Leah Turner, co-founder of broker Owen Froebel shares her top tips for preparing a nursery
for sale in 2024

New Year resolutions should be as true for your business as they are for yourself, and I fully recommend starting the first couple of months with a bang and preparing for a sale.

This doesn’t necessarily mean that you are selling tomorrow or even this year. It’s about understanding your own business better so you can maximise it while you are in it, as well as getting the price and buyer you want when you do look to exit.

Nursery sale preparation: Review day-to-day processes

When we’re in a setting all day, every day, we often end up following processes that are no longer benefiting you or the business. Write down all the processes you have and make this year the year you review them all. Are there aspects of how you fill the sessions that are resulting in lower occupancy?

Is your invoicing process resulting in more time chasing bad debts? The most basic operational processes have a direct correlation on how efficient and profitable your business is. Are they all functioning as they should do, allowing you to ease day-to-day running, maximise profit, and get the best value when the time comes to sell?

Manage your numbers

The term ‘management accounts’ can put people off as they assume this is something the accountant must do for them, or they visualise a complicated spreadsheet with inexplicable formulas and multiple tabs. This doesn’t have to be the case. In terms of management accounts, the key thing is a list of payments received and a list of payments made, ideally with clear information of what those relate to.

List costs with a one-word explanation: ‘insurance’ or ‘food’ and that’s all that is needed. Templates can be found online. This should not only make your accountant’s life easier at the end of the year, it will also allow you to manage the business month-on-month and see how key areas are performing and make it easier to spot rogue costs creeping up.

This also allows you to understand better what your accountant does with the figures. Is your accountant splitting out personal costs that may be construed as an ongoing business cost to a lender? A buyer, their lender and their solicitor will look at every part of the business when the time comes, so familiarising yourself in advance to the parts that may result in a price reduction will allow you to maximise value and be best prepared when the questions are asked. The easier a set of accounts are to read, the stronger the value.

The property

If you own your property, you should be thinking about what you would like to do with it long before sale and investigating if the outcome you want is possible. Always start by talking to your financial advisor as to what the plan will be.

Is it better to sell the property when you exit, or retain it and lease it out? What are the tax ramifications of each option? If you have an expensive property, it may not be possible to sell the freehold to the same buyer as the business.

What will you do if this happens? Is it better to look at sale and leaseback before sale, to ease a sale of the business and free up funds beforehand? If you lease your property, does the current lease offer a security of tenure for you and for the future owner? If you have a lease shorter than five years, it may be difficult for you to get finance against the business if you look to expand and invest, or for a buyer to secure finance to buy the business.

If the lease is not in the Landlords and Tenants Act, then you may not be able to renew once the term is up. No one looks at the lease after it’s signed until a problem occurs. Start by pulling it out of the filing cabinet and see what you have at the moment and think about how you can make it more secure for you.

So, whether you’re already exploring the market, or you’re currently watching from the sidelines as you’re not quite there yet, as with all things, preparation is key. None of these tips are hugely life-changing or TikTok worthy, but as with the new year resolutions, it’s about creating good habits, increasing your own knowledge and understanding, and laying the groundwork. Once that is done, the next year starts on a strong footing and the sky is the limit.