Because I was paying £7/hr for childcare, then £7.50 and as of 1st April - £8/hr. And I know for sure that of the 10 or so staff, 5 or 6 are youfff on appreticechips etc. and the owners husband is on pay roll, her sis/niece etc...
They now rent a school premises at ultra low cost too...
Nurseries not being profitable is a cop out IMHO. Maybe it is region dependant.
The nursery staff here are working 7.30am till 6pm to cover the 8am to 5.50pm nursery opening time. So 10.5hrs per staff member.
The national minimum wage is £10.42 so per staff member. So you are at £27,500 per annum for a senior nursery career (that what they on) The younger staff are on £7.49 regardless age so they are around £19,800 per annum.
Let's take 16 children and its 4 per career (average with ages generally there) the weekly rate is £236.25 per child. So £3780 a week income assuming full time care.
Weekly wages are £1671 then, plus health care, pension, insurance for those staff.
Rent for property to run the childcare centre is £550 a week (Gloucestershire area). Then you have public liability insurance which theirs is around £17.45 a week.
Gas, Electric and Water services another £100 a week. Then you have office supplies, IT, payroll, cleaners, general childcare related supplies such as things for children to do, activities, learning materials pac testing, ISO and code compliance review etc. That is around £200 a week breaking down the annual last year.
ongoing maintenance to fitout of the nursery. Marketing, training. All that is easily another £200 a week.
So now you are at something that £2640 per week expenditure assuming nothing else crops up. So an annual return is £59,280. This gives about a 29% profit margin at best. Then corporation tax takes away about £11k so you are around £48k.
The person on the £29k wage takes that as dividends from that profit (you wouldnt take all that course etc) but that puts them as a total annual earner of around £90k if they did. Honestly for the work time and running a business that isn't a hugely healthy margin. That works back to £4.5hr per child by way.