How to make money from your home: set up a children’s nursery

You can earn £15,000 a year or more by establishing a purpose-built nursery in the grounds of your house, but it's hard graft

Making money from your home usually means renting out your spare room or driveway. However, homeowners with extra land can go even farther. Some, such as the Falkinghams, of Spofforth, North Yorkshire, run a children’s nursery from their garden, earning from £12,000 to £15,000 a year from their spare acres.

About 80 per cent of the UK’s 14,500 nurseries are in the private sector, many situated in the grounds of the owner’s home. This trend is expected to grow as demand for nursery places rises. Three and four-year-olds receive 12½ hours of nursery education a week paid for by the state; next year that will rise to 15 hours.

As home-run businesses go, nurseries are considered relatively secure. As Mike Falkingham says: “In the current economic climate professional mothers are reluctant to risk getting off the career ladder to look after their babies and toddlers.”

However, running a nursery is not an easy route to riches. Dawn Markham, who opened Fernwood Day Nursery in Fernwood, Nottinghamshire, last September, says that job satisfaction compensates for the long hours and relatively low profits. “You are there to see babies take their first steps and to see toddlers starting to draw and to develop their personalities,” she says. “I wouldn’t swap it for anything.” Markham has worked in childcare for 15 years and spent two years planning her nursery, which cost £400,000 to build. She has 40 children enrolled, although only 24 are present at any one time. She charges £142 for five days at the nursery.

If you opt to convert an existing building, you need to plan your renovation carefully. You will have to meet stringent regulations over the tiniest details. For example, daylight must be the main source of light in the nursery; the amount of space given per child, at different ages, must be strictly adhered to; there must be separate staff and office areas, and adequate outdoor play areas.

As for Ofsted requirements, study the Early Years Foundation Stage: Setting the Standards for Learning, Development and Care for Children from Birth to Five, then ask yourself again whether running a nursery is what you really want. “Record keeping and documentation is undoubtedly the worst aspect of the business,” Markham says. “I know it is necessary but I would far prefer to be outside my office, working with the children.”

There is little opportunity to reap economies of scale in the nursery business. Few have more than 130 children enrolled and the size of any group should not exceed 26. Staff/child ratios are high. They should not be lower than 1:3 staff to children for under two-year-olds; 1:4 for two to three-year-olds and 1:8 for three to seven-year-olds. Outgoings on staff are considerable, especially as they are, nowadays, required to be better trained and qualified. All managers must have at least a Level 3 qualification and two years’ experience to satisfy Ofsted.

For those thinking of setting up a nursery in the grounds of their home, Markham has the following advice: “Take on board advice from estate agents and financial advisers to ensure your venture is viable.”

Source: The Times. April 17 2009