Demand for childcare has increased exponentially over the last 20 years, with government spending on early years topping £3.7 billion in 2019 – from almost nothing in the 1990s. Nursery businesses are keeping up with the times, responding to the challenges of the marketplace and the looming concerns over staff retention and the rising cost-of-living. But some are faring better than others.
‘Those that have used the lessons learnt from the pandemic to refine and adapt their offerings – and come up with innovative plans to future-proof their assets – will undoubtedly stand stronger over the coming months and years,’ explains Ben Barbanel, Head of Debt Finance at OakNorth Bank.
The move towards purpose-built accommodation, which is easier to clean and more cost-efficient to run, is just one of the ways that businesses can remain ‘relevant’ in today’s marketplace, according to Barbanel.
But some owners are taking this a step further. Simon Redwood and Andrew Rose, who own and operate children’s nurseries in the north of England alongside their full-time jobs, used reinforced steel in the foundations of their new purpose-built 110-place setting in Chorley, Lancashire, so that they could have the option to add on another floor when necessary.
‘It’s currently two storeys high,’ explains Redwood, ‘But we can just rip off the roof and add another level or two if we need more space,’ he says.
The entrepreneurs’ venture, Strawberry Fields Nursery and Preschool, also has an onsite swimming academy and café, which provides a differentiated offering and an additional revenue stream outside of nursery hours.
‘There’s high demand for children’s swimming lessons in the area. We have 450 children on the waiting list and the calls haven’t stopped coming in,’ explains Redwood.
The constant stream of babies, pre-schoolers and siblings that attend the classes get a first-hand glimpse of the site that houses the on-site nursery, which is a great for potential new starters. And the swim school collects the parents’ data, which works well for future marketing campaigns.
‘When we explain to parents that part of the nursery offering is that their child can learn to swim in a warm pool with a one-to-six ratio, it’s a massive USP,’ Redwood says.
There’s also been no shortage in attracting the best talent, with practitioners keen to work in a state-of-the-art building which has a pool, underfloor heating, fingerprint technology and is surrounded by beautiful countryside.
‘On top of our staff team, we’ve got 15 to 20 quality applicants that are keen to join,’ Redwood says.
OakNorth Bank has been working with the owners to provide growth capital to pursue a buy-and-build strategy to bring nurseries with swimming academies to market.
Barbanel says, ‘It’s a great example of a setting that’s maintaining its relevance, increasing its usage and penetration through the setting and creating a captive audience.’
But he adds, ‘Given the innovative nature of what they've built, there’s going to be a hefty payback period. When it comes to new start-up settings, it’s important to have a reasonable mid-to-long term view. They’ve assessed the risks and are confident it’s going to give them the return they need.’
INTERGENERATIONAL OFFERING
Dementia specialist provider Belong opened its first care village with a fully integrated children’s day nursery on-site in Chester in August 2022, providing care and learning for 25 birth to five year-olds, six days a week.
The £21m state-of-the-art development is the non-profit care provider’s first intergenerational site and is being run by Sue Egersdorff, founder of Ready Generations.
She says, ‘We’ve done a lot of work mirroring the care qualifications across early years and childcare and older people's care and we’ve found that they are broadly the same. What’s more, people want the opportunity to work in older people’s care and in childcare. The team have already undertaken special training to better understand the needs of the young and old in this particular setting but we plan to do a lot more research about what an integrated workforce looks like.’
The care village has a bistro, gym, hair salon, therapy room, and entertainment venue which residents and members of the public have access to, and is great for parents when they drop off their children.
Barbanel says, ‘This model, although niche and unique, is appealing to its stakeholders: the parents. It’s evolving and differentiating its offer and maintaining its relevance in the marketplace. For staff, it offers cross-sector care and potential career progression.’
Barbanel predicts that more innovative ideas will come to the marketplace in the coming years: add-ons with the potential for additional revenue streams; nurseries appearing in flexible office spaces and other non-traditional buildings and locations.
‘It’s an exciting time,’ he concludes.
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