s going to landlords and nurseries !

My BIL’s sister runs a chain of Montessori nurseries in the South East. To say she is raking it in would be the world’s biggest understatement.

They are private businesses, so they are there to make a profit. So what they are saying, they are struggling to make a profit

to solve the problem the government needs to have lots of state owned nurseries where there is no need to turn the profit.

same with GPs btw, if they were just NHS employees and not private businesses it would have been better for everyone

Just looked up my old nursery on companies house, they have 3 nursery's in the group. 2021 they made a profit of £120k. There are three shareholders so assuming they took the whole lot out and didn't leave any in for growth or staff bonus etc. that's £40k each. I wouldn't run a stressful risky business like childcare for £40k dividend a year. Of course they may all be earning £100k on top. But in that financial year that would be daft as it was far more tax efficient to take dividends than earn through PAYE.

If they are a reasonable example. I would say they were a low return company for the stress and risk involved in running them. Must be 50 odd staff to manage, inspections, insurances, masses of H&S. Relying on low paid staff.

Nope, not for me. I'd run a mile.

I know MN hates any mention of SPAG and I will probably get called a cunt for even mentioning it (as usual) , but for some reason I can't leave it alone -

Pedal=your bike
Peddle=A myth

Sorry but I can't stop seeing it.

The school pre school is also probably offering school hours, so no need for staff to be there at the crack of dawn to set up for 7.00 drop offs, nor for staff to still be there at 6.00 for late collections. So whereas a school nursery can employ the same staff to cover the whole time they are open, a commercial nursery has to pay more staff to cover that longer day. A school nursery and a commercial nursery are chalk and cheese when it comes to staffing costs. Add in the hard cost of a private nursery to pay for premises, utilities, insurance, then add on the soft cost of consumable materials , furnishings, decor, cleaning, maintenance etc………

The bigger chains like Bright Horizons are backed by institutional investors like pension funds, so that's where the profit goes. Both of my DC have gone to my workplace nursery, which operates on a not for profit basis; so while the fees are charged at market rate, the income is invested back into the nursery and it really shows. Staff turnover is low, the staff all genuinely care about the children, and the children are happy. Childcare shouldn't run on a for-profit basis, and EYFS education should be part of the school system like in France and Scandinavian countries.

Nope - did I say ALL????

And yes, I can make a certain amount of assumptions based on professional experience and research in my area of Southern England, where small independent nurseries are struggling and closing, and the big chains are moving in using purpose built nursery buildings. Four of those in my small market town alone - even one at the end of my road - and that does not include the private nurseries attached to the three private schools also in my town.

That it doesn’t fit with your experience doesn’t mean the evidence of this model in my area should be disregarded.

Anyway, I am out of this conversation.

Quite the opposite experience for me most in my 12yrs leased hence why you can't presume. It will depend on different factors some areas will mainly own others will mainly lease.

You can't presume based just on your experience.

I always wonder about the care homes as well that seem to be closing down at a rate of knots. Given the insane amount of money they charge, one can't help wondering how they struggle so much

Not a presumption at all - I was in the industry and ran a small business from home before exploring branching out. I spoke to industry leaders when exploring operating as a local independent or as a franchisee when competing with three national chain nurseries operating in the area. All the chain nurseries own the properties. It’s the business model. It’s what hedges them from going under - they weren’t the ones closing down during the lockdowns were they? Their underlying asset continued to appreciate regardless of impact on income.

The ones run in village halls, where they hire facilities, obviously not but they are a rapidly dying business model as they can’t compete with the need to be open from 7am until 7pm (and weekends in some cases) to accommodate modern working practices.

No one “invests” in business that isn’t profitable. Not sure why some parents think private school owners shouldn’t make a profit.
Schools/nursery are expensive to operate with thin profits.

Premises, insurance, employees, payroll, rent, supplies.
How much profit would you want to make on your money running a nursery - 5%, 10% ? They need reserves in case of an emergency.
They are providing you a service and are expecting a return on investment.

(btw charity bosses roll in dough on high salaries, perks).

It’s like any other business surely?
Everyday costs : staff and additional staff costs, accountant, heating, lighting, water, rent/mortgage, insurances , advertising , cleaning etc..,
Then build in cover for staff sickness, holidays, double time if open BH etc..
Food, cleaning materials, building maintenance, maybe garden maintenance. Driveways/parking areas have to be fit for purpose and maintained.
Equip the place. Sinking fund for replacement of materials.
Contingency fund for emergencies.
Then pay the directors.
It’s not a cheap business to run.

The nursery owner I know is a very wealthy man.

Big presumption that businesses usually own, leases are also very common. Difficult to know which applies without actually knowing the ins an outs.

YADNBU. Nurseries are some of the biggest CF's going.

YANBU because in many other countries (Germany, Austria, Denmark, Sweden, Netherlands etc) nurseries provide exactly the same facilities and care for a fraction of the price. Private nurseries cost a maximum of €400 per month. That would include food and all-day care. The vast majority of nurseries have kitchens with freshly prepared hot meals every day.

Staffing is obviously an issue and full-times places slightly hard to find but on the whole, the actual cost of childcare is never an issue. It's absolutely normal for parents to get 1-2 years of paid parental leave and then put their children in nursery around 2, paying few hundred euros a month at most. Paying the equivalent of one adult's monthly salary to have someone take care of your baby for a few days a week is absolutely mind boggling tbh. The UK system is incomprehensible for many people outside the country.

So long as they break even on costs v income, they are making a killing - because the businesses usually own the property; the business services the mortgage/property repayments; the business provides a way for related interest payments to be tax deductible… if the business eventually goes bust or simply ceases trading, the company is sitting on a huge, highly marketable, property asset that has increased in value and been partially paid off via the business.

It’s a huge property development scheme. I know this as I was able to get £1m in asset funding to buy a property to run a private nursery - negotiated over the course on one afternoon of discussion (and a business proposal obviously). Covid happened so I didn’t take the money or buy the property (thank god) - but it’s all about the underlying asset.

The owners may be making a fortune, would it have always been that way?

What about in the beginning, the many years of building it up, nit taking a wage, or staff being paid more that you, what about the possible failed attempts at the business if they lost everything, loosing family time to build it up.

It isn't a sob story, it's a different way of working to being employed these fortunes can take years to build up. There is nothing stopping anyone from giving it a go.

Truth is many can't cut that way if working.