How much does it cost to set up a nursery?

Researching the costs

You should start your nursery budget with a minimum of £40,000 – £55,000.

Below we will be working out a more accurate estimate of how much it will cost you to start up.

Download this start-up costs budget to begin.  Each section here responds to a section in the start up budget, whereby, you can add your predicted expenses.

Start-Up Budget

The cost of opening your nursery:

Staff and recruitment nursery staff

£20,000 – £22,500

  • Recruitment costs:
    • This can be done mostly for free.
    • You can advertise your job role on websites like Indeed, The Job Centre, Daynurseries, Childcare.co.uk, Reed.  These sites also allow you to pay to advertise to more people.  However, I would only use this if you are struggling to find staff, I have been more than successful finding staff with the free listings.
    • You will need to create documents to supplement your recruitment, this includes job descriptions, contracts, interview questions, staff handbooks, policy and procedures to name a few.  This is all available to download for free in the full course, though there are companies you can pay to create them for you or find examples online.
    • You will also get a lot of agencies contacting you to recommend staff.  However, they are quite expensive (costing £2,000 – £4,000 per staff member).  So, I would avoid them unless it is for one of your senior roles
    • If you did want to assign a budget for recruitment, I wouldn’t start with anymore than £1,000 – £2,000
  • Staff wages
    • You should aim to have 3 months of staff wages saved.  This is just to aid cashflow as you may not have enough children at the start to cover your costs.  Bear in mind that you do not need all your staff on opening day, and you can stager staff’s start dates as you start to get more children
    • You can estimate how much you should charge staff by searching the role in your area on Indeed.  Take a note of the average wages for different positions
    • Input these into the staff wages section of the start-up budget sheet.
    • Some roles you may be looking to hire are – Nursery Manager, Deputy Manager, Third-In-Charge, Room Leader, Nursery Practitioner, Nursery Apprentice, Cook and Cleaner
    • What and how many staff you need will depend on you and the size you expect your nursery to have
    • Remember to take into consideration Ofsted Staff Ratios (1:3 for under 2s, 1:4 for 2-3 year olds and 1:8 for over 3s)
    • With an initial staff count of 4 individuals including yourself, your budget for staff wages could start from £20,000 which would cover a a manager/ deputy and two other members of staff.
  • Other staff costs
    • Some other things you will have to factor in is license and training.  This includes getting staff first aid trained and their DBS checks.  You need at least one person with first aid training in the nursery at all times and a DBS check for staff.  First Aid training will cost roughly £60-£80 per staff member and a DBS check roughly £50.  Search online for providers in your area and add this cost to the budget.
    • Uniform – I purchase my uniform from Clothes2Order I found this to be the cheapest and still good quality.  With this link you get £20 off your first order.  Though, you can do your own research to find a supplier for your uniform.  Uniform should cost around £8-£10 per item, we provide 2 per member of staff.
    • In total ‘other staff costs’ should amount to up to £500

Resources

£5,000 – £8,000

This is where people budgets will vary the most.

Remember in terms of children’s development, the greatest resource you have is yourself and your staff.

You should budget at least £5,000 to £8,000 for toys and equipment.  This can include anything from books to tricycles, and puzzles to bean bags.

It is important that the toys you purchase are:

  • Age appropriate – you should have different toys and resources for the different age groups you will be caring for.  Babies, toddlers and pre-school
  • Educational – they should serve a purpose in helping develop children
  • Reliable – they should be good quality, you do not want to have to keep replacing ‘cheap toys’.  Try not to get too much plastic and opt for natural products like wood
  • Fun – they should be fun and engaging to help encourage children’s engagement

Some popular sites to buy resources from are:

Nursery Supplies:

Equipment

Nursery Toys and Equipment

You can also find lots of bargains on sites like Ebay, Amazon, Gumtree, Shpock and Facebook Marketplace.

Car boot sales, charity shops and nurseries that have closed down are also great places you can get resources.

Make a list of the items that you might want to purchase, add them to the resources tab on the start-up budget sheet (shown below).

Browsing the websites above will give you more ideas on what you want to purchase.

Once you have inputted the items you want into the resources section it will automatically be added to the start-up budget section.

Resources examples:

  • Arts and crafts – Paint, Chalk, pens, aprons, pencils, easel, scissors, paper, chalk, junk modelling resources, glitter, play dough (make your own)
  • Construction – building blocks
  • Baby room – cots, beds, chairs, tables, baby seats, changing mats, sensory items, rattles, puzzles, cause and effect toys
  • Role play – dolls, kitchen area, pots and pans, cars, train tracks, animals,
  • Sand and water play – sand trays, sand, sand toys, water toys
  • Kitchen – pots and pans, plates, cups, cutlery, cleaning supplies, bins, fridge, oven, freezer
  • Office and staff room supplies – adult chairs, tables, desks, laptops, printers, tablets, stationary, shelves, filing cabinets, laminators, shredders
  • Other items – ICT toys, computers, books, puzzles, musical instruments,
  • Outdoor toys – tricycles, bikes, scooters, climbing frames, sand and water play, play house, mud kitchen, slides, see-saws

Ofsted:

£220.00

    • Registering with Ofsted costs £220
    • Ofsted could also reject your application. Prevent this by following the guidelines laid out in their inspection checklist.  Further guidance is given in the online course.

Building costs

£15, 000 – £20, 000

You should aim to have at least 6 months rent/ mortgage payments saved in order to help cash flow.

Ofsted can take up to 6 months to view your building and register you. Which means you could have the building empty for this long period.  Because of this it is important to try and negotiate a rent-free period with your landlord (don’t be afraid to ask, especially if you are taking a long lease) and budget for the possibility of having the building empty for up to 6 months

Your rent payments will depend largely on the area you set up your nursery and the size the building.

To get an estimate of how much your fees could cost we will search some suitable buildings in the area you plan to start your nursery.  To do this follow these steps:

  1. Find a property rentals site. For this example, we will be using rightmove.co.uk, though there are many others sites you can use like Property Link, Zoopla etc
  2. On the site click on the Commercial properties section
  3. Select to rent/ for sale
  4. Enter the area you are looking for
  5. Filter by ‘Other’ and select Childcare Facility, Healthcare Facility and Place of Worship
  6. Use the results to estimate how much it might cost to rent your nursery and add to the Start-Up Budget

You may need to modify and redecorate the building also for example putting in smaller toilets, installing a kitchen, making the garden more child-friendly.

Other building costs you need to consider are:

  • Insurance
  • Gas and Electrics
  • Water Bill

Though, these should not cost more than a few £100 per month, especially if the nursery is not currently open.

Marketing costs

£1,000 – £2,000

You should have a budget for marketing also, as you will likely have to advertise to get parents to hear about you.  Some examples of the marketing you can do is:

  • Creating your own website
  • Social media/ google ads
  • Leaflet printing and distribution
  • Directory sign-ups for example Daynurseries or childcare.co.uk
  • Referral bonuses
  • Open days

Summary

By completing the start-up budget you should have a better idea of how much you will need to open up your nursery.  This can be funded by your own savings or by applying for outside funding.

To apply for outside funding you will need to complete a business plan, which is covered briefly in the next section and in depth in the full course.

You may not need all of the amount calculated prior to opening.  However, by having this amount at the start you should have enough to handle any surprises that come up.

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